(Editors Note: To help our readers better understand the impact of Brexit, we called in an expert. The following is a guest blog post from Frank Fanzilli, a SugarCRM board member and former global CIO in the financial services industry).

Brexit – What Happened, and What Comes Next?

Now that we’ve had a few days to reflect and move past the utter shock of the UK’s historic vote to leave the European Union, it’s important for organizations in every country to develop a strategy for dealing with what comes next.

We have entered an era of economic and political uncertainty with no easy fix, and one that is slightly different from that of the past decade. As an organization, it’s important not to overreact, and think you must come up with all the answers to deal with the economic impact of Brexit right away. Sure, the value of the British pound immediately fell to $1.35 against the dollar — its lowest level since 1985. And the U.S. stock market dropped 600 points the day after the decision. But frankly, those are minor issues, and a correction may already be under way. The full extent of the economic impact of this vote won’t be known for some time because, as you’ve probably read, the United Kingdom must invoke the “Article 50 notification” first. After that, it has two years to negotiate its exit from the EU.

So, while England and the EU take a methodical approach to how to best navigate this mess, I suggest you do the same. If you are in the financial services or technology sectors with operations in the UK, it is unlikely that there will be any changes in the short term: A contract that was enforceable yesterday will be enforceable today. The UK’s financial services regime, including EU directives and regulations, remains in place until further notice. But there will be lots of noise, there will be distractions, and yes, there will be more volatility.

What is different about this crisis is that, while it is of course an economic story, it’s also a huge political story — and the largest in the West, at least in my recent memory. And last week’s Brexit vote was just the first political domino to fall. It seems likely that a second vote on Scottish independence is coming. (Scotland voted to remain part of the UK in 2014.) In addition, far-right politicians in France and the Netherlands are now calling for their own EU separation referendums. I’d say the chances of other countries leaving the EU aren’t likely, but then again, I never thought we’d be at this point either.

How Brexit Affects the Technology Industry

Finding talent — Tech companies with offices in the UK might have trouble finding and hiring enough skilled engineers and developers. Without the EU’s “freedom of movement” allowances to let workers travel between countries, companies are now worried about a shortage of qualified employees.

Funding — British entrepreneurs face the potential loss of EU business and research grants. London’s technology industry has been on the rise for the past several years, partly because Great Britain benefits in large part from funds such as the European Innovation Fund. If that dries up, it sets the tech industry back. It goes the other way too: About 50 percent of all European funding comes from venture firms based in London. I don’t see how London venture capitalists will continue “business as usual” until the regulatory implications are better understood.

Free trade uncertainty — This was a major topic at this week’s EU meeting. Leaders in the UK want to maintain “single-market access,” which offers free movement of goods and finance around the EU without tariffs. Unless a new deal is reached — and it appears the EU will play hardball on this — by the time the UK leaves, a UK-based company outside of Europe will trade with the EU under World Trade Organization rules. This would mean UK exporters will pay new EU import tariffs, as well as face other fresh barriers to trade.

Data flow and data privacy — This is the biggest issue, in my opinion. The United States and the European Union are in the process of making final adjustments to their latest data privacy agreement, which governs the flow of data between the United States and Europe. With a major player in the European Union now backing out of the coalition, it throws things into chaos.

Right now, U.S. multinationals and tech firms are running out of ways to legally process the data of European citizens. This is because the EU has so far been unable to finalize an “adequacy” decision that would declare the United States safe as a destination for Europeans’ personal data. When it leaves the EU, the UK will be in the same boat. If British companies want to process the personal data of employees and customers on the European mainland, the country must win an adequacy decision. This means that, even though it’s leaving, the UK must reform its privacy laws to be in line with the new EU rules or face big barriers to cross-border data flows.

Meanwhile, global tech firms must deal with the new EU rules. These rules clear the way for massive fines for privacy violations, and allow people to opt out of being profiled online, but they do at least welcome the uniformity that they promise.

How can businesses protect themselves against the likely forthcoming changes in tech policy? For one, it’s vital to have flexibility in cloud options and the ability to adapt solutions to suit the particular needs of their customers and comply with data sovereignty laws. Modern SaaS companies leverage multiple infrastructure service providers in different countries so that customer data can reside wherever legal requirements force a business to store that data. In contrast, legacy SaaS providers operate a single, vendor-specific cloud, putting all of their customers’ data at risk under the umbrella of that vendor. In this next generation of SaaS, technology companies operate their own cloud and also enable other service providers to deliver that SaaS service on their clouds, either private or public.

Impact to the Financial Services Industry

One note of caution: Operational volatility — especially in trading — is likely to increase for the near future. Investors and their assets will undergo a flight to quality — we’ve already seen that. Minding the shop will remain as important as ever, to make sure that key systems continue to operate without fail. And understanding risk will be a key to institutions’ ability to navigate the crisis successfully.

Until now, most global banks have done business in the EU by setting up regulated businesses in the UK and using their right to “passport” into the rest of the European Union. Now, thousands of jobs may be moved out of London because these banks will no longer be able to run their European businesses from the UK — nor would it make political sense. Dublin, Frankfurt and Luxembourg seem like the most likely places for banks to shift operations, but moving infrastructure and people is expensive and time-consuming.

U.S. banks operating in the UK may also have to deal with new sets of financial regulations — a process that will take time and create more uncertainty. However, there is ample time to set up contingency plans to influence the changing legal and regulatory requirements.

imgresWhat Should Businesses Do?

Nothing can predict what the coming months will hold, but any kind of lasting economic upset is looming, it will happen slowly — hopefully giving sufficient time for businesses to make the right course corrections. Here’s a bulleted list to get your comprehensive plan together:

  • Determine how your employees are taking this news. Reassure them that it will be business as usual until more is known. But also be thinking about how you can offer additional information, guidance and training.
  • Figure out how to best communicate with customers, partners and investors. Come up with answers for questions like, “For customers in the UK and Europe, how will this change their buying behavior? For customers that pay us in depreciating currencies, should we alter payment options?”
  • Calculate what your optimal cash buffer would be in the event that Brexit leads to a liquidity crisis.
  • Evaluate your own company as well as competitors in your industry so you recognize the advantages and disadvantages that all industry players will face as the economic and regulatory situations changes.
  • Assess the impact on your ability to maintain your workforce. Will there be any implications for EU nationals working for your organization in the UK, or for UK citizens working elsewhere in the world? You must understand how this will affect workforce mobility across our organization.
  • As the UK and the European Union work through Article 50 negotiations, monitor how to adapt to changes related to corporate taxes, HR laws and international data management laws.

Most importantly, avoid overreacting and distracting yourself from your current business objectives.

-Frank Fanzilli

If you’re like us, you’ve spent the last several hours digesting the UK’s Brexit Leave vote. While we recognize this is an economic and political story before a tech story, here’s our take on what the vote means.

A UK exit from the EU impacts not just physical borders, but digital borders as well. Data sovereignty, the concept that data is subject to the laws of the country in which it is located, will likely require companies to change systems and processes for managing customer data.

Why? The UK is part of the EU data regime. The vote to leave the EU could create a new UK data regime where companies need to manage CRM system data crossing the new digital border between the UK and the rest of the world. Storing EU customer data in the UK will no longer satisfy EU data laws. Likewise, UK customer data stored in EU countries will have had to comply with separate UK data laws. Changing processes and systems to comply with the new legal landscape around customer data takes both time and money.

How can business protect themselves against the likely forthcoming changes in tech policy? For one, it’s vital to have flexibility in cloud options and can adapt solutions to suit the particular needs of their customers and comply with data sovereignty laws. Modern SaaS companies leverage multiple infrastructure service providers in different countries so that customer data can reside wherever legal requirements force a business to store that data. In contrast, legacy SaaS providers operate a single, vendor-specific cloud putting all of their customers’ data at risk under the umbrella of that vendor. In this next generation of SaaS, technology companies operate both their own cloud and also enable other service providers to deliver that SaaS service on their clouds, either private or public. For example, with SugarCRM, businesses have a CRM system that is ready for a world with multiple clouds and many data sovereignty regimes.

Looking further ahead, the issue of data residency is not exclusive to the EU, but is part of a global trend with similar discussions currently taking place in countries like Russia and Canada. I see this trend continuing with more and more countries moving towards security and privacy laws that require their data to be kept within national boundaries.

The recent battles between the EU and US over the “safe-harbour” legislation are an example of what a thorny issue cloud-based data storage continues to be. The problem is that there’s a fundamental contradiction between the cloud and national borders; information has no respect for lines on a map and tech companies thrive when their solutions are systems that have maximum flexibility. The more legislation that occurs, and I think that this is inevitable post Brexit, the bigger the headache for SaaS companies as they are forced to navigate different legalities in different markets.

I am certain that this debate, this tension between data storage and national security interests, will continue for many more years to come.

No, I’m not going Dear Abby on you, I’m talking about your relationship with your CRM provider.

Sometimes you just don’t know what you’re in for. Everything starts fine, the whole thing seems like a promising partnership between vendor and customer. But, the more you get to know someone, the more you start to realize there are some flaws you just can’t stand – like an ambiguous pricing model.

If you are considering a new CRM relationship with Salesforce, you should be aware of a few things. Salesforce pricing includes upcharges for system usage, which are often very hard to calculate and budget. Just as companies start to realize the business benefits of the CRM system, the costs start to grow exponentially. Upcharges include API calls, which equate to connections to other data sources. Storage-based fees can balloon when storing large files such as PDFs or presentation slide decks in the system. In addition, complete mobile access for some versions can cost as much as $50 additional per user, per month. Also, building custom mobile applications on the Salesforce CRM platform can cost an additional $300 per application per month.

It helps to understand Salesforce business model. They talk about “the age of the customer” and how they want to help you build close customer relationships. That’s great, but what they also want to do is lock you into their proprietary cloud environment and charge you every time you want to access your customer data. Think about that, it is like being charged a toll every time you park your car in your own garage.

A recent Forrester survey revealed that 52% of the respondents picked “high cost of ownership over time” as the one thing they most dislike about Salesforce’s Sales Cloud, followed by “rigid and inflexible pricing model” at 42% of total. As a result, 43% of the respondents said they will “renegotiate our contract with Salesforce when it comes up for renewal,”

Good luck with that one.

Breaking up is hard to do, the best approach is to avoid a dysfunctional CRM relationship in the first place and choose a better partner from the outset.

SugarCRM believes strongly in simple, predictable pricing with no hidden fees or forced upgrades. Unlike Salesforce, SugarCRM includes sales, service and other core CRM capabilities for one price with absolutely no hidden fees. SugarCRM’s sticker price is much lower than Salesforce for similar editions, but that really only tells part of the story.  SugarCRM aims to limit the “hidden fees” that Salesforce is known for.  SugarCRM does not charge exorbitant premiums for object storage nor does SugarCRM force users to upgrade to more expensive editions when the user hits arbitrary customization or API limits.

These are some critical elements to consider when entering into a new CRM relationship. Buyer beware!

For more information about hidden CRM costs, check out our pricing comparison guide.

 

Last week, SugarCRM hosted more than 1,200 attendees at SugarCon, its annual conference for customers and partners. The SugarCon 2016 theme was “Transform Relationships” as we gathered to talk about how industry after industry is being disrupted by ridiculously fast evolution of technology – and what that means for the customer experience.  

It was a great week, with more than 35 breakout sessions from SugarCRM customers and partners, a fabulous list of main stage keynotes, and demos that wowed the crowd.

SugarCRM CEO Larry Augustin kicked off the show by outlining a four-part strategy for companies to adjust their operations to thrive during the era of digital transformation. Clint Oram, SugarCRM’s co-founder and CMO, followed with a demo of the some of the new capabilities that are coming to the Sugar Platform and mobile app.

SugarSRM SugarCon 2016 in San Francisco, California, Tuesday, June 14, 2016. (Photo by Paul Sakuma Photography) www.paulsakuma.com

 

Dr. Catriona Wallace and Rich Green, SugarCRM’s chief product officer, provided some serious brain power on the second day of keynotes. They dazzled the audience with details about how the rise of platforms as replacements for individual applications, machine learning, artificial intelligence, the Internet of Things, and predictive analytics are the key technologies that will shape the future of CRM. Rich introduced the crowd to SugarCRM’s new Sugar Intelligence product line and “Candace” our future intelligent assistant.

Catriona pic

Announcements that we made during the show included:

  • Sugar is now available on IBM Cloud in a single tenant, dedicated private cloud environment. SugarCRM has extended its relationship with one of its closest partners. Organizations now have more flexibility and control over their CRM data with new IBM Cloud deployment options, including bare metal servers, OpenStack-managed clouds and virtualized, multi-tenant cloud services.
  • SugarCRM’s vision for Intelligent CRM begins with the Sugar Intelligence Service™. The new service, currently in development by SugarCRM, combines data from best-in-class external sources with internal data to provide a more comprehensive view of the customer. Further, the Sugar Intelligence Service adds predictive analytics capabilities to make intelligent recommendations for next best actions in customer interactions.
  • A sneak peek at “Candace,” an intelligent agent that guides and assists users in interactions with customers, helping them plan meetings, build deeper connections, recommend best actions, and respond to breaking developments as relationships evolve.
  • A new advanced plugin for Sugar — the Customer Journey Plugin from Addoptify. This new enterprise solution helps SugarCRM customers unite best-practice CRM with their customers’ decision journeys. This infuses the customer’s entire decision process with internal efficiency to streamline processes, boost sales performance and strengthen customer engagement across all departments.

Thanks to all who attended and shared the week with us. Videos of the keynotes will be available shortly for you to (re)watch. In the meantime, please save the date for SugarCon 2017.

SugarCon2017-SavetheDate

We have just returned from a bit of a whirlwind week of events: the trio of CRM Evolution/SpeechTek/Customer Service Experience shows in Washington D.C. and thecrossrdGartner Customer Strategies & Technologies Summit in London. Throughout the week, we heard a LOT of insightful and innovative ideas from analysts, practitioners and other industry experts around the present and future of customer engagement and customer relationship management in general.

One item that stuck out in my mind was Gartner analyst Ed Thompson’s keynote, which focused on the “defining moments” that shape our personal lives as well as the world around us. Note, these are very different than “moments of truth,” those small, but far more frequent interaction points that can make or break your relationships with customers. Defining moments, as Thompson explains, are far more infrequent, think of a major breakthrough such as the market availability of the first digital camera (or even the first camera phone), and have far more profound and lasting impacts.

These moments affect not just the way individuals see the world, but also shape the way businesses (and really, the world in general) operate.

When I look at the industry in which SugarCRM operates, that of front office software, it is easy to see several defining moments. These monumental shifts have been both in the way the customer relationship has evolved, and also about the nature of the technology we create and use in business. And of course, these two are inextricably linked.

A few examples of defining moments that have shaped CRM: the introduction of email into the customer relationship, the emergence of SaaS delivery of apps (and the eventual evolution into cloud software), the iPhone making mobile CRM apps a must-have, Facebook and Twitter becoming de-facto customer conversation channels, etc.

Looking at these defining moments, a few observations become clear. One, the pace and breadth of defining moments in our world is increasing, due mainly to the insanely rapid pace of technology innovation. Second, those that refuse or simply fail to take advantage of the changes pushed forward from these moments do so at their own peril.

We talk a lot about “disruption” and “digital transformation” – but in the light of defining moments these should not be considered single “projects” or a one-time transformation endeavor. Rather, the pace of innovation and the onslaught of more customer channels, data points, and expectations means that businesses must be in a constant state of development, with total openness to change. Sure, change is hard, but you need to aggressively embrace new business models.

One great example is SugarCRM customer CitySprint (who just happened to co-present their transformation story on stage at the Gartner event). While CitySprint is a leader in its space as a last mile delivery and logistics provider in the UK, they saw the disruption curve coming – from new digital technologies like Uber, Amazon Prime, etc. Rather than risk getting left behind, CitySprint is incubating its own startup to shift its business from simple delivery into providing technology, solutions and tools for businesses across the UK to create more effective customer experiences. (CitySprint will be telling more about this story at SugarCon in June FYI.)

So, no matter what your industry, one thing is clear: disruption is coming in some form or another. And, it is going to keep coming. Those who embrace the pace of change and respond accordingly will win. Those who do not will face steeper and steeper uphill climbs in an increasingly competitive marketplace. On which side of this equation would you rather be?

It’s time to Transform Relationships!

The (r)evolution of new technologies is rapidly re-drawing the business landscape. Customers are in charge, hyper-connected and full of expectations that companies know them intimately and deliver communications, products and services designed for THEM. Everyone knows it’s time to transform or be left behind.

The transformation needs to start with taking the customer perspective. SugarCon 2016 will offer new insight from experts and industry leaders on how companies can take a holistic approach to transform relationships to drive deeper customer understanding and deliver more engaging customer experiences.

SugarCon 2016 has more than 35 breakout sessions from top CRM experts. In this year’s sessions, executives and thought leaders from a broad range of industries will address business transformation, strategic IT management, and technical CRM development and deployment topics. In addition, SugarCRM technical experts will go in-depth on the product roadmap and the latest Sugar capabilities.

Some of the can’t-miss sessions at the event include:

Larry Augustin: Transforming Relationships – Four Ingredients for Success – June 14 at 8:45am

SugarCRM works with thousands of companies around the globe. We see four key ingredients that set the very best companies apart. Larry will talk about how each company must align strategy, people, processes and systems to transform customer relationships.

Clint Oram: Transforming Relationships with a Modern CRM – June 14 at 9:45am

Clint will demo how Sugar 7 can help you transform relationships by delivering a seamless customer experience across the entire customer journey, anticipating customer needs and coordinating the actions of teams across large organizations. You’ll see and hear great examples of how Sugar 7 can be extended to address specific industries.

Transformation Around the Globe: Sugar Customer Panel –  Tuesday, June 14 at 11am

We’ve brought together a pretty amazing panel of experts to discuss the market dynamics driving their own business transformations. They’ll share insights and experiences using Sugar to re-tool global sales teams, streamline customer care, and create personalized guest and retail experiences.

The panel includes:

IBM – Deb Drakeford, Director Sales Connect, Office of the CIO

Devlyn Optical – Andrew Devlyn, eCommerce and Innovation Director

Sands China – Scott Lake, Senior Vice President of Loyalty Marketing and Strategic Analysis

Fast Forward with Rich Green – Wednesday, June 15 at 11am

SugarCRM’s new chief product officer, Rich Green, is a recognized Silicon Valley leader and one of the architects of the technology environment that surrounds us today. Rich will discuss major technology drivers, like information to everywhere, mass customization, big data, machine learning, IoT – even quantum computing. He’ll share his vision for how these technologies are transforming CRM — today and well into the future. Expect some exciting announcements and sneak peeks in this session.

Dr. Catriona Wallace: When Customers Take Charge – Transforming CRM to a Segment of One –  Wednesday, June 15 at 8:45am

Dr. Catriona Wallace, one of the world’s most cited experts on the future of customer experience, will share how emerging trends, such as Conversational Commerce, are now creating an environment where both B2B and B2C customers can no longer be put in segments, and instead need to be treated as individuals. Dr. Wallace will share the key trends that have provided customers  more power than ever before as well as the important role that platforms play in better connecting and creating shared value for both customers and businesses. 

The App Throwdown – Wednesday, June 15 at 4:15pm

SugarCRM’s annual showcase of technology for the Sugar platform is always a crowd favorite. The App Throwdown is where customers, partners, and prospects get to see some of the coolest, most useful, and innovative extensions that drive business transformation, save costs, and close deals faster. 

Build your Sugar Expertise

We’ve created a whole new track called Sugar In-Depth where Sugar experts get into the nitty gritty on how to use new Sugar technology like the Mobile SDK, Sugar 7.7, and Advanced Workflow. SugarCon also offers a hands-on “UnCon” track for developers, opportunities to interact with the SugarCRM engineering team in the SugarLabs, and Sugar University training and certification.

Build your Network

SugarCon will offer lots of great networking opportunities – with industry leaders and influencers, peers who share your interests and challenges, SugarCRM executives, technical experts and partners, and of course our event sponsors. Birds of a Feather sessions will offer a place to connect with attendees around topics that matter most to you.

And Have Fun Too!

There are plenty of cool events and experiences at SugarCon. You definitely won’t want to miss this year’s SugarCon Party Tuesday evening, June 14!

Finally, don’t take my word for it. Here’s Clint Oram, SugarCRM Co-Founder and CTO about what will make SugarCon great this year.

(Editor’s note: This article was originally published on destinationCRM.com)

Cloud-based SaaS solutions offer some great benefits, but be careful. Getting trapped in a proprietary cloud solution can lead to a loss of control—of your data, your security, and maybe even your career.

The cloud is certainly having its day in the sun. Social, mobile, and now the cloud have taken turns topping IT priority lists for large enterprises. This notion was underscored when a recent Bitglass survey of 92 CIOs and IT leaders revealed that 55 percent of respondents said their companies embrace a “cloud-first” strategy. Such reverence is hardly surprising. The cloud-based software-as-a-service (SaaS) model offers a lot of advantages for many enterprise solutions. Rapid deployment of off-the-shelf software systems can be affordable, present a low barrier to adoption, and provide an excellent way to prove new ideas quickly. This has certainly made it easy for many companies to implement new software, but there are pitfalls that must be watched for and avoided.

Most cloud solutions are available only in proprietary, multitenant, shared-infrastructure, single-cloud configurations—a big black box in the sky. There is little or no opportunity for companies to decide where they want their applications and data to reside. Public cloud of your own choice? Private cloud? Within your own country’s borders? On premises? A hybrid combination of these? In some cases, all these options are off the table. The only choice is the vendor’s proprietary cloud—a model that just doesn’t work for everyone.

Security concerns, regulatory requirements, and enterprise integration strategies should be carefully considered before deciding to “lock in” with a solution that’s limited to a single vendor’s proprietary, public, shared-infrastructure cloud.

It’s interesting to note that a recent Gartner study, Market Share Analysis: Customer Relationship Management Software, Worldwide, 2014, states that 47 percent of CRM software revenue was generated from SaaS-based CRM applications in 2014. But that means the other half of CRM revenue was generated from private cloud, managed hosted, and on-premises solutions. The more sophisticated multinational companies with intense data integration and data security needs are turning away from the public cloud and choosing the private cloud for their CRM needs.

I recently met with representatives of a large company in the financial sector about a new CRM deployment. Without hesitation, they said, “There is no way we are putting our customer data in a public cloud environment where we lose control.” This is an understandable reaction: Around the world, companies in highly regulated industries like financial services, healthcare, and the federal government must comply with strict regulations that govern the handling of personal information and sensitive data. An out-of-the-box shared infrastructure cloud CRM offering will not meet these strict regulatory requirements.

Compliance is becoming an even greater challenge outside the United States. Many countries have strict rules governing the collection and storage of customer data. This has led to an increasing drive for data localization. For example, Germany requires that data about German users must be stored within the country’s borders. Recent court rulings against the USA-EU Safe Harbor framework and the proposed “Safe Harbor 2.0” data transfer rules will lead to many companies deciding the best way to stay compliant is to keep customer data stored within the same continent and same country, if possible.Cloud Portability Image

In addition to compliance issues, data security concerns have caused many CIOs to delay shared-infrastructure, public-cloud deployments. One of the main concerns for organizations is that information stored in the public cloud is beyond its control. Imagine investing in the best security tools and having the most sophisticated authentication protocols, but still being at the mercy of your cloud vendor’s security mechanisms for managing your most precious asset, your customer data. Your top-notch information security team has no visibility into those security controls, and you have no way to move to another CRM cloud vendor if those security mechanisms are challenged or, worse, fail. It’s not a comfortable feeling. Couple the loss of control with the media’s constant reporting of embarrassing high-profile data breaches such as happened with Anthem InsuranceAT&T, and even Ashley Madison, and the unease about having customer data exposed grows—which is understandable, given the obvious consequences: compromised reputation, lost business, and fines levied for regulatory violations.

Another large multinational electronics manufacturing company I recently worked with reviewed all of the public-cloud CRM solutions available and determined that moving its large volumes of customer data across multiple public cloud vendors was not only potentially unsecure, but too costly. With tens of millions of customers around the world connecting with it across a variety of brick-and-mortar and online channels, the dollar costs of storing that data in a public cloud service and the costs of accessing its own data for reporting and integration purposes via that cloud service did not work out. Global enterprises find the very size and complexity of their customer data challenging to manage and integrate in the public cloud. All of these cost and control issues melt away when the CRM solution is managed in a private cloud, often by one of a variety of different expert-managed cloud service providers.

Organizations should have the freedom to implement the systems and architectures that best address their needs for security, regulatory compliance, and data integration. The cloud is a great option. But getting there shouldn’t force you into an environment that puts your data, your business, or your career at risk.