CRM company dumps Microsoft,
remakes itself with LAMP

Etelos, launched in pre-bubble 1999 as a CRM services outfit, has remade itself as a Web 2.0 company with the help of open source software. Today, Etelos offers hosted CRM applications that weave into Google apps, Windows Live, and even iPods. Leaving Microsoft behind, and all the licensing restrictions that came with it, made all the difference, says CTO and founder Danny Kolke.

In May 1999 Kolke started Etelos with a vision to provide an entire suite of Web applications for salespeople. Etelos started life as a Microsoft shop, but it didn’t take long before Kolke realized that fulfilling his vision was going to take an infrastructure that would allow scalability at a lower cost than was possible with the .Net platform that Etelos was based on. “We quickly decided that because we wanted to distribute our product as a Web application, the Microsoft model was very expensive,” Kolke says. “To try and scale that infrastructure, with a per-CPU cost, and with the ASP pricing model, it would cost multiple hundreds of thousands of dollars. And we didn’t see that much value in [Microsoft’s] core stack.”

Kolke and his team of engineers had heard about open source software and decided to give it a try. “It was our first time,” he says. “I had an engineer and a product architect that had played around with it before, but now they decided to immerse themselves in it and come up with a migration and development path. The first solution that we built took about 90 days from discovery to prototyping. It wasn’t a complete migration, but it was enough to make a decision.”

What Kolke and his team found was that with the low cost of a LAMP stack composed of CentOS, Apache, MySQL, and PHP, they were able to produce a range of hosted CRM solutions that wasn’t possible on a Microsoft infrastructure. “Originally, we were intrigued by the pricing and distribution model [of open source] and then by the economics of developers in the community working on the code.” The collaborative and cooperative nature of the open source community struck a pleasant chord with Kolke. “We were early users of the SOAP toolkit, and we had run into several walls with Microsoft where we had problems with it but couldn’t get clear answers on when they were going to resolve the issues. We got the ‘we know about it and we’ll get to it’ answer. With the open source community, we found a lot more support, and with having access to the code base we could contribute fixes. So the support was a lot more appealing for us, along with the rapid development cycle.”

As Etelos has evolved, its CRM applications have also grown in scope. Kolke hopes to soon begin distributing a version of his product that will allow users to access applications with or without an Internet connection.

The end user solutions distributed by Etelos are proprietary, but the company also distributes a developer version of its infrastructure that is open source, and Etelos encourages developers to build their own applications on top of it.

Kolke says it is not a matter of if, but of when, Etelos will begin releasing all of its products as open source software. “We want to have a successful release and make sure the documentation and the staff are all in place so our customers will have a positive experience. I don’t think posting the code and pitching it over the fence is the right way to serve those users.”

Kolke says the key to successful open source migration, adoption, and development is to understand your business objectives. “If you’re looking for technology to build stuff on top of, if you’ve got an idea for Web-based applications, I’d definitely recommend open source technology over a proprietary-based solution for anybody starting out.”