Open Source ERPs – the future of Business Intelligence

Many times we would have heard or asked our selves this question: how is a free or open source software is interesting to business? The simple answer for it – the cost of possession of such software applications for the customer is in times cheaper that is very interesting to business even at accompanying inconveniences of completion. And this profitability can over come many barriers like organisational, technological or legislative.

It has been a proven that if the company never introduced system of document circulation or an Enterprise Resource Planning(ERP) application, in its corporate culture there are no skills of work and management through informational system. These two processes – development of skills of management and development of informational system as the tool of management – are interdependent. It is often possible to observe that the company management, having absolutely despaired to master management, spends huge money for ERP-system, and the result becomes only comprehension of problems by the personnel and a management, and their correct statement.

EPR-systems has been enabling the companies for great volumes of sales and a gradual reduction in marketing or operational costs. It is necessary for them to analyse the expenses against the margins. For these purposes heavy and expensive systems developed by SAP and Oracle are being used in larger enterprises.
When we are considering enterprises of average and small business, which have opportunities to sell more, but it is already complex to them to cope with their own management. Introduction of system ERP/CRM for them has a big risk of a non-return of investments, there is no direct visible way of a recoupment of system, and therefore the cost of introduction should be in some times less.

It is a known fact that most big organizations select and implement Commercial ERP solutions rather than go with Open Source ERP software. Why so? What are the challenges then that Open Source ERP Vendors face when competing against a Commercial ERP package? Let us investigate and see how Open Source ERP Solutions stack up against the Commercial ERP counterparts.

Time

The time to market, or the time it takes to implement a Commercial ERP package is generally longer (given that you may be subject to software availability timeline restrictions from the software vendor and implementation process methodologies from a large systems integrator). Typically, organizational processes need to conform to the software process itself, and effecting that change can take a long time. Open Source ERP implementations are generally used by smaller companies who are just setting up processes initially, are typically not averse to adjusting to a new process. For this reason, typical Open Source ERP implementations see smaller implementation cycles (mostly due to the simplicity of the project itself)

Cost

Open Source ERP solutions are typically less expensive (most being completely free) to license than Commercial software. The only upfront cost associated with using them is the support and maintenance contract fees or some small amount as License fees when using a customized version that is being promoted by a specific company.

Flexibility

Open Source, means you can have the code, and can modify it yourself! How can a system provide more flexibility than this? Compare this to a Commercial ERP solution: To get any fix, patch upgrade or new functionality on your system and it will take time!

However in case of an Open Source ERP you might need to keep your own team of developers to not only add the features, but to also maintain it yourself. So a complete IT Team may be required.  This implies that even though the cost of initial software acquisition is low, the cost of keeping the software running can potentially be higher.

Training & Ramp-Up

Commercial ERPs typically need specific training for the developers/implementers (examples SAP, Oracle ERP) etc. But for Open Source, you have the entire source-code itself! Open Source ERP providers believe (as do most geeks) that there is no better documentation than the source code itself. Source code may be the best piece of documentation for a Developer, but for an End User it usually means nothing. Now days all the Open Source ERPs come out with excellent documentations including both functional and technical aspects.

Business

Now days IT service providers are also becoming more comfortable with subscription revenue as a business model, something common among open-source companies, while larger enterprises are also getting on board. Financial backing from venture capitalists is helping to boost growth.
According to a survey done earlier this year, about 80 percent of companies have installed or will install some form of open-source software by the end of this year. The cost and time for developing a fully matured enterprise class busines intelligence applications like ERP is too large that it may be affordable for larger IT companies. Open Source business model allows an early entry into the market with lowest TCOs which can open up a service based revenue channel at the starting stages of a business life cycle.
Professional services firms have had practices for proprietary software–such as SAP or Oracle software–for many years. But in open source ERPs, most service providers are still relatively young and the market is unsettled, which means that companies that partner today could become competitors in the future. Some of the popular names among Open Source ERP applications currently are OpenERP, Adempiere, OpenBravo, OpenTaps, Tryton, ERP5 etc.

 

If we consider the arguments above, Open Source ERPs surely has an edge. Keeping in mind about all the advantages there are few points to be investigated before you make a choise of going with Open Source ERPs. The track record of that particular application in providing good documentations when they update the versions, check for the availability and relaibility of support partners apart from the community, explore your ERP’s compatibility requirements for your business purpose and make a right choice form the available applications which can realise those requirements, availability of long term support and capabale of taking the committments.

The best brand ambassador for Open Source today are probably Linux (big presence in Enterprise), Android (big presence in mobile, tablets), Firefox web browser, JBoss Application Server to name a few. Open Source ERP solutions are still far from establishing a brand name for themselves (like Linux, JBoss). They probably will need to build communities like those for Linux and JBoss. They might also require angel investors like those that JBoss, RedHat, and Ubuntu have and at least a decade or more of serious concerted development in order to compete with Commercial ERPs!