Should you Modify ERP? – Proprietary vs SaaS vs Open Source

Hi Everyone,

The purpose of this post is to discuss the topic of modifying ERP  – “To modify or not to modify?” There are generally three options in today’s world for solving problems of accuracy, productivity and insight across an enterprise.

1. Proprietary ERP
2. SaaS ERP
3. Open Source ERP

Your goal when installing ERP is to configure the system to best support user input accuracy, system output accuracy, perform job functions as efficiently as possible, and ensure that right people have access to the right metrics. In my experience, ERP is the one application that everyone modifies in order to achieve accuracy, productivity and insight. However, modifications come at a cost. The above video discusses these costs in terms of proprietary ERP, Saas ERP and Open Source ERP.

Here is the summary of the video:

• I was a Director of IT for 12 years.
• During this time I installed a couple of different ERP systems – both proprietary and open source ERP.
• —–
• Installing proprietary ERP means paying a big upfront license fee for the right to use the software.
• Proprietary ERP means paying a yearly maintenance fee for the right to upgrade and for the right to buy additional support.
• Typical proprietary ERP players include Microsoft Dynamics, Sage, Oracle and SAP.
• You typically pay by features and concurrent users.
• The old school way of thinking is that you do not modify proprietary ERP. The maintenance costs are too high.
  • You had to find an integrator that paid the extra licenses for the apps to modify some of the code.
  • The person who does most of the modifications is considered an architect.
  • Architects demand the highest billable rate
  • Simple changes became big expenses because of the licenses and architectes.
• Two years later when you go to upgrade to a new version, your enhancements potentially break the upgrade process.
• Integrators are typically good at installing and bad at upgrading. Upgrading is tough to begin with. Most do not put in the time to test. This is especially true for modified systems.
• Now, you are paying your yearly maintenance fee for ‘free’ upgrades and you are now paying your integrator for the same upgrade.
• —-
• Along comes SaaS – and now there is no concept of an upgrade.
• SaaS invests heavily in providing many ways to configure the system without letting you touch the code.
• SaaS invests heavily in re-inventing security so that you and your neighbor can touch the same database but not see each other’s data – that is the goal.
• SaaS comes at a heavy price! At $2.5K to $5.5K per user per year, a 100 concurrent installation becomes one of the biggest P&L expenses you have next to payroll.
• SaaS works well if you are small (less than 10 users), it breaks down as your volume and your complexity grows.
• —–
• Open Source ERP
• Developers have made it real over the last 14 years
• It is free to download (ADempiere and iDempiere)
• It is free to prototype (ADempiere and iDempiere)
• It is free to put into production (ADempiere and iDempiere)
• You will never pay a penny in licensing for as long as you use the application (ADempiere and iDempiere).
• You own the application as soon as you download it.
• You are free to use it as is, or you can modify it.
• Open Source ERP’s greatest strengths include
  • – driving down the cost of changes – now performed by a Jr Developer
  • – the application is owned by the organization – in thought, in heart and by ownership
  • – changes are self-documenting, and upgrading changes becomes easier
• Ultimately, you have the greatest freedom and flexibility with Open Source ERP.

ADempiere vs iDempiere vs Openbravo vs Compiere

Please note that ADempiere, iDempiere and Openbravo are forks or copies from Compiere. Therefore, they have similar abilities mentioned above. The biggest difference is that ADempiere and iDempiere are pure open source. There are no features held behind a commercial or paid license.