Hi Everyone,
The purpose of this entry is to pose the question: “How Many $10M+ organizations can go live with an ERP system for less than $10K USD in external costs?” I believe the answer will be more than 100 for 2017. Evaluating an ERP System is difficult. Going live with one is even more challenging. The ERP Academy specializes in helping you evaluate, configure, customize, audit and launch open source ERP for your organization. Going live with an ERP system for less than $10K USD was once thought impossible; however, ERP Academy members have proven this myth busted.
This December will mark the 3rd anniversary of the ERP Academy. During this time, hundreds of organizations have evaluated iDempiere open source ERP. Some of them have successfully gone live with iDempiere. Others are currently in the evaluation and audit stage. Some even decided that open source ERP was not a good fit or their specific needs. Most have found the ERP Academy invaluable in helping make good decisions around the ERP selection and deployment process.
Common External Costs
People often ask “what costs are associated with a free ERP system?” The below bullets will drive 90% of these costs:
- iDempiere Hosting (cloud or local LAN)
- Migrating data from your old system to iDempiere
- Custom print formats
- Custom reports
- Automation to support manual processes
- ERP best practices education
What you get when you join the ERP Academy
- Topic demonstration videos – over 600
- Live discussions – 4+ per week
- Email support – provide by Chuck Boecking personally
- Community – many organizations and integrators
- See the frequently asked questions for more details
Which Organizations have the Most to Gain
iDempiere is a great fit for medium-sized organizations who mange the increased complexity that comes with growth. The following attributes make for an ideal iDempiere candidate:
- Multiple financial entities
- Multiple warehouses
- Multiple currencies
- Multiple languages
- Multiple projects
If you are small and simple organization, iDempiere might not the best fit for you. There are other system that are better designed for simple, single-entity organizations. If you fit this category and you want to implement iDempiere to support future growth, just make sure you have the required resources to support your project.
Required Resources
What internal resources/skills are needed to stay below the $10K external spend goal?
- Strong technology resource(s) – The needed skills are (a) read and write SQL, (b) read Java, (c) working knowledge of Linux.
- Strong accounting resource(s) – You must have a talented Controller who understands the connection between operations and the ERP system.
- Strong project management – You must have a person and a organzational culture for holding people accountable to task.
Budgets vs Estimates
This posts describes a target goal of less than $10K USD. Please understand this is a goal or an estimate – not a budget. This is a big difference.
An estimate is a number or value that represents known challenges combined with average statistics. For example, you might estimate a task to take 1 month based on what you know of the specific project and the average completion time for similar projects.
A budget is the number that guarantees a project’s success. Even though you estimate a project at 1 month, you might budget 2 months to ensure you can finish the project before other tasks are due.
Planned Project Duration
If you are looking at the entire ERP deployment process (evaluate, configure, customize, audit and launch), you should budget 12 months. Luckily, there are are many milestones in the middle to help you gauge your progress and ensure your project is healthy. When you join the ERP Academy, you will have access to a detailed go-live task chart. You should know quickly if you are on target or not.
Financial Return on Investment (ROI)
Have you received your first six-figure quote from a traditional ERP software vendor? Keep in mind this number is just for the up-front software licensing. It probably does not include the education and professional services needed to actually evaluate and deploy your new system. Also remember that with every upfront six-figure quote, there is almost always the yearly licensing cost as well.
Most iDempiere deployments cost less than (a) the cost of the annual software license plus (b) the modules needed to get the proprietary ERP system up to the level of iDempiere. The most recent example was replacing Microsoft Dynamics Great Plains. The quoted cost for the yearly subscription plus the needed inventory modules were over $60K USD. Keep in mind this total was capped at a specific number of users. If the company wanted to grow, there are additional costs per user per year.
Strategic Return on Investment
Open source ERP changes how you view operational investments.
- All hands on: the majority of employees in an organization work to support its core business. Why do companies who purchasing traditional proprietary ERP systems buy seats for about 10% of its employees? Cost is a common answer given. Most organizations implementing iDempiere take the approach that any user supporting its operations should have access to the system.
- Ownership: processes and quality standards are considered to be a source of strategic advantage and directly attributed to supporting customer contracts. Implementing core strengths on a platform owned by the organization is believed to represent an appreciable financial goodwill.
- Ability to Customize: not only can you modify iDempiere without incurring additional expenses, you are free to modify without requiring special permission or review from Proprietary ERP like Dynamics or SAP. Small changes to automate manual processes can create a 10x increase in productivity.
Is this a Self-Install Program
No. I do not believe that someone can self-install an ERP System. The project is simply too big. The reason this challenge is $10K and not $0K is because you need external resources to help ensure your success. There are resources that are great data migration. Others are great at data visualization. You will need these resources to maximize your productivity and minimize your distractions.
Costs Outside of the $10K Goal
There are times when the ERP system must integrate with other systems. I have excluded external system integration from the $10K goal because (a) not every organization has these requirements, and (b) the complexity of the integrations vary greatly between organizations.
The most common integration requirement is with a webstore. To help minimize integration costs, the ERP Academy offers a Magento Integration Quick Start project. This projects demonstrates best practices with webstores in general, and it greatly catapults you toward a working solution if you are using Magento specifically.
Another common integration requirement is with Point-of-Sale (POS) systems. POS is an art and science all to itself. One of the biggest POS challenges is managing stable Internet connectivity to remote locations. The fastest and easiest path to POS success with iDempiere is to use a POS plugin for Magento. This way each location can host its own POS/Magento instance. The Magento Quick Start project can then aggregate the details from each of the remote sites to a central iDempiere instance.
Some organizations do not have the resources or expereince to support project management. The ERP Academy can help. Of all the ERP Academy members, almost half are current or aspiring iDempiere integrators. If you do not wish to support the project management role in your deployment process, you can hire an integrator/implementer to assume this role for you. Doing so will put you over the $10K goal; however, it is important to assess your talents accurately. If you do not have the needed resources, you are better off hiring an expert.
What is the best way to Learn iDempiere and ADempiere?
I teach an on-line class that covers how to learn, configure and audit open source ERP. It uses iDempiere as the reference ERP. Here are the course frequently asked questions. I have learned much over the last fourteen years, and I have much to share. I look forward to seeing you there!!
Why consider Open Source ERP?
Open source ERP gives you every opportunity to prove or disprove its ability to support your company’s ERP needs on a timeline that satisfies your organizational needs. With open source ERP, you do not face the same financial constraints nor do you face the same conflicts of interest as with commercial ERP. Instead, you invest in the appropriate skills and knowledge for your people and processes. Best of all – if open source ERP cannot solve your company’s needs, you can safely justify spending the additional $2K to $5K per person per year for life of your commercial ERP to help drive your organization’s success.
Open Source ERP Round Rug Effect
Open Source ERP has what I call a “Round Rug Effect”. If you were to liken the ERP evaluation process to a 10′ x 10′ room, the story would go something like this:
- Oracle, SAP, and Microsoft are a 10′ x 10′ ERP rug in a ten by ten foot room. They cover the room nicely. You will be hard pressed to find a feature or a use case that they do not cover.
- Open Source ERP is like a 10′ round rug in a ten by ten foot room. It will cover the vast majority of the room; however, it will leave the corners bare. The questions are: “Do you live and operate in the corners?” or “Is open source ERP good enough?”. For most, the answers are “sometimes” and “yes”.
If you are in the ERP evaluation mode, you should ask yourself “Should I include open source ERP in my evaluation process?” If you are less than $300M USD revenue, your answer should probably be yes! This answer comes from these concepts:
- Pillars of Cost – Since open source ERP is free, that means that all the cost of proprietary ERP should be allocated to the corners. If you use height to illustrate this allocated cost, the corners turn into tall pillers of cost.
- Cost of Innovation – At first look, the price tag of free open source ERP is the most appealing benefit; however, this benefit soon becomes overshadowed by the flexibility of open source ERP. If organizational leaders take just some of the cost that would otherwise be spent on Oracle or SAP, and they invest it back into the organization’s skills and knowledge of how ERP works, operational efficiency will never look the same again. If you know how to change the system for the better, and you know it will work. Why would you not?
- Monday to Monday Cycle – Business leaders drive innovation in a company. This innovation is no more apparent than in the traditional Monday morning business meeting where a CEO comes in and paints a picture of the next greatest thing. His or her next comments are “Will it work?” and “Make it happen!”. Open source ERP helps your business and IT teams say yes more often. You are no longer completely dependent on a high-priced Oracle Integrators. You are no longer dependent on spending 18% every year to Oracle for software that you have little control over. Your team applies its knowledge of the system and the knowledge of its world-wide resources to create a proof of concept that paints the real picture the following Monday.
- Right Pay Grade – Open source ERP puts the right tools in the right person’s hands at the right pay-grade. there is little more wasteful that paying a $150/hr integrator for something a Jr IT professional should be doing. Open Source ERP removes the artificial barriers that exist in proprietary ERP.
- ERP for Everyone – User licenses/seats are no longer a consideration. This point cannot be stated strongly enough. At first look, you might think this point is about saving money. It is much more than that. You now have the freedom and flexibility of allowing everyone in your company to interact the system that drives your operations. You simply assign the right roles to the right people to give them access to the appropriate information.
ADempiere vs iDempiere vs Openbravo vs Compiere
The ADempiere, iDempiere, Openbravo and Compiere environments are amazingly similar. iDempiere came from ADempiere. ADempiere and Openbravo came from Compiere. Compiere came from Jorg Janke. Jorg came from Oracle. As a result, iDempiere and ADempiere have much in common with Oracle’s ERP in terms of the financial feature set.
This is both good and bad. Good because iDempiere and ADempiere are quite capable to help a company grow beyond $500M USD. Bad because they tend to be more complex in that they account for multiple languages, accounting schemas, currencies, calendars, costing types, costing methods, etc…. If you are a growing organization, and you need a system that will grow with you, and you have the right internal talent/resources, iDempiere or ADempiere will be a big asset for you.
The biggest difference between these products is that ADempiere and iDempiere are pure open source. ADempiere and iDempiere make all feature available for free. Compiere and Openbravo hold back features behind a commercial or paid license.
Here is an article that discusses the differences between iDempiere and ADempiere.
iDempiere and ADempiere vs Odoo
iDempiere/ADempiere (iD/AD) and Odoo (formerly OpenERP) approach ERP from two very different directions. Odoo comes out of the box with very simple options. If you are coming from QuickBooks, and you need a simple ERP system help you manage your business, Odoo will look and feel comfortable.
iD/AD comes out of the box with every feature installed and configured to run a $200M+ USD business. If your business is growing rapidly, and you are willing to invest the time to learn an enterprise accounting system, then iD/AD will give you confidence.
Which one is best for you depends on your internal talent, growth and business complexity. Here is a post to help you learn more.