No – it is a very good question. If you can find a good open source SAP, open source Oracle, or open source Dynamics, you would be excited – right? The purpose of this article is to educate the modern day company looking for ERP. I hope this article gives you some good insight and answers!
I have found open source ERP to be very capable at basic erp functions. Here is my analogy:
- Oracle and SAP are like a 10’x10′ rug in a 10’x10′ square room. They cover almost all corner cases in regards to functionality, vertical market exposure, and reporting.
- Open Source ERP is like a 10′ round rug in a 10’x10′ square room. There is functionality and reporting that is missing. The question is “how much are you impacted?”
Who benefits the most from open source ERP?
Medium-sized companies ($30M to $400M) typically gain the biggest advantages. These companies often have some technical talent that can take advantage of the fact that the source code is available to read and modify. I have found that small changes in automation can create discontinuous increases in productivity.
- Smaller companies tend to have less talent to use the below capabilities. The complexity tends to be too much. This is where netsuite.com really shines.
- Larger companies need more sophistication.
My qualifications: I have worked with the ADempiere code base for about 9 years. I have actively supported installations since 2006. My smallest customer is $7M in revenue. My largest customer is $400M in revenue. My expertise is in wholesale and web distribution. I have some experience in shop floor manufacturing.
There are three major versions of open source erp:
- Compiere, OpenBravo and ADempiere: I group these together because they all came (forked) from Compiere. Compiere and OpenBravo are both commercial open source where advanced features will cost you $1K per year per user. ADempiere is purely open source (free). I have worked with all three products. Their code bases are amazingly similar. The biggest differences reside in the user interface. ADempiere is my favorite for reasons I will discuss below.
- OpenERP: OpenERP is purely open source. You only pay for training and support. The OpenERP company does not hold any functionality behind a commercial license. I do not have much experience with openERP; therefore, I am speaking from an outsider perspective. I am working with my first openERP project right now. It seems to be a capable product. I will know more as the project goes into production.
- xtuple: I understand that xtuple’s strength and roots lie in manufacturing. I have not performed an evaluation yet.
Strengths of open source ERP (some points do not apply to commercial products)
- It works for general ERP (distribution, manufacturing and services)
- You can get everyone in your company in the system for no additional money. This is an amazingly big deal for medium sized companies. There is not much worse than fighting to get into Microsoft Dynamics when all concurrent seats have been taken. Often companies will create an email ‘email@example.com’ to give a shoutout when Joe goes to lunch and stays logged in.
- The code base is not that complex. When someone asks me how the system work, I literally show then in code. Most customers can perform small changes to create drastic improvements in productivity.
- It scales to an appreciable size. ADempiere will support 100 concurrent users without any real optimization effort. I have worked on projects that exceed 400 concurrent users. BTW – 100 concurrent users on Microsoft Dynamics AX will cost you in excess 2.3K per user per year SAP will cost you about $5K per user per year. (source: see Microsoft’s KapStone Paper & Packaging Corporation case study)
- Open source ERP is open. It is pretty easy to integrate ancillary tools like BI, document management, middleware automation, etc… You are not dependent on canned tools.
- It supports multiple organizations, currencies and languages. All three products seem to excel in this area. I can personally speak from ADempiere’s perspective. Creating consolidated financials across multiple sets of books inside the same system makes financial management and month close much easier.
- It is your asset. With ADempiere and OpenERP, when you download the code, you own it. When you build your business processes around it, you increase your company’s goodwill. When you sell your company, this goodwill can account for a substantial amount of money.
Weaknesses of open source ERP
- Number of experienced integrators.:10 years ago, this was a deal killer. Today, it is common to have a Florida company use a California integrator. You are much less dependent on local talent. Having said that, it is still a disadvantage to have fewer choices.
- Canned functionality: there are two components to this statement. (a) the functionality may just not exist or (b) it exists; however, it is lacking is some way as compared to its proprietary counterpart. This topic may or may not be a deal killer. If you need to re-invent the wheel for your specific need, that is a concern. If you need to tweak code to get exactly what you want, that can be a good thing. Generally speaking, you will spend more to get an open source ERP live than its proprietary counterpart.
- Just because you can modify the code does not mean you should. Many of the open source ERP implementations gone bad came from the fact they wrote a bunch of code that was not critical for go-live. Once you prove the system works for you, go with the minimum for production launch. The rest can be added later.
Having said all the above, I believe open source ERP is definitely worth a look. The benefits you stand to gain are worth the effort. I have been very fortunate to find great customers, and therefore, create great success with these tools.
It hope this helps!
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.