The advantages of an open source ERP system

Why large companies use open source ERP

Posted 02 Mar 2015 by 

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The main reason larger companies use open source Enterprise Resource Planning (ERP) systems is because they are cheaper and easier to customize.

In many cases, when you are implementing an open source ERP system for a large organization, a new interface shell is created outside of the core system to meet the business needs and line-up with the company organization. With commercial systems the existing interface is customized which makes upgrades difficult to say the least. A further reason that open source ERP is used is because you own the system and its full source content, there is no lock-in or dependency on the vendor, and you are more free on how you are going to implement the software. You can do this all by yourself or hire a provider.

Further, it saves your business costs in the long run. When an open source ERP is used there are typically no license or software maintenance costs. In many cases, the external consultants and programmer fees are lower. Most open source ERP software systems can use open source databases and operating systems, giving you a license-free option. Commercial ERP systems often need expensive commercial databases and operating systems.

Large company IT departments appreciate that an open source ERP has is of higher quality, because many independent, often passionate developers have looked at it, criticized its code, and contributed enhancements. Competition between developers is very common in open source software and improves quality. Open source is often built on other open source projects and database models, so open source does not re-invent the wheel, which is what often happens in commercial systems.

Open source ERP systems are easier to upgrade when customizations are properly implemented (outside the base system) than with commercial systems, and upgrades can therefore be done much more often (every three months to monthly) without disruption of the production system.

Are there disadvantages? Sure, but only a few.

Often documentation of the commercial system is better for the standard supplied system too. However, if you are going to modify the user interface anyway, this documentation will not help you much when you need to customize the system to suit your business needs. Another disadvantage could be that open source ERP is still relatively new in large organizations. Because of this, it is sometimes difficult to convince an accounting department or other decision maker to use open source software. Lastly, auditors may not be familiar with a new interface and do not know the system yet. However, training can be easily implemented to avoid these complications when deploying a new system.

Conclusion

If you want to easily customize the system to your needs, save substantial amounts of money, and avoid vendor locked-in, the choice is easy: go open source.

A version of this article posted on LinkedIn by Hans Bakker. Republished under Creative Commons with author permission.

11 Comments

kaveh minooie

could you name a few of these open source projects?

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C Isbell

Kaveh,

ErpNext
Odoo
Apache OfBiz
opentaps
xTuple
OpenBravo

To name a few.

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Eudris Cabrera

Odoo (formerly known as OpenERP until May 2014) and OpenBravo
offers a complete suite of open-source business apps to manage companies of all different sizes.

Odoo is very user friendly and customizable, you can use a lot of features out of the box.

If you need a business intelligence suite, take a look at Pentaho Business Intelligence. It provides data integration, OLAP services, reporting, dashboarding, data mining and ETL capabilities.

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hardawayd

Are there any fortune 100 or 500 companies using open source ERP? If so, name them.

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nigglenuts

There is this awesome thing called Google. I used it and found out that Toyota and Honeywell both use Opentaps. Then I stopped looking to let you have some of the fun looking for your own answers.

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hansbak

Looks like i am not allowed to put links here, but search google for "10 Open Source ERP Options" were you can find a reasonablelist of open source ERP projects

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DocB

Sorry, eudriscabrera , odoo is a nightmare!
Users are running arawy from it, read sorryopenerp.com
Tryton is the well-build successor

In general I noticed companies are very reluctant to openSource ERP system. Unlike e.g. databases or webservers, ERP is not mainstream in the business.
From a certain size onwarsds it is fairly impossible, as you need to find a partner who can offer world-wide 24/7 support.
From my experience, small to medium companies and startups are the target group for oepnSource ERP

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elwis

I've been working with ERP software for many years and have always kept an eye open on the opensource offers. OpenERP/Odoo seem popular among small business and startups (Tryton is just a spin-off ) and Adempiere/iDempiere seem to target larger businesses with more complex needs. Both Adempiere and Odoo is flexible and mature with a healthy community around it.
My hope is that ERP systems will be the next area where opensource software is considered (like in databases & integration platforms etc) so I could devote my full time on developing them for customer needs.

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ced

Tryton is not just a spin-off of OpenERP/Odoo, it is a complete rewrite from scratch with modularity, scalability and security in mind.

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hansbak

Thank you for all your comments. You might be interested to come to the Apache conference in Austin april 15, 2015 where i will give a presentation in this very subject but then also showing that we think Apache OFBiz (ofbiz.apache.org) is the better choice. Check this page: http://sched.co/2PKU

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rolandw

As an open source solutions company we spent many hours evaluating open source financial software to see if they met our needs. We got as far as installing quite a few packages but rejected them all in favour of xTuple. We really only use xTuple for financials and not as a full blown ERP solution (which it is) primarily because we don't need full ERP. However, I can thoroughly recommend the software (qt & PostgreSQL based, fully cross platform), the company behind it (from CEO Ned Lilly, who has even been to see us in London, down) and the community. If you are EU based, there's some fun to be had setting up VAT but once sorted, it works well.

Please note: we do not resell xTuple or gain any profit from it - we're just very happy users.

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