Given that any ERP software would need extensive customization (for example, for interacting with Galenicum's customs management and logistics partners), commercial software offered no advantage, he says. That's not music to the ears of SAP, but Buchen's not alone.
Retail distribution firm Frilac chose Openbravo to ensure control over the ERP system's capabilities when it decided to replace its hodgepodge of disconnected back-office applications with a unified ERP suite. "An open-source software system meant we were in full control — with customizations suited to us, the software adapted to our particular needs and with no restrictions from the product manufacturer," says Carlos Villanueva, Frilac's sales director.
Flexible Support System
Mid-market CIOs also have to be realistic about support options — and the need to not only manage costs but also keep a few exit doors open in case of trouble. An aspect of open source that attracted these open-source ERP adopters was flexibility with who could support their development and maintenance needs.
"It's easy to switch if one consultant doesn't work out," Buchen says. "We could easily change suppliers if we were unhappy with the service," echoes Villanueva. "I'm not tied to any proprietary vendor who tells me what I can do," says Rosa.
Because smaller businesses usually have small IT staffs — sometimes just a few developers and a few network and desktop support staff — they're used to working with IT consultants who specialize in their industry. That makes it easy to adopt open-source software, since smaller companies can often turn to the same independent consultancies that support their other software.
That was the case at Vertex, whose preferred consultant recommended the use of open-source software. Or they can turn to the commercial arm of the open-source project to customize their deployments, ensuring that the development team intimately knows the software. That's the approach taken by Galenicum. But even in this case, familiarity with the consultant played a role: Because Openbravo and Galenicum are both Spanish companies, "we knew them", Buchen recalls.
"The reality is that the people who do all the work [in ERP deployments] are in-house teams or system integrators, not the commercial software vendors," says Martin Schneider, senior analyst for enterprise software at The 451 Group market research firm. "The availability of open source points out that disconnect in the value chain," he says. "It's almost a miracle that SAP got as big as it did; they're just selling a skeleton."
However, anyone relying on open-source software should understand what kind of support mechanism is actually available, says Peter Bohnert, a principal at TDS (the integrator Alperin used). For example, some projects (such as Compiere and Openbravo) have a services division, while others (such as Apache Open For Business) do not. All have independent consultants who offer support as well.
Future Outlook
Analysts are split on how wide the appeal of open-source ERP will be in the coming years. When you consider the entire universe of ERP deployments, few companies have adopted open-source ERP software. Even the most established and longest-lived project, Compiere, mostly attracts companies that have significantly customized their commercial software and thus are more likely to do the same for open-source software, says Forrester's Hamerman. (There's little hard deployment data because the software isn't licensed through normal sales channels.)
"The vast majority of companies prefer the vendor to maintain the system for technical support and compliance," says Hamerman, who expects that approach, not open-source adoption, to remain the norm.
Early adopters tend to be the smaller companies. "Many developers are intrigued by — and therefore gravitate toward — open-source solutions," says Timothy Burks, a principal at PTRM Management Consultants. "But these developers typically report to CIOs and CFOs who are far more risk averse and unwilling to jeopardize their careers; consequently, open-source ERP solutions aren't likely to take off too quickly in the commercial space." Burks expects smaller companies to be more willing to take that risk.
However, Gartner research director Laurie Wurster does not think that companies are so cautious. "Today, ERP is very low on the list in terms of open-source adoption," she says. But it's on a growth path. According to recent Gartner research, among companies currently using or considering using open source in any form, 12 percent are using open-source ERP today. And 14 percent plan to do so in the next 12 months. Open-source ERP should have increasing appeal because of the wave of ERP consolidation — mostly acquisitions by Oracle, Microsoft and Infor, she says.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.