Open Source ERP: they’re not your geek-in-his-basement little software anymore!
Need to implement an ERP at low cost? An Open Source software might be the solution (or not!).
Open Source ERP software are ERP systems built by a community that you can use free of charge (yes, free of charge!). All you need to do is download the software, install on one of your servers – or even on your desktop or laptop – and use it.
What’s the catch?
Well, Open Source ERP are systems that are usually designed for the mass. It means that they’re very generic and need to be massively configured for your business and that they will usually require quite a few custom developments.
This is where it’s not free anymore.
The other choice is to use the free ERP software “as-is”, but it’s not something that usually works for most businesses.
Cost of Open Source ERP
The cost of Open Source software used to be 100% free. They were built and maintained by – sometimes idealistic – communities and were provided free of charge. This has changed now. Nowadays, Open Source ERP systems are just built on a different business model than the – numerous – proprietary ERP on the market.
While you can still use the free version of the software (see examples of free ERP here), it now has fewer functionalities than the paid version and, of course, you get zero support.
Business model – Where they make their money
With proprietary ERP software, you’ll usually pay an upfront cost for the system, an annual recurrent fee for the maintenance and updates. The big players will usually partner with local businesses for the implementation and smaller local ERP companies will do the implementation themselves.
Open Source ERP software will not charge for the software. Instead, they have built their business model around consulting– with often hefty fees -since their software is very generic and usually requires a lot of customization. More than proprietary software.
Nowadays, they also have cloud options. But then you pay a monthly fee based on the modules you choose and the number of users you have. At this point, the cost will be almost the same as any other ERP software… expensive.
Hire a programmer
Instead of working with a consulting firm, you could also use the free version and hire a programmer to develop the features and customization you need.
It comes with some risks, but if you only have minor developments to do, it might be worth it. You can find experienced developers on sites like UpWork for a very good price.
Which one is cheaper?
From experience, I’d say that for a full ERP implementation, Open Source systems tend to be cheaper, but not by much. Depending on your type of business and the IT knowledge inside the organization, it might not be worth the savings.
If you are looking for a simple ERP, then I would suggest you look into the free ERP software available.
Advantages of Open Source ERP
While they have the same advantages of proprietary ERP, they also have some more.
May cost less than traditional ERP
If a lot of customization is needed, it might not be true. But if your processes are simple, you will definitively same money!
That may also be a drawback, but Open Source systems are designed to be customized. They are targeting at a wide range of businesses, so they usually implement a very standard way of working (often limited).
If you have a programmer in-house, you may very well develop your own modules and customize the software so that it works with your business. That allows for a system that better fits your needs.
Disadvantages of Open Source ERP systems
All the disadvantage of ERP, plus a little more!
Usually needs development
If your process is very simple, you might be able to use the software as-is. But as soon as your processes don’t fit exactly how the software is built, you’ll need a developer (and a competent one).
Very little documentation
It’s a classic in the Open Source world, the software are badly documented. I have the image of a wizz kid in his parents’ basement programming those software and never documenting anything, thinking that everyone is as bright as he is and that they’ll understand everything like he does.
Even in the big business that the Open Source ERP world is nowadays, I think they still have the same habit… That or they want you to pay for consultancy…
If you are using the community – free – version, you are on your own.
Your ERP has crashed and doesn’t work anymore? Your problem… In that case I hope your developer is very skillful and knows what he’s doing.
They might answer your needs for a lower cost, especially if you are a small business with simple processes.
As with any major project, make sure you get help from people that know what they are doing. These kind of projects can quickly become a money pit if you start on the wrong track…