While open source is live and kicking in the world of the operating systems (Linux), it’s presence in the world of the business application is (relatively) in its cradles. There is a growing penetration into the CRM products (SugarCRM), and there are open source ERP systems like http://www.compiere.com/ and http://thingamy.com/. To make sure that we are on the same page with "open source", please have this link. In general, you get the code and often for free (life has never been better. right?). In this post I will share with you my perspective on this interesting synergy (ERP and open source). I will use a simplistic CIO point of view scenario (and a humoristic approach):
Mickey, the CIO of a Greece company has lost his support for the old legacy system and is about to go for a new ERP system… Mickey discovered an interesting post from a cool guy about open source ERP. He finds that by using “WTH open source ERP” he can save 1million$ for not buying the “traditional” solutions (SAP, Oracle). Additionally, he reads about the power of the fast growing communities of users. Mickey goes to the CEO and explains how he can save 1M$. The CEO is too busy with the new production line and the deal is approved...
Mickey finds that there is no Greece localization for WTH. But there is a great (yet small) software group that is just writing localizations. Mickey pays 100K$ and gets the localization. He finds that WTH misses some needed functionality that, so he recruits 2 new developers. Mickey also invests 1M$ in new hardware.
Since there are not too many consultants around knowing WTH; Mickey is using some SAP veterans. The implementation costs 3M$. After one year, the system goes live
Luck is about to change. His key developer has just resigned (but that’s fine. All is working and Mickey gets some help from the Web).
Friday eve, and it’s shipping time. Mickey gets a phone (at home). There is a problem to print a delivery note. “Check the damn printer” Mickey tells the guy in the warehouse. Then, a call from the plant manager telling Mickey that some of the delivery transactions are not recorded. Mickey goes to the factory.
It’s 10PM and there are 25 trucks outside the factory. Mickey calls his developers + the consulting firm. No luck. It’s 3AM and the trucks just left. Shipments are delayed (5M$ lost).
Mickey looks into the blogs. The cool guy that told him about WTH is not there. He logs into the WTH site and finally manages to talk to someone that explains him that professional help can be reached only on Monday. Mickey doesn’t sleep for two days..
It seems that the problem grows and there is also a problem with work orders so the production people are going home. Finally he gets a call from WTH. When they try to analyze what happened, it seems that there is a lot of new code now and it’s hard to figure a solution. WTH have sent a person to the site (10K$). After 3 days (and 3M$ lost) it seems that one of the programs written by his developer was causing a major bug.
The CEO’s reaction to the long explanation is “WTH (What the hell) were you thinking when you’ve taken an open source to run our planet?”
Main conclusions:
- Total Cost of ownership - The cost of the product is the small piece in the TCO of ERP. Implementation and hardware will always be there, even if you go for the open source.
- User interaction- Not like operating systems, Business applications are not “one size fits all”. This means that business flexibility requires technological flexibility (e.g. configuration) which increases the chances to get hit. The more your user is playing with system, the greater the chances that bugs will emerge.
- Core role - In most of the cases, your ERP (or CRM) is not just an enabler. Check if it’s part of your “core” (nicely explained by Geoffrey Moore). Don’t go for the open source if it’s part of your core.
- There are no free meals - Quality and service cost money (even if the cool guy from the blog tries to convince you that it doesn’t)
- Ecosystem - the community of the current solutions is not something to underestimate. There are millions of users that have a huge influence on the software provider (SAP, Oracle). Will you have a real say in the world of the open source?
- Don’t buy the cliché – Open source systems are not simpler just because they are "open source"...
2 comments:
While I agree with your first four assumptions, I am not sure that the conclusions are straight forward. In did the cost of product is a small fraction of the TCO, and “one size fits all” is not always applicable in software (even though MS tries to teach us differently) and ERP deals with business core and there are no free meals.
However, the open source does not mean that "it costs no money". The Free software means (and not restricted only to) understand how it works and the right to do changes. You can open your car hood and make changes in your car, but you are not allowed to look how your software works.
The TCO of open source is lower because you can have maintenance contract with other company (than the manufacture) and you can ask anyone to do maintenance or additional development.
In any case, the service level you get is function of the service provider and the agreement you have and is not related to your code license.
You can take a look at: http://www.gnu.org/philosophy/free-sw.html
Hello Eddie. It's an honor to have you as the first commenter in my Blog.. Per your comments:
a. "the right to do changes" - All ERP packages (even the SMB one) have Software Development Kits (SDK). You can easily use Java, .Net, C#, etc, to make fundamental changes in the business logic and UI. Taking that one step a further; ESA/SOA, will actually allow you to set your application as it was built of Lego...
b. "open source is lower because you can have maintenance contract with other company " - that is true, but.. are we really sure that the "other company" will be here 10 years from now? will we bet our business on that?
Cheers (and keep commenting)
Ariel
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