Open Source ERP: positioning, application & how to start

Apart from the functionality, the history of the solution, the customer references and the way of hosting, there is another aspect that must be considered when comparing different ERP solutions, and this is the licensing model. On the one hand, there are Open Source ERP solutions, which have gained enormously in importance in recent years, and on the other hand, there is the "traditional" proprietary ERP software that requires a license.

Open Source ERP: what does it mean?

Open Source ERP means Open Source enterprise resource planning software and as such gives you four major freedoms: the freedom to use the software, to copy it, to study it and to modify it (and even to redistribute the modified versions).

In the proprietary model, you only have the right to use the software in exchange for paying a license fee.

Open Source can also be compared to an online cookbook. In principle, anyone can use the finished recipe and cook his dish. However, everyone is free to create their own variation and save it as a comment or a new recipe. Most of the time you don't find the perfect recipe right away, but with time and further recommendations, it can be improved more and more!

Examples of some Open Source ERP solutions are Odoo, Dolibarr, Apache OfBiz, ERPNext, ERP5 or Openconcerto.

Open Source ERP does not mean for free!

Just because it is possible to use a source code for free does not mean that your Open Source ERP project will not cost anything, since you have to consider three fundamental aspects:

the integration project
the "hidden" time
the costs related to the sustainability of your investment over the long term.

The integration project:

Since the implementation of an ERP system is primarily an interpersonal project and often requires great emphasis on change management, a good ERP integrator pursues two goals during implementation:

Master the balancing act between adapting the software to the customer's specific business requirements and redefining their business processes.
Provide the necessary support to anchor the solution in the customer's organization.

The "hidden" time:

In order to ensure that the implementation goes smoothly and reaches a high level of internal acceptance, the second aspect of "hidden" time must be taken into account, i.e. the time that your teams will have to spend working with the implementing partner, but also on familiarizing themselves with the solution. It is recommended to plan enough time from the very beginning. An ERP implementation is always an investment in the future for long-term reduction of effort and costs. Saving on internal resources during initial implementation often has a negative effect in the long run.

Maintenance costs:

The third aspect you need to plan for is the cost of ensuring the sustainability of your ERP system. This essentially includes the cost of software maintenance, outsourcing and hosting, various functional developments and migration to a higher version (here we recommend upgrading every 3 to 8 years, but this is highly variable).

Open Source ERP: some advantages

When implementing an Open Source ERP, you should not be guided by the supposed cost-free nature of the solution, which, as shown above, does not exist. Instead, you should focus on the following points: Innovation, flexibility, scalability, as well as risk mitigation for your business.

One of the biggest advantages is that you are not tied to a software vendor or integration partner. This provides you with a certain form of freedom and security. If unforeseen risks occur, such as the bankruptcy of the manufacturer, or simply the increase in prices for licenses and services, you can continue to use your ERP system without restrictions. You have the freedom to entrust the further development of your Open Source ERP to another service provider, or even single-handedly acquire skills to continue running your solution internally.

Another advantage is the freely available source code in the Open Source environment, such as the additional modules of the Odoo Community, which are accessible via the Internet. Not only can you install and evaluate the software freely, but the code is usually technologically mature, since you can not sweep the dust under the carpet! Potential bugs and security vulnerabilities can be quickly identified, corrected and patched by any experienced professional, whether or not they are part of the decision-making body of the Open Source project in question.

Hence Open Source ERP systems are usually highly interoperable, i.e. they can be integrated with other third party solutions or services, such as an e-commerce platform, dedicated CAD software, WMS, etc. However, this does not automatically mean that the interfaces are already in place, but rather that there are no obstacles due to outdated technologies, proprietary data formats or other possible barriers.

Finally, due to their technical basis and open structure, Open Source ERP systems are for the most part very flexible when it comes to developing new functionalities and/or envisaging an advanced implementation.

Introducing an Open Source ERP solution:

Which aspects should be taken into account?

If you are considering an Open Source ERP solution, you should consider the following five points in addition to matching your requirements with the software's features.

The availability of a commercial editor that coordinates the development of the solution.
While we know that an Open Source project can continue within the community, in the field of ERP it makes sense to have a "superior" entity that can guarantee the professional use of the solution in the long term. In practice, this means offering additional services and ensuring compliance and monitoring of changes in current legislation, especially in the area of accounting.
The possible availability of two different versions of the software.
The presence of an editor may mean the availability of two distinctly different source codes, a Community Edition (100% accessible and open) and an Enterprise Edition, for which a software subscription must be paid. It is up to you to decide which approach is best for you. If we now take the Odoo example, the editor has chosen a 2-tier model, as the Enterprise version is not based on a different source code, but is built on a layer of modules and services that are completely based on the Community version. Thus, the further development of the Odoo Enterprise version edition cannot be done without investing in the Community version, which is an additional guarantee of sustainability.
The importance of the community
An Open Source ERP cannot exist sustainably and in the long term without the formation of a community of stakeholders from all sectors who continuously develop the solution and democratize its use. It is important to consider not only the size of the community, but also its dynamics and structure. In the context of Odoo, for example, the Odoo Community Association was founded in 2013 by Camptocamp and four other actors and has seen steady growth since then.
The availability and maturity of the players.
You should be aware that great freedom can also bring disadvantages and that you need to invest in the implementation of an Open Source ERP. It is therefore essential to be accompanied by recognized partners and to assess their competencies (obtaining references, size and number of projects carried out, geographical proximity, etc.).
What about the technologies used?
A brilliant Open Source solution developed in a programming language very rarely used is a clear obstacle to the creation of a community, which is precisely the strength of a transparent and sustainable Open Source project.
So unless you are dealing with very innovative technologies (which may soon be bought out), you should make sure that there is no lack of technical resources to support you.

To complete this overview, here are more details about free software, the different types of Open Source licenses (more or less open), the notions of copyright (more precisely: copyleft) or the concept of Open Core vs. Open Source.

Feel free to contact us...

if you want to learn more about Open Source or even about Odoo, the currently most popular Open Source ERP.

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