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Is Open Source The Answer to ERP?

By Galen Gruman

February 15, 2007 — CIO —

When Mark Alperin went looking to replace his aging ERP system in 2006, he found himself in the same place as many CIOs of midsize companies—not feeling terribly sought after by software vendors who prioritize large enterprise accounts, and facing few choices. Alperin serves as COO with CIO responsibilities for Vertex Distribution, a manufacturer and distributor of rivets, screws and other fasteners. He wasn’t happy with the two main packages for his industry, from Activant Solutions and Microsoft (neither of which he was using, nor did he want to use.)

“I had lots of concern over the consolidation of the industry. I felt locked in to those two guys,” recalls Alperin. That lock-in made him nervous, since he was already frustrated by lack of flexibility with his old homegrown ERP system, which was not built around a relational database. Also, customization was a vital need when Vertex acquired other companies or needed to integrate with new customers. “We’ve grown because of our flexibility,” Alperin says. He didn’t want to risk that growth.

So Alperin chose to use the Compiere open-source ERP suite, so he wouldn’t be subject to a vendor’s shifting priorities. “The primary motivation was the ability to control our own destiny,” he says.

Alperin shares that desire with plenty of mid-market CIOs, more of whom are now tapping into open-source ERP, for reasons of cost and flexibility.

Custom Fit

Open source addresses a key concern in this instance. Often, ERP vendors pitch smaller enterprises with packaged applications that they can run as is, requiring little or no IT investment. It’s a logical pitch in environments with scarce technology resources. But a substantial percentage of smaller companies want or need to customize the applications to fit their specific business needs—just like larger enterprises, notes Paul Hamerman, vice president of enterprise applications at Forrester Research.

“There’s such a diversity of needs. Some companies want a system they can mold to their business, which gives them more inherent flexibility. And open source is designed to be customized,” he notes.

And customized without astronomical cost. In Alperin’s case, he first asked a systems integrator he’s used over the years, Transactional Data Systems (TDS), to develop a custom ERP application. Alperin wanted an ERP system he could directly control, with functionality equivalent to getting a customized version of commercial software, he says. But TDS suggested a money- and time-saving solution: Base Vertex’s new ERP application on the open-source Compiere project. “They said it doesn’t make sense to develop all that code when there’s an open-source basis to get started from, eliminating 30 to 50 percent of the coding needed,” Alperin says.

 

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