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.

“SAP and those guys are not serving the mid-market—they provide more functionality than customers need at a price they can’t afford,” she says, “but open source is meeting the needs.” And open source has proven itself in many other enterprise applications, so any concerns center around the software’s fit and support system, she says.

“Open source will become more rampant,” agrees The 451 Group’s Schneider. “People using old SAP R3 and pre-Version 11 Oracle Financials systems in a few years will be looking at [SAP’s] Netweaver and [Oracle’s] Fusion [middleware platforms] and say, ‘We don’t want your middleware,’” he predicts. That opens the door for a serious look at open-source ERP.