The impact of the system is obvious today, he says. The company has grown its revenues to $600 million, from $40 million, and the amount of paperwork created to fulfill orders has dropped significantly. In 2004, workers typically had to fill out 1,000 invoices per day, sometimes creating three invoices for the same order. Today, the company has reduced that number to 400 and can track food wastage: that's data it didn't have in 2004.

"I was really undereducated in the open-source thing at the time," Baroco said. "I became a fan of open-source because of this."

Small and midmarket businesses, such as Cedarlane, are the best prospects for open-source ERP implementations, says Ned Lilly, CEO of xTuple.

"The sweet spot for us is the $20 million to $50 million company that is hitting their head on the ceiling of trying to work on QuickBooks," Lilly says.

Lilly does not expect to convert many customers of traditional leaders such as SAP and Oracle, but for smaller companies that are worried about cost and the complexity of traditional implementations, open-source solutions are becoming a clear choice, he says.

"The fear factor around open-source software has really dissipated," Lilly says. "When we started the company in 2001, at that point, you were still educating people about what open source really means."

In the European and Asian markets, however, customers are more savvy about open-source and have pursued business systems based on the model as way to prevent vendor lock-in, says Don Klaiss, CEO of open-source ERP vendor Compiere, which released an upgraded version of its solution today.

"There are parts of the world, particularly in Europe and Latin America, where there is a very strong bias in favor of open source," Klaiss says. "Customers are very tired of paying high license fees and maintenance fees."

While open-source seems well-suited to the task of enterprise resource planning (ERP) software, the demand is also due to the well-publicized failures of the traditional proprietary software, says Matt Aslett, enterprise-software analyst with The 451 Group.

"The ERP space is ripe for disruption given the amount of consolidation that has occurred in recent years, the ongoing tales of failed projects, and the relative failure of the enterprise vendors to break into the SME [small and medium sized enterprise] space," Aslett says.

Revenues are booming. Compiere saw 300 percent growth in sales in 2007 and expects a similar jump this year, Klaiss says. xTuple's Lilly predicts that sales for his company will double as well. Another open-source vendor, Openbravo, which started as a project in 2001 and as a company received $6.4 million in venture capital funding 2006, estimates that revenues will triple this year and the size of the company will double from 70 employees today.