August 3, 2012 By Drew Robb (IT Business Edge)
Open source is still a small subset of the ERP market, yet its promise of low cost and added flexibility means it merits investigation, especially for entry-level ERP deployments.
Open source ERP has not gained much market traction, as of yet. Analyst firms such as Forrester Research don’t even monitor it currently as it isn’t an area that comes up much in client inquiries. But just as with open source business intelligence or open source CRM, open source ERP promises a software alternative that is less expensive and more flexible than applications sold by giants like Oracle and SAP.
While no accurate market share numbers appear to exist, Ned Lilly, CEO of open source ERP provider xTuple, estimates that the open source share of the ERP market hovers somewhere around one-and-a-half percent. “If you segmented it into three tiers with Oracle and SAP as the top tier, you might be approaching 1 percent to 2 percent in Tiers 2 and 3,” he said. “We’re clearly very early in the adoption curve.”
That doesn’t mean there aren’t options out there, however.
China Martens, an analyst at Forrester Research, named Openbravo, OpenERP, opentaps and xTuple as the four major players in open source ERP. These companies will be the focus of this Buyer’s Guide.
The xTuple software’s open source core is xTuple PostBooks, which includes: all conventional accounting modules; integrated CRM (address book, to-do lists, incident management, opportunity management); project management and time/expenses; sales orders (as opposed to invoicing – it drives inventory-based businesses); purchasing; product definition and costing; manufacturing and distribution (inventory control, bills of material, work orders); shipping and receiving; integrated report writer and financial reporting engine.
Thousands of companies run their entire businesses on PostBooks without any commercial relationship with xTuple, Lilly noted. In addition, four commercially-licensed editions of xTuple add more features for different types and sizes of businesses. A detailed breakdown is available on the company’s website.
“Generally speaking, as a company grows, it will be able to take advantage of the bigger-company functionality in a commercial edition,” said Lilly, offering the example of using more than one warehouse to manage and plan inventory as one sign of when a company might want to graduate to a commercial edition.
How does it scale? xTuple boasts some customers that have moved from SAP R/3, SAP Business One, and Oracle ERP. U-Haul, for instance, has 10 manufacturing plants in the U.S. and is gradually standardizing on xTuple. That said, Lilly accepts that his product doesn’t reach full Tier 1 functionality for big companies operating on a global scale.
“I wouldn’t say that we’re a great fit for a complex multi-national enterprise that buys, plans, sells and deals with deep regulatory requirements across multiple business units in multiple countries,” he said.
xTuple began in manufacturing, and is strong in ERP related to inventory-based business. Smaller firms that have outgrown Quickbooks or Peachtree, for example, could upgrade to the free PostBooks edition. Any business on PostBooks that is growing rapidly could then move onto one of the four xTuple commercial editions.
“For those moving off of older legacy ERP systems, they’d find us a pretty compelling step up – often for less than what they’re paying in annual maintenance on the old product,” said Lilly.
Open source also offers a way for companies to protect their ERP investments, Lilly said. “With so much consolidation and M&A activity in the ERP world, no commercial vendor is safe, and a company can best protect its long-term interests by a) having the source code and b) belonging to a vibrant open source user community.”
Pricing is available at www.xtuple.com/pricing.