Open Source ERP for SMEs

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Open Source ERP for SMEs

• Hyoseob Kim and Cornelia Boldyreff
• Dept. of Computing and Informatics
• Faculty of Technology
• University of Lincoln

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Contents

• What is ERP?
• Why open Source ERP?
• Market Survey
• Conclusions and Further Work

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Current IT Key(Buzz-)words

• ERP (Enterprise Resource Planning)
• CRM(Customer Relationship Management)
• SCM (Supply Chain Management)
• DW (Data Warehouse)
• SEM (Strategic Enterprise Management)
• BPR (Business Process Reengineering)
• BI (Business Intelligence)
• RTE (Real Time Enterprise)

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What is ERP? The dream ...

• Evolved from MRP (Material Resource Planning) in
  1960s
• A term coined by Gartner, Inc. in 1990s
• ERP attempts to integrate all departments and
  functions across a company onto a single computer
  system that can serve all those different
  departments' particular needs
• If installed correctly, it can have a tremendous
  payback!

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SAP Modules
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SAP R/3 GUI Screen
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SAP R/3 GUI Screen(2)
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An Example Order Fulfillment
Before ERP
Problems Delays, lost orders, keying into
different computer systems invites errors
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An Example Order Fulfillment(2)
After ERP
Automates the tasks involved in performing
business process
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Top Five ERP Vendors
2004 revenue forecast 2004 includes revenue
from J.D. Edwards acquisition Source AMR
Research, 2004
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Current Trends

• Consolidation in progress at the top end of the
  market due to saturation
• The SMEs market and developing countries are the
  next battleground.
• Small to medium-sized vendors are felling
  squeezed.
• Deploying the next batch of enterprise
  applications, e.g., CRM, SCM, and SEM to generate
  new revenues

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Small to Medium-Sized Enterprises (SMEs)
an entity that has less than 250 full time
equivalent employees, and has an annual turnover
not exceeding 50 million, or an annual balance
sheet total not exceeding 43 million, and is not
owned by 25 or more by a non-SME
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Why Open Source ERP?

• Mad science or a big dotcom business opportunity?
• There is much more to open source software than
  Linux.
• The availability of open source components, e.g.,
  OS, DBMS, Servers
• ERP is ubiquitous!
• Pitfalls of COTS-based systems

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First we made games, and they said, "Of course
people will make games for free. But they won't
make anything serious and give it away." Then we
made compilers and developer tools, and they
said, "Of course they will make developer tools.
They're developers. But they won't make anything
serious, like an operating system." So, we made
an operating system, and they said, "Of course
they made an operating system. They studied Unix
in school. But they'll never make applications."
Guess what we're making now? Applications. The
next wave of open source is here.
Larry Augustin, Open Source Business Conference,
2005
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Survey of Open Source ERP Market

• SourceForge.net, the largest open source software
  repository
• Had expected a small number of industrial-strength
  packages
• But found many low-quality packages 129 in
  total, majority of these inappropriate for an
  industrial use

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Ideally
Or
At least
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• Highly positively skewed (kurtosis 39.05,
  skewness 5.70)
• Given enough eyeballs, all bugs are shallow.
  Eric S. Raymond

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Strong and continuous interest!
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• Pearson correlation coefficient rxy 0.20
• What it must not fail to do is (a) run, and (b)
  convince potential co-developers that it can be
  evolved into something really neat in the
  foreseeable future. Eric S. Raymond

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• It's fairly clear that one cannot code from the
  ground up in bazaar style. Eric S. Raymond
• rxy 0.26

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t-Tests

• Divided projects into corporate-sponsored ones
  and independent ones
• Conducted t-Tests w.r.t. no. of developers,
  lifespan, CVS activities, and downloads
• Not significant statistical differences between
  the means of these two groups
• Being small, these companies' influences might
  have been minimal.

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An Example t-test for the CVS activities
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Chi-Square Test

• Checked whether each project has released files
• Qualitative data (Yes/No)
• df 1, X2 18.46, alpha 0.05, critical value
  3.84
• Statistically significant

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Conclusions and Further Work

• EISs as the next wave of open source
  applications
• Fierce competition expected in the ERP market
  geared for SMEs
• Originating an OSS ERP project in the bazaar
  style is not recommended!
• New business model for software software as
  service, e.g., consulting, customising and
  maintenance
• Some SMEs ERP vendors will open their source to
  increase market share.

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Conclusions and Further Work(2)

• Investigating the developers' various
  characteristics, e.g., why do developers want to
  start their own projects rather than joining
  existing ones?
• Surveying customers' needs Know your
  customers' needs
• Looking into the evolutionary pattern of OSS ERP
  packages

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