Reflections on the Emergence of Open Source ERP

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Reflections on the Emergence of Open Source ERP
2nd Entreprise Systems Pre-ICIS
Workshop (ES-SIG) December, 8-9 Montréal,
Canada Redouane EL Amrani Reims Management
School France
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Agenda

• Research interest objectives
• Methodology
• Literature Review
• Main Issues
• OS ERP business model
• OS ERP offers for SMEs
• The obstacles to OS ERP development
• Proprietary ERP reactions and challenges for OS
  ERP
• Proposition of research Agenda
• Conclusion

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Research interest

• The newness of OS phenomenon in business
  applications area the OS ERP represents a new
  concept for most businesses
• The research firm Gartner (2006) forecasts that
  demand for OS ERP software should grow
  significantly in the next few years, spurred by
  free licenses and the desire not be bonded to a
  vendor
• Comparison of OS ERP proprietary ERP business
  model
• The lack of IS research on this topic few
  studies are dealing with OS in the application
  world and specifically the ERP environment

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Research objectives

• Improve our understanding of the significance of
  OS ERP in organizations
• Initiate academic research

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Methodology

• IS literature review (academic professional)
• Apart from Dreiling et al. (2005), there does not
  seem to have been any study of OS ERP
  specifically.
• Interviews with OS ERP actors
• Two CIO of companies that have implemented OS ERP
  applications
• CEO of a consulting firm specialized on OS ERP

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Literature Review

• OSS Literature
• Motivations development methods Jin et al.,
  2005  Stewart, Gosain, 2005 Lerner, Tirole
  2002
• Management process organization structure
  Jørgensen 2001
• Comparison with proprietary software quality,
  security, support, etc. Boulanger, 2005

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ERP  actors

• OS ERP
• Compiere
• Tiny
• ERP5
• Open MFG

• Proprietary ERP
• SAP Business One
• Microsoft Navision
• Sage
• Others

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OS ERP business model

• The absence of fee-based license contracts
• Free availability of the source code (brings some
  flexibility)
• Independence from the vendor, migrations and
  upgrades
• The pooling of development and maintenance costs

• The risk of the extreme customization of the
  product Soh et al., 2000 Brehm et al., 2001 .
• Implementation risks are the same for OS ERP
  proprietary ERP.

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OS ERP for SMEs

• SMEs which have already installed ERP modules
  from a proprietary vendor.
• Firms in blocked transition with proprietary
  market vendors

• Fast-growing companies (start-up) For those
  companies, the absence of license costs as well
  as input costs are viewed as an advantage.

• Companies with a specific character or culture
  (familiar with the OS world and have already
  implemented OS applications (linux or appach, for
  example)

• some large firms !!! (it is used like a brick
  in their IS to support their internal
  development)

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The obstacles to OS ERP development

• The OS ERP world has not been understood by all
  enterprises. It is still synonymous with
  risk-taking Ghosh, 2006
• The support and maintenance context could limit
  the resort to OS ERP (Boulanger 2005).
• OS ERP lack maturity
• Cultural differences between CEOs and CIOs

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Proprietary ERP reactions

• Last years arrogant thoughts
• The vast majority of OS ERP is too immature to be
  dangerous
• They are in a hype cycle and their applications
  could not support and run the business correctly

• Now
• SAP decided to invest over 900 million euros in a
  five-year span to develop its offerings to SMEs.
• Oracle and Microsoft launched so-called
   express  free versions of their databases or
  development tools
• SAP expected to develop new strategies and
  approaches for going head to head with OS
  providers
• SAP hand over its database (MaxDB) to MySQL
  community

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Challenges for OS ERP

• Shift OS ERP from option status to IS strategic
  guideline
• Bring more and more warranties on product
  quality, related services and their
  sustainability.
• Propose new technologies SOA, web services

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Research Agenda
Loosely coupled system
Coupled system
Research results
Real problems
Research problems
IS research
IS professional
IS professional
IS research
Research model methods concepts
Real solutions
Real problems
Benbasat and Zmud (1999)

• The lack of IS research on OS ERP until today
  there has been very little reported research
  specifically on OS ERP
• IS academics need to understand the changes that
  are occurring in industry and how they affect
  organizations

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Rsearrch Agenda

• There are many topics of interest to MIS
  scholars.
• What is available?
• What is the implementation process?
• How to integrate them with the rest of the IT
  portfolio and how to maintain and eventually
  retire them.
• What does it really cost to implement OS ERP
  solutions?
• The extent and growth rate of the collaborative
  community supporting an OS ERP product.
• Theoretical approaches Niederman et al., 2006

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Conclusion

• OS ERP system is an economic and business
  reality. The relatively limited number of
  research projects on OS ERP shows that the
  implications of this type of solutions are
  inadequately studied.
• SAP, Microsoft and Oracle are today the top
  players of software packages. Salesforce.com and
  Compiere may be some of the winners in the years
  to come.
• We still lack hindsight and feedback from
  enterprises which must be carefully examined. It
  is urgent to take on this topic and make it a
  subject matter for research.