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Case Study of Open Source ERP
Evaluation in a Small Business
David L. Olson
Jesse StaleyDepartment of ManagementUniversity of Nebraska - Lincoln
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Open Source Development
Red Hat [2009]: Can save by:
1. Enabling use of commodity hardware ratherthan proprietary machines
2. Avoids maintenance contracts
3. Greater functionality, reliability, performance
4. Faster learning curve, available support tools
5. Avoid vendor lock-in
6. Reduce need for security consultants & tools
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Open Source ERP Products
Compiere
OpenMFG
Open for Business Project
Tiny ERP
Open Office
OpenPro
Sourceforge.net listed over 1,000 ERP projectsMay 2009
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Open Source ERP/EIS
Jaisingh et al. [2008]: OSS ERPs can be
customized to modify code, gain competitive
advantage
Serrano & Sarriegi [2006]: OSS ERP benefits:
Increased adaptability
Decreased reliance on single supplier
Reduced costs
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Small Business & ERP
Raymond & Uwizeyemungu [2007]
Studied 356 small Canadian manufactures
Internally predisposed higher commercial dependence
Externally predisposed larger, more decentralized
Unfavorable to ERP more diverse customer base, lownetworking
Snider et al. [2009]
Five Canadian small business cases
All needed to integrate legacy systems
All needed scalable solutions for growth
Successful project used consultants, external training
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Six Primary Risk Dimensions in IT/IS ImplementationPoba-Nzaou et al. [2008]
Organizational Personnel, organizational structure
Business-related
Business process consistency & reliability Technological
Information processing systems
Entrepreneurial
Contractual Financial
Cash flow, licensing, upgrading
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Weld Engineering Technology Inc.
WETI
Industrial automated welding systems
Engineer to order manufacturer
Each job different
Major jump in growth
Early 2003 old system inadequate
Track sales
Track parts
Document work
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1st Round: Business Case
Alternatives considered
In-house development
Had experience in software, but lacked time, personnel
Primary vendors (SAP, Oracle) Owners had worked for large companies, saw horrors
Low cost vendors (Microsoft, others)
Great Plains, Sage, Infor Visual considered
Average cost $60,000, rejected
Off the shelf software
QuickBooks, Microsoft Office Suite
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1st Round: Selected ERP Lite
Price per user about $300
Much lower than SAP, Oracle
Provided basic inventory tracking, order
management
Had MRP functionality
Started with Microsoft Access database Could be upgraded to Microsoft SQL Serveror
MySQL
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Systems Design
ERPLite provided basic needs Would need additional software
Microsoft Access database
Support optional, inexpensive
Bill of materials Revision tracking
Work orders
Purchase orders
Sales order entry
Accounting Inventory
MRP
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Decision
Mid-2004
Purchased 3 user seats
Intended to buy more once system proved itself
For a few months things worked well
Testing went smoothly
Limitations: Work order processing took too much time
Overwhelming paper trail
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ERPLiteTradeoffs
One positive feature was the ability to accessmost of the source code with Visual Basic forApplications
Could customize easily Modified work order system
But created problems in other parts of the ERP
Maybe because WETI left on its own to decipher bast
practices for system optimization Modifications made it more troublesome to talk
to ERPLite
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Within 1 year
WETI dropped monthly support
Chose to pay on per case basis
Meant they didnt get bug fixes or patches
In 18 months head of manufacturing dropped
work order system
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Accounting
ERPLitedidnt meet WETI accounting needs
Could integrate with COTS accounting software
Used QuickBooks
When Manufacturing dropped work order system,
accounting presented a problem
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Round One Results
4 years later only purchasing and sales quote
modules used from ERPLite
Instead of integrated system
QuickBooks
Excel spreadsheets
Separate Access databases
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Round 2
OPTIONS Low cost vendors
DBA Manufacturing
Fishbowl inventory
Rejected due to lack of functionality
Mid-market ERP vendors Sage AccPac
Epicor
Made2Manage
E2 Shop System
Exact JobBoss Infor Globals Visual
M1
Open Source
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Focused analysis
Visual & M1
Both claimed the functionality needed
Spent a couple of months demonstrating
Asked for bids on 10-user system with onsitesupport and training
Range $18,000 to $42,000 Plus $5-8,000 for dedicated server & SQL database
Owners rejected as too expensive WETI had just build modern manufacturing center,
automation project over budget and late
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Open Source
Google search yielded:
OpenBravo ERP web-based
Tested, looked good, but poor timing & owners rejected
xTuple
Head engineer had a friend who used in another firm
Procurement, production, costs
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xTuple
Offers 3 versions
PostBooks free
Support service charged
Could upgrade to other editions
Standard, Manufacturing editions have
commercial license
Decided to try free version If looked good, could upgrade
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Implementation
Installer downloaded through SourceForge.netvia xTuple project page
Needed source code
PostgreSQL database (open source, free) Report writer OpenRPT to query database
Installation took minutes
Tested on data available on SourceForge.net
Postbooks project page Assessed in a few days by 2 people
Functional, easy to use
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Initial Application
Owners never asked for approval
Since it was free, they didnt object
After a month of segmented testing
Populated database in batches
Slow due to unstructured format
Many missing data
Within weeks, 750 to 1000 parts out of 16,000 entered
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Company Events
Four months into data entry
WETI sales suffered from recession
Layoffs imminent
15% of WETI employees laid off
Including Open Source developer
Shortly thereafter the Head of engineering and
manufacturing left Thus the two project champions were gone
No hard decisions made about continuing
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Conclusions
Demonstrated the feasibility of Open SourceERP
BPR positive
Several best practices adopted Could modify functions & reports (customizable)
Time consuming activities
Master parts list generation Updating BOM data for hundreds of products
Organizing inventory
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Inferences
Proof of concept
OSS ERP Can Work
Takes a great deal of effort
New type of Systems Analysis
Web search for components instead of programming
Nothing is for free
You have to pay for features
OSS makes it possible to pay less
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