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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

CONFENIS 2010 Natal


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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

CONFENIS 2010 Natal

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