Open Source ERP Guru

A couple of important updates:

Free ERP Training

As we announced earlier this week, we will be conducting live, online, free ERP introductory sessions. The first one is coming up next week, Tuesday, March 3rd (not Monday, as was stated in the earlier announcement).
There are still a few sits left (we can have as many as 20 participants in each session). These sessions are great for anyone interested in ERP, and wants to learn the basics. Whether you are a collage student looking for an interesting career, a small business owner considering an ERP project or an IT professional looking for a new, exciting area of expertise, our free, live, online ERP courses can help you make the right decision.

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ERP, The Beginning

It all began with 5 IBM engineers from Manheim, Germany , working nights and weekends on the next big thing in software: ERP, Enterprise Resource Planning. The year was 1972, and the business software world was a spaghetti of systems, vendors and technologies. Departments could not communicate with each other because their software systems spoke different languages. Babel tower of custom applications. SAP was about to change everything.
They called the company Systemanalyse und Programmentwicklung (“System Analysis and Program Development”) and incorporated in April of 1972. They had their first customer that year (probably the shortest sales cycle for SAP ever!!), ICI, which is still an SAP customer, 35 years later.
At that time ,MRP software was becoming widely regarded as a key to success in efficient manufacturing operations. Accounting software was around for more than a decade, dominated by solutions from IBM. Integrating the two was (and still is) a nightmare.
In 1973, SAP was ahead of everyone else in the integrated business applications industry, releasing R/1. In 1979 it will release the R/2 ERP application.

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Building software applications is unlike building anything else in the sense that you never stop building it (unless you run out of money..). Imagine building a two floors house, and while finishing the first one, you realize how useful it would be if you would build another floor, and then another.
ERP applications are very dynamic, much like the business environment nurturing it. For open source ERP vendors that means they will always need to build additional floors to make existing and future customers happier with their solution.
Our last development status report was almost a year ago, and it’s time to check on the different project’s development activities.

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Open Source ERP Guru, the leading open source ERP blog, is proud to announce the beginning of a series of free ERP training sessions. The first Introduction to ERP online course will be held next Monday, March 2nd 2009.

The ERP training classes will be held using online conferencing services from DimDim. Since we will be using the free conference service plan, we are limited to only 20 participant. If you are interested in participating in the first ERP training session, please contact us as soon as possible.

Courses are completely free, and donations are welcomed, using the Donate button bellow this post. Another way to show your gratitude is to link from your blog/website/social network profile to this post or to the homepage of Open Source ERP Guru.

The course is aimed at anyone who is interested in the exciting area of Enterprise Resource Planning. We will try to keep technical details to minimum, and focus on business processes, ERP modules and benefits for organizations. We will also demonstrate ERP functionality with open source ERP application Openbravo.

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The ultimate ERP sales pitch every customer gets to hear goes something like “our ERP system provides a complete solution to all your business requirements”. We all know that’s not true, but this is still the number 1 reason why companies invest in ERP solutions – they expect to get a single application to run their entire business.

It is practically impossible to develop a single application that will answer ALL the needs of all customers. What ERP vendors do, is develop an application that supports core business processes, aiming at the lowest common denominator in terms of business processes and data model. Even core business processes (order-to-cash, procure-to-pay) can vary widely from organization to organization (think manufacturer vs.  service company).

The solution? extension modules. ERP vendors were smart enough to realize they cannot provide everything every customer wants.Vertical solutions are a great example- hotels, airlines, communication companies, government agencies, all have very specific needs. So the vendors developed an extension framework, allowing 3rd party software developers to build their own modules.

These modules are independent of the core application, can have their own data structures, business logic and user interface. The framework is designed in a way that poorly developed modules will not interfere with core functionality. The framework should also provides means for the developer to make sure that the extension doesn’t break after an upgrade.

As far as proprietary ERP vendors are concerned, SAP provides the Business Add-In(BADI) interface, while Oracle provides both OA Framework (OAF) and Oracle Application Development Framework(ADF).
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Traditionally, one of the major challenges facing any implementations of ERP systems is the poor user experience. In other words, users hate ERP UIs. The reason is rather historical – since so much focus was placed initially into making ERP software robust and reliable, very little thought was dedicated to the end user. That created a generation of frustrated office,warehouse and shopfloor workers, making the lives of CIO rather miserable.

Attempts to solve this issue included web interfaces that were built on top of ERP systems, enterprise portal pages containing small ‘portlets’ or worklets or widgets, and custom made interfaces. Changing the core user interface was often too difficult, expansive and error-prone, and many ERP systems haven’t made any change to their core UI components in years.

The Openbravo team recognized this issue early, and took the best approach – listen to what your users are saying. They initiated a project called Openbravo’s User experience lab, where input from the community helps the user experience team redesign the user interface. I think one of the major differentiators between proprietary and open source ERP vendors is that due to cultural differences, open source vendors are much more transparent and are doing a much better job really listening to what their users have to say. This is another great example on how important listening to your customer is.
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It’s earnings season for open source ERP vendors, and growth is phenomenal. Following record results reported by Compiere, a leading open source ERP vendor, xTuple reports an astonishing 250% growth in revenue in 2008, year over year. Since all vendors in this space are privately held companies, we do not have actual revenue figures, but growth across the sector is impressive.
In times when proprietary ERP vendors report slowing revenue growth and layoffs, attributed to the economic slowdown, growth of open source ERP vendors (in the triple digits) is truly unique . Since many organizations are now more cost aware, the obvious cost advantage of open source ERP (no license fees), along with a critical mass of production customers and a new level of maturity, both in terms of technology and channel partners, make these solutions an option any smart CIO must consider.
xTuple also reported their customer base more than doubled during 2008, another tremendous achievement by the xTuple team, led by CEO Ned Lilly. We couldn’t put it any better than Ned did:

“We are very pleased with our success in 2008 and are seeing continued growth in 2009, as larger enterprises scrutinize their current software vendor relationships, and growing companies look for greater visibility into their operations to maximize profitability in tough times. The current economic climate has made more urgent the need for low-cost, high-value solutions that deliver immediate return on investment. As a result, more companies are looking to open source solutions. xTuple has been at the forefront of bridging the worlds of open source and ERP software, and will continue to innovate and lead in response to this massive market need.”

Will 2009 be the year of open source ERP?

I read this nice post by Fabrizio Capobianco, CEO of open source mobile company Funambol. He got a chance to meet with Manel Sarasa, CEO of Opnebravo, and discuss the idea of moving the Openbravo headquarters to the silicon valley. Manel have been pondering on the idea for a while now, currently without concrete plans to make the move.

I was wondering if moving to the valley would be a smart move by Openbravo, or any other open source ERP vendors. To answer that question, you need to break open source ERP to two parts – open source and ERP.

As far as open source is concerned, I agree with Fabrizio’s argument that because there are many large open source companies headquartered in the valley, it’s a good place to be in. Networking is the main reason, and any businessman will tell you, you have to network to survive and flourish. Also, if you do have plans to be acquired by one of the large IT vendors (Oracle, Sun etc.), being located closer to them would definitely make the acquisition process easier.

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Despite the contracting economy, open source ERP vendors are steaming full ahead, never looking back. In this news roundup,  Openbravo attracts two new top leaders and Compiere reports strong growth for 2008 and wins a huge customer.

Openbravo announced two new senior management recruits. Jesper Balser, one of 3 Navision founders, joined Opnebravo as a board member. Balser co-founded Navision, a danish ERP solution for the SME market back in 1984. In 1992, Navision was acquired by Microsoft for about 1.5B US$, and the Navision solution was integrated into Microsoft Dynamics, the business management suite (Navision was later renamed Microsoft Dynamics NAV). Balser brings a huge amount of experience into the table, from building, to expanding and then selling a successful ERP for the SME market. It’s not clear yet if Balser also invested his own cash in the company.

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