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ERP Software
Posted On December 5, 2007 by Geeta Priya filed under
Enterprises large and small often go in for a massive computerization effort which we terms as Enterprise Resources Planning. This effort is often meant to streamline processes in an organization or for improving the efficiency of an organization. Often such efforts give results that can be measured, and an effective ROI can be captured.
An ERP system is often very critical for an organization that has gone through the entire implementation cycle. Even an hour or two of the system being down can cost a company thousands of dollars of business.
Hence it is imperative that you are careful as far as your ERP choice is concerned. Common sense tells you to build your ERP system based on reliable technology, established vendors and around good processes.
However surprisingly, many customers in the recent past have lost millions of dollars of investment due to rampant dynamics in ERP space. In the past several years many ERP vendors have either been acquired or have been forced to move out off business. Many customers have been left high and dry because of the same reason.
Companies that install ERP do not have an easy time of it. Don’t be fooled when ERP vendors tell you about a three- or six-month average implementation time. Those short (that’s right, six months is short) implementations all have a catch of one kind or another: The company was small, or the implementation was limited to a small area of the company, or the company used only the financial pieces of the ERP system (in which case the ERP system is nothing more than a very expensive accounting system). To do ERP right, the ways you do business will need to change and the ways people do their jobs will need to change too.
This is one of the reasons why many companies globally are actively considering deploying ERP solutions on Open Source.
Most Open Source ERP solutions are technically free. At least you get to evaluate the product, get a use and feel of it. Then you actually think about deploying it. This is where you start shelling out money in support and implementation costs.
Let us compare the costs of implementing ERP from the perspective of an Open Source ERP and a standard commercial ERP. ( See Table 1).
As you may observe there is some definite advantage of moving the Open Source way.
In this article we compare three Open Source ERP systems. Kindly note that we have not tested the software. To be honest the efforts required for testing or for that matter running an ERP system is indeed very huge, and requires you to create data that truly humongous. However we have managed to checkout on some of the details on these three products.
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Cost of Licenses— There exists a cost of license. Typically in a commercial software set up, this is the money that vendors like SAP or Oracle get. The implementation costs are usually pocketed by the system implementer. The cost of licenses vary on the number of users and modules.
Training—Training is the near-unanimous choice of experienced ERP implementers as the most underestimated budget item. Training expenses are high because workers almost invariably have to learn a new set of processes, not just a new software interface. Worse, outside training companies may not be able to help you. They are focused on telling people how to use software, not on educating people about the particular ways you do business. Prepare to develop a curriculum yourself that identifies and explains the different business processes that will be affected by the ERP system. Integration and testing—Testing the links between ERP packages and other corporate software links that have to be built on a case-by-case basis is another often-underestimated cost. A typical manufacturing company may have add-on applications from the major—e-commerce and supply chain—to the minor—sales tax computation and bar coding. All require integration links to ERP. You’re better off if you can buy add-ons from the ERP vendors that are pre-integrated. If you need to build the links yourself, expect things to get ugly. As with training, testing ERP integration has to be done from a process-oriented perspective. Veterans recommend that instead of plugging in dummy data and moving it from one application to the next, you should run a real purchase order through the system, from order entry through shipping and receipt of payment—the whole order-to-cash banana—preferably with the participation of the employees who will eventually do those jobs. Customization—Add-ons are only the beginning of the integration costs of ERP. Much more costly, and something to be avoided if at all possible, is actual customization of the core ERP software itself. This happens when the ERP software can’t handle one of your business processes and you decide to mess with the software to make it do what you want. You’re playing with fire. The customizations can affect every module of the ERP system because they are all so tightly linked together. Upgrading the ERP package—no walk in the park under the best of circumstances—becomes a nightmare because you’ll have to do the customization all over again in the new version. Maybe it will work, maybe it won’t. No matter what, the vendor will not be there to support you. You will have to hire extra staffers to do the customization work, and keep them on for good to maintain it. Data conversion—It costs money to move corporate information, such as customer and supplier records, product design data and the like, from old systems to new ERP homes. Although few CIOs will admit it, most data in most legacy systems is of little use. Companies often deny their data is dirty until they actually have to move it to the new client/server setups that popular ERP packages require. Consequently, those companies are more likely to underestimate the cost of the move. But even clean data may demand some overhaul to match process modifications necessitated—or inspired—by the ERP implementation. Consultants costs—When users fail to plan for disengagement, consulting fees run wild. To avoid this, companies should identify objectives for which its consulting partners must aim when training internal staff. Include metrics in the consultants’ contract; for example, a specific number of the user company’s staff should be able to pass a project-management leadership test—similar to what the consultants have to pass to lead an ERP engagement. Retention costs t is accepted wisdom that ERP success depends on staffing the project with the best and brightest from the business and IS divisions. The software is too complex and the business changes too dramatic to trust the project to just anyone. The bad news is a company must be prepared to replace many of those people when the project is over. Though the ERP market is not as hot as it once was, consultancies and other companies that have lost their best people will be hounding yours with higher salaries and bonus offers than you can afford—or that your HR policies permit. Huddle with HR early on to develop a retention bonus program and create new salary strata for ERP veterans. If you let them go, you’ll wind up hiring them—or someone like them—back as consultants for twice what you paid them in salaries. ................................................................. | Traditional Commercial ERP No major advantage for commercial software
This is a bane of almost all ERP systems
A hidden cost | Open Source ERP
Traditional ERP software. Experienced hands at a Compiere or any other Open Source ERP tool May be hard to find. However user training costs
No major advantage for
Having the code in hand, helps you to customize to have the skills sets.
There are several open source Data migration tools.
In case of implementing an Open Source ERP tool, the Consultant is a domain expert and relatively less expensive.
Good Open Source talent is Also expensive. Yet you do Not worry about SAP pros Demand rising. |
Compiere
Compiere has been Open Source ERP software for more than six years. Compiere Inc a Portland based company is the lead developer of the product and Compiere works through a chain of partners. Partners generally depending on their proximity to the customers implement the solutions, and pay Compiere for backend support.
According to Compiere web site, the 70% of cost of ERP software is the cost of pre-sales demonstration and prototyping. Compiere leaves that to customers. Compiere also does not charge for licenses.
Even the support costs are less since there is a user community and mailer lists which takes care of support. As we went to press Compiere claims nearly million downloads of the software.
We attempted installing the software. You require either Oracle or Sybase on your PC Server. With a lot of customization it might be possible to configure Compiere for MySQL or PostGresSQL. But as it stands you need a licensed software which means that for the solution you need to cough up money upfront.
Though the web site talks about installation within an hour, we took much more than that. Compiere is build on Java, and you require the Java SDK installed on your Server.
We did not checkout the features, since a total evaluation of the software would have required more man power and time.
| Software: Compiere |
Sequoia ERP
Sequoia ERP is based on the Open For Business (OFBiz) project, a successful open source project that has been used to develop sophisticated custom enterprise applications since 2001. OFBiz offers a rich feature set, virtually unlimited flexibility, and scalability. Today, OFBiz enjoys a strong global developer community in the United States, Europe, and Asia and has been deployed in a variety of product-oriented retail, distribution, and manufacturing companies.
Sequoia ERP's goal is to bring the power of the OFBiz framework and applications to a broader range of users and service providers by creating regular stable releases with well-defined feature sets and community and commercial support options. Thus, users and consultants looking for an "out of the box" open source ERP solution can now tap into the power and flexibility of OFBiz.
Sequoia ERP is sponsored by Open Source Strategies, Inc., one of the core developers in the OFBiz community. It is named after the Sequoia evergreen tree, commonly known as the "Redwood," and was first released on August 23, 2005.
Build on reliable Java technology the Sequoia ERP is licensed under MIT license. It’s over-reliance on java Servlets may be a put-off to many, but the technology works.
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TinyERP
Tiny ERP is yet another Open Source ERP. This is written using the open source and agile programming language Python. There are of course questions about using a scripting language for writing enterprise class applications. By TinyERP has implementations that fuel many Europe establishments. It is small, easy to use and is stable.
TinyERP is developed by a European company called Tiny and needs GtK and GNOME environment to run. It is indeed tiny. The server and client modules are very both less than an MB. Additional modules plus dependencies increases the size of the footprint.
TinyERP server and clients are available for both Debian and Fedora. And installation is indeed fast.
Tiny makes money in two ways. One selling support through partners. It also sells documentation.
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Software: Sequoia |
Conclusion
If you do not have the bucks to actually call in a SAP or Oracle Consultant to set up ERP for you, all you need to is to get a good developer and take a day off from work, and try setting up an ERP solution all by yourself. This will give you some idea.
If you are an Open Source developer or developer company there is some business to be generated.