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Open Source ERP - A Case Study
Posted On September 24, 2007 by Geeta Priya filed under Miscellaneous
Arvind Jain, a self-styled CIO of a Bangalore based manufacturing company had to take a call. His company had received a letter from the Business Software Alliance (BSA) to reply back on issues regarding software licenses used by the organization. Jain knew that someone had spilled the beans and has reported to BSA regarding the huge number of illegal licenses used in his organization. He knew the implications clearly. His organization never used any higher end technology or applications. However there were about 70 odd computers that was used for mostly Microsoft Office applications. His accounting department which he personally monitored used a popular financial accounting package. Apart from these, there were a few other non discreet cases of pirated software in the organization, which he knew he can do without.
He spoke to a friend and worked out the cost of moving to 100% legal software compliance. The cost was estimated at approximately Rs 15,000 per PC which meant an investment of Rs 1 million. He knew he will have a tough time explaining to his bosses why he requires so much of funds.
A bigger issue which was pondering Jain was the fact that he had planned to invest into an ERP system to improve the efficiency of the organization. The company had earmarked an investment of Rs 8.5 L for a solution from a well known company which was propitiatory and used a Visual Basic interface with Oracle at the server.
He knew very well that he has to either cough up the money and move to at least 80% software compliance and push the ERP implementation for the next financial year, or prepare his management to face the law.
However by some quirk of fate Jain had to interview some candidates for the job of an EDP assistant within a week of receiving the letter from BSA. He was impressed by the credentials of a young candidate called Kumar, who happened to be an RHCE and an amateur programmer. Kumar was smart enough to understand that he can get a job with the organization if he manages to convince his boss on deploying GNU Linux.
Jain was extremely apprehensive. A commerce graduate by qualification, Jain had only seen Microsoft Windows during his decade and a half as a professional. However Kumar’s enthusiasm forced to spent an afternoon loading Fedora Linux on his PC. And within a week he was hooked on.
In the next three weeks, with the consent of his management and against some oppression from many of their colleagues, Jain and Kumar forced almost ninety per cent of the staff to move their office applications on to Linux and Open Office. “ It was quite painful, since there were obstacles which were beyond our comprehension,” explains Jain.
With the help of a popular networking consultant Jain managed to run the network off a Linux server. They purchased a few copies of Windows and Office for rest of the computers. “ The senior managers are still using Windows. I am not an Open Source fanatic, but purely an opportunist. Given a chance I might have still preferred to run all applications on Windows, but cost of licensing is exorbitant, and for an organization like ours the opportunity cost on very Rupee matters ,” says Jain.
Having tackled a problem, Jain knew that he has created a problem for himself by moving onto Linux. There were few ERP vendors supporting end-to-end solutions on Linux. And those who were providing were way too expensive.
Open Source to the rescue
“ A number of developers and development companies approached me saying that they will develop a solution from scratch. However when they chalked out the costs, the figures were in the vicinity of a million Rupees,” remembers Jain “ I honestly did not have the patience nor could I trust a solution from scratch,” he adds.
Jain did extensive studies on ERP implementations done by competitors, read case studies and analyzed reports. “ I was quite stunned that the real cost of an ERP solution is rarely the licensing. It is customization, support and migration,” he says. “ In fact the costs of even migrating from Windows environment to Linux was expensive if I consider the ROI costs. During the 3-4 weeks of migrating users, three of us ( in the EDP department) did not do anything else,” he adds.
According to Jain the cost of implementation is usually double cost of licensing, and some times the training can make it up to five times more expensive.
Having spent two to three months on a Linux desktop, Jain was confident of using Open Source technologies and products. During his research he stumbled up on Open Source Business applications such as Sequoia, TinyERP and others. He tried downloading and running these applications himself with admittedly indifferent success. “ I guess I am too old to learn Java. And these applications require expertise that is beyond that of a programmer,” he confesses.
After speaking with number of Open Source freaks, he understood one more reality. “ You do not have many Java gurus who genuinely love Linux and Open Source.”
Barely four months after his organization moving to Linux, Jain managed to hire a small start-up to customize Sequoia for his organization. They have already implemented the first two modules, and at the current trends, Jain is hoping that he will complete the project with less than half the estimated budget.
He has one last message for potential CIOs and developers thinking about switching over “ Open Source software is never free. If you are willing to put some effort it can be made cheap. But that is it.”
(The names changed on request since organization is still communicating with BSA)
Next: Open Source for Business Applications? Beyond a case study....
He spoke to a friend and worked out the cost of moving to 100% legal software compliance. The cost was estimated at approximately Rs 15,000 per PC which meant an investment of Rs 1 million. He knew he will have a tough time explaining to his bosses why he requires so much of funds.
A bigger issue which was pondering Jain was the fact that he had planned to invest into an ERP system to improve the efficiency of the organization. The company had earmarked an investment of Rs 8.5 L for a solution from a well known company which was propitiatory and used a Visual Basic interface with Oracle at the server.
He knew very well that he has to either cough up the money and move to at least 80% software compliance and push the ERP implementation for the next financial year, or prepare his management to face the law.
However by some quirk of fate Jain had to interview some candidates for the job of an EDP assistant within a week of receiving the letter from BSA. He was impressed by the credentials of a young candidate called Kumar, who happened to be an RHCE and an amateur programmer. Kumar was smart enough to understand that he can get a job with the organization if he manages to convince his boss on deploying GNU Linux.
Jain was extremely apprehensive. A commerce graduate by qualification, Jain had only seen Microsoft Windows during his decade and a half as a professional. However Kumar’s enthusiasm forced to spent an afternoon loading Fedora Linux on his PC. And within a week he was hooked on.
In the next three weeks, with the consent of his management and against some oppression from many of their colleagues, Jain and Kumar forced almost ninety per cent of the staff to move their office applications on to Linux and Open Office. “ It was quite painful, since there were obstacles which were beyond our comprehension,” explains Jain.
With the help of a popular networking consultant Jain managed to run the network off a Linux server. They purchased a few copies of Windows and Office for rest of the computers. “ The senior managers are still using Windows. I am not an Open Source fanatic, but purely an opportunist. Given a chance I might have still preferred to run all applications on Windows, but cost of licensing is exorbitant, and for an organization like ours the opportunity cost on very Rupee matters ,” says Jain.
Having tackled a problem, Jain knew that he has created a problem for himself by moving onto Linux. There were few ERP vendors supporting end-to-end solutions on Linux. And those who were providing were way too expensive.
Open Source to the rescue
“ A number of developers and development companies approached me saying that they will develop a solution from scratch. However when they chalked out the costs, the figures were in the vicinity of a million Rupees,” remembers Jain “ I honestly did not have the patience nor could I trust a solution from scratch,” he adds.
Jain did extensive studies on ERP implementations done by competitors, read case studies and analyzed reports. “ I was quite stunned that the real cost of an ERP solution is rarely the licensing. It is customization, support and migration,” he says. “ In fact the costs of even migrating from Windows environment to Linux was expensive if I consider the ROI costs. During the 3-4 weeks of migrating users, three of us ( in the EDP department) did not do anything else,” he adds.
According to Jain the cost of implementation is usually double cost of licensing, and some times the training can make it up to five times more expensive.
Having spent two to three months on a Linux desktop, Jain was confident of using Open Source technologies and products. During his research he stumbled up on Open Source Business applications such as Sequoia, TinyERP and others. He tried downloading and running these applications himself with admittedly indifferent success. “ I guess I am too old to learn Java. And these applications require expertise that is beyond that of a programmer,” he confesses.
After speaking with number of Open Source freaks, he understood one more reality. “ You do not have many Java gurus who genuinely love Linux and Open Source.”
Barely four months after his organization moving to Linux, Jain managed to hire a small start-up to customize Sequoia for his organization. They have already implemented the first two modules, and at the current trends, Jain is hoping that he will complete the project with less than half the estimated budget.
He has one last message for potential CIOs and developers thinking about switching over “ Open Source software is never free. If you are willing to put some effort it can be made cheap. But that is it.”
(The names changed on request since organization is still communicating with BSA)
Next: Open Source for Business Applications? Beyond a case study....