The Case for Open-Source ERP

Si Chen believes open source has something to offer organizations with specialized business applications needs.

To Chen, principal of Open Source Strategies Inc., a Los Angeles-based consulting firm, open source's flexibility lends itself to ERP (enterprise resource planning) solutions. Open source puts ERP source code in the hands of companies, which can freely modify it to meet their specific needs.

With ERP customization is close to inevitable. Chen pointed out that as many as 80 percent of ERP deployments in some market segments are custom-developed systems. And commercial ERP products from the likes of Oracle and SAP are rarely implemented without significant adaptation.

Open source, open ideas. Click here to read more.

"In the commercial world, you are still sort of stuck – you have to pay the license fee," Chen said.

But with open source, he added, customers can forgo the license fee and tweak the software until it suits them.

Chen's first exposure to open-source ERP was in a user role. He began exploring the field a couple of years ago when he sought a system for his online retail operation, Gracious Style. He settled on the OFBiz (Open For Business) open-source enterprise automation suite. In time, Chen's company became one of the core developers of OFBiz.

Now, Open Source Strategies is lead developer on Sequoia ERP, a version of OFBiz positioned as an ERP solution. Sequoia ERP is available under the MIT Public License.

"We saw a significant need for an open-source ERP solution that was low cost and … very flexible and could be developed in a community process," Chen said.

Dan Houck, a software architect based in Pittsburgh, said Sequoia ERP "will require extensive customization for your business and a heavy knowledge investment." That story, he added, holds true for any ERP offering. But if an organization is going to invest heavily in ERP, Houck reasoned, why not invest in "something you have control over?"

The source-code angle is indeed one plus. But Chen also described benefits specific to Sequoia ERP, as it builds upon OFBiz. For one, it aims to create regular, stable releases with well-defined feature sets. In addition, Chen said Sequoia ERP caters to users and service providers, while OFBiz primarily addresses the developer community.

For ERP developers knowledgeable in Java, OFBiz provides a great opportunity, according to Chen. But this approach proves daunting for people who focus on ERP processes and implementation, rather than development, he said.

Sequoia ERP, on the other hand, seeks to create an implementation-oriented community

Chen said he envisions two types of companies that will help organizations deploy Sequoia ERP. Implementation services providers will "help end users understand their needs and deliver the application to them," he said. Companies offering customization services will then tailor the implementation to fit the customer's requirements.

UFT gives lessons in open source. Click here to read more.

Open Source Strategies and other participants in the OFBiz community can provide the customization services, Chen said.

Sequoia ERP was first released in August 2005. The company describes release 0.8.1 as a production-ready release with the latest release, 0.8.2, incorporating additional improvements. The software is available at sourceforge.net.

Chen said the plan is to have release 0.9 ready in January and version 1.0 available in the spring or early summer of 2006. The goal with Sequoia ERP 1.0 is to have a fully integrated open-source general ledger component, he said, noting that GL has historically been a weak spot for OFBiz.

But Chen contended that the success of open-source ERP doesn't rest on the presence of a particular feature. The key, he said, is a change in the perception of what open-source ERP "really means and brings to people."

And what open-source ERP delivers, according to Chen, is an engaged user and developer community. ERP efforts such as OFBiz may have a small base of users compared with other open-source projects, but enjoy a higher percentage of people who contribute back to the project.

"ERP is a very natural thing for businesses and business users to collaborate on," Chen said.