Open-Source ERP Makes Headway in U.S. Market

By John Moore  |  Print this article Print

Compiere's open-source ERP and CRM software is starting to take off domestically as well as overseas. Meanwhile, health care and the midmarket are fueling the growth of service companies.

An open-source business-application vendor is ramping up its U.S. partner push as it seeks small to midsized customers.

Compiereplans to recruit 20 to 30 U.S. integrators and VARs this year. The company already has about 15 U.S. companies on its partner roster.

Compiere provides its open-source enterprise-resource-planning/customer-relationship-management system free of charge. It offers presales consulting, implementation services, and support through its network of partners.

The company on Monday announced the release of Compiere ERP & CRM system, version 2.5.2c. This version provides improved request functionality, batch invoice entry and improved security management, according to the company.

Jorg Janke, president and project lead, said the company's partners concentrate on small and midsized customers. Distribution chains, both owned and independent, represent an important market niche and one in which neither SAP nor Oracle excels, he said.

Goodyear Germany, which owns its retail stores and works with independent dealers, was the first customer to go into production with Compiere's open-source business application. That installation went live in May 2000.

Initial interest in Compiere was among European and Latin American companies. In Asia, Singapore was a particularly active market. The U.S. market lagged, but in the past 18 months, Compiere has made progress in signing U.S. partners, Janke said.

Those partners are targeting small and midmarket companies that have been using solutions such J.D. Edwards (acquired by PeopleSoft), and Microsoft's Great Plains and Solomon, Janke said.

Among Compiere's U.S. partners is Global Era,a Denver-based software development and integration company. Global Era has built an ERP practice around Compiere. The company has seen sales activity skyrocket since July 2004, according to Vince Clark, president of Global Era.

"We are pursuing a track right now of having eight to 10 implementations running at any given time," he said.

Consulting and implementation around Compiere represents about half of the company's business. Global Era also develops custom software based on open-source tools and technology.

Clark said he sees the product as a fit for customers with revenues ranging from $50 million to $200 million who are interested in replacing legacy systems. At the low end, Clark said, he has customers and prospects approaching the $10 million mark who are ready to replace small-business systems such as Quickbooks and Peachtree.

In addition, acquisitions in the ERP field also have sparked interest in Compiere, Clark said. "The rollup that is going on in the industry at all levels is something that is concerning to buyers," he added.

Health care surge fuels Perot.

Health Care Surge Fuels PerotHealth care helped propel Perot Systems'first-quarter results, which the company reported Tuesday.

Perot Systems posted first-quarter revenue of $473.3 million, an increase of 13 percent compared with the year-ago quarter. Diluted earnings per share rose 38 percent year-to-year to 22 cents. For the second quarter, the company said it expects a revenue range of $475 million to $490 million and diluted earnings per share of 25 cents to 27 cents.

The company's Industry Solutions line of business was its fastest-growing business segment, generating 16 percent growth. Industry Solutions contains Perot Systems' commercial outsourcing and consulting business.

Within Industry Solutions, health care led the way with 18 percent year-to-year growth in the first quarter. Peter Altabef, president and CEO at Perot Systems, said a significant portion of the health care uptick stems from clinical systems implementation and outsourcing contracts.

Read more here about Perot Systems' gains in the health care industry.

In February, Perot Systems launched a Clinical Solutions Center to centralize its clinical resources and project management methodologies in one organization. In the following months, Perot Systems appointed Dr. Kevin Fickenscher to the newly created post of executive vice president of clinical transformation.

Health care of late has become a vertical market of interest to integrators. Accenture and IBMboth have made acquisitions in this field in recent weeks.

Perot's government services line of business didn't fare as well, with revenue declining 3 percent in the first quarter. The company attributed the decline to delays in government contract award decisions.

MindTree Seeks Expansion

MindTree Consultinghas big plans for the next 12 months, with goals that include organic growth of 60 percent and revenue of $85 million to $90 million for its 2005-06 fiscal year, which began April 1.

MindTree, whose main offices are in Bangalore, India, and Somerset, N.J., provides a mix of IT R&D (research and development) services. The company, which closed its 2004-05 fiscal year with $55 million in revenue, lacks the size of its Indian technology services counterparts. Wipro,for example, finished its fiscal year ended March 31 with $1.87 billion in revenue.

But MindTree emphasizes greater customer attention and access as it grows into a midtier player, said Joseph King, senior vice president of sales and marketing at MindTree.

That philosophy apparently has won over some customers. Volvo, when it decided to offshore work to India, selected MindTree over its much larger rivals.

"They told us they would rather get an 'A' team from MindTree than a 'C' team from a larger company," King said. He said he has found that companies looking to offshore have opened their preferred vendor lists to include midsized companies such as MindTree.

MindTree, which will hit its six-year mark in August, was launched simultaneously "in both ends of the world," King said, contrasting MindTree with companies that started in the United States or India and later expanded overseas.

The company derives 70 percent of its business from IT services—applications development, maintenance and the like. The latter category, King said, has become particularly active as customers seek to outsource the maintenance of legacy applications, while their internal IT teams focus on developing new technology.

The remaining 30 percent of MindTree's business comes from its R&D services. Here, the company develops custom software, which it licenses to companies that embed the software in their products. Areas of development include wireless technology, VOIP (voice over IP) and SANs (storage area networks). Sony and Fujitsu are among the company's R&D customers.

Some of the larger Indian services companies also provide R&D services. But there's one area where MindTree won't be competing: business-process outsourcing. King noted the "growing pains" of BPO vendors, which struggle with high turnover. "We don't think that is the space for us to be in," he added.

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John writes the Contract Watch column and his own column for the Channel Insider.

John has covered the information-technology industry for 15 years, focusing on government issues, systems integrators, resellers and channel activities. Prior to working with Channel Insider, he was an editor at Smart Partner, and a department editor at Federal Computer Week, a newspaper covering federal information technology. At Federal Computer Week, John covered federal contractors and compiled the publication's annual ranking of the market's top 25 integrators. John also was a senior editor in the Washington, D.C., bureau of Computer Systems News.