Open Source Offers ERP Alternative
The Norfolk, Va. company targets small and midsize businesses, with a particular emphasis on manufacturing firms.
Ned Lilly, OpenMFG LLC's president and chief executive officer, said he estimates that there are 300,000 manufacturers in the United States with annual revenue between $1 million and $50 million.
He described the under-$50 million market as an area that's largely "green field" in terms of existing ERP applications.
"It's not uncommon for us to go into an under-$50 million company and see nothing but QuickBooks and Peachtree," he said.
OpenMFG, which runs on Linux, Mac OS and Windows, offers the small manufacturing field a variation on the open-source theme. While open-source vendors such as ComPiere offer ERP for free, OpenMFG charges a licensing fee.
Customers can pay an annual site license fee or pay for a traditional perpetual license. The annual license fee starts at $15,000 per year for up to 15 users. The traditional license for ERP planning, execution and supply chain modules is priced at $2,500 per user.
The price is $3,000 per seat for users needing accounting modules in addition to the core ERP. Annual software maintenance can be had for 10 percent of the total license fee.
OpenMFG's open-source element lies in its construction. The application builds upon open-source components such as the PostgreSQL open-source database manager. The core application is written in Qt, a C++ development framework from Trolltech, a Norwegian company. OpenMFG also includes an open-source report writer as well. OpenMFG created the latter feature, called OpenRPT.
The SQL report writer is integrated with the OpenMFG product and also is available separately via SourceForge.net. Lilly said being able to avoid an Oracle or SQL Server license takes tens of thousands of dollars out of the product cost. And OpenRPT lets buyers skip a per-seat charge for Crystal Reports, he added.
The other open-source philosophy has also influenced the product. "We actually manage the development of the product like an open-source product," Lilly said. OpenMFG takes contributions from customers and resellers and the resulting enhancements "flow back into the main product," he said.
Raven Zachary, founder and principal of open-source consultancy ORev, said OpenMFG's hybrid nature, something between open-source and proprietary software, may be emulated elsewhere.
"The hybrid model is something I believe we will see more of in the future, as the software industry moves towards open source due to competitive and marketing pressures," Zachary said.
OpenMFG, meanwhile, is lining up channel allies for its hybrid approach. The company has 16 resellers in North America14 in the United States and two in Canada. Lilly said the company aims to have about 40 to 50 resellers in total.
"We want to have a bigger geographic footprint," he said. He said the company has developed a territory system to prevent partners from competing against each other or with OpenMFG.
One OpenMFG reseller, Innovation Software Group, is helping JV Precision Machine Co. install a Linux-based implementation of OpenMFG. Lilly said the project marks the first all-Linux implementation of the product.
Lilly said he believes OpenMFG will "open up possibilities" in a market segment in which resellers may have had little to offer in ERP. That solution shortfall, though, appears to be on the way out. Zachary said a number of products have emerged, citing ComPiere, ERP5, OFBiz (Open for Business) and SourceTap as vendors who have made inroads in the open-source ERP market.
With the ERP market heating up, more tools for approaching the SMB space may help resellers cultivate a promising field.