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Is Open-source ERP system suitable for your business?

Year 2018
December 2018
Is Open-source ERP system suitable for your business?
19 Dec 2018

Is Open-source ERP system suitable for your businessAfter years of offering ERP services, we have seen many questions and enquiries concerning open-source ERP system. Why not for self-developing ERP solution packages? Is open-source ERP cost-effective? Why do SMEs stick to a proprietary ERP system?

In this article, we would like to bring about a summarised overview of an open-source ERP software to clear out your concerns as well as help you in the process of selecting a suitable ERP to improve your business performance.

What is an open-source ERP Software?

A typical example of a closed-source software suite is Microsoft Office whose source code is proprietary to Microsoft company. This means that users can only access the software executables and operate the files which require programming functions. The software users are unable to make further adjustments to the functions of the program.

On the contrary, open-source software (OSS) is defined as a software whose source code is accessible to every user for study and modification purposes. It is designed as a more flexible technology with quicker development which encourages independent developers to contribute in testing, bug fixings, improving the source code and enhancing the software functions.

Accordingly, the open-source ERP software allows companies to download, study the source code and make modifications for their own needs without paying extra fees to the ERP software provider.

Companies acquiring open-source ERP software are not dependent on any software vendors. Even when the ERP providers close down their services, the software still remains, as its code will continue to exist and be developed by its users (Academic Science).

What are the concerns about open-source ERP software?

1. The security level of an open-source ERP

Security is regular anxiety that organisations all over the world are concerned about, especially when making investments in technology. There is an assumption that open-source ERP software is less secure than the proprietary one. Unfortunately, this is a proven statement which is a known fact.

Since the coding of an open-source ERP software can be easily found, modern-day hackers will always be able to learn the coding structure and leverage on the fragility of the open-source software effortlessly. Besides, without the software provider’s support, open-source ERP users also need to be capable of managing cybersecurity risks, including server maintenance, data backup, setting up of firewalls as well as making necessary software updates to fully protect their organisation’s confidential data and networks.

2. The requirements to operate an open-source ERP

Open-source ERP software is highly recommended for companies who have a strong IT department. This is because when full control of the source code is available, the in-house IT staff would be required to have considerable knowledge on programming and ERP development to be able to read, modify and make proper customisations to the system. The IT team would also have to be in charge of implementation, training, system maintenance and software updates as these supports are not provided by an open-source ERP provider.

In fact, ERP software may be more complex and time-consuming to develop or customise without an expert’s consultation or advice. As technology is changing rapidly, open-source ERP users need to keep an eye on the innovative updates of ERP functions and features to progressively improve their organisation’s processes. Thus, the open-source ERP software development team should preferably be comprised of a project manager, analysts, developers, testers, functional experts and so on, to properly operate and develop the system. Instead of being dependent on an ERP provider, companies will have to rely on the knowledge of their own IT team.

3. Is open-source ERP software cost-effective?

Acquiring an open-source ERP system may sound attractive with no charges for licenses, subscription, customisation or support fees, etc. However, as discussed above, there is a requirement to have a strong in-house team of ERP technicians. It is recommended that companies should thoroughly consider the costs of IT effort for ongoing operation (implementation, training, support, maintenance) as well as ERP system upgrades and customisation. In the long run, the IT costs accumulated may exceed the price of the closed-source ERP licenses paid on a subscription basis, which will ultimately cause a burden on your finance.

Summary

Overall, open-source ERP software will be more practical for large organisations with robust development and strong in-house IT forces or companies with very simple operational processes. The reason being that open-source ERP software is commonly not fully developed with integrated functions, thus requiring extensive effort on additional development and security enhancement, companies especially growing SMEs would prefer the partnership with closed-source ERP vendors as they provide full support and a higher level of security.

It is highly recommended to do immense research and seek consultations from experts prior to making decisions on technology investment such as an ERP system, which can cause a huge transformation to your business. You can follow these 5 steps to pick up a best fit ERP solution for your organisation.

For any help on assessing your organisation’s capabilities to select an open-source or closed-source ERP software in Singapore, our experienced ERP consultants will be happy to listen to your necessary requirements and provide a suitable solution to optimize your business processes as well as productivity.

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