Case Study of Open Source ERP Evaluation in

Case Study of Open Source ERP Evaluation in a Small Business David L. Olson Jesse Staley Department of Management University of Nebraska - Lincoln CONFENIS 2010 Natal

Open Source Development Red Hat [2009]: Can save by: 1. Enabling use of commodity hardware rather than proprietary machines 2. Avoids maintenance contracts 3. Greater functionality, reliability, performance 4. Faster learning curve, available support tools 5. Avoid vendor lock-in 6. Reduce need for security consultants & tools CONFENIS 2010 Natal

Open Source ERP Products • Compiere • Open. MFG • Open for Business Project • Tiny ERP • Open Office • Open. Pro Sourceforge. net listed over 1, 000 ERP projects May 2009 CONFENIS 2010 Natal

Open Source ERP/EIS • Jaisingh et al. [2008]: OSS ERPs can be customized to modify code, gain competitive advantage • Serrano & Sarriegi [2006]: OSS ERP benefits: – Increased adaptability – Decreased reliance on single supplier – Reduced costs CONFENIS 2010 Natal

Small Business & ERP • Raymond & Uwizeyemungu [2007] Studied 356 small Canadian manufactures – Internally predisposed – higher commercial dependence – Externally predisposed – larger, more decentralized – Unfavorable to ERP – more diverse customer base, low networking • Snider et al. [2009] Five Canadian small business cases – All needed to integrate legacy systems – All needed scalable solutions for growth – Successful project used consultants, external training CONFENIS 2010 Natal

Six Primary Risk Dimensions in IT/IS Implementation Poba-Nzaou et al. [2008] • Organizational – Personnel, organizational structure • Business-related – Business process consistency & reliability • Technological – Information processing systems • Entrepreneurial • Contractual • Financial – Cash flow, licensing, upgrading CONFENIS 2010 Natal

Weld Engineering Technology Inc. WETI • Industrial automated welding systems • Engineer to order manufacturer – Each job different • Major jump in growth – Early 2003 old system inadequate • Track sales • Track parts • Document work CONFENIS 2010 Natal

1 st Round: Business Case • Alternatives considered – In-house development • Had experience in software, but lacked time, personnel – Primary vendors (SAP, Oracle) • Owners had worked for large companies, saw horrors – Low cost vendors (Microsoft, others) • Great Plains, Sage, Infor Visual considered • Average cost $60, 000, rejected – Off the shelf software • Quick. Books, Microsoft Office Suite CONFENIS 2010 Natal

1 st Round: Selected ERP Lite • Price per user about $300 – Much lower than SAP, Oracle • Provided basic inventory tracking, order management • Had MRP functionality • Started with Microsoft Access database – Could be upgraded to Microsoft SQL Server or My. SQL CONFENIS 2010 Natal

Systems Design • ERPLite provided basic needs • Would need additional software • Microsoft Access database • Support optional, inexpensive – – – – Bill of materials Revision tracking Work orders Purchase orders Sales order entry Accounting Inventory MRP CONFENIS 2010 Natal

Decision • Mid-2004 • Purchased 3 user seats – Intended to buy more once system proved itself • For a few months things worked well • Testing went smoothly – Limitations: • Work order processing took too much time • Overwhelming paper trail CONFENIS 2010 Natal

ERPLite Tradeoffs • One positive feature was the ability to access most of the source code with Visual Basic for Applications – Could customize easily – Modified work order system • But created problems in other parts of the ERP • Maybe because WETI left on its own to decipher bast practices for system optimization – Modifications made it more troublesome to talk to ERPLite CONFENIS 2010 Natal

Within 1 year • WETI dropped monthly support – Chose to pay on per case basis – Meant they didn’t get bug fixes or patches • In 18 months head of manufacturing dropped work order system CONFENIS 2010 Natal

Accounting • ERPLite didn’t meet WETI accounting needs – Could integrate with COTS accounting software – Used Quick. Books – When Manufacturing dropped work order system, accounting presented a problem CONFENIS 2010 Natal

Round One Results • 4 years later only purchasing and sales quote modules used from ERPLite • Instead of integrated system – Quick. Books – Excel spreadsheets – Separate Access databases CONFENIS 2010 Natal

Round 2 • OPTIONS – Low cost vendors – DBA Manufacturing – Fishbowl inventory • Rejected due to lack of functionality – Mid-market ERP vendors • • Sage Acc. Pac Epicor Made 2 Manage E 2 Shop System Exact Job. Boss Infor Global’s Visual M 1 – Open Source CONFENIS 2010 Natal

Focused analysis • Visual & M 1 – Both claimed the functionality needed – Spent a couple of months demonstrating – Asked for bids on 10 -user system with onsite support and training • Range $18, 000 to $42, 000 – Plus $5 -8, 000 for dedicated server & SQL database – Owners rejected as too expensive • WETI had just build modern manufacturing center, automation project over budget and late CONFENIS 2010 Natal

Open Source • Google search yielded: – Open. Bravo ERP – web-based • Tested, looked good, but poor timing & owners rejected – x. Tuple • Head engineer had a friend who used in another firm • Procurement, production, costs CONFENIS 2010 Natal

x. Tuple • Offers 3 versions – Post. Books free • Support service charged • Could upgrade to other editions – Standard, Manufacturing editions have commercial license • Decided to try free version – If looked good, could upgrade CONFENIS 2010 Natal

Implementation • Installer downloaded through Source. Forge. net via x. Tuple project page – Needed source code – Postgre. SQL database (open source, free) – Report writer Open. RPT to query database • Installation took minutes • Tested on data available on Source. Forge. net Postbooks project page – Assessed in a few days by 2 people – Functional, easy to use CONFENIS 2010 Natal

Initial Application • Owners never asked for approval – Since it was free, they didn’t object • After a month of segmented testing – Populated database in batches • Slow due to unstructured format • Many missing data • Within weeks, 750 to 1000 parts out of 16, 000 entered CONFENIS 2010 Natal

Company Events • Four months into data entry – WETI sales suffered from recession – Layoffs imminent – 15% of WETI employees laid off • Including Open Source developer – Shortly thereafter the Head of engineering and manufacturing left • Thus the two project champions were gone • No hard decisions made about continuing CONFENIS 2010 Natal

Conclusions • Demonstrated the feasibility of Open Source ERP – BPR positive – Several best practices adopted – Could modify functions & reports (customizable) • Time consuming activities – Master parts list generation – Updating BOM data for hundreds of products – Organizing inventory CONFENIS 2010 Natal

Inferences • Proof of concept – OSS ERP Can Work – Takes a great deal of effort • New type of Systems Analysis • Web search for components instead of programming • Nothing is for free – You have to pay for features – OSS makes it possible to pay less CONFENIS 2010 Natal