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CHAPTER 10
ERP AND OPEN SOURCE SOFTWARE

10.1 Open source software: a brief introduction

Software for which the source code is distributed with the software is called open source software. Because of the
availability of the source code, open source software can be studied, improved, adapted and further distributed
without restrictions. Everyone is free to make the best use of the software without being restricted in any way
[Working Group on Libre Software, 2000]. Open source software is different from what is known as closed software
or proprietary software, that is distributed in binary format that is readable for computers only and cannot be
modified by people.

A wide-spread misunderstanding with respect to open source software is that open software is free of charge. This
misunderstanding has arisen because in English the term free software has often been used as a synonym for open
source software. The word free in English has several meanings, while free in relation to open source software should
be read as source code at everyone’s disposal, and not as free of charge. Some open source software is free of charge,
but this is not necessarily the case. However, the source code of open source software is always accessible and
available with the software.

Open source software is usually developed by so-called communities, groups of developers that work together on a
project. The developers do not meet in person, but they meet virtually on open source hosting sites. One of the largest
hosting sites is Sourceforge. This site hosts more than 100 000 projects, and the collective community consists of
more than one million registered developers [Sourceforge, 2007].

In principle, specification, software development, testing and error correction can execute by any member, and these
activities can also be carried out in parallel. A healthy competition exists between participants. Community members
who see the benefits of cooperation can reach synergies, while members who do not agree a selected direction can go
their own way and create a so-called branch of the software. In recent years it has turned out that this development
methodology leads to high quality software that can be developed very fast.

Inherent to open source software is the fact that no marketing and sales organisations exist for developed software.
Formal patch planning for error correction, and formal release planning for new functionality, are incompatible with
the way open source communities work, and it is also not always clear on which computer architecture the software
will run. This can be a barrier for the use of open source products by companies and other organisations, because they
are used to the professional, sometimes even obtrusive sales and marketing organisations of proprietary software
applications.

In times of software monopolies, the transparency of open source is attractive for our society. Many opinion leaders
have studied the opportunities of open source software and have determined their position. As an example: most
political parties in The Netherlands advocate the use of open source as an alternative for proprietary software. The
political parties expect lower costs when open source software is used; for some parties, a sentiment against large
multinational companies also plays a role. According to some parties, open source software could be a valid
alternative for companies like Microsoft, that are experienced as monopolists in the market, and that can enforce
prices and version management by keeping their source code confidential [VOSN, 2007a].
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10.2 ERP and Open Source Software

The ERP category on the aforementioned open source hosting site Source forge holds almost 200 open source ERP systems. An
ERP system that is generally expected to survive is Compiere, Fisterra, TinyERP (OpenERP), OpenBravo, vTiger.
According to Janssen Lok et al. [2006], two important criteria determine the suitability of an open source ERP solution for
businesses: the professionalism of the community and the critical mass of the user base.
The professionalism of the community can be measured on the basis of the information on open source hosting sites. The critical
mass of the user base is considerably more difficult to measure than the professionalism of the community. It is assumed that
open source software only has a limited share of all organizations that use ERP.

10.3 Implementation Strategy

Two important differences exist between proprietary and open source ERP systems: the relationship with the ERP supplier and
the use of the source code.
In case of a proprietary ERP system the organization that wants to use ERP starts a long-term relationship with an ERP supplier.
In case of a proprietary ERP system the organization that implements ERP does not normally have access to the source code of
the ERP system, while unlimited access to the source code is the main characteristic of an open source ERP system. When
measured over the total ERP life cycle, the costs of an open source ERP system will not necessarily be lower than those of a
proprietary ERP system.
Organizations can choose one of two strategies when using open source ERP as an alternative for proprietary ERP. The first
strategy is to implement the open source system as if it were a proprietary system, by selecting a commercial party that offers to
deliver the software as a package and maintains the source code. The second strategy is to actively use the differences between
open source software and proprietary software by maintaining the software in the organization itself.

10.4 Summary