Earlier this year, Matt wrote that, in 2009, companies will balk at long and costly implementation cycles for enterprise ERP products and turn to open source ERP, especially in the current economy. I’m not completely convinced that enterprises spending on “18-month, multimillion-dollar ERP rollouts” will turn to open source ERP. A company was looking at a multi-million dollar Oracle or SAP implementation is probably large enough (read: risk adverse enough) to stay the course. Projects may not progress as quickly as previously planned.
On the other hand, there is an absolutely large opportunity for Open Source ERP in the SMB market. Companies that have 50-2000 employees often need more than Quickbooks, MS Excel and roll-your-own apps. This is where Openbravo and Compiere have a role to play. Along these lines, I spoke to Sujee Saparamandu, the CEO and founder of OrangeHRM, an HR management software vendor.
Think of OrangeHRM as the PeopleSoft of open source ERP software. OrangeHRM has over 200,000 downloads, but more importantly, over 700 paying customers. These customers have an average employee size of 50-100 and the largest customer has 2,000 employees. OrangeHRM appears to be business model agnostic. OrangeHRM offers their product under the GPL license which leverages the open source distribution model. From here, customers can choose to pay for support as is common with a support-based oss business model. Or, customers can choose to pay to access a hosted version, thereby leveraging the SaaS business model that other oss ERP vendors utilize. And lastly, OrangeHRM sells proprietary add-ons around the open source OrangeHRM package, which we know as the Open Core business model.
I told Sujee that it’s a good idea for a company like his to offer multiple ways for customers to gain value from OrangeHRM. Over time, one of these models may become the major revenue driver and require special focus. But for now, broader choice is a better choice.