Recent surveys have found that small and medium businesses (SMB) are increasingly willing to consider open source solutions. Not surprisingly, SMB and large enterprises are predisposed to different categories of open source software. Survey data suggests that open source ERP is one such OSS category where SMBs are more likely to adopt OSS than their large enterprise peers.

Several open source ERP vendors are vying for a share of the action. Small and medium business owners and/or IT department heads should consider whether an open source ERP package could meet your business needs as your company grows.

Growing adoption of OSS in SMB
Just fifteen months ago, Forrester published survey data that suggested SMBs were much more apprehensive about open source software then large enterprises. In summarizing the Forrester results, I wrote:

The Forrester study also found that more than half of SMBs (57 percent) also expressed concern that open-source software would be complex and hard to adopt, but only 32 percent of enterprises expressed a similar sentiment. In addition, 68 percent of SMBs cited the availability of service and support for open-source software as a concern, compared with 47 percent of enterprises.

More recently however, Jay Layman of The 451 Group reported that a study from CompTIA suggested SMBs were more willing to consider and invest in open source products. Layman wrote:

In terms of open source, the study indicates nearly 20% of SMBs polled plan to begin using open source software in the next year. We believe that is a significant figure, particularly when we consider all of the open source software – from OS to middleware to applications — that SMBs may already be using, but just are not necessarily aware it is open source (via SIs, resellers, service providers and others that are increasingly using and incorporating open source).

Open source ERP usage small, but larger in SMB
Forrester analyst Jeffrey Hammond’s recent LinuxCon keynote contained a wealth of data, including a view of OSS adoption by software category across company sizes.

According to a 4Q2009 survey of over 1,900 IT decision makers, companies with 20 to 999 employees were 50 percent more likely to have adopted open source CRM and ERP business applications than companies with more than 1,000 employees.

It should however be noted, that only 9 percent of companies surveyed with 20 to 999 employees were using an open source ERP offering. The adoption rate was however higher than Portals, such as Liferay, or Business Intelligence tools, such as Jasper Reports, across companies of all sizes.

All this begs the question, “could an open source ERP package be right from my midsize business”?

When to consider open source ERP products
Ned Lily, CEO of open source ERP vendor xTuple, explained in an email that his company is seeing strong interest from two types of customers.

First, companies with revenues of $5 to $50 million annually that are outgrowing the capabilities of QuickBooks. Previously, their only logical choice was an SMB version of SAP or Oracle Applications. However, the complexity of an SAP or Oracle Applications implementation and the time required ultimately forced customers to make due with QuickBooks.

Second, midsized companies that adopted an ERP package in the lead-up to Y2K, and are now beginning to consider alternatives that provide greater flexibility without the need for an army of consultants and at a much lower cost. Access to source code, either directly or through service providers, is a key attraction to companies in this second camp. Lily explained

We hear anecdotally from partners and customers that implementations are faster because of open architecture and ability to make low-impact changes to the source code or extensions around the core.

xTuple recently announced new customers, a Cloud-based offering, a user community of over 25,000 active members and over 400,000 downloads to date.

Openbravo and Compiere, both previous winners of InfoWorld’s Best of Open Source in the ERP category, are two other leading open source ERP products.

In addition to a traditional software package, Openbravo offers its ERP package as a software or hardware appliance to further simplify and cut deployment costs. Openbravo also boasts a large partner network, which can help midsize companies evaluate and adopt an appropriate product.

Compiere on the other hand was recently acquired by Consona Corporation. Coverage of the acquisition suggests that Compiere needs to refocus on its users, partners and community if it hopes to grow again.

The list of open source ERP vendors is not exhaustive by any means. Midsized enterprises considering an ERP package are encouraged to evaluate several packages – which, of course, is made easier through the low barrier for open source offerings.

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