Recently, I got the opportunity to interview Ruth Hoffman, who is one of selected few end to end experts on open source ERP and I would like to share the excerpts of the interview with my readers as these are not only enlightening but forces all of us to think twice on our ERP strategies as far as selection between Commercial ERP and Open Source ERP is concerned. She was able to run an Open Source ERP
OFBiz without a single IT staff for her small business and was able to demonstrate that it truly is cost effective to use OFBiz to run a business. Let us go through key contents of the interview with her:
Puneesh: What is the key driving factor(s) for organizations for using Open Source ERP? Ruth: In my experience there is only one reason that any organization considers using Open Source ERP: cost. Perceived and real costs are always at the bottom of any decision to venture into the Open Source world. When you consider the real costs of implementing a proprietary ERP vs. Open Source alternatives, there are several factors to keep in mind:
- Up front and recurring licensing and royalties (not all Open Source are created equal!)
- Initial startup costs including customization fees and training expenses
- Platform dependent costs (such as lock-ins with proprietary and expensive databases or certain hardware such as MicroSoft SQL/Server and Windows based platforms)
- On going maintenance and support
When we move beyond cost factors, deciding which Open Source product to selected is motivated by: features, available support, community activity, installed based or even the technologies supported ( For example, Java vs. PHP). The importance of any one motivator varies depending on the organization’s business goals
Puneesh: How did the just concluded recession positively or negatively impacted Open ERP scene?
Ruth: I look at any downturn in the economy as a real positive for low and/or no cost software alternatives. Open Source ERP is no different. Any business that is left standing will be looking to do more with less and that includes the software used to run the business. There are also many new businesses that come on-line everyday that are looking for alternatives to high ticket, proprietary ERP solutions
Puneesh: What makes OfBiz a better option than its competition?
Ruth: The competition is fierce, no doubt about it, but OFBiz has these factors in its favor
- Technically, OFBiz is superior to several of its competitor because it has been architected from the ground up as service oriented, event driven, modular platform. Adding new services is an easy and cost effective alternative to complete system rebuilds
- It comes complete with a data abstraction engine (the OFBiz Entity Engine) so you write database access code one time and run that code on any number (mix-and-match) of physical database systems including proprietary databases, if desired. This minimizes support costs and frees the developer to write business logic and not database maintenance code
- From a business perspective, it is licensed under the Apache 2.0 licensing umbrella. That means that as a business owner you:
- Pay no licensing fees
- Pay no royalties
- Own the code including all source
- May make any changes, sell your code or toss it out. It is your choice
Puneesh: Could you please share an example/case study where OfBiz could help business achieve its objectives/metrics?
Ruth: While I’ve used OFBiz in several enterprise applications in the last few years, when I started MyOFBiz.com I had one objective in mind: “To eat my own dog food”. That is, I wanted to prove to myself and the world that it truly is cost effective to use OFBiz to run a business. So, in order to prove my assertion I had to demonstrate that:
- I could get my business up and running quickly with OFBiz. It took me about 2 weeks to get the MyOFBiz.com site branded (web page design) and up and running offering products for sale (my books) as well as other content including free OFBiz information guides, a survey and a blog. Now, my entire business is running on OFBiz
- It is easy to add new business features and functions to the website. Since that initial site launch, I’ve added new features and functions without much trouble. In many cases, it is just a matter of turning the existing OFBiz Services on. For example, I built a custom mailing list application that takes email addresses from various website sign-up locations (survey and/or website sign up) and automatically adds recipients to one or more mailing list. I don’t need to keep a list of hundreds of recipients on my local workstation. It is all done from my myOFBiz .com administrative application
- Maintenance and support are not a huge drain on my budget or time. Since I’m just one person, it’s really important that I can run OFBiz without an IT staff. My daily operations and maintenance is on auto pilot. I don’t need a DBA or IT staff to manage my site
- As my business grows, OFBiz will grow with me. I won’t need to reinvent the wheel or start over. Ever. I developed the initial site in less than a month. I’ve gradually add more features including RSS feeds, a members only library and more resources. I’m now working with other authors to publish their work under the MyOFBiz.com brand
- Eventually, I plan to offer credit card sales directly on the site. Currently, the only payment method supported is PayPal. The reason is to keep costs down. At this time transaction volumes don’t warrant paying credit card processing fees. So, a near term integration of my shopping cart with a credit card processing service, will be an easy addition. OFBiz has everything I need to set up my shopping cart for credit card processing right out-of-the-box
So, I think I’ve proven to myself and the world that if I can use OFBiz to run my business, anyone can. All it takes is a little time and effort to “learn the ropes”. You won’t be disappointed with all OFBiz has to offer
Puneesh: What future (and its time frame), you see for Open Source ERPs specially when Software as a Service for liecense based ERPs (Commercial ERPs) is the buzz word?
Ruth: First, I’d say that SAAS ERP will validate the existence of low-cost or no cost Open Source ERP products. It will show small and medium sized businesses that they too can afford to have all the business tools that the big boys have. It drives down the cost of ERP which is good for us because that is what we have: low cost ERP.
So as the proprietary vendors move down the food chain and start offering ERP in a pay as you go or SAAS model, I think you will see more small and medium sized businesses move towards ERP automation. And, once they have taken the plunge, it isn’t a far stretch for them to go full tilt with their own ERP. Having your own IT shop and ERP system isn’t for everyone. But for those with the vision to understand the difference between SAP or Oracle owning your data and you owning your business data (and the costs associated with each) I think Open Source ERP will be there as a viable alternative.
One final note: OFBiz is uniquely positioned in this regard since there has been much recent project activity to support what we call “multi-tenancy”. What this means is, there will soon be support within OFBiz to be your own Open Source SAAS ERP provider, should you choice to go that route. You could then provide SAAS ERP to other businesses using OFBiz as the foundation
Puneesh: Any closing comments/suggestions for the companies who want to make decisions on whether to go for Open ERPs or not?
Ruth: To make a decision to invest in Open Source ERPs or not is really a two part endeavor. The first decision is whether to go with ERP or not. There are many business that are stuck in the distributed mindset. In these IT shops, you add more servers and more Web Services instead of consolidating (and normalizing) data which, is the raison d’etre for ERP. And, I can tell you from having been inside some of these organizations, there isn’t enough internal network bandwidth to accommodate all communications necessary to keep the business running smoothly. Performance and data integrity suffer. As orders and transaction loads increase, network bandwidth requirements go up exponentially. Not only do you pass lots of data around, you also need to manage the network with more network bandwidth and servers. There is a very definite limit to growth when going down the distributed application path using Web Services to tie everything together.
Once you’ve made the decision to go the ERP route, then you can decide if Open Source is right for you. That is a decision that each business owner needs to make on their own. I guess I’d say, there are no free rides, just some less expensive ones.
Puneesh: Thanks Ruth for your valuable time and inputs and I am sure that this will help lot of organizations to evaluate their ERP options and take a correct decision for transforming their businesses.
Brief Bio of Ruth:
Ruth Hoffman is a “seasoned” IT professional with over 25 years of software design, development, product management and software product marketing experience. With considerable experience managing enterprise software integration and implementation projects with large budgets, she has seen first hand, the benefits that ERP brings to the table.
While she have been following and using OFBiz for over 7 years, she have never had any formal affiliation with the Apache OFBiz project. She loves working with OFBiz and want to share her enthusiasm for this amazing ERP software suite with the world. Her recent efforts have focused on putting together the myOFBiz.com website to both showcase some of her work and help inform the world about OFBiz.
For more details on her work, please visit her site http://www.myofbiz.com/
