In the never-ending battle to improve productivity, cost-effectiveness, and operational efficiency, businesses have been turning to Enterprise Resource Planning Software to help them keep track of their operations and day-to-day tasks. This in turn has allowed businesses to streamline their operations and boost their productivity.
It can also be considered as a single hub to manage a company’s different business processes from accounting, finance, human resources, procurement, manufacturing, distribution and so on. It is a digital business suite that provides a single interface to all business processes.
Open-source ERP’s, in turn, offer several distinct advantages over more traditional models. This article explores the pros and cons of such software.
What is ERP Software?
Before we get into the pros and cons, it’s important to understand what exactly an ERP software actually is. An ERP is designed to manage an entire business process. It consists of suites that can help a company to manage their operations from end to end in an effective manner, reducing the time and cost of operations by automating various tasks.
Using ERPs can also help address critical issues such as improving the flow of information and improving accountability. These software suites are designed to help an organization to analyze their operations and manage them by automating various tasks.
The software is designed to support a number of industries and/or operational business functions, including but not limited to:
- Accounting
- Finance
- Human Resources
- Procurement
- Manufacturing
- Distribution and Logistics
- Information Technology
Finally, these software suites can often integrate with existing/legacy software, even if that functionality doesn’t come out of the box. Specific compatibility depends on the ERP—with open-source ERPs typically having the widest range in this regard.
Why should your company consider an open-source ERP?
An ERP being open-source allows companies to expand that ERP’s capabilities through custom code. In contrast, proprietary ERP’s are fully controlled by the company who made it. While these ERP providers do allow for customization still, what additional functionality you can introduce and how you introduce it is often pre-defined. For open-source ERP’s however, you are able to write your own code (or use community-based code) and have functionality exactly as you want it.
For example, Odoo—one of the more popular open-source ERP’s—comes with a highly skilled and dedicated community that can help solve many customization or implementation issues. Odoo users have access to community-made integrations and solutions, which in turn they can adopt into their own ecosystems. This makes for a highly scalable software architecture that can naturally grow bigger with the business: one module at a time.
Primary benefits of using an open-source ERP
- Flexibility – It is flexible as it is developed in an open-source environment. You can customize it according to your needs and requirements.
- Scalability – The system is scalable and can easily scale up or down according to the business requirements. Once a new module is added and integrated, everything is immediately available to that module, including past data.
- Cost-effectiveness – Some open-source ERPs may adopt unique pricing models more suitable for specialty businesses, rather than a per-user license fee. For certain companies, this may be a more favorable option.
- Security – The open-source ERP is safe and secure as compared to the proprietary versions.
- Community Support – Due to its open-source nature, there is a more established peer community support specific to integrations, best practice use cases and more.
Drawbacks of Using an Open-source ERP
- Complexity – With customizability comes complexity: choosing between thousands of apps can be hard to match the current workflows of a company
- Management Responsibility – Management of the environment, performance optimization and proper security provisioning is the responsibility of the user organization or a Managed Services Provider.
- Lack of Business Suites – The breath of business function support is reduced compared to proprietary ERP systems
Open-Source ERP Recommendation – Odoo
There are a number of open-source ERPs on the market, so it can be tricky to decide which is best for you. A popular platform amongst users is Odoo. Odoo is a suite of open-source business apps designed to work together as an ERP. It can be used to manage any kind of business, from a small company to a multinational corporation.
The platform supports three operating models:
- Hosted by Odoo in the Odoo Cloud
- Hosted by the Company in its own private cloud environment
- Hosted on-premise or in a data center running on virtual machines or bare metal.
For our clients, we find that the main benefit of Odoo is its flexibility and ability to grow/scale with the organization. When starting with Odoo Cloud for example, all a company needs to do is create an account, input some information and preferences and already get presented with a software suite that can manage their CRM process, accounting, supply chain management and more—depending on the specific functionality that company needs.
As that company grows, they may need to start customizing Odoo’s modules to either fulfill a very specific business requirement, or be used with other software in their technology stack. In this use-case, that company can then transition with Odoo to a version that can be extended and custom-written typically with much more ease rather than migrating to an entirely different ERP platform.
Scalable integration, improved customizability paired with great usability and accessible community support, makes Odoo an ERP solution to be a very viable option for many types of small to medium-size businesses.
Conclusion
Ultimately, choosing an ERP is among the most critical choices that a company needs to make. It is a comprehensive software solution, with each option having their own strengths and weaknesses.
Open-source ERPs, for their part, are nearly unrivalled in their flexibility when implemented properly. However, the complexity of doing so can be just as challenging, especially when compared to out-of-the-box solutions offered by their competitors.
For either choice, finding an implementation partner is key to helping decide between your options and find one that exactly fits your company’s needs.
If you’re already looking to implement an open-source ERP, or simply need help getting started in the ERP decision process, contact us today!
