Ideas on Enterprise Information Systems Development

This blog is devoted to ideas on Enterprise Information Systems (EIS) development. It focuses on Lean Thinking, Agile Methods, and Free/Open Source Software, as means of improving EIS development and evolution, under a more practical than academical view. You may find here a lot of "thinking aloud" material, sometimes without scientific treatment... don't worry, this is a blog!
Every post is marked with at least one of Product or Process labels, meaning that they are related to execution techniques (programming and testing) or management techniques (planning and monitoring), respectively.

Thursday, October 28, 2010

Free/Open Source ERP (FOS-ERP) - Part VI

In 2007 I wrote a book chapter on the differences between FOS-ERP and proprietary ERP (P-ERP), published as part of the Handbook on Research in Enterprise Systems in 2008. This post is part of a series that revisits this paper. Please refer to the first post of this series to better understand the structure used in this comparison. 

Opportunities and Challenges
FOS-ERP offer a series of opportunities for actors that are currently out of (or ill inserted) the ERP market. Since there is nothing such as free lunch, these opportunities come together with a series of challenges, as listed below.

For smaller consulting firms:
a) Opportunities:
P-ERP vendors generally impose rigid procedures, associated to high costs, for firms that want to enter their partner network, raising the difficulties for smaller enterprises to become players in this market. In contrast, smaller consulting firms can enter the FOS-ERP market in an incremental way, increasing their commitment to a project as new business opportunities appear and bring more financial income. In other words, firms can start contributing with small improvements to the project as a way of gaining knowledge on the system platform and framework, and, as customers appear, more money can be invested on a growing commitment to the project.
b) Challenges:
If on one hand it is easier to enter the market, on the other it is harder to retain clients: a broader consultancy basis empowers the demand side, making customers more demanding and reducing profit margins.
Keeping the quality level among a heterogeneous network of consulting services providers is also a major challenge. FOS-ERP in general lack certification and quality assurance programs that guarantee service levels to clients. However, exactly those programs keep smaller consulting firms way from P-ERP, pushing them towards FOS-ERP. For a small consulting firm, a possible solution to this deadlock is to start with smaller, less demanding projects, and then go towards bigger ones, as its deployment processes and related activities gain maturity. This maturity will become the competitive advantage of the firm on a high competitive FOS-ERP market.

For smaller adopters:
a) Opportunities:
lower costs open new opportunities for Small and Medium Enterprises (SME) to become ERP adopters. With globalization, small firms suffer more and more with competition, and when they try to modernize their processes, they hit the wall of global players’ high costs, or have to adopt smaller off-the-shelf (and also proprietary) solutions that ties them to a single supplier that usually doesn’t have a partner network. In contrast, FOS-ERP are less expensive and support can be found in different ways, including individuals and small consulting firms.
This is also truth for local governments and countries in development in general, by reducing costs and technological dependency from global players. In fact, FOSS in general is an opportunity for countries in development to shift from buyers to players in the software industry.
b) Challenges:
lower costs can also mean that adopters have to deal with lower service levels, then stressing the necessity of carefully evaluating FOS-ERP options and the maturity of their supportive services. Actually, as said before, consulting certification is yet on the early stages for FOS-ERP, thus quality of service must be carefully addressed during contract negotiation.

For researchers:
a) Opportunities:
I've been contributing to ERP5 since its conception. During this time it was possible to observe, and sometimes take part, of all the process that compose an ERP solution, from conception and development, to business models, deployment, operation and maintenance, and evolution. This is a really good opportunity, since most research papers on ERP are related to deployment and operation, given that P-ERP companies don’t usually open their solution's internals for researchers. Smaller research groups can find their way in this area by getting associated to a FOS-ERP project, and contributing to specific parts of it.
b) Challenges:
If on one hand the openness of FOS-ERP may give researchers more information on their internal features and development processes, on the other hand it is harder to get information from a distributed set of partners that sometimes carry informal relationships. Social and economical aspects, like reward structures, must be taken into account to understand the dynamics of FOS-ERP, like in every FOSS, bringing more components to be analyzed.

For individuals
a) Opportunities:
FOS-ERP represent an unique opportunity for an individual to install an ERP framework and understand its internals. It is the chance of participating in a big software development project without being an employee of a big company. Also, the developer can incrementally gain knowledge of the system, and get free support from the community, without the necessary investment on the P-ERP expensive training and certification programs. In the future, these advantages can make more free-lance developers enter FOS-ERP communities, currently formed mostly by consulting companies employees.
b) Challenges:
learning the internals of a FOSS in general means to spend considerable time in understanding system architecture, design decisions, and specific features. Moreover, FOS-ERP still lack courseware in general*** to help accelerating the learning process, and many times the individual must count on Web sites, mailing lists, discussion forums, and the good will of community members to acquire deeper knowledge on the framework.

***When I originally wrote this in 2007, ERP5's OSOE Project didn't exist yet. My opinion on ERP5 can be biased, but the truth is that Nexedi agreed on this point and decided to start a web based training program to fill this gap.

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