Free and Open Source Enterprise Resource Planning: Systems and Strategies
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Free and Open Source Enterprise Resource Planning: Systems and Strategies

Rogerio Atem de Carvalho (Instituto Federal Fluminense, Brazil) and Björn Johansson (Lund University, Sweden)
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Release Date: December, 2011|Copyright: © 2012 |Pages: 241
ISBN13: 9781613504864|ISBN10: 1613504861|EISBN13: 9781613504871|DOI: 10.4018/978-1-61350-486-4

Description

Free/Open Source Enterprise Resource Planning systems (FOS-ERP) are gaining popularity and acceptance due to two main factors: their lack of licensing fees and customizability. Given this, organizations are able to easily adopt and manipulate these systems to meet their individual needs.

Free and Open Source Enterprise Resource Planning: Systems and Strategies unites research on FOS-ERP, comparing differences with proprietary Enterprise Resource Planning products, and demonstrating key research factors. It includes cases demonstrating how small enterprises have benefited from FOS-ERP in Spain and in Belgium, along with difficulties encountered and solutions developed. This essential reference addresses key issues such as security and legal risks, as well as challenges, opportunities, and barriers to adoption.

Topics Covered

The many academic areas covered in this publication include, but are not limited to:

  • Barriers to the Adoption of Open Source ERP
  • Belgian SMEs and Open Source ERP
  • Business Modeling and ERP
  • FOS-ERP in Brazil
  • Legal Issues with FOS-ERP
  • Open Source as a Strategic Asset
  • Open Source ERP vs. Proprietary ERP
  • Risks and Opportunities in FOS-ERP Systems
  • Security Management for Open Source ERP
  • Tailoring FOS-ERP Packages

Reviews and Testimonials

This volume brings together an outstanding selection of papers describing FOS-ERP, comparing differences with proprietorial ERP products, and demonstrating key research factors. It includes cases demonstrating how small enterprises have benefited from FOS-ERP in Spain and in Belgium, along with difficulties encountered and solutions developed. It addresses key issues such as security and legal risks. [...] This edited edition should serve as an excellent resource to researchers in the field of enterprise information systems.

– Rogerio Atem de Carvalho, Instituto Federal Fluminense, Brazil and Björn Johansson, Lund University, Sweden

Table of Contents and List of Contributors

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Preface

INTRODUCTION

Enterprise information systems are designed to integrate all of an organization’s information system computing.  They increase the speed with which information flows through a company. They can lead to reduced inventories, shortened cycle times, lower costs, and improved supply chain management practices.  Enterprise information systems:

  • create value through integrating networks across a firm or firms (Metcalfe’s Law),
  • implement of best practices for each business process,
  • standardize processes within organizations,
  • provide one-source data resulting in less confusion and error, and
  • can give on-line access to information. 

All of these features facilitate better organizational planning, communication, and collaboration.  

The enterprise system market has seen a great deal of evolution in the 21st Century.  We have seen a great deal of change in this market, as Oracle has acquired PeopleSoft and J.D. Edwards, and BAAN has been acquired by another software firm.  SAP and Oracle continue to dominate the high end of the lucrative enterprise system market, joined by Microsoft.  While SAP claims in its television ads that it also serves small businesses, Microsoft has made great inroads in the enterprise system market by offering its products to medium enterprises that are more affordable than the prices needed for SAP or Oracle.

OPEN SOURCE SOFTWARE


OSS has become a viable means of software creation.  Sun Microsystems long viewed OSS as a means to develop long-range market strength (Babcock, 2009), although this effort was insufficient to avoid short-term takeover by Oracle.  Other firms, however, have been able to make OSS work, to include Dell computers (Conry-Murray, 2009).

Open source technology makes possible cooperative development of information technology tools, in turn making it possible to use small bits of functionality developed by others and tested by the market rather than having to develop everything yourself.  With OSS, developers and users are free to utilize and modify OSS by accessing open code. Web 2.0 provides a cooperative development environment allowing widespread participation.  Products such as the Web server Apache, the database query engine MySQL, and the cash management system GNU Cash have been highly successful (Jaisingh et al., 2008-9).  Hossain and Zhu (2009) attribute open source software development as being faster and more responsive, leading to more robust and secure software.  Open source products have been developed for financial applications (Kane and Masters, 2009), marketing applications (Fleisher, 2008), and many other fields.

While products in the Free Open Source Enterprise Resource Planning (FOS-ERP) domain are developed by proprietary firms, there is a related open source ERP business model for distribution.

Open Source ERP

There is a demand for less expensive systems by many organizations.  Hauge et al. (2006) cited evidence that few SMEs in Eastern Europe have implemented ERP systems, due to lack of needed financial and human resources.  Recently, ERP vendors have realized that open source systems (OSS) have robust capabilities, both as a source of content for vendors as well as a threat to the proprietary enterprise system market share from competitors based on OSS development or delivery (Grewal et al., 2006).  Open source ERP systems are used by firms such as Home Depot, Toyota, and Fidelity (Weber, 2005). Web delivery has been selected as a means to distribute a number of interesting enterprise system software, led by Compiere and Nexedi from France.  Compiere (and many similar products) are open in the sense that they are downloadable for free.  The business model is based on collecting fees for service and support.

Olsen and Saetre (2007) reported that in-house development of ERP was feasible and cost effective due to the availability of modern development tools.  Open source ERP products can provide similar flexibility, and we would expect that to be at even lower cost.  Three potential benefits in using OSS ERPs are increased adaptability, decreased reliance on a single supplier, and reduced costs.

ERP Support to Small Organizations


Open source ERP systems have appeared as a viable alternative for small businesses.  The business driver has been lower costs, but the ability to customize has also been important.  Barriers to successful implementation include database migration, synchronization of software to company workflow, developing user interfaces and user support, and integrating third-party software.   This volume provides valuable insights into the potential and risks involved in FOS-ERP.

VOLUME CONTENTS


The volume is opened by Carvalho and Johansson with a discussion of what is different about Free/Open Source (FOS-ERP) and Proprietary ERP systems.  They emphasize the cost benefits of FOS-ERP, comparing that with what they offer their adopters.  Balancing this cost advantage are issues in specific software business model evaluation, software selection, customization, and maintenance.  Challenges and opportunities are discussed.  There are different ways in which a small organization can adopt an ERP. Offering a product in the FOS-ERP market is relatively easy, but that creates a dynamic market with easy entry for new competitors.  Furthermore, lower cost comes with lower service levels.  Carvalho and Johansson cite new developments in the form of improved training materials in the FOS-ERP industry, as well as a changing market where Proprietary ERP vendors have responded by offering cheaper versions of their software in software-as-a-service mode.  The need for certification and consulting processes to match the quality of Proprietary ERP vendor networks was raised.  This chapter provides a strong basis to describe the field of FOS-ERP.

Monsores and Tanaka
survey the primary FOS-ERP systems available on the market, focusing on Brazil.  A survey of SourceForge.net was the basis for this research.  They draw upon their prior research to establish that FOS-ERP projects are maturing, and that there has been a significant increase in such projects in 2010 over 2009.  Monsores and Tanaka also reviewed seven FOS-ERP projects (Adempiere, Openbravo, PostBooks, WebERP, Compiere, OFBiz, and ERP5) based on SourceForge.net as well as information gathered from vendor Web sites.  Each system was qualitatively evaluated, concluding with report of market presence in Brazil.    Their analysis concludes that FOS-ERP has a very promising market in that rapidly growing economy.  

Huq, Shah and Mihailescu
evaluate key factors motivating small organizations to adopt FOS-ERP.  Reported reasons for ERP system selection were reviewed, along with critical success factors.  Huq et al. then develop a theoretical framework based upon results from a purposive sample of nine international small business ERP installations and one organization classified as of medium size.  The sample was generated from a list of FOS-ERP users, querying them concerning motivations for their selection decision.  Ten consultants and vendors were also sampled on the same questions.  Differences in rankings were analyzed, along with expert judgment (obtained from one of the editors of this volume).  The article is a source of factors that were found to be most important in FOS-ERP adoption by small businesses.

Heredero, Berzosa and Seco
give a case description of FOS-ERP implementation for a Spanish financial company.  The processes of selection and implementation were described with the intent of demonstrating decision making processes, inferring critical success factors, and identifying relative advantages obtained from FOS-ERP.  The characteristics of successful implementation project leadership were inferred based upon the experience.  A specific technical factor found to be critical to success was the importance of software testers.

Deodhar, Saxena, Gupta and Ruohonen
analyze business models of open source ERP, emphasizing the importance of software licensing and partner networks.  Business models are defined in terms of product strategy, revenue logic, distribution model, and delivery of maintenance and service.  Concepts are demonstrated through a case of implementation of an OpenBravo ERP system in Spain. The approach these authors give emphasizes viewing FOS-ERP benefits and risks from both vendor and user perspectives.

Tambo and Koch
review the expenses involved in proprietorial ERP systems.  FOS-ERP offers a way to obtain needed computing system support at lower costs.  But barriers to FOS-ERP adoption exist.  These barriers are reviewed through desk study, and means of managing them outlined.  The potential of software-as-a-service and other rapid developments in the ERP market give FOS-ERP relative advantages over proprietary ERP.  But while there are cost advantages, risks are more uncertain.  Tambo and Koch emphasize the need to view FOS-ERP adoption as risk taking, balancing opportunities with threats.

De Silva
examine legal risks of FOS-ERP with respect to England and Wales.  The developing nature of this legal domain was recognized.  The need for licensing was argued, and copyright restrictions listed.  Twenty open source licensing systems were measured by popularity.  Risks included enforceability and the distinction between copyright and contract.  Key legal challenges to date were reviewed.

Wölfel and Smets
discuss the role of consulting support available to aid small and medium enterprises (SMEs) in selecting FOS-ERP.  Smets is associated with Nexedi, the provider of ERP5, and thus this chapter gives valuable advice concerning tailoring FOS-ERP.   The research questions addressed are: (1) which tailoring options are most suitable for automation in general, and specifically for ERP5; and (2) How can ERP5 tailoring options be automated?   A design science paradigm consisting of expert interviews, desk research, and an example was used to answer these questions.  The development of ERP5 was reviewed, with a presentation of tailoring options.  The problem of automatic system configuration (tailoring) was discussed from the perspectives of knowledge engineering and artificial intelligence.  The ERP5 AI Toolkit was described.  Wölfel and Smets show how ERP5 category configuration can be automated.  Prototypes and initial validations were found to be promising, yielding decision trees that worked well.  Further research needed for more complex configurations was outlined.

Stefanou
provides a chapter elaborating on opportunities and risks for smaller organizations in adopting FOS-ERP.  Because they have revolutionized the way in which business software is developed and distributed, Web 2.0, cloud computing, and open source software are reviewed to frame these opportunities and risks.  The primary risks considered are security and hidden costs.  Stefanou offers guidelines to eliminate such risks.  He also reviews small organization characteristics favorable to either FOS-ERP or Proprietary ERP.  Given the importance of risk management in today’s world, this chapter is a very good source for potential adopters in their initial evaluation of FOS-ERP.

Ven and Van Nuffel
describe adoption of an open source ERP in Belgium.  Barriers to adoption identified from prior research included lack of functionality and lack of support.  Literature reporting ERP selection criteria of SMEs was reviewed, as were specific criteria used by Belgian SMEs.  Ven and Van Nuffel went to SourceForge.net and Freshmeat.net to obtain information about open source ERP adoption in Belgium.  Functionality of 36 open source ERP products was compared.  Ven and Van Nuffel then selected ten of these products (those demonstrating the most comprehensive functionality) and analyzed the network of consultant support available for each, categorized by areas of Belgium, its neighbors, the European Union, and the world.  The study concluded that lack of open source ERP functionality is not an issue, but that lack of support continues to be a problem.

Stojanovic, Acimovic-Raspopovic and Bostjancic Rakas
focused on the issue of security in FOS-ERP.  FOS-ERP system security can be vulnerable to external threats. The state of current technology was reviewed, along with a listing of security issues.  Means to secure network infrastructure are given.  These authors identified properly defined service level agreements as a starting point to assure required security, and proposed a security management architecture to fit within a service management quality system.  This chapter gives excellent advice in designing a more secure FOS-ERP.

THE POTENTIAL FOR OSS ERP
As demonstrated by the chapters in this volume, many ERP products have been developed to serve smaller organizations (Business, non-profit, government).  The open source approach can be applied to any type of product development.  However, since the code is freely distributed, the business model is complicated.  Revenues can be generated through a variety of strategies, to include sale of complementary products and services.  

This volume brings together an outstanding selection of papers describing FOS-ERP, comparing differences with proprietorial ERP products, and demonstrating key research factors.  It includes cases demonstrating how small enterprises have benefited from FOS-ERP in Spain and in Belgium, along with difficulties encountered and solutions developed.  It addresses key issues such as security and legal risks.  There are excellent discussions of challenges and opportunities, along with barriers to adoption.  This edited edition should serve as an excellent resource to researchers in the field of enterprise information systems.

REFERENCES

1.    Babcock, C. (2009) Open source will pay dividends in the cloud, informationweek.com, 30 March, p. 18.
2.    Conry-Murray, A. (2009) Can enterprise social networking pay off? Informationweek.com, 23 March, pp. 23-29.
3.    Fleisher, C.S. (2008)  Using open source data in developing competitive and marketing intelligence, European Journal of Marketing Vol. 42, Nos. 7/8, pp. 852-866.
4.    Grewal, R., Lilien, G.L. and Mallapragada, G. (2006) Location, location, location: How network embeddedness affects project success in open source systems, Management Science Vol. 52, No. 7, pp. 1043-1056.
5.    Hauge, J.B., Imtiaz, A., Auerbach M., Eschenbächer, J. and Seifert, M. (2006) Enhancements in performance through virtual collaboration among SMEs: Potentials, needs, and research challenges, IFIP International Federation for Information Processing, Vol. 224, Network-Centric Collaboration and Supporting Frameworks, eds. Camarinha-Matos, L., Afsarmanesh, H., Ollus, M. (Boston: Springer) pp. 255-264.
6.    Hossain, L. and Zhu, D. (2009) Social networks and coordination performance of distributed software development teams, Journal of High Technology Management Research Vol. 20, pp. 52-61.
7.    Jaisingh, J., See-To, E.W.K. and Tam, K.Y. (2008/9)  The impact of open source software on the strategic choices of firms developing proprietary software, Journal of Management Information Systems Vol. 25, No. 3, pp. 241-275.
8.    Kane, D. and Masters, J.D. (2009) Open source finance, Journal of Investing Vol. 18, No. 1, pp. 92-96.
9.    Olsen, K.A. and Saetre, P. (2007) ERP for SMEs – Is proprietary software an alternative? Business Process Management Journal Vol. 13, No. 3, pp. 379-389.
10.    Weber, S. (2005) The Success of Open Source. Cambridge, MA: Harvard University Press.

Author(s)/Editor(s) Biography

Rogerio Atem de Carvalho a B.Sc. in Computer Science and M.Sc. and D.Sc. in Industrial Engineering. He is a teacher and researcher at the Instituto Federal Fluminense (Federal Fluminense Institute) - IFF, Campos, Brazil, where he coordinates Nucleo de Pesquisa em Sistemas de Informaçao (NSI - Information Systems Research Group), which has been producing innovative software in partnership with government and private sectors since 2002. He is also a teacher and researcher with the Production Engineering Graduation programs at Universidade Federal Fluminense and Universidade Estadual Fluminense. His research on FOS-ERP was awarded by IFIP in 2006 and jointly by IFIP and IEEE in 2007. He is a consultant for government and private sectors and authored many book chapters and research papers on ERP, ECM, Software Engineering, Project Management, and Decision Support Systems.
Björn Johansson holds a PhD and a Licentiate degree in Information Systems Development from the Department of Management & Engineering at Linköping University and a Bachelor degree in Business Informatics from Jönköping International Business School. He defended his doctoral thesis “Deciding on Sourcing Option for Hosting of Software Applications in Organisations” in 2007. Currently he works as an Associate Senior Lecturer at the Department of Informatics at School of Economics and Management, Lund University. Before that he had a Post Doc position for three years at Center for Applied ICT at Copenhagen Business School, within the 3gERP project (http://www.3gERP.org). He is a member of the IFIP Working Group on Diffusion, Adoption and Implementation of Information and Communication Technologies (IFIP TC8 WG8.6), the IFIP Working Group on Enterprise Information Systems (IFIP TC8 WG8.9) and the research networks: VITS Work practice development, IT usage, Coordination and Cooperation and KiO Knowledge in Organizations.

Indices