Why Select an Open Source ERP over Proprietary ERP?: A Focus on SMEs and Supplier’s Perspective

Why Select an Open Source ERP over Proprietary ERP?: A Focus on SMEs and Supplier’s Perspective

Nasimul Huq (Jönköping University, Sweden), Syed Mushtaq Ali Shah (Jönköping University, Sweden) and Daniela Mihailescu (Jönköping University, Sweden)
DOI: 10.4018/978-1-4666-3886-0.ch084
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This chapter introduces the key factors that motivate Small and Medium Sized Enterprises (SMEs) to select Open Source ERP (OS ERP) over the proprietary ERP. The chapter starts with the related previous research works by stating the basic concepts of OS ERP selection. The goal of this chapter is to empirically identify the most important factors that may motivate the Small and Medium Sized Enterprises (SMEs) to select this category of enterprise systems. Therefore this chapter proposes a Theoretical Model for Open Source ERP selection by SMEs and later on conducts an empirical study based on that theoretical model. The chapter tries to broaden the discussion around the important selection factors by including the perspective of the suppliers along with the perspective of OS ERP implementer SMEs.
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Open Source ERP is defined in the context of ‘Open Source’ and ‘ERP’. Literature review reveals that Open Source ERP got acceptance because may be organizations were confronted with problems while using Proprietary ERP systems or Open Source phenomenon got maturity (Johansson & Sudzina, 2008). Valkov (2008) discusses problems of traditional ERP systems and illustrate that current commercial ERP software models are too complex, hard to extend or update which leads to high costs, big development efforts, and redundant data structures. The author further argues that the integration and implementation are too complicated, sluggish, costly and unable to meet the needs of clients in most of the cases.

Johansson (2008) explains that vendors of Proprietary ERPs face various challenges, which they should tackle of if they want to remain in business market in upcoming times. The authors illustrate that the question, whether or not Open Source software can serve as a useful input to manage future challenges engender by current proprietary ERP systems. Kim and Boldyreff (2005) explain that Open Source is still in its infancy but the Open Source Software community has started to move into ERP sector. The authors further discuss that because of the complexity associated with large corporations of their business processes, Open Source ERP might never be suitable for them, while SMEs are more suitable candidates for it as they can more easily adapt themselves to ever changing business environments.

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