Is Free Open Source ERP Real
a deep insight analysis

We will not give an official explanation here about the meaning of the word ‘open source’. I believe those who know a little about IT will know its meaning. Open source software can be found in any business sectors. Almost every commercial software will have an alternative open source version, such as Microsoft Office VS OpenOffice, such as Windows VS Linux, such as Salesforce VS SugarCRM, and so on.

But many people may have just heard of it, but what does it feel like to use open source software? For example, let's talk about guns. There are some gun masters in the world. They are very smart and love guns. They have made all kinds of weird guns by themselves. But the clever guys were too lazy to write instructions for use, too lazy to write brochures, and even not willing to build an attractive package for his guns. Those guns were scattered randomly on the ground, good ones, bad ones.

If you know guns, you can pick up those guns, test them yourself, and choose the best one by yourself. Then write instructions for use, package and promote by yourself. If you don't understand guns, stop playing because it is very dangerous.

Commercial software, just like some guns that are not made by clever people, not the best performance. But its manual is complete, the packaging is superb, the technical support is 24/7, and it may also come with insurance, which makes people feel that this gun is very nice at first glance.

Of course, the above example is exaggerate, because there are some simple open source software that are really free and easy to use tools. Today we will focus on the free open source ERP.

First of all, ERP is an extremely complex software system, the difficulty and cost of its development are much higher than ordinary software systems. Therefore, most traditional ERPs have decades of history, such as SAP, Oracle, etc., and because of the high threshold, it is difficult to be replaced and surpassed. Since around 2000, due to the rapid development of computer technology, programming technology has become more and more advanced, and software developers have also increased. In the open source ERP industry, several good projects have also sprouted. At first it was Compiere, OpenBravo, and then OpenERP, they almost became the outstanding representative of open source ERP from 2000 to 2010. Among them, Compiere and OpenBravo were acquired or privatised, and then gradually ceased the open source nature. And iDempiere and Adempiere derived from Compiere continue to continue their open source life cycle.

The above is a comparison of Google Trend (evaluation by searching volume) from 2004 on the trend of OpenERP, Compiere and OpenBravo. It can be seen that the red and yellow lines have shown a downward trend due to privatization after reaching the peak, and even gradually faded out. In addition, the blue OpenERP continues to be a pure open source model and has gradually become the leader of open source ERP, and it becomes almost the only choice. Note that since 2014, OpenERP was renamed Odoo, so the blue line began to decline in 2014.

Around 2010, some new options emerged in the open source ERP field. Some of the more famous ones are ERPnext, WebERP, iDempiere, etc.

As can be seen from the figure, Odoo, which was renamed from OpenERP, is still outstanding, and the gap with other systems is getting bigger and bigger. What caused this unfavarable result?

1. ERP development is difficult, taking a long time, and having high barriers to entry.

2. ERP has complex functions, and it is difficult to integrate code and functions only by the free management of the open source community

3. The open source ERP business model is not clear. Simply saying, no good profit model can be found. Traditional ERP relies on expensive license fees and annual maintenance costs to make money. Open source ERP does the opposite, but so far, no good income stream has been found.

4. There are many factors that enterprises consider when choosing ERP, which is affected by brands, media, etc. The open source system simply lacks marketing resources.

In fact, even the dominating Odoo is experiencing the dilemma of insufficient funds. In the Odoo business model, the largest revenue is the annual fee of the partners, followed by the enterprise version sold, and the least is the subscription fee for the SaaS platform. Its SaaS platform originally is hoped to be able to be top priority of the company's revenue. Unfortunately, the lack of professional self-service in B2B SaaS proved to be difficult to sustain, and its purchase rate and renewal rate were very low.

Starting from the V9 version, Odoo has also implemented a separate model for the enterprise version and the community version. Whether it will eventually follow in the footsteps of Compiere and OpenBravo is worth looking forward to.

Finally, a comparison between Odoo and SAP and Oracle’s Google Trend is attached. There is a long way for the free open source ERP to go... (blue is Odoo...)

To check how to use Free Open Source ERP in the best way, check the next blog here.

using free open source ERP