Straight off the bat, the term enterprise resource planning (ERP) seems like a complicated domain, only to be meddled with by people actually running companies. Knowing how different aspects of an ERP program work can be of considerable value to your future employers. If you know how to work some of the open-source ERPs and can customize them, even better.
Also, it is important to understand what such suites have to offer, and how they can be used by you, rather than be distracted by the connotations of the label ERP. The millions of people who use Adobe Photoshop for occasionally cropping images are a testament how little the connotations of a program matter.
An Enterprise Resource Planning system is a software (and maybe even hardware) solution that facilitates the sharing and processing of an organization’s data. It can significantly help mesh the different resources at the company’s disposal, and make managing the different functions of the company better.
Some of the processes that ERPs can handle are:
- Human Resources
- Material Requirements Planning
- Sales Order Entry
- Purchase Order Processing
- Supply Chain Management
- Cash Management
- Warehouse Management
- Bills of Material
- Capacity Requirements Planning
ERP software stands to change the business process for the better, making it more efficient. Furthermore, by providing better insights into an enterprise’s functioning, it can expose further areas for optimization, in both cost and time. By opting for open source software, there can be further savings in cost.
For a program to be considered as ERP software, it needs to cater to as many of the enterprise’s needs as possible. Bills, costs, inventory, sales, attendance... the list is endless, and data streams in constantly. It is hard to imagine now, just how these tasks were accomplished before computers came on the scene!
These different streams of data have typical associations to particular resources of an organization. Depending on the software solution used, an ERP can help an organization in managing sales, marketing, billing and inventory management. The best thing though is that the environment is integrated, and an overview of all the enterprises resources can easily be obtained.
Integration is what ERPs are all about. Software for accomplishing the individual functions are always there, but the reason ERPs are preferred is mainly because they offer an integrated solution. Besides the fact that ERPs offer an integrated solution for an organization’s many domains of functionality, they have little identity of their own.
The main aim of an ERP is to consolidate all the data, and services into one integrated workflow.
Anyone with even a cursory experience with the internet will realize that hyperlinks are perhaps the coolest things around. The way they allow for cross-linking of information is something for which is hard to find a parallel. ERP software in a similar manner allows for the cross connection of data which belongs in completely different streams, and allows them to be compared, compounded and manipulated. It then becomes quite easy to see the relationships between the different organizational resources.
While the more data collected, the better, with increasing amounts of data there is increasing need for better ways to utilize and manipulate this data, and that is something that ERP programs provide. By making it easier to record and utilize this data, they also enable and encourage the collection of more data, and from more diverse aspects of an enterprise’s functioning.
An important thing to note is that in today’s connected internet-driven world, this data is essentially available in real-time, the benefits of which are obvious. Real-time data means real-time control, where negative trends can be immediately recognized, quashed, and positive trends can similarly be analyzed, attributed and improved upon.
Open Source ERP
Before open source ERPs began to appear, companies could either purchase / rent ERP solutions for high prices, or they could implement their own solution, which took time and money, and itself needed to be maintained. Open source ERPs provide a perfect middle ground.
Open source software is touted with its many benefits in almost every field of computing, but where it can really shine is when people can actually utilize the code. For most people who are not developers, software being open source does not help much. The code is out there but there is little chance you will ever be able to use it, all you can comfort yourself with is the fact that it being open source means development on the software should always continue in some form.
Enterprises can surely benefit from the community support and a wide developer base, however companies can gain even further benefit as they have the capacity to hire developers to customize and optimize the software to their exact needs. They can develop additional modules in case some functionality is missing, or remove functionality to improve performance and ease of use.
That is not all, since the software is open-source they don’t have to wait for the software company (or in this case community) to fix bugs.
Another possible advantage with open-source software solutions is that you could possibly integrate the best functions of different open source solutions into a single package (although with the different architectures of such software it is difficult to imagine this case). For companies that plan to shift from a proprietary solution to an open source one, the company can chose to mimic the old interface, to make it easier to transition.
In the end, for companies that have the capacity, going open source can not only save money, but also give the company a more powerful and integrated organizational framework catered directly to its needs. No longer will they have to pay huge sums of money for software that might not end up meeting their needs, or purchasing software that the company might abandon later on. With the source code in their hands, they can lead the development even if no one else is there.
The open source disadvantage
While many people appreciate the power of open source, when it comes right down to it, many companies prefer to use proprietary software that comes with a support contract (although some open source ERPs are also offered with support or even commercial licenses). The open source aspect is endearing, but if the organization lacks in-house IT skills, the flexibility, and customizability of the software is lost to them.
When you have your own customized and home-developed solution for ERP, you are bound to find that you are dependent on the original developers for continued upgrades. With changes in the development team due to any reason, there could be significant problems – to alleviate these, make sure throughout development that the code is well documented and commented.
Open Source ERP Solutions
There is no shortage of open source ERPs today, which just goes on to show how diverse the open source community really is. While commercial ERPs can cost the company millions to implement, open source solutions are essentially free!
Open taps is a flexible ERP software package built on open source technologies such as Apache Geronimo, Tomcat, and OFBiz, and can run on a variety of open source and commercial databases. The software itself is available in a modified version of the GPL.
It is built on a Service Oriented Architecture, which means that the functionality of the software is provided by loosely coupled services. In such architecture, each service provides functionality for one task, and by combining these services in the required pattern, you can accomplish complicated tasks. This also makes the system very flexible.
Compiere is a professional ERM solution that has a commercial backing. Unlike opentaps, it espouses a Model driven architecture, in which the model of the data is used to generate the procedures that define a process. This means that as the company’s requirements change, and the more, and different kinds of information need to be collected, the structure of the database can be changed with ease. Compiere’s use of the MVC paradigm, allows this information to be presented using multiple views, which can be modified to accommodate each companies special needs.
The company behind Compiere also provides professional versions which come at a subscription price, and support more features. While long criticized for only running on propriety Oracle database servers, it is well on its way to develop support for open source datable servers such as MySQL, PostgreSQL etc.
Based on the Zope server this ERP5 is another open source ERP under the GPL. Similar to Compiere it too is available in a paid version as ERP5 Express which comes a SaaS.
The 5 in ERP5 is not based on a version no, but the five principles of Resource, Node, Path, Movement, Item which are employed in ERP5. Where resources are as their name suggests, the resources available to the company such as products in an inventory, machines in factories etc. Nodes represent points which deal in resources, such as bank accounts which deal in the resource of money, or a manufacturing plant which deals in raw resources and finished resourced. Paths define the procedure of exchanging resources between nodes. Movements represent the actual utilization of paths to move resources between nodes. Finally, Items are instances of resources, such as a printing press is an item that represents a resource.
ERP5 utilizes these concepts in creating “business templates” which define the core functionality. It has been awarded the Best ERP Implementation by “Decision Informatique Professional Magazine”
Open source is creeping into the most unusual places, and it is best that you take advantage of this. The open source community is teeming with brilliant products that can help optimize your organization to the best and fullest, and open source ERPs represent a brilliant consolidation of some of the best open source technologies out there. You need not look at open source ERPs as an endpoint for your needs, but more as starting points upon which you can build your organization’s infrastructure. This might seem like a lot of unnecessary work, when so many commercial implementations exist, however once you are done with the effort, you will have a much more streamlined and optimized solution that is best suited for your needs.