"SAP and those guys are not serving the mid-market — they provide more functionality than customers need at a price they can't afford," she says, "but open source is meeting the needs." And open source has proven itself in many other enterprise applications, so any concerns centre around the software's fit and support system, she says.

"Open source will become more rampant," agrees The 451 Group's Schneider. "People using old SAP R3 and pre-Version 11 Oracle Financials systems in a few years will be looking at [SAP's] Netweaver and [Oracle's] Fusion [middleware platforms] and say, 'We don't want your middleware,'" he predicts. That opens the door for a serious look at open-source ERP.

SIDEBAR: Consolidation Mania

Since 2002, your ERP vendor choices have dwindled as commercial vendors went on an acquisition spree and gobbled up rivals. Consider the line-up changes that left SAP, Oracle, Infor, Microsoft and Lawson Software standing in this game of survivor:

• SAP purchased Factory Logic.
• Oracle purchased JD Edwards, PeopleSoft and Siebel Systems.
• Infor purchased Extensity, GEAC, Infinium, Lilly Software, Mapics, Marcam, Mercia Software and SSA Global; SSA had purchased Baan, Epiphany, Max International and Provia Software.
• Microsoft purchased Axapta, Great Plains Software, Navision and Solomon.
• Lawson purchased Intentia.
• QAD purchased Precision Software.
• Intuitive Manufacturing Systems purchased Relevant Business Systems and SupplyWorks.

SIDEBAR: My ERP Story

At first blush, Scott Rosa's experience parallels that of other successful open-source ERP adopters. But the path to success wasn't straight. The CTO of Prevention Partners, which manufactures and distributes posters, buttons and other health-related signage, says his company outgrew its vertical-market, Windows-based ERP system. So Rosa hired a consultant to customize the Open For Business open-source ERP software for his firm's distribution arm.

But the project management spun out of control, causing the effort to go over budget. First problem: The consultant had no experience with Open For Business, and its learning curve was steeper than expected. Second problem: Because Open For Business is very customizable, both Prevention Partners and its consultant "got caught up" in much customization, Rosa recalls. And Open For Business is based on Java, which Rosa's developers aren't experienced in, so they couldn't take over.

But Rosa didn't move back to a commercial product. Instead, he adopted the WebERP open-source software to develop a custom version for his company's manufacturing arm, which needed a quick and easily deployed ERP solution.

WebERP uses the PHP language, which his developers know, and Rosa can manage directly.

He plans on completing the Open For Business-based ERP effort as well. "I've got the code. I just need to find someone to finish it for us. I would not buy a proprietary solution," Rosa says.

Ultimately, Rosa plans to migrate one business to the other's ERP, but he hasn't decided which of the two open-source options will prevail.

SIDEBAR: Open-Source ERP's Big 3

At least five open-source ERP projects exist today, but just three of those — Compiere, Open For Business and Openbravo — have gained traction, analysts say. In order of age:

Compiere: Founded in 1999, this project has the most adoption and "has grown into a significant level of functionality", says Paul Hamerman, a Forrester Research analyst. Compiere particularly suits sales, CRM and retail uses, but for manufacturing, lacks shop floor management capabilities, says Martin Schneider, an analyst at The 451 Group.

Open For Business: Part of the Apache group of projects, the first version was released in 2005. It's best suited for online businesses, says Peter Bohnert, a principal at Transitional Data Services.

Openbravo: First released in 2006, Openbravo is designed for customization, rather than for a specific type of industry. It's Web-based, so companies with remote offices and travelling executives can provide browser-based access to simplify deployment and client management — attributes that won over pharmaceuticals supplier Galenicum's COO, Erich Buchen.

Less-established open-source ERP projects include WebERP and ERP5. Note that a few ERP applications are often considered to be open source but are not: OpenMFG, a well-regarded commercial application for manufacturers, lets licensed users access and modify the code for their own use, but not redistribute the code. Tiny ERP, a free ERP application, is nonetheless licensed and its code is not available.

By G Gruman