Open Means Business

Providing modular architecture, better security and enhanced customization, open source ERP and CRM are set to grab more market share in the next few years

By KTP Radhika

Coimbatore based Trident Pneumatics is into manufacturing critical compressed air solutions. One of the largest exporters of air treatment products in India, the company was using an Indian accounting software to manage its business operations. However, streamlining business turned out to be a problem. The management wanted to automate the interlinked business processes and to get real-time and accurate management information. Trident also required better inventory management and optimized production planning and control.

The management felt that only open source solutions were capable of offering high levels of customization, and decided to use an open source alternative for ERP. It implemented OpenERP 5.0.14, an open source product from the vendor OpenERP, which solved all their problems.

Like Trident, a whole lot of companies are now entering the open world of business software. From the reliable, secure Linux operating system, to the unsurpassed LAMP platform (a platform consisting of Linux, Apache, MySQL and Perl/PHP/Python), open source has quite a lot to offer for enterprise business systems. In recent years, open source software has begun to move into the mainstream business application marketplace, and are increasingly deployed in mission critical scenarios.

According to IDC, the global software market is worth close to $300 billion, with open source growing at an average yearly growth of 22% and expected to exceed $8 billion by this year. In 2012, Gartner reported that on average, 29% of deployed code was open source. The research firm also predicts that by 2015 at least 95% of mainstream IT organizations will leverage open source solutions within mission-critical software deployments.

Specific figures for India may not be available at the moment, but experts say the industry is maturing faster. Another report from Gartner in 2012 said open source software would continue to broaden its presence and create pressure on market leaders during the next three to five years, especially when open source becomes a key element of the software quality landscape beyond the developer level. It forecast that nearly 70% new enterprise Java applications will be deployed on open source Java application servers by the end of 2017.

It all started with Linux going into data centers, comments Arun Kumar, General Manager, Red Hat India. “From analytics to business applications, interests in open source is getting high because Linux data centers have received a lot of credibility in the past 10 years. Linux data centers have grown from virtually zero to around 20% during this period. It is poised to grow from 25% to 30% in next 2- 3 years,” he says.

Open source software are widely adopted by companies for asserting control over their IT infrastructure, feels Sumit Misra, General Manager and Head – Competency Process, RS Software. “An open source model for an ERP or CRM allows companies to access the system’s code and customize it using their own IT department instead of paying extra for vendor customization services and licensing, as is typically the case with closed source programs.” RS Software started using open source tools from 2011 for its analytics and mobile application development (Android). Typically, organizations adopt the open source software stack bottom-up. That is, they start on the system infrastructure level (e.g. Linux) and then move up the stack to application infrastructure (like applications servers) and then to business applications. “Thus people who are invested in Linux have moved up in the stack since they have experienced that open source is as good or even better in certain aspects compared to the proprietary alternative. Their next option is middleware. After that core applications will be their choice,” explains Kumar.

Not just cost
Free and open source software (FOSS) holds many compelling advantages for businesses. There is a common view that price is the motivating factor for adopting open source software since it is relatively cheap. But open source is much more than that. The results of a survey on ‘Future of Open Source’ conducted by Black Duck Software, a leading open source software partner, and North Bridge Ventures this year shows that freedom from vendor lock-in and better quality software are the prominent factors in choosing open source software. Atul Saini, Founder and CEO, T3 Edutainment, a company that provides technology solutions and a range of quality educational programs, states that freedom is one of his major criteria while choosing open source. The company is using open source tools for their inventory management, project management and sales management for the past two years.

According to Rushabh Mehta, Founder, ERPnext, a cloud-based open source ERP vendor, in an open source ERP or CRM, it is up to the user company – not the vendor – to decide what is the time to upgrade.

Fine architecture is another advantage open source software offers. Open source applications are coming with zero legacy. Thus developers can build applications with latest tools. Kumar of Red Hat states, “In open source applications, the architecture is far superior since they do not have the burden of legacy to take along with. So they have a whole lot scope for innovation. Open source applications, hence, will be more modular, architected with latest framework, developed using latest best practices and much more secure. With all these features, open source developers can bring out completely new breed of applications for enterprise users.”

Secure and flexible
Bugs in open source software also tend to get fixed immediately. “Open source codes are available publicly. And open source communities globally contribute and analyze the code, making it more secure and constantly increasing the quality. So they are rich in features, excellent in design and more secure. Also, open source tools provide us with the much needed customization and agility,” says T3 Edutainment’s Saini.

Another major benefit, obviously, is customization. Open source solutions can be easily customized for diverse businesses involving no additional costs. Open source applications offer a framework which can further be customized to build an application to suit various individual requirements. So, more number of businesses are embracing the open source development technology. Mantavya Gajjar, Director, Tiny ERP, a division of OpenERP, says, “Open source solutions in the business application space have helped companies set up their online identity in an easier and cost effective manner. It is very easy to customize open source software if you are familiar with the code. You can also change work flows as per requirement.” OpenERP is a global vendor of open source ERP.

Flexibility is a major factor that attracts adoption. Mahesh K. Malani, Head (Operations), Mahesh Engineering Services, a company that supplies industrial electrical products, states that flexibility was one of the main attraction for choosing open source solution for his business. The company currently uses ERPnext for its business purposes. “Whenever there was a scenario of a considerable change in our product offering, pricing, specification, terms and demanding customer expectations requirements, open source solutions provided us all the flexibility and scalability where proprietary solutions failed,” he says.

Reduction in the total cost of ownership is indeed attracting companies to open source business applications. “ERP is a valuable tool that allows businesses to realize improved performance and better financial management. Even with its benefits, the high cost of proprietary ERP causes many executives to question their return on investment in these products. However, the costs for proprietary and open source systems vary widely and scales with the size of the business. With open source solutions, the system is free to download and there are no user licenses. No licensing fees means businesses are able to create as many user accounts as they need without worrying about the cost,” explains Gajjar.

Adoption gearing up
Obviously, all these benefits are boosting adoption of open source applications among businesses, especially in the small and medium (SME) sector. Technological innovations such as cloud computing and mobile-based solutions are driving adoption for open source business applications.

In the past few years, many open source based software have become popular in areas such as ERP, CRM, HRM, POS. Gajjar says, “Last year, we saw several clients adopting open source in the business application space on a large scale, and we saw an increase in proposal work related to open source.”

In the SME space too, open source adoption is on the rise. “In India, people are still stuck with Tally. But things are changing. The industry is slowly moving up. There are many companies now offering open source ERP services which will drive innovation in this space and drive adoption,” feels Mehta.

An open future
Despite their new-found popularity in the business application space, open source tools still have a long way to go to catch up with their proprietary counterparts. One challenge is that open source solutions may require additional development to enable them to integrate with an existing proprietary environment. Some open source solutions may never work well with established proprietary products. Another challenge is training the internal staff. States Gajjar,

“In many enterprises, the staff are traditionally trained and practiced using proprietary software programs. Introduction of new programs and software may require re-training in order to enable the crew to use open source solutions. This may be a challenge for many organizations.”
Scarcity of vendors with adequate support is also posing a challenge for the user community in business application space. Kumar feels, “ERP and CRM are business critical applications. If anything goes wrong, it will affect the entire business.” So if companies are not able to find out a proper vendor or system integrator to step up and provide adequate support, there wont be a major rise in the adoption rate. “But all these challenges are a question of time. People will see this as an opportunity and will start coming up with proper solutions, support and will monetize it in coming few years,” he visualizes.

While proprietary software laid most of the foundation for computing since the beginning, open source has proven to be just as useful and valuable as proprietary software has been. With advancements in technologies emerging everyday, open source solutions will become very powerful and continue to advance and contribute to computing and software development. They will start managing the critical needs of the enterprise community. Experts feel that in the near future many more open source tools, which can be integrated with core business applications, will emerge and will enhance the functions of core business applications. These solutions, rather than replacing the entire system, will help increase the functionalities of the existing systems and boost the value proposition of the entire business.