ORGANIZATIONAL TOOLS IN THE WEB: ERP OPEN SOURCE

ORGANIZATIONAL TOOLS IN THE WEB: ERP OPEN SOURCE

Carlos J. Costa Adetti/ISCTE, DCTI - ISCTE

Lisboa, Portugal

Manuela Aparicio ITML

Lisboa, Portugal

ABSTRACT

ERP (Enterprise Resource Planning) open source systems appeared as opportunities. For example, to organizations that cannot support the cost of large ERP systems, open source may be a possible solution. Nevertheless, those systems have limitations. Those systems may not be as free as their developers claim. Furthermore, as developers do not receive a fee for the production of the software, those solutions are not so well built. In this paper, we intend to answer three questions. First, we want to know the main needs in terms of software systems in organizations. We also want to know in what extent open source ERP may become one competitive solution for IT Consultant, Software Distributor, software producer or information systems clients'. Finally, what extend current solutions presented by the market fulfils client’s needs.

KEYWORDS

ERP, open source, organizational systems, web applications.

1. INTRODUCTION

Enterprise Resource Planning (ERP) corresponds to type of information system composed of configurable integrate software modules. This kind of systems is configurable for an efficient management of all organizational resources. With a common database, it is possible to obtain the integration of information and processes in all organizational areas.

ERP play as main role an accounting information system, either in its financial either in its operational perspective. Nevertheless, ERP plays an important role in document production and delivery. In fact, invoices, bill of materials, budgets, receipts or contracts corresponds to important documents produced and partially supported by ERP systems. On the other hand, ERP are becoming important web applications, being integrated with other organizational systems.

The benefits of ERP adoption are certainly numerous, including, for example, cost reductions, productivity improvement, quality improvement, customer service improvement, better resource management, improved decision-making and planning, and organizational empowerment (Laukkanen et al., 2005)

The major advantage of these systems is that they provide a common integrated software platform for business processes. These systems have two important features: firstly, they facilitate a causal connection between a visual model of business processes and the software implementation of those processes, and secondly they ensure a level of integration, data integrity (Klaus et al., 2000).

Any ERP system pushes a company toward full process integration and solves the fragmentation of information. However, the tight process integration involves operational issues that must be carefully managed (Park and Kusiak, 2005). On the other hand, those systems have important impacts (Hedman and Borel, 202)] and bring also complications to organizations (Davidson, 2002). Although all discussions about

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productivity impacts (Hitt et al., 2002) and fitness to specific social and economical context (Rajapakse and Seddon, 2005), ERP have important benefits and are not only important, but also fundamental tool for the management of a modern organization (Shang and Seddon, 2000).

We intent to answer two questions: 1) What are the main needs in terms of software systems in organizations? 2) In what extent open source ERP may become one competitive solution for IT Consultant, software

distributor, software producer or information systems clients'? 3) In what extent actual solutions presented by the market fulfils clients needs? In order to answer the second question, it was performed a mix of stakeholder analysis and SWOT

analysis approach. In order to answer the third question, it was performed a documental research based in available information, or in Internet either in digital and print supports.

Those are the questions that we intend to discuss in this article. Many other software systems could be subject of study. But our emphasis was in those systems that could be accessed in a Web interface. We also analysed possible links with other systems through Internet technologies, like web services.

2. FEATURES OF ERP SOFTWARE

As a commercial product, ERP software is offered by a range of vendors that specialized in this segment of the software market. The main ERP vendors are SAP, Baan and Oracle (Kalus et al. 2000, Parr and Shanks, 2000). ERP software is highly configurable to accommodate the diverse needs of users across most sectors of the economy (Kalus et al. 2000).

Traditionally when most people referred to the "core" ERP applications or "modules," they mean the back-office capabilities to manage human resources, accounting and finance, manufacturing, and project-management functions. However, major ERP suites, like SAP, Oracle and Bann, provide much more, including modules for sales force automation, business intelligence, customer relationship management, and supply chain management (Parr and Shanks, 2000).

ERP tends to integrate more and more features in order to fulfill informational needs of an organization. The ERP market is entering another major technology transition phase. Service Oriented Architectures

(SOA) may have the same disruptive effect that other technologies have had on the market, such as the emergence of client-server systems had in the 1990's (Keilly, 2005).

SAP AG is the leading provider of enterprise software solutions that integrate the processes within and among enterprises and business communities and is the third-largest software company in the world. SAP was the creator of Enterprise Resource Planning (ERP) in which established their reputation as a technology leader. Founded in Walldorf, Germany in 1972 by five former IBM systems engineers, SAP now employs more than 23,700 people in more than 50 countries and has over 13,500 customers in 120 countries.

Companies of all sizes, including 80% of the Fortune 500, currently use SAP software. SAP customers also include dot-com and start up companies around the globe. 39% of SAP's customers are companies with less than 200 million in annual revenue. Nearly 90% of SAP's first 100 customers are still customers some 20 years later. They have added e-business functionality to increase their competitiveness and efficiency.

Since their formation in 1981, Sage has grown rapidly to become the world-leading supplier of business management software and related services to SME (small and medium sized enterprises).

In 1999, the top five vendors (J.D. Edwards, Baan, Oracle, PeopleSoft, and SAP) in the ERP market accounted for 59% of the industry’s revenue. AMR Research expects the top five vendors in 2005 (SAP, Oracle, Sage Group, Microsoft, and SSA Global) to account for 72% of ERP vendors’ total revenue (Keilly, 2005).

3. OPEN SOURCE

Software Open Source is software distributed by an Open Source License that makes the source code available under specific terms, allowing modification and redistribution without having to pay the original author. Such licenses may have additional restrictions such as a requirement to preserve the name of the authors and the copyright statement within the code (Wikipedia, 2006)

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There are different types of open source licenses, the most popular licenses are (Mockus et al., 2002, Kavanagh, 2004): GPL (Gnu General Public License), LGPL (Lesser General Public Licence), MIT License, MPL (Mozilla Public License) and Apache.

Theses can be categorized from most permissive to the most restrictive as follows: BSD, MIT, and Apache – these licenses are all permissive allowing free distribution, modifying, and

license change; from economic viewpoint, also public domain software (software with no copyright) falls into this category. The MIT license allows adopters of the technology to customize, use and even sell it as desired with no obligations other than a release of liability and a copyright acknowledgment for the original source.

LGPL is a non-reciprocal version of the GPL, allowing free distribution, modifying and license change if bundled as a whole into new work; derivative works must be under LGPL or GPL (license is persistent)

GNU GPL allows free distribution and modifying but all bundled and derivative works must be under GNU GPL (license is persistent and viral)

Commercial allows the use of software only in specific circumstances and hence these may be called all restrictive licenses”

Open source has become an integral part of the technology infrastructure that supports ERP systems. The ERP vendors are assumption open source technologies, especially at the platform level (Mitchell, 2005) Vendors such Oracle "[Linux] has eclipsed Solaris as the second-most-preferred platform for the Oracle ERP applications right behind Windows” (Mitchell, 2005).

4. USER NEEDS

In order to analyse the user needs, there were made 60 interviews to top managers and CIO of SME from Lisbon and Tagus Valley. The interviews were conducted by the same person and there were made two open questions (2 and 4) in order to cover several aspects of the enterprise information system. There were also made two closed questions (1 and 3), the possible answers were based in the organizational theory, according to the organizational functions (e.g. Stoner and Freedman, 1995). The asked questions were the following:

1. In what areas started the computerization of the enterprise? 2. What tools and functionalities were used when the enterprise were subject of computerization? 3. In what areas the enterprise is today computerized? 4. What tools and functionalities are being used today in the enterprise?

Question 1 and 3 have as possible answer: 1) Selling/Invoice, 2) Marketing, 3) Stock management, 4) Finance, 5) Production, 6) Human resource, 7) Client management, 8) Global management, 9) Operational management and 10) Other. Respondents could answer several areas. The results of answers to those questions are presented in table 1.

Table 1. Areas of computerization

Starting Today Selling/Invoice 43 72% 56 93% Marketing 2 3% 37 62% Stock management 32 53% 41 68% Finance 27 45% 42 70% Production 12 20% 20 33% Human resource 15 25% 34 57% Client management 29 48% 47 78% global management 4 7% 24 40% operational management 5 8% 14 23% others 14 23% 20 33%

Question 2 and 4 are open questions. Data was subject to content analysis. By categorizing we obtained

the results presented in the following table.


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Table 2 Tools and functionalities

Starting Today ERP 13 28 Web 2 31 Word 6 1

In table 1, it is possible to see that some organizational areas have a strong implementation of information

technologies, such as selling, stock management, finance and client management. The table 2 shows that today there is a growing usage of ERP and Web.

5. OPPORTUNITIES AND THREATS FOR OPEN SOURCE ERP SOFTWARE

The market of the ERP is evolving (Kumar, 2000, Hanseth et al, 2002). Faced with the emergence of solutions for the SME, several Open Source solutions appeared on the market.

Open source ERP applications are starting to get attention. Applications such as Compiere or ERP5 compete directly with commercial ERP systems. Initially targeting small and mid size companies, the two vendors represent a renegade force in the open source ERP environment that could eventually shift power away from the large ERP software vendors (Mitchel, 2005).

The currently ERP software exists in three different forms: generic, pre-configured, and installed (Klaus et al, 2000)

In its most comprehensive form, the software is generic, targets a range of industries, and must be configured before it can be used.

Pre-configured templates have been derived from the comprehensive software. These templates are tailored towards specific economy sectors (e.g., manufacturing, retail) or companies of a certain size, i.e. SME.

For most users, ERP-software presents itself as the operational installation after the generic or pre-configured package has been individualized according to the particular requirements. Some differences between Open Source and Commercial ERP Systems are presented in the following table.

Table 3. Open source vs. Commercial software. Comparison

Open Source Commercial Price of software Free Pay Source Code Public Protected Development Small Companies, Volunteers. Commercial Companies

Financial Support Donations, Support, Formation or special modifications in the software Software sells, Implementation, Formation

Guaranties No guaranties Support and Development continuity

Implementation Could be implemented by the client with no extra costs or pay support by the developers / consultants.

Many consultants specialized in every kind of ERP solutions for different economy sectors. Some small ERP software packages are selling with no technical intervention.

Management No management granted. Everyone has access to Source Code and could develop the software.

The ERP software company’s and Consultants

The adoption of open source presents several advantages and disadvantages, according to the

stakeholders’ perspective.

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Table 4. Open source opportunities and Threats

IS Client SW Producer SW Distributor IT Consultant Opportunities – It’s possible to continuous

development by the client – Free – Public Source Code – Possibility of depending not

from just one (or small number) of technology suppliers.

- Possibility of using open source versions in marketing strategy- Possibility of using open source versions in development strategies

- More complex technology, corresponding to entry barrier

-

Threats – Many disperse solutions – Less expensive commercial

ERP software – No guaranties supplied by

SW producers – Dependency from technical

workers

- Possibility of loosing control over the software

Distributors whose business is supported in commissions based in licences had to change their business.

Widely used technology

Other stakeholders may be considered. In fact, at government level, the option for open source or

commercial software is not neutral. The use of open source has also advantages in the perspective of local and national development. It has impact at the budgetary level (taxes and government expenses) or import-export equilibrium and even GNP growth rate.

The use of open source technologies is especially advantageous to universities, which may use technologies without paying and producing software that could enrich communities in which they are embedded

6. OPEN SOURCE ERP SOLUTIONS

Sourceforge has 151 projects classified as ERP. Nowadays, in the Internet we could find a variety of ERP Open Source software packages, some of then are complex enough for using in a variety of business industries. The possibility of using those systems in the Internet (or in a Intranet) is usual.

The most famous Open Source ERP software are the project Compiere and ERP5. Compiere, initial with Oracle database, but, actually uses a PostgreSQL, in a totally free and Open Source platform. Compiere certainly is most complete solution.

Nexedi develops ERP5, under the GPL Free Software license. ERP5 is written entirely in Python and leverages the Zope Enterprise Objects framework to provide high performance and availability on clusters of inexpensive PCs.

Compiere is addressed more to the finance and distribution (a module directed manufacturing should however be born). ERP5 is addressed to manufacturing industry, with a real capacity to manage complex nomenclatures of products.

The technological bases are also extremely different. Compiere is developed as Java, with J2EE Open JBoss Source and a relational database like Oracle, DB2 or even PostgresSQL. ERP5 is developed in Python, and Open Source Zope.

WebERP contains full accounting features, including general ledger, accounts payable, and accounts receivable books, as well as role-based security and a highly customisable Web-based front end. Oriented toward manufacturing-style business processes, it includes support for order entry and inventory management. As opposed to Compiere, it has no modules for customer management, HR, or similar resources. Gold, silver, bronze, and translation support are available from a number of companies around the globe.


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Table 5. Some Open Source ERP solutions based in Deblock (2004)]

Name Origin Licence Technology Functionalities

Compiere http://www.compiere.org Public Mozilla Licence

J2EE, JBoss

Sales Management, Catalogues Management, the tariffs, management of the purchases, stock, logistics, countable and financial management

ERP5 http://www.erp5.org GPL Python, Zope Management of production, financial management, CRM, logistic chain, E-business, groupware

Fisterra http://www.finisterra.org GPL

GNOME2 development platform, PostgreSQL

Management of warehouses, stocks, treasury, invoicing.

OFBiz (Open For Business) http://www.ofbiz.org MIT XML, J2EE

Customers Management, suppliers, employees, management of the articles, stocks, the orders, project management, E-trade

Opentaps http://www.opentaps.org/ MIT XML, J2EE

Customers Management, suppliers, employees, management of the articles, stocks, the orders, project management, E-trade

PGI Suite http://www.taika.fr GPL Apache, MySQL, PHP

Financial management, commercial management of the sales and stocks.

webERP Http:/www.weberp.org GPL Apache, MySQL, PHP Financial Management, Accounting

Tiny ERP http://www.tinyerp.com GPL Python, PostreSQL

Based in a Client Server Platform; ERP and CRM

Finisterra is an open source GNOME development framework. It is indicated for the implementation of

whole business management applications, ad hoc ERPs or modules of other management systems. Fisterra is implemented in the C programming language, and the entire framework is available as public API's over this.

The first release of the application was born as a custom-made development implemented by Igalia for an automotive glass replacement and repair company, Auto Arte in 2002. In the development contract was agreed to release the code with the GPL. In April 2003, Igalia announces the release plan of its management application. Work is done during the first months of 2003 in order to prepare the code for publication. In May, Fisterra 1.4 is published (code, user and developer documentation) and in July, Fisterra 1.5 is published, with some improvements and bugs fixed from the previous version. From September 2003, is being developed the Fisterra 2 (new version of the system, more generic and powerful). This version is published in 2004. In June 2005, Fisterra 1.x is called as Fisterra Garage to avoid confusion with the Fisterra development framework.

As curiosity, while Igalia was developing the first versions of the project, the Prestige tanker sunk in front of Gallia’s coast in the Northwest of the Span. Fisterra was one of the villages more affected by the disaster. Fisterra is also a Galician name coming from the Latin word Finisterrae (the end of the land).

Though only C is currently supported in Fisterra, it has been thought and developed in a way it should be easy to implement bindings in other languages.

OFBiz, also called “Open For Business Project”, is an open source enterprise automation software project licensed under the MIT Open Source License. By open source enterprise automation it is meant Open Source ERP, Open Source CRM, Open Source E-Business / E-Commerce, Open Source SCM, Open Source MRP, Open Source CMMS/EAM, and so on.

OFBiz offers a great deal of functionality, including: advanced e-commerce, catalogue management, promotion & pricing management, order management (sales & purchase), customer management (part of general party management), warehouse management, fulfilment (auto stock moves, batched pick, pack & ship), accounting (invoice, payment and billing accounts, and also GL), manufacturing management, general work effort management (events, tasks, projects, requests, etc) and content management (for product content, web sites, general content, blogging, forums, etc).

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The ERP solution Neogia leans on OFBiz ERP sturdy technical foundations, a set of technical and business components well known for their high coverage, flexibility and great sturdy. OFBiz Neogia solution covers finance, manufacturing, CRM and e-commerce.

Opentaps Open Source ERP + CRM brings the advanced features and scalability required for enterprise software with the flexibility and low cost of ownership that only open source can deliver. Key features of opentaps Open Source ERP + CRM include full suite of integrated applications that deliver a 360-degree view the client’s business. It is compatible all major open source and commercial relational databases, including MySQL, PostgreSQL, Oracle, Sybase, and Microsoft SQL Server and runs on Linux, Unix, and Windows operating platforms. It includes Service-Oriented Architecture for easy interoperability with external or legacy applications. It allows remote and local synchronization for scalability and high availability. It also includes Workflow for adapting to unique business processes. Opentaps is available under the business-friendly MIT Public License.

The core of Opentaps is a production-ready release of the Open For Business (OFBiz) project, which offers all of its features plus regular releases and upgrade ability. In addition, complementary Financial and CRM modules complete the feature set to deliver an out-of-the-box ERP and CRM suite.

Taika PGI Suite is an ERP that covers all the enterprise functions including: purchases, valuing, productions and stocks, as well as accounting, human resources, CRM and reporting.

The webERP project started in 2001 as an idea with the challenge to create an efficient web-based distribution ERP system using best of breed infrastructure - the PHP web-scripting language and the MySQL relational database management system. The aims were to make the system: fast and scalable, run on any browser, usable over dial up and have readable and consistent code throughout to allow IT literate business people to be able to review and modify it for their needs.

Having released the code to the open-source community in January 2003 it has forged ahead spreading functionality wider as different contributors have embraced and extended the core in the different areas appropriate to their business and given back to the webERP community. What they have now is the result of many people's contributions of robust extensively peer reviewed code to provide a reliable operational ERP system suitable for many businesses. The manual contains the names of the increasingly long list of contributors.

The code of webERP is released under the GPL. webERP has now exceeded 40,000 downloads and received many accolades from users, developers and industry commentators alike.

Tiny ERP is free software that boosts productivity and profit through data integration. It connect and improve business processes; sales, finance, supply chain, project management

Generically, those open source ERP implemented in languages widely known, like Java, PHP, C and Python. This is an advantages relatively to SAP uses a specific language (ABAP). On the other hand, most of those systems also have a Web interface.

Some of the systems have limited support, a tiny manual, and generally they do not have implementation methodologies. Templates and specific functionalities also need to be developed.

Those limitations can be seen either as business opportunities either as research opportunities.

7. CONCLUSION

The market of great ERP software packages is totally controlled by large software companies, like SAP – number one in sells, Oracle, BANN or SAS (Reilley, 2005).

If we have a company with capital to invest in ERP solution, certainly SAP, Oracle, Bann or other ERP supplier offers a great integration with business process and good software quality. On other way, we have an alternative that appears less expensive, where the software cost is free; the major investment is in implementation and education. Generically, those open source ERP implemented in languages widely known, like Java, PHP, C and Python. This is an advantages relatively to SAP uses a specific language (ABAP).

One of the phases in the implementation of a new ERP is the complex process software customisation to satisfy the business processes. This software parameterisation is not always trivial, usually is necessary some technical knowledge. Some of the systems have limited support, a tiny manual, and generally they do not


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have implementation methodologies. Templates and specific functionalities also need to be developed. Those limitations can be seen either as business opportunities either as research opportunities.

But several questions may still need to be answer. In a scenario of Open Source, could we obtain all the benefits that a commercial ERP systems presents? The implementation and management of those solutions are granted? An Open Source ERP system could be a key for Small and Medium Enterprises (SME) or specific industry sectors?

Other specific items may also be subject of future research. As long as those systems are implemented in the Web, usability tests, web design analysis may be subject of future work..

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ORGANIZATIONAL TOOLS IN THE WEB: ERP OPEN SOURCE