Most Small and Medium Enterprises (SMEs), especially companies with turnover less than Rs. 50 crores (Rs. Fifty Million) want to adopt ERPs but are deterred due to high cost of branded ERPs such as SAP B1 or Microsoft Business Central. This week, we will discuss Open Source ERPs in continuation of our series ERP Focus, which we started with our blog https://mentorsunlocked.com/erps-in-indian-market/ . We have earlier discussed SAGE ERP ( https://mentorsunlocked.com/erp-focus-series-sage-erp/ ) and E Bizframe from Eastern Software Systems (https://mentorsunlocked.com/erp-focus-ebizframe-from-easter-software-systems/ ).

Open-Source Software, unlike proprietary software like SAP or Business Central, are developed through collaboration, mutual exchange and contribution to community. The software code is available to everyone and hence is mostly free. The software can be downloaded and customized for a company. While there are lot of open-source ERPs, two popular Open-Source ERPs are ODOO and ERPNext.

Advantages of Open-Source ERPs are flexibility and easy customization. The software or its various modules and functions being available online with a thriving community of contributors means that the software or its components frequently get updated at no cost. The software can be scaled up as per use. The components of the software can be downloaded and hacked for the company.

On the other side, there are some disadvantages of open-source software. Smaller businesses cannot afford to develop a team of software developers and testers. They rely on companies that customize and maintain the software for them. The quality of software is a function of quality of team that implements open-source software. Small implementers are not able to afford quality resources, unlike bigger implementers. Bigger implementers are part of the community and often contribute to community in many ways. ODOO addresses it to some extent by sharing a list of their partners online (https://www.odoo.com/partners) . ERPNext (https://erpnext.com/open-source-manufacturing-erp-software) , just like Red Hat provides its own version of Open-Source Software. It provides services like customization, maintenance and up-gradation of software and integration with other hardware and software to its customers. All open-source software come under GNU (General Public License) which is free and hence the client only has to pay for customization and maintenance of software unlike license fees in proprietary software.

SMEs wanting to adopt cheaper ERPs may want to explore Open-Source ERPs that may provide better quality software and more reliable services than some of the local ERP vendors or small implementers of branded ERPs. The key to get software of global quality at the price of local ERP is due diligence and clarity in ask from implementer. The customer should conduct a due diligence of both software and the implementer. Check number of installations of the software, type of companies that have purchased or are using that ERP, number of implementers and size of implementers of the ERP. A thriving community reduces risk of dependence on any one implementer and provides alternatives in case an implementer leaves business.

These software are used by some of the most trusted companies in India and abroad like Zerodha, Neolync, Coffee Selection etc. Increasingly Governments and other private companies are also adopting open-source software because of the cost, flexibility and security.