It will be interesting to see if open source ERP and SaaS ERP survive. With the former, I would be concerned about regulatory and other upgrades. E.g., will there be enough committed community members to apply tax updates for all areas, not just their localities? With the latter, how flexible can it be if you cannot customize at all?

Perhaps CIO can do a thorough analysis of Compiere vs ERP5 vs TinyERP vs OpenBravo vs OpenMFG?
Come up with some sort of standard "across the board" criteria to evaluate all apps and go from there. Stick to issues of USE and IMPLEMENTAION.

I've heard for instance that TinyERP is written in Python which allows them to keep the codebase small and add features faster than other competitors. This is a serious competitive advantage. I think ERP5 runs on Zope, which is Python-based.

Maxwell (aka MaxTheITpro)
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I firmly believe that enterprise open source represents the future of on-premise software solutions.

Not only are there collaborative development and innovation advantages, the open model delivers a much healthier relationship between the end user customer and the company delivering the system. Because the software is freely available companies judge 'the fit' for themselves and the old software salesman's fast talk is eliminated. Discussions center on solving business problems.

The business model works nicely as well. The up-front licensing fees are removed for the customer and the software company gets a recurring revenue stream. Instead of one-time lumps of money that must be scrounged up every quarter. The OSS provider has a reliable, cumulative, and highly scalable cash flow.

Skepticism of a better way always occurs, particulaly from the ones with the most to loose, in this case you'll hear it from Oracle and SAP. Time will tell, but I can't imagine a world where the open model does not become a prevasive force in the enterprise. Last year we transitioned our company to an OSS model and have seen triple digit growth since at Aras. Our software is mission-critical as well, albeit for enterprise PLM and compliance processes. You can see the innovation for yourself www.aras.com

Minimal upfront cost. Total flexibility to develop not only industry-specific, but company specific applications. It all sounds great in theory, but there is a catch. Small and mid-sized companies often don't even have IT departments, let alone a staff that has experience developing and supporting complex business applications. Before making a decision to go with open source ERP, a company must realize they will need to become a full-time software development and support organization as well. This means increased payroll and overhead that makes the low upfront costs of open source ERP seem not so.....low.

Consider this in regards to buying a BMW. Would you rather pay $1,000 and have a BMW manufacturer ship you all the parts, and say put it together yourself? Or would you rather purchase a BMW from a dealer for $40,000, and be assured that it works, and has been assembled correctly? I think the choice is obvious.

Good points, if you don't have IT skills and are alright with a preconfigured system where your critical business data is in the cloud then the way to go is SaaS.

We find that it's not small companies that really appreciate the Enterprise Open Source format, but midsized to large global companies. That's the profile that is really serious and is downloading the Aras software.

Most have implemented enterprise software already (in our case PLM) so they have skills on staff and recognize both the benefits of the EOS format and also the superior nature of our software and how it's better; more advanced, more flexible/powerful, easier to use, etc.

At the end of the day the EOS format gives a company control and flexibility while reducing the enterprise software expense risk. If the company in question seeks those attributes in their next software system, then EOS is the format for them.

Do you ready believe that one size can fit all? One ERP system may be better for certain industries than others. In some cases, one may be better for your neighbor next door than yours, because every small business is unique. Every small and medium size business has its niche.

Unless certain ERP systems on your shopping list are specific to your industry, choice of ERP system may not be the most important success factor.

IMHO, the success of an implementation depends mainly on the strength of the implementation team and the dedication of the management team. Dedication of the management team is important, because the management team may anticipate various levels of resistance to the changes from the user community within the organization. The bigger the user community, the bigger chance of encountering resistance would be.

A company planning to implement an ERP system should either build a strong implementation teams in-house or partner with experienced ERP solution provider. This is especially important for open source ERP implementation.

One of the advantages of Open source ERP is its flexibility. A strong ERP implementation team can alter the software to perfectly fit the user requirements. This usually has higher return on investment compared to purchasing a rigid off-the-shelf ERP system.

A rigid system may fit 90% - 95% of one's requirements. However, the cost to "fix" the system for the rest of 5% - 10% requirements could be considerable, depending on the selected product. In the previous six years, my team have been helping our clients (in property management, non-profit organization and retails) to address their business challenges successfully by altering existing open source ERP and CRM systems. Compiere is one of my favorite open source systems, because of its platform independent and scalability nature.

In addition to the flexibility of open source system, there are many good reasons for open source ERP system. Here is an interesting one: the risk of system upgrades. Suppose a system is working well for you for a long period of time. Let us come up with some good reasons to upgrade your system when your software vendor asks you to...

Yesss!! Good article.

There are really very good developments happening in the area of Open Source ERP. This article gives overview of the best initiative happened in recent years. That is a methodology for evaluating open source ERP systems and selecting best ERP suites argeted business. And guidelines for installing and implementing the same. next step is systematic open source ERP training methodology, post ERP implementation support. For all SMEs looking for suitable open source free accounting softwares this is the right place.

Very helpful materials for students , cunsultants and industries which are trying to implement free small business softwares. SITE Open Source ERP (SOSE) has created and improving online ERP dictionary too. Dictionary will contain all possible ERP related terms. This will be a break through in online ERP studying. And site contains 10 days (Select->Implement->Train->Expand) SITE methodology training guide, step by step process to implement open source ERP solution. And SOSE! comes with listing of Open Source ERP systems available. Description of them along with comparison guidence will help users in selecting right software for their business.

SOSE! SITE Open Source ERP is moving in right direction in becoming central platform for all Open Source ERP systems. It is one good initiative and a happy news for all ERP community members around the globe.

It has grownup..and it will!!!
Open source technology suits business when it is selected correctly. There are good initiatives are happening to unify all Open Source ERP s under common place.Using these things selecting and comparing them will be easier, even ERP training for it is available there. It clearly shows what will be the future...

I have been following the open source ERP arena for the past year. IT has shown tremendous growth and maturity. Openbravo, for example, raised 12M$ in funding. That is a clear indication that the business model for these companies is valid. Not having to pay license fees allows open source ERP customers to put more money into customizations, providing a much higher ROI.
You are welcomed to visit my blog-it covers all major open source ERP solutions:
http://opensourceerpguru.com/
Thank you for the great article,
Open Source ERP Guru

While open source ERP systems have made significant progress in terms of delivering better and more comprehensive features and functionalities, it is important to understand that successful implementations require significant customizations.

Openness and transparency of open source model is often cited as a key enabler in customization efforts but when you are looking at a system as large as Compiere or OpenMFG, that transparency adds little value. For example, it takes a seasoned java developer over 3 months to be able to make significant customizations to the core of Compiere without disrupting the overall flow and architecture of the system. Any company that thinks they can implement an open source ERP by just downloading it off the internet and giving the source code to a team of developers is taking a huge risk. Safer and risk-minimized approach is to rely on vendors who have an excellent track record in implementations, know the source code inside out and demonstrate a keen sense of business acumen.

Varun Shrestha
PBA Solutions