The Risks and Rewards of Open Source Software

When evaluating ERP vendors, one of the most important factors to consider is whether or not your organization can rely on the vendor for maintenance and support services. What if you find a bug in your system that needs to be fixed? What if you need upgrades or regulatory updates? If you don’t invest in maintenance or support, don’t count on your ERP vendor to be there for you when times get tough.

Although most proprietary software vendors include maintenance fees as part of the initial cost, open source software providers usually do not include these fees. This can lead the customer to believe that important services, like maintenance, are not really necessary investments. In reality, maintenance is extremely important and your organization will assume a high level of risk if it invests in an open source ERP system without paying for maintenance and support.

Following is a list of several advantages and disadvantages of open source software that your organization should consider before embarking on an ERP software selection project:

Advantages

·         Since maintenance fees are not included in the initial cost and there are no licensing costs, open source systems are essentially free to own and use. The total cost of ownership may also be less than proprietary software since maintenance fees are usually lower.

·       The source code can be modified and customized to meet your organization’s business needs and there are typically a wide range of integration formats.

·  Your organization likely won’t need to devote as many resources to help with system implementation as it would with traditional software.

Disadvantages

·         Open source providers do not have high profit margins and their software is developed on a miniscule budget. It’s quite possible that your organization’s provider could go out of business or be acquired by another ERP vendor and leave your organization stranded.

·         Since open source providers have fewer active customers than top-tier commercial ERP providers, there are fewer implementations to benchmark against and learn from.

·         Open source software may not have as many cost-saving benefits as your organization might think. The basic, free version of open source software will probably not fully meet your organization’s expectations so it will inevitably end up investing in maintenance and support. The more your organization customizes the software, the more money it will likely end up spending.

·         Your organization will likely still need to hire external consultants to help manage organizational change and to guide any business process reengineering.

Before your organization is entranced by the money-saving promises of open source ERP software, consider the amount of support your organization will actually need from your software provider. The key to a successful ERP initiative is strong support from your vendor and consistent guidance from external consultants.