240 likes | 447 Views
Case Study of Open Source ERP Evaluation in a Small Business. David L. Olson Jesse Staley Department of Management University of Nebraska - Lincoln. Open Source Development. Red Hat [2009]: Can save by: Enabling use of commodity hardware rather than proprietary machines
E N D
Case Study of Open Source ERP Evaluation in a Small Business David L. Olson Jesse Staley Department of Management University of Nebraska - Lincoln CONFENIS 2010 Natal
Open Source Development Red Hat [2009]: Can save by: • Enabling use of commodity hardware rather than proprietary machines • Avoids maintenance contracts • Greater functionality, reliability, performance • Faster learning curve, available support tools • Avoid vendor lock-in • Reduce need for security consultants & tools CONFENIS 2010 Natal
Open Source ERP Products • Compiere • OpenMFG • Open for Business Project • Tiny ERP • Open Office • OpenPro Sourceforge.net listed over 1,000 ERP projects May 2009 CONFENIS 2010 Natal
Open Source ERP/EIS • Jaisingh et al. [2008]: OSS ERPs can be customized to modify code, gain competitive advantage • Serrano & Sarriegi [2006]: OSS ERP benefits: • Increased adaptability • Decreased reliance on single supplier • Reduced costs CONFENIS 2010 Natal
Small Business & ERP • Raymond & Uwizeyemungu [2007] Studied 356 small Canadian manufactures • Internally predisposed – higher commercial dependence • Externally predisposed – larger, more decentralized • Unfavorable to ERP – more diverse customer base, low networking • Snider et al. [2009] Five Canadian small business cases • All needed to integrate legacy systems • All needed scalable solutions for growth • Successful project used consultants, external training CONFENIS 2010 Natal
Six Primary Risk Dimensions in IT/IS ImplementationPoba-Nzaou et al. [2008] • Organizational • Personnel, organizational structure • Business-related • Business process consistency & reliability • Technological • Information processing systems • Entrepreneurial • Contractual • Financial • Cash flow, licensing, upgrading CONFENIS 2010 Natal
Weld Engineering Technology Inc. WETI • Industrial automated welding systems • Engineer to order manufacturer • Each job different • Major jump in growth • Early 2003 old system inadequate • Track sales • Track parts • Document work CONFENIS 2010 Natal
1st Round: Business Case • Alternatives considered • In-house development • Had experience in software, but lacked time, personnel • Primary vendors (SAP, Oracle) • Owners had worked for large companies, saw horrors • Low cost vendors (Microsoft, others) • Great Plains, Sage, Infor Visual considered • Average cost $60,000, rejected • Off the shelf software • QuickBooks, Microsoft Office Suite CONFENIS 2010 Natal
1st Round: Selected ERP Lite • Price per user about $300 • Much lower than SAP, Oracle • Provided basic inventory tracking, order management • Had MRP functionality • Started with Microsoft Access database • Could be upgraded to Microsoft SQL Serveror MySQL CONFENIS 2010 Natal
Systems Design • ERPLite provided basic needs • Would need additional software • Microsoft Access database • Support optional, inexpensive • Bill of materials • Revision tracking • Work orders • Purchase orders • Sales order entry • Accounting • Inventory • MRP CONFENIS 2010 Natal
Decision • Mid-2004 • Purchased 3 user seats • Intended to buy more once system proved itself • For a few months things worked well • Testing went smoothly • Limitations: • Work order processing took too much time • Overwhelming paper trail CONFENIS 2010 Natal
ERPLiteTradeoffs • One positive feature was the ability to access most of the source code with Visual Basic for Applications • Could customize easily • Modified work order system • But created problems in other parts of the ERP • Maybe because WETI left on its own to decipher bast practices for system optimization • Modifications made it more troublesome to talk to ERPLite CONFENIS 2010 Natal
Within 1 year • WETI dropped monthly support • Chose to pay on per case basis • Meant they didn’t get bug fixes or patches • In 18 months head of manufacturing dropped work order system CONFENIS 2010 Natal
Accounting • ERPLite didn’t meet WETI accounting needs • Could integrate with COTS accounting software • Used QuickBooks • When Manufacturing dropped work order system, accounting presented a problem CONFENIS 2010 Natal
Round One Results • 4 years later only purchasing and sales quote modules used from ERPLite • Instead of integrated system • QuickBooks • Excel spreadsheets • Separate Access databases CONFENIS 2010 Natal
Round 2 • OPTIONS • Low cost vendors • DBA Manufacturing • Fishbowl inventory • Rejected due to lack of functionality • Mid-market ERP vendors • Sage AccPac • Epicor • Made2Manage • E2 Shop System • Exact JobBoss • InforGlobal’s Visual • M1 • Open Source CONFENIS 2010 Natal
Focused analysis • Visual & M1 • Both claimed the functionality needed • Spent a couple of months demonstrating • Asked for bids on 10-user system with onsite support and training • Range $18,000 to $42,000 • Plus $5-8,000 for dedicated server & SQL database • Owners rejected as too expensive • WETI had just build modern manufacturing center, automation project over budget and late CONFENIS 2010 Natal
Open Source • Google search yielded: • OpenBravo ERP – web-based • Tested, looked good, but poor timing & owners rejected • xTuple • Head engineer had a friend who used in another firm • Procurement, production, costs CONFENIS 2010 Natal
xTuple • Offers 3 versions • PostBooks free • Support service charged • Could upgrade to other editions • Standard, Manufacturing editions have commercial license • Decided to try free version • If looked good, could upgrade CONFENIS 2010 Natal
Implementation • Installer downloaded through SourceForge.net via xTuple project page • Needed source code • PostgreSQL database (open source, free) • Report writer OpenRPT to query database • Installation took minutes • Tested on data available on SourceForge.net Postbooks project page • Assessed in a few days by 2 people • Functional, easy to use CONFENIS 2010 Natal
Initial Application • Owners never asked for approval • Since it was free, they didn’t object • After a month of segmented testing • Populated database in batches • Slow due to unstructured format • Many missing data • Within weeks, 750 to 1000 parts out of 16,000 entered CONFENIS 2010 Natal
Company Events • Four months into data entry • WETI sales suffered from recession • Layoffs imminent • 15% of WETI employees laid off • Including Open Source developer • Shortly thereafter the Head of engineering and manufacturing left • Thus the two project champions were gone • No hard decisions made about continuing CONFENIS 2010 Natal
Conclusions • Demonstrated the feasibility of Open Source ERP • BPR positive • Several best practices adopted • Could modify functions & reports (customizable) • Time consuming activities • Master parts list generation • Updating BOM data for hundreds of products • Organizing inventory CONFENIS 2010 Natal
Inferences • Proof of concept • OSS ERP Can Work • Takes a great deal of effort • New type of Systems Analysis • Web search for components instead of programming • Nothing is for free • You have to pay for features • OSS makes it possible to pay less CONFENIS 2010 Natal