Open source apps garner interest

Sugar has released its latest CRM suite and downloads of Compiere’s Linux-based ERP solution have topped the 750,000 mark. Open source ERP apps may enjoy more success at the SMB level rather than within the enterprise. However, questions marks still remain over such solutions.

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By  Maddy Reddy Published  October 31, 2004

|~|jjankecompiere11.jpg|~|Jorg Janke, founder & CTO of Compiere. |~|Commercial open source customer relationship management (CRM) applications vendor Sugar CRM has released the latest version of Sugar Sales Professional. The CRM suite is built on pure LAMP (Linux, Apache, MySQL, PHP), and has already clocked in 25,000 downloads from small-to-medium sized companies around the world.

The launch of Sugar is the latest in a number of open source CRM applications to hit the web. Other solutions, such as those delivered by Anteil, Kontor, Compiere and Fisterra are already garnering mind share, if not market share, as enterprises search for more cost effective applications in the face of tighter IT budgets.

Of these four, Compiere claims to be the most successful to date as it has recorded more than 750,000 downloads of its Java-based integrated enterprise resource planning (ERP) Compiere 2.5 suite in the past five years.

“The interest in Compiere is steadily increasing. More people are not just looking at Compiere, but implementing it. Looking at the requests we are getting there is a good user base in the UAE, Egypt and Iran,” says Jorg Janke, founder & CTO of Compiere.

Although Janke is unable to name customer references, he says this is down to end users being unwilling to talk about their use of open source, rather than IT departments downloading the software and then abandoning it.

“Customers and prospects we gather in the Middle East are a bit conservative and are not willing to talk about open source apps. Also, we have no control or information about Compiere users, so it is hard to say who is using it. Later this year, we will add a voluntary registration and that should help,” he explains.

While open source enterprise apps give more control over the source code of the software and have no expensive licensing costs compared to commercial ERP, they do have hidden costs. Another issue facing the open source model is the general perception of it, according to Rakesh Kumar, senior vice president of technology research at Meta Group.

“There is a lack of clear and accurate information whether Linux is cheaper or expensive. And we don’t really have concrete live data to give a definitive verdict on how cost effective or expensive open source is and that is part of the problem with its adoption,” he says.

For instance, Compiere can be downloaded off the internet but users have to pay US$3500, although this is considered minimal when compared to license fees charged by commercial ERP vendors. Even commercial ERP vendors such as PeopleSoft, which is currently porting its 170 businesses apps onto Linux, concedes that free software may cater to the limited needs of small-to-medium sized businesses (SMBs).

“There may be a demand for it [open source ERP apps] in the SMB space, but when you look at enterprises… it might not serve the purpose. The challenge is to deliver a sophisticated level of functionality and [vendors and customers] cannot have those business functions and integration without significant investments. Most enterprises are still risk averse when it comes to their mission critical apps. They will only move to Linux when it’s completely mature and risk-free,” says Steve Curtis, Linux consultant at PeopleSoft EMEA.

However, open source technology still accounts for about US$408 million and enjoys about 1.6% of the overall market, while commercial ERP vendors still have a stranglehold of 46% in the US$26.7 billion ERP applications market. Importantly, when an enterprise is making a significant investment on its ERP system, it is assured of an ongoing vendor support, which has an edge over commercial ERP vendors, claims IDC.

“The international players that have been willing to establish a local presence have the upper hand,” says Jyoti Lalchandani, regional director, IDC Middle East &North Africa. “A local presence or an indirect sales channel is essential for vendors because clients tend to favor those who show a commitment to the region,” he notes. ||**||

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