For some companies, one attractive alternative to traditional ERP software is the growing movement towards open source ERP. And open source ERP’s biggest attraction is the price: It’s free. Well, since, apparently, there is not even any such thing as a free lunch, open source pricing demands a more in-depth look.

Open Source ERP:

Is It Really Free?

It’s true that there are neither license fees nor module costs. And you can add as many users as you like without added expense. Simply go to the open source ERP vendor’s website and download the ERP backbone and all the modules you need. Implementation costs can be far, far less that with traditional ERP, especially if you are disciplined and can forego extensive customization.  

Once you’ve downloaded your open source ERP software, you own it. Prior to open source, the only way to “own” your enterprise software was to build it from the ground, a costly and time consuming proposition. By utilizing the source code of open source ERP, you can still get the much of the customization as a start-from-scratch system at a fraction of the cost. And, of course, there are no annual maintenance fees, so the total cost of ownership can be genuinely minuscule.

Realistically, though the software may be free there are still some significant costs you’ll incur with open source ERP. You’ll need to employ programmers to learn the complex source code of the open source software, and to modify some modules. You’ll need to invest in training for all users, initially and on an ongoing basis. And you’ll need to have people on staff that can support and maintain the software.

Open source software isn’t going to get upgrades and fixes from the vendor on a regular or predictable basis, and documentation can be sketchy when upgrades do come. Same is true for product enhancements, which come at a slower pace. Some open-source ERP suppliers may provide the initial software for free, but may want to charge for upgrades and enhancements.

Choose your open source ERP software wisely, especially looking for an active user community, with forums, help groups and online access to FAQs and topic discussions. This will be your de facto “vendor support hotline.” There’s an opportunity here: Investments you make in software customization, modifying modules and improving usability can be re-sold to other users to recoup some of your costs.

Another reason to choose a popular and widely used open-source solution is that some open source software simply disappears if it doesn’t gain critical mass. You can still operate your business with what you have, but the solution is not going to have as long a lifespan has a heavily supported solution.

Open source ERP isn’t for anyone, especially for the faint of heart or those companies without a strong IT capability, or the willingness to invest in one. Open source ERP makes most sense for companies in industries where companies very similar to yours have deployed the same open source solution, so that the user group and online forums provide a rich support structure, and where the software has already been heavily modified for your special needs even before you download it.