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February 04, 2004 (CIO) -- Jorg Janke didn't set out to write open-source ERP software. But like many small start-up application vendors, he found the traditional path to success blocked by sales and marketing costs.
"I thought open-source was a model where I can make money and not have salespeople," he says. "My customers do presales and demos on their own by simply downloading the software and trying it."
Janke says he has no idea how many companies are using the software, called Compiere. But for the part of his business that keeps him afloat -- paid support contracts -- the response rate so far has been worse than that for spam. Out of more than 600,000 downloads of Compiere, 50 customers have signed support contracts. And those contracts start at $1,500 for 10 people per year -- a pittance compared with the license fees charged by commercial ERP vendors, which charge anywhere from 10% to 25% of those fees per year for maintenance and support. Compiere works with Linux, Unix, Solaris and Windows 2000 server operating systems, and with Linux and Windows desktop systems as well.
But Janke professes not to care. It's 50 customers more than he would have had under the old model. After four years of sweat equity -- a veteran Oracle Corp. ERP developer, the 48-year-old Connecticut-based German native wrote most of the Compiere code -- he and his staff of one are making a living. Janke also gets to work at what he loves to do: write code. "Someone you've never heard of [calls and] says they like your software and wants to give you money. That's pretty good," he says.
Open-source ERP software has limits. But that's OK: End users can write add-ons. Compiere is targeted at small and midsize companies. "If I said it was targeted at the Fortune 100, no one would believe me anyway," Janke deadpans. He's right. Compiere's functionality goes from general accounting and retail-inventory management to sales and purchase orders. But it doesn't have many manufacturing functions, which are key pieces for big companies.
Those parts are in the works -- though not by Janke. He has signed up 30 small consultancies around the world to install and service Compiere, and they are working to add manufacturing functions. The partners are free to sell customized software versions, but Janke controls the release schedule and support for the core software.
Customers share the coding burden too. Jacob Pedersen, sales and logistics coordinator at Danish pharmaceutical company Pharma Nord APS, joined another company to write a credit card processing application in Danish for Compiere. The two companies hired a programmer in Poland and then donated $15,000 worth of code to Compiere. Pedersen is also involved in the effort to develop manufacturing functionality. It's the only thing holding him back from installing Compiere at Pharma Nord's headquarters. He has already installed it in Pharma Nord's satellite sales offices in France, Spain and Holland. So far, Compiere has cost Pharma Nord about $50,000, much less than the systems it replaced, says Pedersen.
European customers, more accepting of open-source, make up about 40% of Compiere's customer base, says Janke.
"We don't want to be tied into a particular software vendor anymore [because] they decide to change their terms and we're locked in," says Pedersen. "Even if Compiere gets bought out or changes its terms, we can continue running it because we have the code."
Besides, adds Pedersen, helping create the software you're running is fun: "We feel kind of like pioneers -- in a good way."
Reprinted with permission from
This story is reprinted from CIO.com, an online resource for information executives.Story Copyright CXO Media Inc., 2006. All rights reserved.
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