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Open-source ERP vendor hustles in SAP's back yard

By John Blau
October 24, 2006 12:00 PM ET

What's it like for a small German provider of open-source enterprise resource planning software to peddle its product in the home market of SAP AG, the world's largest maker of commercial business software? "It's a challenge, but we have a business that's growing," Hilmar Brodner, managing director of Synerpy GmbH, said Monday on the sidelines of the Systems IT trade show in Munich.

Synerpy allows businesses to download its business application software suite, avERP, free of charge and modify the product as they please. The product contains around 40% of the functions available in the offerings of large ERP vendors, including SAP, according to Brodner

The vendor makes money from selling various services, such as consulting, programming and training. At the high end, Synerpy generates around $1,893 in revenue per user, according to Brodner. "Customers are free to decide how much support they want," he said. "There is no obligation; it's up to them."

The Bayreuth, Germany-based vendor has about 60 customers, mostly small and medium-size enterprises. They range in size from around five employees to more than 850.

"Larger companies in Germany are showing greater interest in open-source software, thanks in part to initiatives such as the open-source project launched by the city of Munich," Brodner said. "I think we will see greater momentum in the large enterprise segment over the next two years."

Brodner acknowledged that many big companies will continue to buy commercial products "largely because of the name" and because of the resources that big vendors like SAP, Oracle Corp. and Microsoft Corp. commit to developing and supporting software to manage business-critical processes.

"Businesses that buy software from large, well-known venders believe when they pay a lot, they can expect a lot," Brodner said. "But for us to compete, we have to prove to customers that they can expect a lot from us, too. And they can. This is a very competitive market."

And it helps, he admits, when the product is free.

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