OpenERP aims to impress U.S. market

Open source ERP vendor launches first U.S. office, rolls out new products

When Beija-Flor Jeans started outgrowing its Intuit QuickBooks software last year, the company started looking around for something more robust to help mange its growing accounting, CRM and inventory management needs.

But rather than spend big bucks on a commercial enterprise resource planning suite, the company decided to try open source technology from OpenERP, a relatively little known vendor based in Belgium.

Six months later, it's a move that appears to have paid off, says co-founder Kathy Moca, president and co-founder of Beija-Flor, a small business that supplies Brazilian-made jeans to about 300 boutique stores in the U.S.

"It cost us less than half of what it would have cost if we had gone with a commercial solution," she said. And it has been much easier to customize and mold OpenERP to their needs than it would have been possible with a commercial product, she said.

OpenERP is hoping that such customer experiences are what will help propel the company to the same sort of success in the U.S. that it claims to have had in Europe and Asia.

The company recently opened its first office in the U.S. as part of a broader expansion strategy that is being fueled by a $4.2 million investment by a European investor in April.

It aims to set up a network of partners to help customers integrate the software into their business environments.

Earlier this week, OpenERP rolled out a new, more modular version of its software that allows companies to download only the specific components they need, instead of the whole suite as they needed to until now.

OpenERP is written in Python and integrates a full range of business applications such as CRM, purchase management, manufacturing, warehouse management, accounting and human resources.

OpenERP has separate server and client components both of which are available for free under a GPL license. The latest version, OpenERP v6, allows customers to download just the applications they need and quickly add more as needed.

The company's revenues come from hosting the application for customers under a Software-as-a-Service (SaaS) model, and from maintenance and support contracts, said Marc Laporte, the company's chief operating officer.

For customers that choose to host the software themselves, OpenERP sells a publisher warranty that covers issues such as bug fixes, security alerts and support for migrations to new versions of the technology, Laporte said.

OpenERP software that is available for free onsite use is exactly the same as that offered on the SaaS platform, so companies that download the software and those that have it hosted get the same functionality.

OpenERP charges $39 per user per month for the hosted version of the software. The publisher warranty costs $3,800 per year for an on-site OpenERP implementation with up to 25 users.

The price points are less than one-third of what companies would pay for comparable functionality with a commercial suite, Laporte said. "It leaves customers with money for customization," if needed, he said.

Steven Moca, technology consultant for Beija-Flor, said that while the software is relatively easy to use and implement, companies -- especially smaller ones -- will still need some hand-holding.

"OpenERP appears to be trying to bring the dynamics of Open Source to the ERP space, said Al Hilwa, an analyst with IDC. A few other companies such as OpenBravo, Compiere and SugarCRM have also been offering similar software for sometime now.

Hilwa said SugarCRM appears to be the one with "some level of scale with this approach."

Besides the cost aspect, OpenERP gives users the ability to inspect and customize the code, he said. "This approach might appeal to a segment of users who are willing to tinker with the code and take active participation in the feature development," Hilwa said.

"Most ERP buyers are generally looking for ready-made solutions, however, over time they have had to invest a great deal in configuring big ERP systems to meet their needs," he said. So the relatively easier customization enabled by open source tools can be an advantage he said. "SMB is definitely the sweet spot for this,' he said.

Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at  @jaivijayan or subscribe to Jaikumar's RSS feed . His e-mail address is

Copyright © 2010 IDG Communications, Inc.

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