• Open Source SaaS ERP. Will it ever be accepted by the enterprise?
  • Ray Tetlow
  • Management Consulting
Open Source SaaS ERP. Will it ever be accepted by the enterprise?

Over the last several weeks we have wondered why open source ERP is not yet generally accepted in the business community.  

They should be; for the most part they work well, run wide and deep and cost hardly anything in term of licensing.  But unlike their infrastructure ( think Linux, Apache, MySQL) counterparts, business open source solutions have been met with tepid reception from most customers.

The question is why?

First, business software (as opposed to infrastructure) is sold not bought.  This buying pattern means that enterprise software must be sold on top of a large sales and marketing budget.  In other words, the salesmanship wins even though what you are selling maybe inferior. 

With business software, customers want (and need) to be sold a solution.  Most open source vendors do not have (or cannot afford) a well oiled sales engine to do this.  Customers therefore gravitate naturally to commercial (more expensive) safe-harbor equivalents that can acutaly sell a convincing solution. 

Second, the large community of passionate developers that support open source software are technology (versus business) orientated.   This works well for infrastructure software where people contribute and innovate. 

Problems arise when developing business software.  Developers either need to become experts in the business domain (not normal) or they need to work with business people.   Business people are for profit and are not community focused.   This conflict of interest (especially if VC money is involved) creates all sorts of issues.

But exceptions are happening. 

There are companies, such as SugarCRM, that have broken out of the open source mold and moved to commercial products, obtained adequate funding and even have a very sophisticated (for profit) sales and marketing team.  

Are companies such as SugarCRM still open source? 

In our opinion no.  Make no mistake, they are for profit and need to be to sustain.

In summary, the only way that business open source solutions will work for is by eventually adopting a commercial  (for profit) model and slowly phase out the open source roots.

  • Ray Tetlow
  • Management Consulting