For companies wanting to implement an enterprise resource planning (ERP) solution, opting for open source software might seem the most cost-effective route to take at first glance, but it’s a decision that can end up costing them more money than they bargained for in the long run.
This is the opinion of Bluekey Software Solutions’ Leo Dreyer, who says it’s astonishing that companies would use free – or the cheapest – software they can find to perform their most critical business processes.
“There seems to be a growing trend amongst South African businesses to use open source software for business applications and processes. It’s worthwhile mentioning that some open source software is credible, robust and can provide the starting blocks for building bigger and better things, according to an organisation’s requirements.
"In fact, in the past few years we’ve seen the rise of some really great open source software solutions from developers that have become trusted brands.
“However, the strategic need for an integrated business management tool cannot be addressed with haphazardly pieced-together software sourced from the Internet.
"Aside from integration issues, companies just don’t get the support they need to properly implement ERP and leverage it to its full advantage,” says Dreyer, adding that a lot of companies buy cheaper ERP systems for capturing financial transactions only, and then build on that with other bespoke applications for business-specific processes.
“Once again, integration and support challenges make this a tough course action, often with very little reward and no financial returns.
"Costs also start adding up. When you have to buy more than one application to piece together the system you need to fulfil your requirements, or if you have to re-implement another ERP system because it doesn’t integrate with the rest of your software, time and money certainly become a factor.
“The cost of ‘lost’ is always hard to measure, and often it’s only after there’s been a costly breach, mistake or loss that companies even realise what the costs of not having an effective system in place actually are.”
Dreyer says companies need a shift in mindset on ERP.
“For many companies that are still using manual systems and spreadsheets, opting for open source feels like a safe route to take because it offers the opportunity to try ERP on for size without any capital outlay.
“However, investing in a properly supported, integrated solution has numerous benefits that can’t be realised from this kind of approach. With tighter control over all aspects of the business and real-time access to accurate and reliable information, companies can achieve quick return on their investment in an integrated business management tool while those that have chosen the open source route are still in the throes of a tenuous implementation.
“Of course, it all depends on how a company defines ERP and what they expect from it. If a business is only using the software to capture journals and is not looking to use ERP more strategically across the enterprise, then a cheap or open source solution will do the trick. However, most companies nowadays demand more from ERP,” admits Dreyer.
"Those who want more from ERP than accounting need to approach ERP more strategically.”