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Open Source ERP Business Model Framework

Open Source ERP Business Model Framework. David L. Olson, Univ. of Nebraska Björn Johansson, Lund Univ. Rogério Atem de Carvalho, Instituto Federal Fluminense. ERP. Integrated BPR efficiency Reduced IS payroll MANY OPTIONS International differences SELECTION PIRCS meta-method

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Open Source ERP Business Model Framework

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  1. Open Source ERP Business Model Framework David L. Olson, Univ. of Nebraska Björn Johansson, Lund Univ. RogérioAtem de Carvalho, Instituto Federal Fluminense FAIM 2012 the Baltic

  2. ERP • Integrated • BPR efficiency • Reduced IS payroll • MANY OPTIONS • International differences • SELECTION • PIRCS meta-method • SMART multicriteria selection FAIM 2012 the Baltic

  3. Alternative Supply Chain Software Sources

  4. GMRG Data AnalysisOlson, Chae, Sheu: International Journal of Production Research accepted 2012 CONFENIS 2011 Aalborg

  5. Methods Used – Planning & Control11-manual; 2-desktop software; 3-custom software; 4- commercial software- 5-modified commercial software CONFENIS 2011 Aalborg

  6. Methods Used to Record Data CONFENIS 2011 Aalborg

  7. ERP Selection CriteriaBaki & Çaki [2005] FAIM 2012 the Baltic

  8. Open Source Software • Operates under license allowing release of source code free of charge for others to use & modify • Free redistribution • Open source code allowing modifications • Modifications to be distributed same as source code

  9. Open Source Development Red Hat [2009]: Can save by: • Enabling use of commodity hardware rather than proprietary machines • Avoids maintenance contracts • Greater functionality, reliability, performance • Faster learning curve, available support tools • Avoid vendor lock-in • Reduce need for security consultants & tools FAIM 2012 the Baltic

  10. Open Source ERP/EIS • Jaisingh et al. [2008]: OSS ERPs can be customized to modify code, gain competitive advantage • Serrano & Sarriegi [2006]: OSS ERP benefits: • Increased adaptability • Decreased reliance on single supplier • Reduced costs FAIM 2012 the Baltic

  11. Open Source ERP Products • Compiere • OpenMFG • Open for Business Project • Tiny ERP • Web ERP • Open Office • OpenBravo • OpenPro Sourceforge.net listed over 1,000 ERP projects May 2009 FAIM 2012 the Baltic

  12. Open Source ERP Benefits • Cost • Blue-Star reengineered, switched to new open platform • Total investment $2.5 to 3 million • Much lower than proprietary would have been • Saved $100,000 to $150,000 per year • Streamlined processes • Updated best practices • Eliminated third-party vendors • Save $25 million in license & maintenance fees

  13. Open Source ERP Benefits • Agility & Scale • Can modify, grow • Paypal increased server farm to meet demand • Linux enabled upward scalability • Chicago Mercantile Exchange • Switched to Linux • 20% drop in time to process trades • Higher customer satisfaction

  14. Open Source ERP Benefits • Quality & Security • Constant testing & improvement • Breaking Vendor Lock-in • High investment in vendor software leads to stickiness • Open source avoids this • Compiere maintains lift of available consulting partners

  15. Open Source Risks • ADOPTION NOT WIDESPREAD • Licensing issues • Often written by software engineers, not lawyers • License-detection agents exist • Competitive worries • Any competitor can obtain the same system • Can customize • Expertise required • Documentation • Support

  16. BUSINESS MODELS • Cost sharing • Risk spreading (offer software free, share maintenance) • Loss leader • Widget frosting (have hardware vendors add your software) • Give recipe, open restaurant (sell service) • Accessorize (give free, sell associated products) • Free software, sell the present (expiration date) • Free software, sell brand (sell validation tests) • Free software, sell content (fees for complementary products) FAIM 2012 the Baltic

  17. Watson, Boudreau, York, Greiner & WynnCACM [2008] • Proprietary Public cannot view source code • Open Communities SourceForge.net • Corporate Distribution RedHat, SpikeSource, OpenOSX • Sponsored Open Source Apache Software Foundation, IBM (Sun) • 2nd Generation Open Source Hybrid - corporate distribution & sponsored OSS CONFENIS 2011 Aalborg

  18. The Metropolis ModelKazman & Chan [2009] CACM • Crowdsourcing • Both for software development, general business • Move to service orientation vs. product • Emphasize: • Crowd management • Separation of kernel content and peripheral components • Less formal requirements process • Focus on architecture • Many eyes testing FAIM 2012 the Baltic

  19. Yochai BenklerThe Wealth of Networks [2006] CONFENIS 2011 Aalborg

  20. ERP’s Future • SAP, Oracle prospering • High end of the market will continue to be strong • Upgrades • Microsoft moving into SME market • Very large potential • International vendors finding niche • Local advantages • Open Source opportunities • Parallel to Linux • Related SOA/SaaSmodel

  21. Conclusion • Open source ERP projects are increasing • Not all projects are highly structured • Reluctance to use open source ERP in firm’s core activities • PROVIDES OPTION FOR SME • VENDORS CAN USE TO REFINE THEIR SYSTEMS • Open source an access to free labor

  22. Spectrum • Major vendors • SAP, Oracle (BAAN) for large organizations • Outsourcing • Application service providers (EDS, IBM,…) • Mid-range vendors • Microsoft (Sage, Lawson, etc.) for smaller organizations • Local vendors • Country specific vendors (China, Korea, Taiwan) • OPEN SOURCE • Compiere, Nexedi,… CONFENIS 2011 Aalborg

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