Companies looking for Oracle or SAP may not turn to open source ERPs because the companies which are large in size require ERP implementation package to handle the complex transactions and to handle the bulky database transactions. But there is a growing market of small and midsized enterprise which is not ready to buy license of expensive software and invest "multimillion dollars" into automation. Further, it requires more than half a year for implementation and future investments.
Midsized companies have more than 250 employees and the turnover can be around 50 million Euros, whereas, small sized companies have headcount more than 50 and turnover is around 10 million Euros.
There are two types of ERP packages available in market: Open source and closed source. In both the cases, the ERP implementation stages are almost the same and in case of open source, the software is available for free, therefore, the cost on number of license reduces but the risk of failure is almost the same, and the efforts and time required for implementation is also the same.
There are many companies less than 50 employees and these companies may need all the complex functionalities of ERP. Open source ERP is popular with midsized companies having human resource in the range of 50 to 2000 and in case the companies are working on simple Microsoft Office files such as Excel or QuickBooks - it comes as a boon.
Many SMEs are investing in implementing open source ERP but it is very risky and tough task to get it successfully. There are a number of reasons for companies not going for open source ERPs and some of the reasons are
1. The requirements of various companies vary and the source code may not provide the needed complexities in functionalities as required by the company.
2. It requires hiring technical and functional staff to analyze the code and to customize as per the requirements of the company. So the time of implementation of ERP can be more.
3. Expenses can go beyond the price of an average ERP. Many organizations do not want to invest towards software development, administrative tasks, instead they just want to concentrate on core business issues but development on source code requires the company to get involved at each stage of development. The cost of customization and annual maintenance is can be very high.
4. Features such as interface with banks, international issues, currency conversion and language require the software to have globalization features, and open source may not have such advanced features.
5. The software does not come with a proper training and support, and the reliability of developments cannot be confirmed. There are many systems which may end up in failure after succeeding in initial stages. In such cases; the buyer may not be in a position to file a complaint about it.
6. Buyers are not clear about the legalities related to the software and such reputation limits the market of the software.
7. The documentation and help part may not be complete or not even present.