I recently read an article posted here that proclaimed open source is "the future of software." While I'll agree that open source has been a tremendous success in some parts of software, there is at least one area that I don't see it taking off - enterprise resource planning (ERP). Open source has yet to take off in ERP software for a variety of reasons.
Enterprise Applications Are Sold, Not Bought
Enterprise applications require sales and marketing to encourage widespread adoption. The traditional strength of open source is in development - thousands of developers contributing code to a greater good. The open-source expectation is that free software will sell itself. Early adopters will embrace the free technology and rave about its capabilities; the majority will follow the buzz. This has proven effective for open-source infrastructure, where the users are curious developers with the inclination and skill set to tinker with new technologies.
Enterprise applications are different. The buyer has the expectation that his hand will be held by doting sales professionals throughout the sales cycle. And they need it. Too many line-of-business buyers are groping in the dark during the software selection process. As a result, the best product rarely wins in the enterprise apps market. The best sales and marketing wins. In the case of ERP, open-source players are helplessly outmatched by Big ERP’s sales and marketing muscle. Oracle spends $4.6 billion a year on sales and marketing, while SAP spends $2.8 billion.
Capitalists Make Poor Contributors
Community contributions are central to the open-source model. Traditionally, the largest area of contribution has been developers writing and contributing code. However, contributions are also made in quality assurance, documentation, and support. Again, this has worked well for open-source infrastructure where technology is coded for developers, by developers. There is an admirable sense of partnership between these birds of a feather. A developer’s necessity spurs innovation, while altruism and a desire to be recognized drives her to contribute that code to the open-source project.
This model breaks down when business people enter the picture. As capitalists, they are compensated to grow their firm’s profits, not support a community. Business people seek a proprietary competitive advantage. As a result, they are unlikely to share their innovations. In most cases, business people will support the core of an open-source project; however, they will soon seek to monetize differentiated extensions and other value-added enhancements to the project. Based on what I’ve read of the Compiere chronicles, it appears that the competing financial motivations of the sponsor, channel and contributors were behind many of that project’s challenges.
Application Development Requires Domain Expertise
When it comes to open-source infrastructure, contributing developers are coding in their comfort zone - deep in the technology stack. But when they’re asked to code business applications, they move beyond their comfort zone. For application development, developers need detailed product requirements, which are traditionally delivered by a business-savvy product manager. In open source, this pairing is difficult as a result of the point we made above: business people are less likely to contribute.
Again, the Compiere story is informative. Members of both the Compiere project and its subsequent fork, ADempiere, note that community contributions were primarily technical. These include database ports, performance enhancements, and new Web client technology. Once again, we see the developers contributing the underpinnings they felt to be critical. Meanwhile, functional enhancements were developed by commercial entities - Compiere, Inc., and its channel partners - but were typically monetized as proprietary code rather than contributed.
SugarCRM Has Succeeded, but it’s Fake Open
SugarCRM stands out as the one open-source application project that has gained critical mass. In fact, SugarCRM has emerged as a viable alternative to industry leader Salesforce.com. However, SugarCRM’s success has been achieved through a commercial effort that is almost indistinguishable from a traditional proprietary software vendor. The company has raised over $50 million in venture capital, it has a dedicated sales team, and it employs savvy marketing. Finally, it sells Professional and Enterprise editions, which are essentially commercial software.
Is this true open source? The community edition may be free, but it is flimsy in comparison to the commercial editions. From my perspective, SugarCRM is a commercial software product.
It would seem then that open source may not be the future of software full stop. In the world of enterprise resource planning, there are still quite a few hurdles to be overcome.
Action Item: Have any thoughts on how open source might be able to overcome these obstacles? Please leave a comment.
Footnotes: Derek Singleton blogs at Software Advice, an online resource that presents reviews and comparisons of mrp software.
