xTuple's CEO sees growing enterprise adoption of open-source ERP, but analysts question its long-term prospects.Open-source ERP software developer xTuple on Jan. 3 will launch a new three-tiered network service, the xTuple Network.
Dubbed XTN for short, the network is essentially a suite of managed services designed to help users better maintain and upgrade their xTuple enterprise resource planning applications. While XTN is a step in the right direction when it comes to easing companies fears about reliable service and support for open-source software, the real question is whether open-source ERP applications will ever truly make inroads in the enterprise.
Ned Lilly, president and CEO of xTuple, said that while PostBooks, the companys horizontal suite of ERP applications, is geared mainly toward the QuickBooks migration crowd—the small and, in some cases, midsize business sector—more enterprise-level CIOs are looking into open-source ERP as a viable alternative to proprietary offerings.
"Weve historically focused on the small and midsized business market, but we see more and more interest from enterprise players," Lilly said. "After the holidays well [announce] our first SAP conversion, and weve had a couple other people coming off of larger packages as well. I think people are going to be surprised at how quickly the notion of open-source ERP works its way up. Like everything else, it will start small and work its way up. More and more CIOs are kicking the tires of people like us, especially when they have a big Oracle maintenance contract coming up."
At the same time, xTuples biggest competitor, Compiere, has seen some relatively significant success, despite a community splintering in 2002 that led to a spinoff of Compieres ERP products and community. Compiere itself has seen more than 1.2 million downloads of its software—though with SourceForge.net as distribution hub, its impossible to tell how many of those downloads are test drives as opposed to actual implementations—and it offers commercial support and services to a network of more than 100 partners in 25 countries.
Click here to read more about xTuple, formerly OpenMFG.
But in a Dec. 13 Forrester Research report, analysts Michael Goulde, John Rymer and David DSilva found that open-source software deployment is more tactical than strategic. In a survey of 2,252 "software decision makers," Forrester found that while two-thirds of the respondents surveyed are interested in open-source software, adoption is not seen as a high-priority initiative in the coming year.
"We found that 41 percent of the sample indicated that expanding use of open-source software was not on our agenda," wrote Goulde. "Only 23 percent said that it was either a priority or critical priority."
Open-source software adoption turned out to be more of a tactic for achieving other high-priority initiatives, like implementing enterprise collaboration and Web 2.0 strategies and adopting SOA (service-oriented architecture), the report said.
The two main barriers for open-source software adoption remain security and continuity of service and support, according to the Forrester report.
"Among the firms that indicated that they are either planning to pilot or are currently piloting open-source software other than Linux, 79 percent expressed concerns about the availability of service and support for the software," Goulde wrote. "Even more telling is that 88 percent expressed concerns about the security of the software. This is even higher than weve seen in the past. … These two concerns by themselves, if not addressed, could easily delay deployment of open source into production."
A separate Dec. 21 Forrester report found that while open-source products are now practical in many product categories, "they havent caught on in the enterprise applications market," wrote analyst Sharyn Leaver, who found a few notable exceptions in down-market categories like procurement and CRM (customer relationship management) where IT shops already embrace open source.
xTuples XTN service aims to ease some of the service and support fears found in Forresters report. As a suite of managed services based around maintaining and upgrading open-source ERP, XTN provides three support tiers. At the Basic level, once customers implement either OpenMFG or PostBooks on the server, there are ongoing maintenance and upgrades, Lilly said. The middle Backup tier adds automatic nightly updates, while the Premium tier adds high-end database tuning and optimization.
"Its not quite remote database administration, but were sort of heading in that direction—the care and feeding of the database," Lilly said. "Were trying to simplify ERP for the smaller market that might not have a whole lot of technical services in-house."
The XTN service could help spur open-source software adoption in another way, too: While the early iteration is clearly a service offering, XTN will eventually morph into a platform with third-party add-on capabilities, Lilly said.
"We see more and more people interested in developing add-on solutions, vertical solutions that sit on top of the base ERP," Lilly said. "Lots of people call themselves a platform. We look at it as a business operating system—the fundamental blocking and tackling of the operating system—that seems like a logical start for us, and a big part of putting a horizontal product out there. We built up a pretty good business, a set of products and services in the manufacturing vertical, but there are all kinds of other verticals that still need that horizontal infrastructure."
Lilly anticipates rolling out more tools and resources in early 2008 to enable more vertical solutions. The tools will be developed both in-house and through the open-source community.
"There are some architectural things that were going to be improving, but we are also listening very carefully to what people are telling us around solutions for industry," he said. "So there is a partner push there as well."
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