Impex Embraces Open-Source ERP

Case Study: Compiere and Mango Network team up to bring the maker of plastics products a flexible open-source ERP and CRM solution.

When one of J.D. Hicks clients expressed an interest in enterprise resource planning software, Hicks did what many people do: He turned to the Internet for product research. It was while surfing the Web that Hicks discovered Compiere, a Portland, Ore., developer of an open-source ERP system.

"Ive been a longtime advocate of open source," said Hicks, CEO of Mango Network, an Irving, Texas, software and services company. "When I found Compiere, I tracked the progress of the product for about a year before I finally contacted the company."

That initial contact occurred in September 2004 when Hicks traveled to Toronto for a Compiere training class. The purpose of the trip, he said, was to conduct due diligence "to understand the product and see if it was ready for prime time."

It was there that Hicks met Jorg Janke, Compieres founder and principal. Hicks said his mind was made up after the class: He would use Compieres namesake ERP and CRM (customer relationship management) product to provide the foundation for ChannelMaker, ERP software that Mango introduced to the market in September 2005.

Mango, which specializes in providing software and services for small and midsize wholesale and retail distributors (those with annual revenues of between $10 million and $50 million), needed to find an ERP product that could meet the needs of its niche target market, Hicks said.

For example, any ERP system that Mango would offer to clients would have to include support for drop shipping and functionality for sophisticated bills of materials, among other capabilities.

Hick said that is the primary reason he was looking for an open-source product. Given that his target market represents a niche, he needed to add industry-specific product extensions to any ERP system that he, in turn, offered to his clients. Hence, Hicks needed to have ready access to the source code.

As for other open-source options, Hicks said he also evaluated ERP software from The Open For Business Project, an open-source initiative licensed under the Massachusetts Institute of Technology. In a head-to-head comparison of features, Hicks said he found Compieres offering more comprehensive.

/zimages/3/28571.gifClick here to read about software from Microsoft that bridges the ERP-CRM gap.

In addition to open source, Hicks had another, more ambitious requirement for any ERP system he would offer his customers: It would have to lend itself to be delivered over the Internet in a SAAS (software as a service) model.

"Our vision is to shift the way enterprise software is sold, purchased, implemented and deployed to small and medium businesses," Hicks said.

Hicks said small and midsize distributors have the same ERP-related functional requirements as their bigger counterparts—capabilities such as inventory management, accounts payable and receivable, and order management, for example. Yet, many SMBs (small and midsize businesses) lack dedicated IT personnel and dont have the financial resources needed to buy and maintain a comprehensive ERP package from a traditional software vendor, Hicks said.

"One of the things we run into a lot is an old legacy system thats dying or that a vendor wont support anymore," Hicks said.

By offering ERP as a service that clients access via the Internet, smaller companies are spared the expenses associated with software installation, maintenance and upgrades. However, unlike many SAAS providers, Mango charges annual fees based on a customers revenues, rather than monthly fees based on the number of users.

One such customer is Impex Films, a Houston-based distributor of plastic films and packaging products. Ash Shah, president of the $12 million company, said Impex wanted to deploy an ERP system that would consolidate the companys accounting, CRM and spreadsheet systems.

"Were growing every year, and we needed to have a good reporting mechanism to the banks that lend us money," Shah explained. As Shah recalled, Mango President Chris Keele first contacted him about ChannelMaker after receiving an e-mail inquiry from an Impex employee. That initial contact was followed by an in-person presentation.

After evaluating other ERP products, including Microsofts Great Plains, Shah signed on with Mango in September, implementing ChannelMaker. Shah said he opted for Mangos product because he liked the concept of SAAS.

Next Page: Cost advantages of SAAS.