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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.
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.
Cost Advantages of SAAS
“[Mango] would handle the hardware, and we didnt need to worry about the computer stuff,” Shah said.
But the main selling point was cost, he said. He didnt have to pay a huge fixed cost upfront, and the quarterly fee he pays is based on sales.
Although Shah said he was initially concerned with security issues posed by open source, those worries have been assuaged.
And as for results, he said he has a much more accurate picture of inventory, orders and financials.
Previously, using three systems simultaneously, Shah said he could provide his banks only with an aggregated average of Impexs financials.
Shah said the few glitches hes had with ChannelMaker—in some instances, inventory wasnt recorded properly, for example—have been fixed promptly, a testament, he said, to a solid partnership between Compiere and Mango.
As for Janke of Compiere, he has extensive experience in ERP, having developed his first such system in 1984. Hicks said it was a combination of Jankes experience, his commitment to open source, his partnership philosophy and the capabilities of Compieres ERP system that persuaded him to join forces with Janke. Hicks has plenty of company; as of February, Compiere had signed up more than 60 channel partners in more than 20 countries.
As a provider of an out-of-the-box ERP/CRM system based on open source, Janke said that potential partners can do extensive pilots of the product before they opt to use it. Indeed, he said, Hicks experience of spending a year evaluating the product before deciding to go with it is not unusual.
“Many people look at Compiere for a fairly long time,” Janke said. Not only do they weigh the pros and cons of the product from a technical perspective, but they also have to evaluate whether they can effectively market the product to their customers.
As Hicks did, anyone interested in becoming a Compiere partner can attend one of the companys training events that are held four times a year.
For Hicks, Compiere is an ideal partner because “they have mutual skin in the game.” Theres a shared-risk, shared-reward philosophy between the companies, he added. “Im spending my development money to enhance a product and train people in support,” Hicks said. “Compiere is supporting us, letting us add extensions and giving the code away. They work with us through the sales cycle as we try to close a sale.”
For Impexs Shah, his experience with both Compiere and Mango has been extremely positive, he said.
“Now with consolidated functionality, we accurately record the cost of every unit of our material,” Shah said. As the company anticipates double-digit growth in the future, he said he will continue to use ChannelMaker. “Its really good software, Shah said, “and the people [at Compiere and Mango] are hardworking and service-oriented.”
One major area that Janke said he is focusing on is marketing. To date, he said, Compiere has done a good job communicating its technical prowess to partners.
Janke said hell now concentrate on translating Compieres technical experience into business benefits that corporate customers will be able to understand.
Megan Santosus is a freelance writer based in Natick, Mass. Contact her at megan.santosus@gmail.com.
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