Exploring Open Source

ERP in SMES

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Presented by Muneek Shah

Under Guidance of

Dr. Gayatri Doctor Mr. Rushik Shah

Associate Professor CEO

CEPT University Alakmalak Technologies

Contents

Introduction

Research Objectives

Research Questions

Literature Review

Questionnaire Design and Sample Size

Data Analysis

Conclusion

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Introduction

Defining ERP (Enterprise Resource Planning) ERP term designates an integrated set of software packages intended

to tie together various business processes such as financial, human

resources, supply chain and logistics

ERP systems serve to simplify business processes and give organisations a

cost competitive edge by ensuring that the whole business value chain from

raw materials inputs to final product is integrated

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Definition of Open Source Open Source should comply the following characteristics:

Free distribution

Must include Source Code and it must be in a readable form so that a

programmer could modify the program.

Derived Works - the license must allow modifications, other derived works

Integrity of The Author's Source Code the license may restrict source code that modifications are distributed as patch files.

No Discrimination Against Persons or Groups

No Discrimination Against Fields of Endeavour

Distribution of License the rights of a program must apply to all those to whom such program is redistributed.

License Must Not Be Specific to a Product.

License Must Not Restrict Other Software

License Must Be Technology Neutral

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Defining MSME Micro, small and medium enterprises (MSME) as per MSMED Act, 2006 are

defined based on their investment in plant and machinery (for manufacturing

enterprise) and on equipment (for service enterprise)

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Open Source ERP In present business scenario, companies are increasingly looking for flexibility, cost

savings and efficiency in the business applications they acquire.

The increased competition has driven companies to look for new ways to succeed

and remain competitive.

Enterprise Resource Planning (ERP) is one of those technologies that are at the

heart of the IT strategy of a company and Open Source ERP systems bring cost

savings compared to proprietary ERP systems which makes them to me more

popular and increasingly solicited.

In the Open Source ERP software market, there are following major players:

Adempiere, Compiere, OpenERP, Openbravo, Opentaps, xTuple

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Research Objectives

To identify benefits of Open Source ERP in SMEs

To carry out comparison of top open source erp

To find out the awareness ERP software in SMEs

To find out the most important factors that may motivate the SMEs to select Open Source ERP

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Research Questions

What are key benefits of employing Open Source ERP in SMEs?

Which of available Open Source ERP are market leaders?

What is the level of awareness of ERP software in SMEs?

What are the factors that motivate the SMEs to select Open Source ERP?

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Comparison between Proprietary and Open Source Vendors

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Proprietary Vendors Open Source Vendors

License and implementation cost is

high.

Lengthy implementation process

Not best fit for local industry

No Customization Leading to use 3rd

party Solution

Development is complex

Migration to new version has a

different cost

Flexibility and Module addition entail

extra cost

SAP , Oracle, Microsoft Dynamics

No License Cost only support service

charges

Quick Implementation

Specifically designed for SMEs

Easily and Rapidly customized

Development is quick.

No Migration Cost on new version

Free of Cost Flexibility & Module

addition.

OpenERP, Openbravo, Opentaps

Literature Review

Source: Open Integrated Solutions. (2011). Commercial Vendors Vs Open Source Vendors.

1. Reduced total cost (price)

2. Business Process Reengineering

3. Ease of use

4. Adaptability and flexibility of software

5. Short Implementation Time

6. Customization

7. Easy Integration with your systems

8. Vendors who have expertise in your domain of business

9. Vendor reputation

10. Vendor Support

11. Decreased reliance on Single Vendor

12. Free Upgrades

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Factors that motivate to select an Open Source ERP

Source: Johansson, S. &. (2009). Choosing Open Source ERP Systems:

Majed Al-Mashari, A. A.-M. (2002). Enterprise resource planning: A taxonomy of critical factors.

Fiona Fui-Hoon Nah, K. M.-S. (2003). ERP Implementation: CIO Perceptions of CSF Birdogan Baki, K. . (2005). Determining the ERP package-selecting criteria

Google Trends Comparison

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Source: Google. (2014). Google Trends Comparison. Retrieved 2014,

Open Source ERP projects download per week

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Source: SourceForge. (2014). Search Results of ERP. Retrieved 2014, from sourceforge.net:

Questionnaire Design and Sample Size

To design the questionnaire the following factors were taken into account:

Questionnaire had to generate interest in the respondents

Questionnaire had to be precise

Respondents should able to complete questionnaire in absence of

researcher.

Data Collection was carried out via online questionnaire tool (eSurv.org)

The link to the online questionnaire was sent to 160 participants and 30 fully

completed the questionnaire while 6 partially completed it, so they were

rejected as part of sample size

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Data Analysis

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64%

36%

Type of Organization

Manufacturing Sector

Service Sector

15

61%

21% 11% 7%

Organization Size (no of employees)

100

16

35%

17%

14%

6%

5%

3%

SAP

Open ERP

Oracle E-business Suite

Microsoft Dynamics

Other

Open Bravo

SAGE

Awareness of ERP

20%

17

68% 32%

Aware of Open Source Software

Yes

No

18

14%

86%

Implementation of ERP in organization

Yes No

19

3%

7%

7%

7%

7%

7%

10%

13%

13%

13%

13%

0% 2% 4% 6% 8% 10% 12% 14%

Increased interaction across the

Improved interaction with customers

Improved interaction with suppliers

Reduced head count

Return on investment

Improved on-time delivery

Reduced cycle time

Increase overall productivity

Quickened information response time

Improved order management/order cycle

Improved cash management

Post ERP implementation benefits

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1.5

1.6

1.6

1.6

1.8

1.8

1.9

2.1

2.2

0.0 0.5 1.0 1.5 2.0 2.5

Customer service

Manufacturing productivity

Supply chain visibility

Lesser delivery times

Reduced inventory

Decrease in manufacturing lead time

Manufacturing

Improved Product quality

Increasing Competition

Key drivers for implementing ERP

Rank Factors Weighted

Average

1 Price 4.53

2 Industry specific solution 3.78

3 Security 3.46

4 Amount of customization required 3.35

5 Implementation time 3.10

6 Past experience of Company 2.53

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Ranking Selection factors of ERP

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Importance of factors for selecting Open Source ERP

Reduced Total Cost 11%

Upgrades for open source ERP systems are for free 11%

Customization 11%

Easy Integration with your systems 10%

Implementation Time of ERP Solutions 10%

Changing Business Processes 10%

Vendor Support 10%

Decreased reliance on Single Vendor 9%

Vendor reputation 9%

Vendors who have expertise in your domain of business 9%

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75%

25%

Willingness to implement Open Source ERP

Yes

No

Conclusion The study has shown that even though the awareness of ERP in SMEs is high,

the number of implementation in organizations is low.

And also out of the number of people, who are aware about ERP, 68% are aware

of Open Source softwares, this indicates that the level of awareness about open

source softwares is high

The ranking given by the SMEs for the selection criteria of ERP is as follows:

So from the above ranking it is inferred that price, industry specific solution and

security matter the most when selecting ERP in their organization.

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Rank Factors

1 Price

2 Industry specific solution

3 Security

4 Amount of customization required

5 Implementation time

6 Past experience of Company

Total of 12 factors were identified from secondary data to fulfil one of the

objectives of study, which was to identify the most important factors that motivate

SMEs to select Open Source ERP.

Out of which top three factors identified from survey are as follows:

Willingness of SMEs to opt for Open Source ERP was also checked, out of all the respondents 75% responded positively, so after learning about Open Source ERP

in detail, the SMEs were very positive about implementing Open Source ERP in their organization in near future. Some of SMEs also asked for how to have a demo/trial of Open source ERP, so that they can experience it hands on.

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1. Reduced Total Cost

2. Upgrades for open source ERP systems are for free

3. Customization

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Birdogan Baki, K. . (2005). Determining the ERP package-selecting criteria: The case

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Thank You

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