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Indian Institute of Management Kozhikode

Management Information Systems


Case Analysis: IT Leaders, Vertex Distribution and Prevention Partners The future of ERP may lie with open source

Submitted to: Dr. M. Hari Sankar

Submitted By: Kavya SS PGP/14/276 Kritika Gupta PGP /14/277 Kulbhushan Baghel PGP/14/278 Lokesh Singh PGP /14/279 Mahtaab Kajla PGP/14/280

Q1: The case highlights differences in adoption of open-source ERP systems between small or medium and large companies? Do you think it is only a matter of cost? Justify your answer.

Answer:

Q2: Enterprise resource planning systems are clearly the backbone of the modern enterprise. How comfortable would you feel about recommending the adoption of an open source package to perform these functions, and why? What kinds of resistance, if any, would you expect to find about your proposal?

Answer: We would recommend the adoption of open ERPs only for the small and medium scale
enterprises as of now. We are excluding large scale organizations for the time being as there is no proven open source ERP solutions till date of the scale required by these firms. It can be a risky option if the requirements of the large companies are not understood properly and the implementation fails. Such failures result in substantial loss in profits, revenues and market share sometimes even leading to bankruptcy of the company. We recommend the use of open ERP for SMEs for the following reasons:

Decreased Costs: As the open ERP systems are available free of cost, it serves as a financially
viable option for the SMEs especially as the money saved can be used for customization. Flexibility in terms of modifying and customizing the current implementation. It also facilitates database connectivity across the various databases available. SMEs can seek support for the ERP implementation and customization from the consultancies which support their other software projects. Bye-Bye Vendors: SMEs can do away with the vendors by implementing open ERPs as most of the ERP deployments are done by in-house teams and not the commercial software vendors.

Management Information Systems| 31/07/2010

Possible oppositions to the proposal are as follows:

Updates: Depending on the project, your ERP may receive updates at irregular or unannounced
intervals, which might backfire on system.

Support: While the communities for some open source ERPs provide wonderful support, you'll mostly
be limited to community forums and groups if you have any problems, as no official support website or phone number exists.

Compatibility: Many open source ERPs work toward compatibility with other common software suites,
but yours may not function with other programs. If you can't use the files another business sends you, then you may need to switch systems or programs just to complete simple tasks.

Q3: Do you agree with the rationale stated by some of the CIOs in this case that if ERP systems need to be customized anyway, starting with an open source package may make more sense than with a commercial one? Why or why not? Justify your answer.

Answer: Yes, because commercial software gets outdated after a few years and is unable to keep up the
companys growing needs. Their replacements are big and expensive and take a lot of time and money to customize. Also the software is not very nimble which is serious a flaw at a time when the business needs IT to move fast. Lack of customization ability serves as a major source of contention for the CIOs Advantages to move to Open Source ERP

Saving Licensing Costs: Licensing costs are saved, which serve as huge incentives especially for
SMEs which can use the additional money for customization. More flexibility: A right tool for right job. Financial Suitability: Suitable for SME companies Regulatory requirements. If your ERP is not meeting regulatory requirements, then its better to go for Open ERP. Core competencies . One of the primary reasons an organization implements Open ERP software is to force them adhere to best practices in their industry. Competitive advantage: If organization is using a customized product, it can serve its needs in effective and efficient manner as every organization has some extra needs which cant be fulfilled by the basic ERP proprietary software. Less Coding: The framework is already present which makes customization easy and reduces dependency on the vendors. It saves 30-40% code needed.

Complete and Feature Rich ERP and CRM System

Management Information Systems| 31/07/2010