Open-Source ERP? One Company Takes The LeapOpen-Source ERP? One Company Takes The Leap

When Medal LP began looking to upgrade its business-management software in August, a half-million-dollar commercial enterprise-resource-planning package was out of the question. The company, a subsidiary of industrial and medical gas supplier Air Liquide Group America LP, wanted one application to handle accounting, general ledger, shipping/receiving, and sales functions more easily than its software from FileMaker Inc. Although Air Liquide uses ERP software from J.D. Edwards, which is now part of Oracle, the Medal subsidiary "would have been lost in all of that application's menus," Medal IT manager Andrew Holowka says.

Holowka looked to open source. Why? First, cost. But second, Holowka wanted something to run on both Linux and Mac OS X. He did some research and found OpenMFG LLC, which makes an ERP application that runs on the PostgreSQL database. "I went to the Apple product finder site and did a search," he says.

OpenMFG isn't a pure open-source model. The license makes the software's source code available to paying customers, and they can make revisions. But any improvements then belong to OpenMFG. "We bring those modifications back in like with open source, but we own them and push them to the main product," OpenMFG CEO Ned Lilly says. "This is like a proprietary GPL."

Lilly had been working on the venture-capital side of media conglomerate Landmark Communications Inc. in 1999 and dealt with a startup Landmark funded called Great Bridge, trying to create a business model around commercializing the PostgreSQL database. The startup didn't survive, but Lilly got a taste of the open-source market.

Does open source make sense for something as complex as ERP? Holowka had his doubts. He researched the PostgreSQL community and was satisfied the database had a developer community supporting it. And he has worked with the OpenMFG code enough to believe the quality is at least as good as what he has seen in the commercial market, adding that open-source programmers "are doing this for notoriety, so they don't want to put garbage out there." Medal will have 15 users on OpenMFG by the end of the year, paying $15,000 annually.

Holowka doesn't expect OpenMFG, ComPiere Inc., and other open-source ERP vendors to affect the competitive landscape. But that wasn't his goal. Says Holowka, "It'll affect my bottom line. We've always looked to low-cost solutions--simple things that solve complex problems."

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