Download - Exploring Open Source ERP in SME’s
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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
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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.
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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
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Google Trends Comparison
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Source: Google. (2014). Google Trends Comparison. Retrieved 2014,
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Open Source ERP projects download per week
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Source: SourceForge. (2014). Search Results of ERP. Retrieved 2014, from sourceforge.net:
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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
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61%
21% 11% 7%
Organization Size (no of employees)
100
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35%
17%
14%
6%
5%
3%
SAP
Open ERP
Oracle E-business Suite
Microsoft Dynamics
Other
Open Bravo
SAGE
Awareness of ERP
20%
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68% 32%
Aware of Open Source Software
Yes
No
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18
14%
86%
Implementation of ERP in organization
Yes No
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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
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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
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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
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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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Bibliography
Free Software Foundation. (2012). Retrieved 2014, from http://www.fsf.org/
ADempiere. (2011). Documentation. Retrieved 2014, from adempiere.com:
http://www.adempiere.com/ADempiere_ERP
Anja Schatz, M. S. (2014). Open Source ERP resonable tool for manufacturing smes?
Stuttgart, Germany: Fraunhofer institute for manufacturing engineering and automation.
Birdogan Baki, K. . (2005). Determining the ERP package-selecting criteria: The case
of Turkish manufacturing companies. Business Process Management Journal, 75-86.
Chang, H. Y. (2012). Evolution of ERP Systems Implementation in Taiwan. Journal of
E-Business.
COMPIERE. (2013). COMPIERE ENTERPRISE EDITION. Retrieved 2014, from
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Deloitte , CII. (2008). Growth Oppurtunities for Indian SME's. Deloitte .
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Fiona Fui-Hoon Nah, K. M.-S. (2003). ERP Implementation: Chief Information Officers Perceptions of Critical Success Factors. INTERNATIONAL JOURNAL OF HUMANCOMPUTER INTERACTION, 5-22.
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Fougatsaro, V. G. (2009). A Study of Open Source ERP Systems. BLEKINGE
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Gartner. (2012, April). Newsroom. Retrieved Feb 2014, from Gartner.com:
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Google. (2014). Google Trends Comparision. Retrieved 2014, from Google Trends:
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Thank You
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