Top free ERP and open source systems (plus hidden costs)
Using a free ERP system can be a great starting point for small businesses looking for their first system.
A free ERP system is exactly that - free. These systems are typically open-source or have a free pricing tier where businesses can use the software either at its full capacity, or use limited features.
What is free ERP software?
Free ERP software usually falls under two models: open-source, or software with a free user tier. The software begins at no cost - there are no installation or license fees to consider when implementing a free ERP system - the outlay of "cost" is your time and resources spent installing the system and migrating your data.
What is the best free ERP for a small business?
Free ERP is often a good initial step for startups or small businesses, a free system will allow you some of the functionality of a full ERP often with opportunities to pay for additional functionality. The best free ERP for your small business will depend on many things - including cost - such as how quickly your business will grow? If your small business is expected to grow quickly, a free ERP system may not have the functionality to support you fully versus paying for a system that could quickly scale up, or identify a solution that has opportunity to scale up without a costly data migration two years down the road.
Why do companies offer a free ERP?
As with all software industries, there are developers who see the potential for quicker and more flexible technological development; by offering their software as open-source, lots of developers can pitch in and make large improvements and advance the software to become more encompassing.
Companies that offer their software as a free tier typically want your business to grow with their software, and as your needs grow you will upgrade to their paid offerings. Free ERP systems can come with limitations on user numbers or number of transactions in a system, or even limitations on features themselves. As a company grows and sees the value with ERP, you will likely want to expand your features and functionality to fully support all your business functions. This may mean buying extra modules that can improve your software's abilities, such as adding an ERP finance module.
What is the best free ERP?
We researched and compared several free ERP systems that were open-source (OS) or free to download and use. Consequently, we identified some of the best free ERP systems on the market, including:
- Dolibarr ERP
- Odoo ERP
- Scipio ERP
- Marello ERP
- VIENNA Advantage
What is the best open source ERP?
- Dolibarr ERP
- Scipio ERP
- Marello ERP
These are the free ERP software that we'll discuss below in more detail.
Problems of free ERP software
From both research and educational perspectives free ERP systems can be a great way to learn about the operating vagaries of complex software systems; particularly given today’s access to cloud-based platforms. In this environment, sophisticated systems can be turned upside down, tinkered with, or blown up entirely, with little negative impact other than the potential of wasting installation time on systems that may offer neither complete documentation, nor direct support. Free ERP allows businesses the opportunity to 'test drive' the impact of an ERP, so to speak. Recent ERP research detailed that the leading reason for implementing ERP is to increase efficiency, now businesses can accurately assess whether their system will help them meet business goals. However, in the commercial world, time is money and any ERP technology based on a free pricing model tends to offer a framework for processes at best, or time-engulfing black hole at its worst.
Beyond these caveats, free ERP software systems are rarely without a financial cost, since these platforms require the same implementation, configuration, and maintenance expenses as any other costed variant. Secondly, open-source or free systems can experience irregular performance results due to an understandable lack of infrastructure investment behind the product. The point here is simple; just because a system is ‘free’ it doesn’t necessarily follow that the product will provide good long term value.
Having said all that, there are some particularly good products on the free ERP market, let’s check out our original top free ERP systems.
1. Free ERP: ERPNext
At the lowest tier, ERPNext represented one of the more innovative shops among the cluster of best open source ERP solutions. The original user interface was particularly simple, and many of the system’s processes appeared to be quite straightforward. At the time the platform was ‘free’ for those who wanted to self-host the platform. The original research suggested that the only downside was that scalability needs were limited at the ‘free’ level. Nevertheless, for small enterprises, the platform did it’s the job effectively.
The company continues to grow and currently maintains nearly 500 enterprises in various staged of self-development. The ERPN community has grown as a consequence of continual development.
2. Free ERP: Dolibarr ERP
Dolibarr ERP represents a next step in open-source development. The application appears to be easy to master and includes everything an ERP requires, including accounting, CRM, HR, and inventory modules.
3. Free ERP: Odoo ERP
Odoo offered a particularly intriguing value since it offered ‘…two ways it could be operated’ on the open-source tier. The approach focused on a cloud value providing the ability to provision 50 users or less. The second approach offered a source code value, thereby allowing the user to tweak the system’s base code as desired. Odoo continues to grow in both form and sophistication. The platform currently touts over 3 million users, and as an expected turn of events, is still free as an entry product value.
4. Free ERP: iDempiere
At the high end of the free ERP tier, iDempiere offered a particularly dense code base, effective user interfaces, and comprehensive reporting. However, although the system was open-source, in order to leverage the technology most effectively the user was encouraged to have a clearly educated IT group available to deal with any implementation and configuration processes, backed up by a cadre of third-party ERP consultants. The iDempiere community continues to offer OS platforms including a particularly complex and sophisticated ERP variant. Once again, however, this open-source offer is not for the faint of heart, so if you think it will suit your enterprise needs, be ready to bring your ‘A Game’ along with a solid cadre of techs to manage the platform.
5. Free ERP: Scipio ERP
Scipio ERP is an open-source solution with a free entry-level software for small businesses specializing in eCommerce offerings. Their free version offers their templating toolkit and full support from the Scipio ERP community. They do offer support, extra themes, and components in their paid-for option which starts at $5,000 annually.
6. Free ERP: Marello ERP
Marello Community is Marello's free ERP offering for small businesses. Marello Community offers all essential features and capabilities that a small business needs when first using ERP with a strong focus on organizing sales, and allowing developers a look into their system.
7. Free ERP: VIENNA Advantage
VIENNA Advantage offers a community edition of their software, they list a basic set of features designed for small businesses and developers who are looking to deploy a few ERP features to their organization. There aren't any support levels with their free offering.
8. Free ERP: MixERP
MixERP is an open-source ERP available for developers using GitHub. MixERP is built for small businesses and runs a large help document to assist users in their software functions including adding users, transaction reporting, and human resources features.
Why businesses may opt for a free ERP
Now, while the previous discussion largely related to some of the negative elements associated with open-source ERP systems, in concert with the three previous closing assertions there are some other clearly positive values as well. First, there’s the matter of reduced up-front cost.
To be frank, any enterprise that doesn’t fret over money is likely to fail sooner rather than later. Consequently, given the enormous direct and indirect costs related to operating an ERP platform over time, any enterprise would be insane to try and avoid typical costs relating to a platform’s initial purchase price.
For example, in order to license from 2 to 50 ERP seats in the cloud, the average price range is between $5k to 90$k; while at the same time, the same number of seats is purchased on a premise-ownership basis, that cost goes up by several magnitudes to range from $20k to $200k. So, regardless of how you’re going to house the ERP variant, these numbers are nothing to sneeze at.
Next up, there’s the matter of customization. In this case and assuming that an enterprise is particularly tech-adept, open-source systems are perfect platforms for those who want resources-processes done in on a proprietary basis. For example, consolidated sales reporting is a highly subjective art.
Some firms may want reports that display each and every sales revenue element rolled up on a ‘projected’ monthly total. However, other companies only consider ‘booked sales’ as valuable reporting metrics. Consequently, depending on a branded systems level of sophistication, the way that these reporting requirements differ could become a problem over time.
However, with open-source processes, users themselves easily alter how a system responds, and for enterprises’ that are most clever, this characteristic can save thousands of money year-over-year.
Probable costs relating to free ERP
In my 2017 analysis, we discussed ‘probable costs’ related to open-source, and to be blunt, not much has changed from then to now. However, there is at least one core evolution that has altered the ERP open-source landscape during the preceding two years; lazy acceptance of cloud utilization.
Two years ago, according to Gartner and others, branded cloud-based ERP adoption suggested an 81% enterprise adoption rate, with open-source adoption roughly running at a similar adoption burn-rate. However, by 2019, while branded players are still growing, open-source systems are languishing at the same levels or worse.
According to tech consultant Frank Scavo writing for The Enterprise System Spectator, three components apply to the OS malaise:
- “Open source needs a large set of potential users. Although the ERP market is huge, when you break it down by specific industries, it is small compared to the market for, say, Linux.
- Enterprise apps require a large effort in marketing and sales. Buyers put great weight on name recognition. But open source projects do not generally show much interest in the sales and marketing side of a business.
- Open source is labor-intensive. It is great for organizations that have time but no money…ERP adoption is somewhat more successful in some developing countries, where there are very smart people with good technical skills willing to spend the time to implement a low-cost or no-cost solution.”
From an anecdotal level, these assertions tend to track with our own thinking. However, once again, there is opportunity in the open-source market, if an enterprise is capable enough and persistent enough to stay the course.
Disadvantages of free ERP
Let’s face it, enterprise-scale ERP platforms don’t exist because they’re impressive bits of software, but instead, exist to put more money on the user’s bottom line if properly utilized. Nevertheless, regardless of how clever you are, and how simple a system may appear to be, there’s always going to be a higher-than-normal degree of risk relating to any freeware business technology.
This assertion applies in triplicate when it involves an ERP platform, since resources-based platforms not only alter operating processes but over time, they also alter the way that workforces behave. For example, a simple manual process such as creating an invoice becomes much more complex when it’s integrated within an ERP system.
Aside from dealing with sometimes clunky user interfaces (see more on this directly), there are also common issues relating to where data is either pushed to one database or pulled from another. If corruption occurs, either way, just putting a series of numbers on a series of lines with the goal of calculating a sales total can cause a real problem.
This, then, represents an enhanced risk of lost time, or worse than that if the electronic invoice won’t calculate at all. With fee-based systems, the user can always call the brand tech and get him to deal with the problem. But if you’re operating on the open-source tier there’s no one to complain to except yourself.
Second, regardless of any apparent level of sophistication involving an open-source ERP system, these systems tend to be known as programmer rather customer-centric products, also sometimes referred to as ‘hobbyware’. In this case, systems tend to grow over time, not to plan. As a result, from a customer perspective, this means that documentation will usually be weak, while direct developer support will be equally weak or non-existent at all.
Third, at the OS tier, more times than not, issues of irregular usability emerge at the user level. In this event, I’m not discussing how a system works in general terms, but how that system is appreciated by the user while engaged in its processing chores. In the open-source world, programmers drive the bus, and everyone else follows along in their wake.
Consequently, this inverted value proposition becomes particularly concerning at the user interface level, since OS systems tend to focus on what’s under the hood, while not caring all that much about the quality of the exterior paint, brightwork, or how easy a system is to deal with. Again, these issues are real, but they are also manageable if an enterprise understands what its management is doing, well-heeled enough to harbor a solid group of internal tech resources, and finally, financially strong enough to pay for the privilege of getting something fixed at premium prices.
Previously free ERP: Openbravo ERP
At the mid-level OpenBravo was seen to be a solid solution for mid-sized companies. Its primary upsides related to the system’s initial cost, along with the fact that the platform allowed users to experience web and/or cloud-based ERP from the outset. Additionally, the system was quite scalable, thereby providing a cost control double-whammy. This product is no longer available as an open-source value.
Previously free ERP: xTuple ERP
xTuple previously offered a free ERP software, now their lowest cost per user is $90.
So there you go. If you think that your enterprise has the moxie to handle a self-developed ERP platform, feel free; but nevertheless, always mind the minefields before you step off.
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