Most multichannel merchants are familiar with the two dominant ways of acquiring operational management system software: a licensing agreement that provides access to a usually-limited number of users; or an outright solution purchase that generally permits unlimited users.
The cost of the latter is much higher than the cost of the former. And if the solution purchase includes access to the system source code to allow the user to make modifications, the price can be astronomically high.
These two options can be employed whether the system is hosted inhouse or through a private or public cloud platform.
But there’s a third way: Open-source systems. To date, these have gained most acceptance among ecommerce platforms (such as Magento), operating systems (such as Linux) and database applications (such as MySQL), as opposed to business systems of a more general nature.
As their name implies, the primary advantage of open-source-coding systems is that they can be used and adapted by anyone, at no cost (or at least at much lower cost, if you opt to use an open-source vendor with support options—see below).
Users can customize and extend the software as they like to accommodate their individual business needs—a potentially significant advantage when there is a large gulf between a company’s evolving needs and its traditional vendor’s development plans.
Users may choose to keep their changes to themselves or, as is more often the case, share them with the rest of that system’s user community. To facilitate this process, there is typically a “vendor of record” for the solution. This vendor evaluates and vets the new code to make sure that it’s reasonably bug-free and consistent with the architecture of the system.
The downsides
Open-source emerged as a viable alternative in the 1990s among a group of independent developers who believed that all software should be free. When Netscape opened its code to all in 1998, open-source became legitimized, or semi-institutionalized.
Still, the open-source movement has never really entered the mainstream—probably because of some potential downsides:
Downside #1: Although a vendor of record usually provides some baseline for evolving the system, and most development on the system is shared among users, there is often no one in charge of directing or focusing that development.
Keeping the system current with your changing environment will be up to you and whether other users turn out to be responding and adapting the coding to achieve similar objectives. This means that an open-source strategy could ultimately end up falling far short of what a responsible (and genuinely responsive/forward-looking) traditional vendor might provide.
Downside #2: There is no built-in, formal system support. Instead, in most cases, there are two options: relying on the community of users to help resolve usage issues or to debug the code; or paying the vendor of record support fees. Some—but not all—of these fees are modest. And over time, paying support fees can begin to approach what you would have paid a vendor for a standard system, one that would have allowed you to benefit from the vendor’s development momentum.
In short, as always, it’s buyer beware. And remember: There is some truth to the cliché that you get what you pay for.
Open-source vendor options for multichannel merchants
There are just two vendors offering open-source solutions in the multichannel direct-commerce field: Opentaps and OpenMCR. Here are some basics about these vendors:
Opentaps (opentaps.org) is the much more established option. It bills itself as an “open-source ERP + CRM” application that “supports ecommerce, customer relationship management, warehouse and inventory management, supply-chain management, and financial management, as well as business intelligence-and-mobility integration, out-of-the-box.”
Opentaps is sponsored by Open Source Strategies Inc. and was developed by full-time professional developers working in tandem with “a global community of partners and contributors.”
The system has a services-oriented architecture built on Enterprise Java J2EE foundations, using Apache Tomcat and OFBiz (the Apache Open For Business Project). This makes it an open-source suite built on open-source operating platforms. Users can also incorporate proprietary databases into Opentaps.
Open Source Strategies manager Si Chen reports that the platform’s users, which include Folica.com and Retrevo.com, employ the system to manage direct B-to-B and B-to-C online sales and partner-channel sales (such as Amazon and eBay), as well as warehouse/fulfillment activity, purchasing and even accounting functions.
“Once a company grows to a certain size, traditional point solutions start to break down, and a platform like Opentaps that encompasses all of a business’s needs becomes very compelling, versus integrating separate online stores, warehouse, CRM and ERP [enterprise resource planning] systems,” Chen says.
This ignores the reality that there are about three dozen fully integrated “traditional” solutions specifically designed to meet the needs of multichannel merchants. But it also illuminates the perspective of the open-source community, which is sometimes more focused on being a counterpoint to traditional systems than on the actual competitive dynamics of the solutions marketplace.
That said, there are indeed significant open-source success stories. For example, one multichannel merchant converted to Opentaps in 2007 from a legacy IBM AS/400 environment that was becoming difficult to manage. This company, now a major Opentaps user, reports that it saved $1.5 million in operating expenses by automating tasks in finance, marketing, customer service and order entry.
Perhaps even more important for this global company (which is not named due to client confidentiality concerns), the Opentaps solution incorporated multilingual, multinational functionality. This alone can be a very compelling argument in favor of open source—if you have the requisite IT skills for support and programming (either inhouse or on a third-party basis).
Opentaps is available under two sets of terms. There is an open-source license that allows you to use, modify and redistribute the source code of the software at no cost, but also requires that you publish/share your modifications, extensions or customizations. Or, there is a license that allows developers to incorporate Opentaps into other applications. This “professional” edition ($600 per user per year) also offers developers professional system-support from Open Source Strategies, with guaranteed response times, plus update releases.
Opentaps can be run in the cloud on the Amazon Elastic Computing Cloud (EC2). You can also purchase an advanced financials module, an email marketing integration module, and a VAT management module for European implementations.
OpenMCR (openmcr.com) has thus far worked with a single user—Boulder, Colo.-based Only Natural Pet Store, which went live in late 2011.
The system is built on Compiere, a cloud-based, open-source ERP and CRM system owned by Consona Corp. and available via Amazon’s EC2. Compiere experts and a network of authorized partners (including OpenMCR) help companies with solution design, integration, migration, training, technical support and compliance with local requirements in 25 countries.
The functionality supported by OpenMCR is comprehensive. It includes order approval workflow; inventory allocation (soft and hard); kit management; lot management; expiration dating; warehouse walk-order and travel-path sequencing; wave and cluster picking; plus full financials, reporting and analytics.
There is role-based and field-level data security, as well as these technology options:
· Operating system: Windows or Linux
· Database: Oracle or Postgres Plus
· Middleware: Java and JBoss
· Browsers: Internet Explorer, Firefox or Chrome
The bottom line
Deciding whether to go the open-source route should be more than a matter of not wanting to pay money for a software license. After all, a small but growing number of traditional vendors are “giving away” their systems and charging only an annual support fee, which makes them equivalent to open-source, at least from a purely financial perspective.
Rather, the biggest determining factor should be the degree to which your business is able to take on the development of and at least some of the support for its mission-critical solutions. While open-source doesn’t mean being totally on your own, realizing its full benefits most definitely requires wholeheartedly embracing the responsibility for your systems.
Ernie Schell is executive director of Marketing Systems Analysis.