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Open-Source ERP Systems for Small Business: Pros and Cons

If you are looking into Enterprise Resource Planning (ERP), there are choices to consider. When it comes to small business ERP solutions, it’s important to evaluate open-source and enterprise software.


Of course, choosing an ERP software solution depends on many variables, such as your budget, business size, and in-house skills. While the functionality of consolidating infrastructure and underlying processes might be comparable, there is a significant difference between the real-time costs of the two options.


Making an informed decision is essential to ensuring your solution provides sufficient capacity to deliver financial management services for a small business environment.

How Are Open-Source and Enterprise ERP Solutions Different?


A cloud-based ERP software for small business entities is undoubtedly an excellent way to boost efficiency, performance visibility, and productivity. Proprietary and open-source ERP solutions, on the other hand, carry particular challenges.


Open-source ERPs are free and accessible to any developer with the knowledge to incorporate or add to the code. They are, at least initially, a lower-cost option that can expand ERP functionality. However, licensed, ready-to-use enterprise ERP software overcomes the limitations of an open-source ERP platform and is considerably easier to maintain.


One of the key elements that needs to be considered when comparing the two is the size of your team and whether you have an in-house IT department with sufficient expertise to maintain an ERP. Without this specialized technical support, an open-source ERP may quickly become unsustainable and unable to scale to meet your business requirements as it grows.

Advantages of Open-Source ERP Software for Small Businesses


The obvious advantage of any open-source software is that there are minimal upfront costs involved. Businesses can hire developers to create a new interface, with the ability to implement and adapt the software as required. Other pluses to consider are as follows:


  • Diversity: There are numerous platform models that smaller companies can find if they do not require a highly functional commercial ERP system. Interconnected networks can be integrated with any hardware or other applications.
  • Lack of installation: Because the software is open-source, the business doesn't need to invest time in the installation or pay for licensing.


There are potential drawbacks, too. In terms of support, some online user communities share advice and guidance about overcoming problems with the software.

Disadvantages of Open-Source Small Business ERP Systems


The biggest issue for most small organizations is that open-source ERP systems provide very little technical support, aside from other users who choose to contribute to online forums. The quality of advice offered on these forums varies substantially, so an early-stage or small company has no dependable, professional support if they need to troubleshoot or find that their ERP isn't performing as expected.


Open-source ERP providers rarely, if ever, provide ongoing support, so they are best regarded as a do-it-yourself solution. A vendor-licensed product, on the other hand, delivers 24/7 assistance, automatic software updates, and service upgrades as part of the licensing cost.

Data Security


Robust security and data encryption are integral components of an ERP system, but an open-source solution has its limitations. For example, if a business needs to transfer data, it cannot depend on an open-source software provider to help if they run into difficulties. If this happens, the user runs the risk of losing high-value data assets. 


If there is no vendor to contact to provide a shortcut or offer a quick solution, the only alternative is to outsource and try to identify the problem by paying someone to help.

ERP Software Ownership


It is important to consider the unique requirements, organizational objectives, and goals of the small business when choosing ERP software. While open-source ERP solutions may be simple to integrate, they are not specifically engineered to meet business needs. The company loses the benefits of research and development that continually advance the value of enterprise ERP software.


If you choose an open-source ERP and find that it is glitchy, has high failure rates, or has limited user functionality, you may need to make the frustrating decision to go back to the drawing board. 

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