ERP software: Open Source or Traditional?

Now, after Oracle purchased PeopleSoft, it is SAP and Oracle who are the only players in the market segment of large corporations. These two vendors have top of the notch solutions with functionality both deep and wide. “What are the reasons companies decide to buy Oracle vs. SAP and vice versa?” I hear this question few times during last months.

Believe me or not, but functional nuances is the last thing to be considered today. The decision to buy ERP (ERP – Enterprise Resource Planning) software usually is very strategic. That is why it is product (and vendor) strategy that matters most. That means today clients tend to consider what vendor and its product will look like in 3-5 years, what is vendor’s development strategy, acquisition strategy, etc. And both SAP and Oracle pay much attention to communicate their strategy. (My opinion, that here Oracle looks better, more open and consistent, still…)

For big companies it is also important that vendor has proven and controlled financial stability (for vendors it usually means being public) and will exist (in any form) virtually forever, or at list for a very long time, and will not disappear one day. That is why big company will most likely to chose between Oracle and SAP, giving no chance to open source packages WebERP, SugarCRM, TinyERP, Compiere and others.

But what about mid- and low-market? Here chances of open source packages will be much higher. They still have to struggle with traditional players and have both pros and cons being compared against them. (Detail analysis is not subject of this post, but offer good topic for separate one.)

However a very special “opportunity segment” are companies with the same or similar philosophy like rapidly growing start-up companies. Open source model gives tremendous opportunity for such companies to save costs from the very beginning, contributing to financial success (of lower financial dependence) and giving opportunity to invest into development and operations.

We know such examples as SpikeSource. And I am sure there are others, so you are welcome to add more examples and to express your opinion in the Comments.