Friday, March 21, 2008

xTuple: a hybrid open-source ERP development model

Open source ERP products have made good progress in the past few years in gaining customers. But their challenge has always been to leverage their "developer community" to fill out the functionality of their products.

Developer community is key
There's a little bit of a chicken-and-egg problem here. To encourage contributor code submissions, the owner's development organization needs to have adequate resources to foster relationships with the community as well as to evaluate and incorporate the contributions. But to afford those resources, the product needs a large enough installed base to support the contributors.

Large open source infrastructure software projects such as Linux and Apache don't have this problem. Those products are used to support all sorts of applications, giving them tremendous scale and major service providers take it upon themselves to hire and subsidize the efforts of the project's key leaders. The scale of these projects also leads to a large pool of contributors eager to see their improvements adopted into the core product.

Open source ERP products, on the other hand, are much more narrow in their market focus and therefore have a more limited pool of contributors available. Which is why we do not see an open source ERP project of the scale of Linux, Apache, or MySQL.

A hybrid model
I've been aware of this problem for some time. So, I took note of an announcement from xTuple (formerly OpenMFG) regarding 13 major enhancements contributed by customers over the past few years (which they dub "greatest hits").

A quick read through of the enhancements shows they are not small changes. They include an EDI engine, a complete project management subsystem, multi-currency functionality, an MPS module, and a shop floor subsystem that employs lean manufacturing and theory of constraints concepts. One contribution is from a consortium of five customers who put together a CRM module.

To understand how xTuple has gotten this level of cooperation from its customers, I called Ned Lilly, the firm's CEO.

According to Lilly, xTuple is an open source hybrid. It develops its product in three versions: a completely free and open source Postbooks edition, which it positions as suitable for small businesses; a Standard edition, which is its intermediate offering; and its OpenMFG edition, which is the premium offering.

The Postbooks version is freely available for download from xTuple, at no charge. The latter two versions are sold under a traditional license, through authorized partners, who pay an annual fee to xTuple. Source code is available to customers, and the partners are encouraged to develop enhancements for specific customer requirements. Under their agreement, the partners are then obligated to return those enhancements to xTuple, which evaluates them for applicability to the core product.

Customer contributions are included in all three editions, even the open source Postbooks version, but the really sophisticated stuff, of course, is saved for the higher end versions. According to Lilly, about one third of the source code across the three editions was contributed directly by customers, and another 60% or so was developed by xTuple under customer sponsorship. The CRM module mentioned earlier was a customer-sponsored development.

Open source purists might balk at this hybrid model--why isn't it all free, why do partners have to pay to be partners, etc.? Nevertheless, it's hard to argue with success. Although all ERP vendors claim that customers drive new features and enhancements, few can actually point to code that their customers have directly contributed. xTuple is making good progress in the key success factor of open source projects: getting users to actively contribute to development.

If we have to compromise a little with the open source model to make that happen, so what?

Related posts
OpenMFG is now xTuple
Open source ERP gaining adherents
The disruptive power of open source
Total cost study for an open source ERP project
ERP Graveyard

1 comment:

Christian Geisert said...

The Apache Software Foundation actually has an ERP called Apache OFBiz (Open For Business) ;-)
I'd say it already has quite a large and active developer community (and the updates in last months are confirming this), it just needs a bit more marketing ...