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By: Rahul Kumar on August 29, 2019
For many organizations, enterprise resource planning (ERP) software has become an indispensable tool. It helps them integrate their resource distribution processes from every operational silo, including purchasing, inventory, manufacturing, distribution, accounting, and human capital management.
As a result, ERP software has become an expansive market comprising several paid, proprietary tools. Each product’s capabilities vary, with each standing out in one area. Many of these are used across industries and are backed by strong after-sales support.
But, in some cases, your needs may not be complex or numerous enough to justify paying for a proprietary ERP tool. Or, your business might need an ERP tool with a level of customization that’s hard to apply on a proprietary product.
In this article, we’ll take a look at free and open source ERP solutions to help you decide if a free or open source tool is right for you.
When are free or open source ERP tools the right choice?
Understand free, open source, and paid ERP tools
Examples of free and open source ERP tools
Follow these basic steps to pick an ERP vendor

The most basic reason for choosing a free ERP tool is that you’re a first-time user, and you want to evaluate the value ERP software provides you before committing to a paid option. As you go about identifying its value contribution, you’ll also get to see how ERP tools work in general and how to implement one into your ecosystem.
The next use case is simple economics combined with basic prudence: Does your budget permit you to go with a paid tool? Will you use all the features you’re investing in?
If you have the budget but your needs are met by a free ERP tool … you can guess what we’d recommend!
Let’s understand general scenarios when these software would be best to consider:
When to consider a free ERP tool: On an average, an ERP project costs about $7,200 per user over a five-year period. Identify how many users in your organization would use the ERP tool, and then calculate the total cost (number of users multiplied by $7,200) you’ll have to shell out for a paid ERP tool. Does the figure justify the business value it’ll generate? If not, then you might want to consider a free ERP tool, at least to start.
When to consider an open source ERP tool: Open source doesn’t necessarily mean free, but these tools are appealing to many buyers due to the high level of customization they offer. If you’re unable to find an ERP tool that the vendor can customize to suit your exact business needs, consider trying an open source option.
Let’s look at an example: Why did a manufacturing control supplier replace SAP Business One (paid ERP tool) with Odoo (open source ERP tool)?
Client: U.S. based manufacturing control supplier (one-third of an industrial component sales and service organization), with two integrated sister companies.
ERP integration partner: Open Source Integrators
The challenge: The organization had earlier implemented a paid ERP tool, SAP Business One, but still struggled to support its overall business operations.
The solution: After a detailed investigation of various open source ERP tools, the client:
The results:
At this point it must be pointed out that any software’s suitability to a business is a subjective aspect. Many businesses find the benefits of paid ERP software to be worth the investment, and you’d be closing the door on hundreds of vendors and their extensive support and expertise if you disregard paid ERP tools right off the bat.

Here’s some insight to better understand free, open source, and paid ERP tools:
Suitable for: Small and midsize businesses.
Major pros: No procurement costs.
Major cons: All features not necessarily available. In addition, most free tools cap the number of users and there may be third-party integration limitations.
Details: These are solutions whose source code is available for download, and can be tailored to meet specific user requirements.
Suitable for: Businesses with access to software developers.
Major pros: Open source communities of such tools constantly work to improve them and share the results.
Major cons: The technical know-how required to set up and maintain these tools can be intimidating for the average business. You may end up hiring software developers for customization, implementation, and training.
Details: These are the tools for which you need to purchase the license (on-premise) or subscribe to a monthly or annual plan (cloud-based).
Suitable for: Midsize and large businesses.
Major pros: More robust functionalities than free ERP with plug-and-play usability as opposed to open source tools.
Major cons: If you end up disliking your paid ERP tool, you may be stuck with it until your software license expires or your contract ends.

If you’re interested in free and open source ERP tools, it’s just a matter of evaluating your options. To help you, we’ve profiled some of them available on our website (find out how we chose these products to feature here).
Type: Free and open source.
Functionalities: Accounting, sales management, supplier management, inventory management, and distribution.
What users like: Reviewers describe xTuple as flexible and customizable. They appreciate the structured workflow that connects all the modules together in a coherent fashion.
What users would like to see: Some reviewers mention they’d like an updated interface design and better customer support.
xTuple inventory management
Inventory management in xTuple (Source)

Read reviews of xTuple
Type: Open source.
Functionalities: Recruitment, inventory tracking, project management, timesheet maintenance, and marketing automation.
What users like: Reviewers praise Odoo’s customization, the ease of uploading data through Excel, intuitiveness, and integrations.
What users would like to see: Some reviewers would like the customer support to respond more quickly to technical tickets, as well as a shorter learning curve.
Odoo project management
Project management in Odoo (Source)

Read reviews of Odoo
Type: Free and open source.
Functionalities: Financial accounting, project management, human resources, sales management, and inventory management.
What users like: Reviewers describe ERPNext as easy to set up and customizable. They appreciate its intuitive user interface, and growing and active community forum.
What users would like to see: Some reviewers would like it to remain up and running at all times, since it slows down quite usually. They’d also appreciate quicker offline synchronization.
ERPNext sales management
Sales management in ERPNext (Source)

Read reviews of ERPNext
Type: Free and open source.
Functionalities: Sales management, human resource management, product and stock management, financial management, billing, marketing management, and reporting.
What users like: Reviewers praise Dolibarr’s ease of use, frequent updates, easy implementation, and customizability.
What users would like to see: Some reviewers would like a dedicated customer support for faster resolution of queries, instead of asking at the community forum. They’d also appreciate an updated user interface.
Dolibarr product management
Product management in Dolibarr (Source)

Read reviews of Dolibarr

Regardless of whether you’re going with a free, open source, or paid ERP tool, there are a few steps you should always take before picking a vendor:

How we chose the products featured here:
To be chosen, ERP tools had to:
We determined the most popular tools to feature by choosing those ranked highest in Google search results—that also have a profile and reviews on our website—during the week of July 15, 2019.
Notes:
If you’ve decided on open source software, there may not be a vendor account manager to meet with. Instead, speak with whoever is helping you implement the system and set milestones for when it will be ready for use.
The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.
The 6 Phases of a Successful ERP Implementation
The Benefits, Challenges, and Best Practices Associated With Postmodern ERP Integration
Software Needs Cycle for Manufacturers: An ERP Functionality Checklist
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