It is a known and accepted fact in the business community that integrating the existing infrastructure with an advanced ERP system will generate favorable results in streamlined operations and an increase in revenue. According to global ERP stats
- 95% of businesses experienced an improvement in their internal processes post ERP integration.
- Businesses experienced more than 46% reduction in operational costs
- Within an initially projected timeline, 85% of the companies were able to achieve their anticipated ROI.
- Businesses were able to reduce their cost in IT by 40%, in inventory management by 38%, with a 35% reduction in cycle time with the ERP system.
The above-mentioned market data demonstrates the advantages of Enterprise Resource Planning. However, integrating the ERP software framework into your existing infrastructure can cost you a significant amount.
- The cost of owning an ERP system for mid-level companies is around 3 – 5 percent of their annual revenue.
- For the big companies, the same will cost around 2 – 3 percent of the annual revenue.
Considering both the financial obligations and the benefits of ERP integration, one has to be wise while choosing an open-source or proprietary framework. Are you having a hard time making the decision? Well, let’s simplify it for you by stating all the differentiating points between the two.
What is an Open-Source ERP Framework?
In an Enterprise Resource Planning open-source framework, the source code is available publicly. It allows developers and enterprises to leverage the source code free of cost and customize it to sufficing their requirements. By owning open-source ERP frameworks, the enterprise can save a lot due to zero licensing charges.
What is a Proprietary ERP Framework?
A proprietary ERP framework refers to a system that has its intellectual property rights owned by an enterprise. In this case, the publisher of the source code holds the proprietary rights of licensing and customization. You will have to pay a significant amount in the form of licensing fee (one-time), subscription charges, etc., to gain access to the ERP framework.
What is the Difference between Open-Source and Proprietary ERP Framework?
Both open-source and proprietary ERP frameworks have their respective advantages and disadvantages. Let’s elaborate on all aspects to make the choice easier for you.
Open-Source ERP Framework
|The source code is openly available for download and trial. Most of the vendors offering open-source frameworks provide a free version of the software.||It provides deploying infrastructure in an open-source framework that can minimize the competency of the system owing to the licensing agreement.|
|Access to a global community of developers and users for free support in the form of forum discussions, white papers, documentation, newsfeeds, live chat, etc. It saves both time and resources.
|The support from the global community might be free but not as fast you would like it to be. The support is more generalized rather than being targeted.|
|The open standard of data format and communication protocol enhances interoperability, thus augmenting the performance.||There might be a lack of quick response when needed, posing risk for the functioning of the business.|
|Open source ERP projects have a global community of developers working on the same. So, if there is a bug or any glitch, it gets fixed instantly and without any extra charges. This also ensures lesser bugs in the system.|
|Owing to the open-source community, one can rest assured of better security.|
|There is no chance of the project gets shut down since it is maintained by a community of developers and not a single vendor|
Proprietary ERP Framework
|Ensures a high level of precision owing to a more targeted approach in designing.||The initial investment for proprietary software is more compared to an open-source framework. However, the higher levels of precision and enhanced functionality make up for the hefty price.|
|It enhances stability and scalability with routine updates and upgrades with a long-term development plan.||It makes you more dependent on the vendor of the proprietary software. You have no other choice but to abide by the norms, timeline, and availability.|
|It might cost you more, but with a proprietary framework, one can enjoy full rights to the software’s ownership.||Being a closed source framework, it comes with opacity issues.|
|Prompt support for any glitch or bug fixes dedicatedly offered by the vendor.||Access to the source code of the program is limited to the publisher. So, if there is a problem, such as bug issues, you have to depend on the proprietor instead of fixing it yourself.|
|There are modified support packages available with the software. You can utilize them soon after buying the rights of the framework.|
In this comparative analysis, we have highlighted all the essential aspects of both open source and proprietary ERP frameworks. The rest is upon you to decide, which ERP software framework will suffice your needs in the best way possible. We would like to recommend that the choice should be made considering your business requirements, and with regards to your budget constraints. You can start with the basic modules and then eventually upgrade them into a robust and scalable infrastructure.