This is the first in a series of blog posts dealing with the new Erpnext business system solution, and some of the useful things that you can start doing with it and how to get started.
First a little bit about what Erpnext is, what it does, and why it is so different, and disruptive. Until recently, there was no simple to use, inexpensive, and comprehensive integrated system for small businesses. Erpnext fits into the tier between entry level, and mid/high level. There are lots of simple entry level systems out there that usually only handle accounting functions like Quickbooks or Sage Simply accounting. From that level, it’s a big jump to complex, and expensive mid level systems like Netsuite or Odoo, or the traditional/proprietary in-house ERP systems like MS Dynamics, or Sage 300, or hundreds of other based on traditional/proprietary models that make them very expensive, and difficult to implement. The bigger packages require a much larger commitment in terms of resources, and are really overkill for many small businesses, (or underkill in the case of entry level). According to the stats that I have seen most of the traditional ERP implementations end up failing, running over time and budget etc. One of the reasons for that is trying to implement a solution that is not a good fit (too big or too small).
Enter Erpnext. This solution is a fully integrated system, as opposed to a “best of breed ” approach which Intuit has taken with their Quickbooks Online product, where add-ons can be connected to the core accounting. Each approach has advantages and disadvantages. Integrated tends to be more seamless, since there is less that can go wrong, less 3rd parties involved, easier to upgrade, and simpler to use. Once you get the hang of one part of the system, all the others tend to be similar. The disadvantage of a fully integrated approach is that it is harder to implement, since everything is closely related. When you make a transaction in one part of the system everything that is related gets updated (unless you turn it off in certain cases, like starting up for example). And individual modules don’t tend to be as strong as “best of breed” modules which focus one area of the system only. But It’s not necessarily one vs. the other, since you can use them in combination with each other. Some refer to this as Postmodern ERP, according to Gartner (article in a previous post).
Things that make the Erpnext project different:
Pure Opensource – The other well known Commercial/Opensource ERP alternatives have different versions, with different licensing. It’s really hard to keep track of which versions have what features, (as if an implementation isn’t complex enough). Dual Licensing models can get expensive and complicated. There is only ONE version of the erpnext system which has EVERYTHING. No crippled community version. Erpnext has a simple business model. They derive all their revenue from hosting, and services. Their pricing is clear, and very reasonable. They are the only ones who have taken this approach in the small business ERP space. This leads to a simpler and more cost effective solution.
They make it easy to do a full and complete evaluation, and decide if the system is a good fit, before you invest a lot in the project – Nothing is hidden, and no big surprises. No limits if you install on your own system, which is documented, and not difficult. I have done it many times. Getting your feet wet is as easy as registering a single user version on their cloud, which can be expanded as the need arises (see how to get started below)
Flexibility – You have ultimate flexibility in terms of how you want to deploy – in the cloud or in-house, or virtual server, or move from one to the other. It’s also flexible in terms of being able to make modifications. Many changes can be made by users themselves like adding or hiding fields, simple reports, or customizing print forms. Complex mods can be made by developers, using the frappe framework or python source code.
Good community and discussion forum – In general the community is very good and helpful, and people understand the Opensource philosophy of helping one and other out, and giving back. Erpnext is in the process of forming a non-profit foundation like the linux or libreoffice communities to ensure that it will stay open indefinitely, and not be co-opted by commercial interests, at any point.
The whole culture is different than the traditional guys – For example, nothing is hidden. Users and partners can check the bug list before submitting to see if someone else has encountered the same problem. Patches, or fixes can be contributed by anyone. Of course urgent issues, or paid support contracts will get priority response from the core team. In addition to the source code for the core product, the source for add-ons are also on github, for anyone to access. And people actually make enhancements and contribute them back.
Support is knowledgeable and responsive – An Opensource project has to be funded somehow or it won’t survive. In this case, the revenue model is fee for hosting and services, which could be support, training, customization, data migration, and lots of other things that are important to get a system up and running, and make it better and more efficient. So, this is what they focus on, not selling (or should I say overselling) software.
Project is well managed and design decisions make sense – Project leads are smart, and involve the community as much as I have seen on any project. They value people’s contributions, (not only developers). They are responsive to feature requests from users, where it affects everyone, and not obscure use cases (that’s what the local partners are for, as well as localization, and integration)
Up to date technology – The system is built from the outset with the latest opensource component stack, which makes it is web/responsive for any device including mobile, and not only parts of the system. They had the advantage of not having to be compatible with old systems, and the screens are designed to work well on mobile devices. Open REST API’s are available for integration with other systems where it makes sense.
The System is surprisingly comprehensive – Lots of features that you don’t see in most small business systems, like integrated web content management, B2C shopping carts, B2B portals, customer service, integrated email threads, workflow for approvals and automations, email alerts, in addition to lots of other features. Good security, multi-company, and multi-language support are all included. Some of the partners have developed versions for specific vertical markets, like schools or hospitals or property management for example, in addition to the more common distribution, manufacturing and service industries. There are also many add-ons which are being developed. (like Quickbooks integration for example, if you would rather use a localized accounting solution together with Erpnext, or use the Erpnext internal accounting). You have lots of choices.
Focus is on improving the product and not marketing bling – The downside of this is that many of you won’t have heard of them yet. But they are growing organically by inbound marketing., which doesn’t require big budgets, that the consumers end up paying for.
Total cost of ownership is much less than any other alternative with the same features and capabilities. (No games with pricing and licensing).
How to get started quickly and easily
Take a look at the web site at http://erpnext.com. You can click on features at the top right of the screen, and there is a docs section for more info and a user’s guide. There are also lots of instructional videos. The system is pretty easy to use, but there is always a bit of a learning curve when you first start with a new system. Once you learn how to get around, you will keep discovering new and valuable things that you can do with the system.
Here is a getting started video:
Signup at erpnext.com – 1 user is free. You can take as much time as you want to evaluate the system, and start using it for interesting things. You can add users for minimal cost when you are ready, or go the “self hosting” route if you have a lot of users, or want to do extensive customisation. (If you are a partner or service provider, you can deploy in multi-tenant mode, with multiple sites, using sub-domains).
There is a “learn” icon on the desktop where you can find instructional videos. If you click on your name in the top right of the screen, you can customise your settings. For now, just click on the button that says “set desktop icons” in the top right of the screen, and check the modules that you would like to work with.
This is a game changer. I have been following the market and this project for a long time. In the past, I felt they had a lot of potential, but weren’t quite ready yet. It takes a long time to develop a stable, reliable and mature ERP solution. That’s really important if you are going to be using it to run your business and rely on for financial results. This year, I feel that they have reached critical mass. You will be hearing a lot more about Erpnext in the coming year.
Having said all that, some companies will always be a better fit than others, depending on their specific requirements. That’s why it’s important to understand your needs, do good testing and gap analysis. Take advantage of the openness of the system and do a good evaluation.
In subsequent installments of this newsletter, I will start talking about some of things that you can do with the system, right off the bat. Then you can slowly take it to the next level. The system is able to scale, and grow with you.
Fred Blauer, CPA, CISA,
Member of the Trybe