Open source or licensed ERP — what actually differs

There is a lingering assumption that open-source software is the budget option and licensed software is the professional one. That has not been true for a long time, and believing it leads businesses to overpay for reassurance.

The real differences are worth understanding properly, including the ones that favour licensed products.

What "free" actually means

Free refers to the licence, not the project. An open-source ERP still needs process mapping, configuration, data migration, training, hosting, backups and support. Those are the majority of any ERP budget regardless of platform.

What you avoid is paying every year for permission to keep using the software. That money instead goes into work that produces something — better configuration, more training, faster support. For a fixed budget, more of it reaches the parts you feel.

The ownership difference, which matters most on a bad day

With licensed ERP, stopping payment eventually stops access. Your data may be exportable, but the system running your business is not yours.

With open source, the software is yours under its licence. You can host it anywhere, keep running an old version indefinitely, hire any competent firm to work on it, or take it in-house. If you fall out with your implementation partner — including us — you are inconvenienced rather than trapped.

This rarely matters until it suddenly matters a great deal: a partner goes quiet, a vendor changes pricing, a business goes through a difficult year. Ownership is insurance against situations you cannot predict.

The honest case for licensed ERP

There are real arguments on the other side and you should hear them.

• A single vendor is accountable for the product, which some boards and auditors prefer
• Large partner ecosystems make replacing an implementer easier in some markets
• Certain industries have deep specialist modules that open source has not matched
• Formal certification and compliance documentation can be easier to obtain
• Where a parent company mandates a platform, the decision is not really yours

How to decide without being sold to

Ask any vendor three questions. What is the total cost over five years at our expected headcount? What happens to our system if we stop paying you? Who else could take this over if we needed them to?

The answers tell you more than any demonstration. A vendor who answers all three plainly is worth listening to, whichever kind of software they sell.

At a glance