Essay: OpenERP evaluation with SAP as reference

The purpose of this essay was to compare and analyse the most commonly used ERP system of SAP with an openERP system by Odoo in order to find out wich ERP system suits small companies the best.


TABLE OF CONTENT
1 INTRODUCTION 3
2 SAP 4
3 ODOO 4
4 SIX DIFFERENT CRITERIA IN ORDER TO EVALUATE THE EXISTING ERPS ON THE MARKET 5
4.1 Market Position 5
4.2 Features & Business Coverage 5
4.3 Technical Quality 6
4.4 Customisation & Flexibility 6
4.5 Productivity, Ergonomy & Ease of Use 7
4.6 Total Cost of Ownership (TCO) 7
5 CONCLUSION 8


1 INTRODUCTION
There once was a speedy hare who bragged about how fast he could run. Tired of hearing him boast, slow and steady, the tortoise, challenged him to a race. All the animals in the forest gathered to watch.
Hare ran down the road for a while and then and paused to rest. He looked back at Slow and Steady and cried out, “How do you expect to win this race when you are walking along at your slow, slow pace?”
Hare stretched himself out alongside the road and fell asleep, thinking, “There is plenty of time to relax.”
Slow and Steady walked and walked. He never, ever stopped until he came to the finish line.
The animals who were watching cheered so loudly for Tortoise, they woke up Hare.
Hare stretched and yawned and began to run again, but it was too late. Tor-toise was over the line.
After that, Hare always reminded himself, “Don’t brag about your lightning pace, for slow and steady won the race!” (Aesop)

‘Learn by discovering where the challenger meets the Leader.’


2 SAP
SAP ERP is the world market leader in enterprise software applications and stands for Enterprise Resource Planning software that was developed by the German company SAP ES headquartered in Walldorf Germany. In 1972, five entrepreneurs had a vision for the business potential of technology. With only one customer and just a handful of employees, SAP set out on a path that would not only transform the world of information technology, but also forever change the way companies would do business. Now 43 years later, SAP is helping companies of all sizes and industries overcoming the complexities that are a burden to our business, jobs, and lives. With Run Simple as its main op-eration principle, SAP focuses on one single purpose every day: ‘To help the world run better and improve people’s lives.’ (SAP, 2015)
3 ODOO
Odoo S.A. is the software vendor of the Odoo Apps, which used to be Open-ERP. Fabian Pinckaers, who is also the current CEO, founded Odoo in 2004. Odoo is the fastest evolving business software in the world. It has a complete range of business applications covering all key business needs. The reason why Odoo is the only software in the world having such a large range of users is, because Odoo offers a complete range of business applications that fits the needs of large and small companies enabling them to quickly and easily adopt through a smooth and user-friendly experience. Odoo is also very flexible and fully integrated in order to cover the needs of very complex organisations. It is an open source, which means that it is actively maintained by a large base of developers to meet evolving customer needs and improve new, innovative ap-plications in order to help organisations worldwide grow their business. (Odoo, 2015)

4 SIX DIFFERENT CRITERIA IN ORDER TO EVALUATE THE EXISTING ERPS ON THE MARKET
When small or large organisations consider buying an ERP system, they will look at six different criteria to evaluate the ERP systems that are currently on the market. These criteria are: market position, the features and business cov-erage, the technical quality, the customisation and flexibility, the productivity-ergonomy and ease of use, and finally the total cost of ownership.
4.1 Market Position
The market position has a strong impact on the clients’ trust. It indicates how the market perceives the product, the brand and the vendor. SAP still has a strong advantage in terms of brand recognition. Both SAP and OpenERP fol-low a global strategy in order to develop their software.
4.2 Features & Business Coverage
SAP is more advanced than Odoo in most analysed business applications. Odoo just entered the market, but it is just a matter of time before Odoo offers more. It profits from three accelerators. Firstly, Odoo is an open source appli-cation, which means that new software developments are free. Secondly, a community of developers develops the product. Thirdly and lastly, the archi-tecture and platform of the software allow fast developments compared to SAP. It is important to point out that a SAP module covers a functional scope that can be compared to a department of a company. An Odoo module gathers only a restricted set of specific functionalities, but OpenERP is catching up on its functional coverage.
4.3 Technical Quality
The technical quality criterion shows how the product supports the develop-ment of specific requirements. These criteria are: efficiency, accessibility, da-tabase flexibility, debugger, modularity, and security. Regarding to database flexibility, Odoo scores lower compared to SAP, because it uses an open source database able to support the equivalent workload of Oracle, which is also a company specialised in enterprise software applications. Unlike SAP, the lack of a native debugger is surprising, but the community provides many powerful debugging tools.
4.4 Customisation & Flexibility
The flexibility of software is the ability to easily change according to different users and system requirements. This criterion is critical when selecting an ERP system since midmarket companies, like any others, need a system that is able to adapt to a fast moving business environment. On top of being flexible, the system has to be easily configurable. This often helps to reduce the budget of the implementation project and the system maintenance. When implementing an out-of-the-box solution, the configuration effort required to fit Odoo’s software to the client’s needs is reasonable, because is it only a matter of adding features. SAP’s product contains so many features that the configuration effort requires modifying existing features, which takes a lot more time and money.

4.5 Productivity, Ergonomy & Ease of Use
This criterion is one of the main focuses of OpenERP’s research and develop-ment centre. From a functional point of view, Odoo must extend its industry solution offer by integrating the specific requirements of some specific sectors. Odoo must also keep on developing new functionalities expected by the cli-ents. Even if the ergonomy and the ease of use seem to be criteria of ac-ceptance, SMEs don’t give them priority. The functionalities must first meet the client’s needs.
4.6 Total Cost of Ownership (TCO)
The Total Cost of Ownership is a calculation designed to help people to take financial decisions with full knowledge of the facts. Rather than just looking at the purchase price of an object, the TCO looks at the complete cost from pur-chase to disposal. It adds to the initial purchase price other costs incurred during the life of the product, such as service, repair, and insurance. There are three main cost groups that have to be taken into account: Implementation cost, installation cost, and maintenance cost, including upgrade and support costs. Odoo’s implementation and maintenance costs are much lower, com-pared to SAP, because of the lower effort required configuring and customising the product. Also, the installation costs of Odoo are much lower, because there is no license cost and the hardware requirements are limited.

5 CONCLUSION

Using ERP software has a few advantages. Firstly, ERP software generally pro-vides easier global integration, which means that barriers of currency exchange rates, language, and culture can be bridged easily and automatically. Secondly, updates only need to be updated once in order to be implemented company-wide. Thirdly, it provides real-time information, reducing the possibility of redundancy errors. Fourthly, the user-friendly interface is completely customisable, allowing the end-users to create a more efficient work environment. Lastly, vendors of such software have much knowledge and expertise on how to best build and implement the system.

Using software like SAP’s has some disadvantages. Firstly, companies are locked into a relationship by contract with a vendor until it expires and it can be unprofitable for a company to switch vendors if the switching costs are too high. Secondly, the inflexibility of vendor packages may not fit the company’s business model well and customisation can be very expensive. Lastly, the re-turn on investment may take too long to be profitable and all implementations have a risk of project failure.

It is clear that the future of SAP and Odoo will be settled in the short run. If SAP manages to solve the customisation of its environment and the very high costs of its TCO before Odoo reinforces its position by quickly meeting the needs for strengthening its functionalities and by developing vertical solutions, then SAP will maintain its leadership. In my opinion, this future could be set-tled within 5 years from now.

6 BIBLIOGRAPHY
Aesop. (n.d.). Story Library. Retrieved from The Tortoise and The Hare: http://www.storyarts.org/library/aesops/stories/tortoise.html
Nieuwenhuysen, Y. D. (n.d.). Retrieved from http://docs.google.com/a/openerp.com/file/d/0B2KZdZ9Oqr_ZZmM5YjBiZmMtNjExYS00MjlmLWFkMGUtZDcxODViNjY3OWE5/edit?pli=1
Odoo. (2015). Retrieved from http://www.odoo.com/nl_NL/page/about-us
SAP. (2015). Retrieved from http://www.sap.com/corporate-en/about/our-company/index.html
SAP. (2015). Retrieved from http://www.sap.com/corporate-en/about.html
SAP. (2015). Retrieved from http://www.sap.com/corporate-en/about/our-company/history/index.html

Source: Essay UK - http://doghouse.net/essays/information-technology/essay-openerp-evaluation-with-sap-as-reference/


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