OpenMFG Uses Open Source Model To Partners’ Advantage

Software vendor OpenMFG's combination of open-source bridge-building and hard-headed business objectives serve up a stew of intriguing contradictions. For the company and its partners, however, it's also a mix that dishes out the profits.

Rochelle Garner, Contributor

November 9, 2005

4 Min Read

Software vendor OpenMFG serves up a stew of intriguing contradictions.

On one hand, the company, which offers ERP applications for small manufacturers, follows the open-source model of development. Instead of writing all of the code by itself, Norfolk, Va.-based OpenMFG turns to a community of VARs and systems integrators to enhance the applications. In addition, much of the OpenMFG suite relies on open-source components, such as the PostgreSQL database and the Qt development framework. That foundation enables pricing that starts at $15,000 for up to 15 users.

But while OpenMFG’s development and foundation hail from the open-source world, the company’s licensing model is decidedly commercial—geared to helping partners make money with applications that small manufacturing companies crave. The 12-module ERP suite delivers functions for managing inventory, scheduling and planning, and warehouses, as well as sales and purchase orders.

“We are not ourselves open source, but we do have this hybrid approach to licensing,” said OpenMFG’s CEO Ned Lilly. “All of our VARs and customers get the full source code, and we encourage them to extend it at the source-code level so that the customer can get applications that are perfect for them. We then take those changes our partners and customers make, bring them into the supported product, and we release it. This approach takes everyone out of the business of maintaining one-offs, which is the danger of source-code licensing.”

In other words, OpenMFG is adapting the open-source methodology for use within a private community of partners and customers. But as a commercial venture, OpenMFG must actively manage the community, publish the product road map, as well as create standards and procedures by which partners add functions.

“I love the way we can contribute features,” said Frank Parks, vice president of technology at EzBizPartner, a business and technology consulting firm in Glen Ellyn, Ill., focused on SMB customers. “We can draw up some prototypes and give them back to OpenMFG, so that I’m not stuck with having to do [the programming] myself, and everyone inside the community benefits with features that are easily modifiable and maintainable,” he said. “And because the suite is based on an open-source stack, we have a lower price entry point that can save my customers $20,000, compared with Microsoft SQL.”

Now OpenMFG aims to expand its channel community with a new development partner program that complements the existing focus on implementers.

“If you think about our ERP system as the framework for the basic business processes manufacturers need, you can see that other types of applications and solutions could interface with it,” Lilly said. “We want to make it easier and more profitable for third parties to work with us.”

Partner levels depend on the degree to which third-party applications have been integrated with the ERP suite. Silver partners, for example, connect their applications to OpenMFG through basic APIs. Gold-level partners enable their applications to be accessed directly from within OpenMFG. Platinum-level partners deliver the same tight integration as Gold partners, but boast higher certification training. Royalties rise with each level.

Tova Systems, which focuses on small companies in regulated industries, already qualifies as a Silver partner with its Document Control application. Using Web services APIs, Tova can serve up shop floor documentation or work order procedures, for example, with a single URL call from the ERP software.

“OpenMFG is one of the few companies out there that has found a way to use open-source technology to benefit their customers—but in a sustainable business model,” said Wendy Levine, president and CEO of Tova, Pittsburgh. “They’ve written a very good product that’s affordable for these very small customers, can be easily managed and can compete with some of the midmarket apps.”

OpenMFG charges $2,500 per seat in a perpetual license. Annual fee pricing starts at $15,000 for up to 15 users.

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