If you are an ERP software developer or an ERP reseller looking to looking to grow your business with a future-ready ERP software solution, you’re probably investigating the best route to go down – Open source ERP verses white label ERP software.
The technology businesses need to operate at their best in today’s digital age is constantly growing, and it’s hard to keep up with the kinds of technology solutions your clients want, need, and demand. But there are solutions out there that can future proof your business and that of your clients.
Sourcing a modern white-label/private label ERP software or open source ERP software product combined with your services may be the logical next step for your business. In this blog we’ll assist you by breaking down the differences between open source and white label ERP software and outlining the advantages and disadvantages of both.
What is open source ERP?
Open source ERP is defined as any program whose source code is made available for use or modification by its users or other developers as they see fit; this is usually made available freely.
What is white label ERP software?
‘White label’ refers to a fully supported ERP software product or service that’s made by one company but sold by another. In essence, white-label solutions are products or services you can rebrand and resell as your own to your own clients.
One way to assess whether your best suited to open source ERP software or a white label ERP solution is to take a look at the various pros and cons. Let’s start with open source ERP software.
Advantages of open source ERP software
No installation or licencing fees
This is the primary reason most buyers will consider open source software as an option for their business. It is often viewed as ‘free to own’ and less capital intensive than proprietary software. While an advantage, it’s also a disadvantage. Your company may still have to bear the cost of ‘developing’ it to meet your customers’ specific nuances or niche markets. Open source ERP software is typically built to suit a broad spectrum of users and generic business practices
Choosing one of the many open source platforms available can immerse you in a cutting edge tech environment that has a large and engaged community behind it. Discussions forums, feedback and access to community resources such as program modules to increase functionality or tweaks to improve performance feature here. The opportunity also exists to trade ideas and resources with others in the community.
Users of open source software can modify and redistribute the underlying source code of their applications, at will. This enables you to customise the software to meet the specific needs of your clients. Assuming the knowledge exists in-house, you can make alterations to the program code yourself and add modules developed by your team. Alternatively, you can reach out to the development community or outsource development work to members of the project community.
Security, Updates & Maintenance
Open source projects are noted for the speed in which program bugs or security issues are identified and corrected by members of the development community. That puts the control of the update, maintenance and security management aspect of a platform squarely in your hands. Users of proprietary ERP software generally have to rely on the software manufacturer or vendor for upgrades, security patches and maintenance.
There are of course disadvantages to operating an open source ERP system and they include the following:
Disadvantages of Open Source ERP software
High IT cost
Although open source ERP does not require you to pay licensing costs, using it can result in high IT costs. Not only do you need a team that can install and maintain your system in-house but you need to provide all of the end-user support and training in-house too. Proprietary systems undergo rigorous R&D and user testing and bring with them years of experience installing the system into clients’ businesses. Open source systems may not have been put through the same level of scrutiny and often only offer the ‘bare bones’ requiring you to add or heavily customise it to meet your client’s unique requirements. Many open source ERP vendors lack industry knowledge and project experience so the gap between business requirements and basic functions can often be large. So you need to consider the IT effort and costs associated with taking on an open source ERP software as the costs can quickly add up and exceed the price of proprietary ERP software licenses.
One of the biggest challenges of open source solutions relates to the quality of support available and the accessibility of the support itself. The software itself may be free but the support is not. If you have the in-house knowledge, skills and resources and do not require outside companies to aid development and support then this may not be an issue. Smaller companies with limited technology experience however may have a tougher time getting actual troubleshooting help and immediate support as there is no one to call if an open source product starts to give a company issues. Relying on external sources for support can be expensive.
Many risks and uncertainties
There is a level of risk associated with working with an open source ERP software. What if the user community stop working on new features, will it be discontinued by the provider? The provider is also not liable for functionality issues so errors or system failures can cause significant damage to your business. In terms of security, the source code is public so it can pose a security risk as hackers can get their hands on it just as easily as everyone else. Vendors offering licensed products can have shortcuts or backdoor solutions when it comes to moving or transferring data but with open source, the burden might be entirely on you to do this kind of troubleshooting.
Counter to open-source ERP software, you have white-label or private label ERP software. Taking on a white label ERP solution is a powerful strategy to increase your distribution and revenue opportunities. There are many benefits to adding resalable and rebrandable ERP products and services to your core business model.
Advantages of White Label ERP Software
Faster to market
If there is already an ERP solution on the market that fits your business’ needs and that of your clients, then there’s no need to reinvent the wheel. This means no time or money is wasted on producing the best software solution when there is already one on the market that you can rebrand for your business. You get to sell a quality product and associate the product with your business. The extra months (or even years) that it would take you to develop your own solution can force your customers elsewhere for solutions. You avoid this with a pre-packaged solution that meets their needs immediately.
Tried and tested solutions mean less internal overheads
Established ERP providers come with years of experience developing, implementing and supporting their platform and come already packaged ready for deployment. In many cases, industry-specific solutions have been developed that already cover the unique requirements of your client base and come with user interfaces and functions that are technically mature. This results in better installation and ease of use for your customer. More importantly, it means a better quality of service delivered to the client. For you, it requires less resources, leaving you to focus on your skills to develop your business and related services.
It’s quick and easy to brand
Free from spending time and money on research and development, you can simply apply your logo to your new ERP solution. To your customer base, you’ve simply got a new product on the market or the 2.0 or 3.0 or 4.0 version of your existing product No integrity will be lost. Rather it can enable you to create stronger relations with your customers and boost your brand’s visibility in the market.
Manageable Customisation costs
With white label ERP software you may be required to do a certain amount of initial customising but for the most part, a solution that meets the needs of your business and that of your clients exists in the marketing place. Modern ERP systems like GenetiQ ERP give partners more control and autonomy in making adaptations to delight their customers reducing the reliability on the developers of the software. Here the rules-based architecture enables you to tailor the software to more closely meet your clients’ individual needs.
High operational reliability
White label ERP software entails much lower risks. Uptime and consistent functionality is the vendors’ responsibility. They are also responsible for maintaining, developing and updating the system and take care of data protection and data security.
Scale your offering and grow
By leveraging white label ERP software you are able to add new products and services to your core offering. Opportunities to scale your revenue and grow your brand, reputation and offerings are huge. With white label ERP software you get a much higher client lifetime value, revenue per client and profit per client.
Save time and money
Developing a solution from scratch takes time and a large amount of resources; both financial and in human terms. While a customisable open source ERP solution may look like the best option at the outset, you may quickly find the effort disrupts internal business processes and can incur budget over-runs. You may be able to build it yourself but it’s important not to forget the time and cost involved in designing, building, testing and marketing your solution. Cutting corners anywhere here can be detrimental to your business. Investing in an existing solution can be more cost-effective in the long run.
Focus on your business’s core competencies
Taking on a white label ERP solution can help you focus on your business’s core competencies. Prepackaged solutions provide an opportunity to trust the experts in the specific space you are focused on and enables you to build upon your brand, sell your services and seek out new revenue opportunities.
Disadvantages of White Label ERP Software
As a start-up company or small company, it can be harder to establish yourself as an actual vendor of an ERP solution that is seemingly so advanced. Unless the ERP vendor can provide strong testimonials for the software, it can be difficult to position yourself as a leading ERP vendor starting out.
Taking on a white label ERP software means you will need time to familiarize yourself with the product you are branding as your own before installing an actual clients’ project.You will also need to have adequate support in place to answer in-depth questions about a product or service you had no hand in developing. To be an expert in the software, your team will need to stay on top of the product, know what new features are available, what’s in the pipeline or product roadmap etc.
It can take a bit of time to learn a new package, train your staff and get comfortable selling your new solution to clients. In essence you always need more resources than you think. You may need resources to make the materials required e.g. sales material, marketing material, training tools etc). It’s a good idea to spend some time going through the on-boarding process with your prospective ERP vendor.
The bottom line is, there are a number of open source ERP solutions out there and while white label ERP solutions might be more niche or industry specific, you need to take a good look at your business, your customers and your leads.
Which software platform would best provide for their needs and that of your business?
Your first instinct may be to try do-it-yourself solutions. But this may not be the best option in the long-run.
In many cases, building a customized solution from scratch in an attempt to meet the exact specifications of your business can be a setup for failure. That’s because building your own solution can lead you to you reinventing the wheel. It will also slow down your time to market. In many cases, building your own solution can result in the project running over on time and costs and may become a talent drain
Then you may consider open source ERP software. Here, you have a starting point that needs to be tailored to meet both your needs and that of your clients. But do you have the in-house skill, knowledge and resources to tailor the software to an offering that meets your clients’ needs?
If you don’t, then a white label ERP solution may be for you. This way you take on an already mature product that can get you quicker to market, enable you to expand into new markets and add new revenue streams; all under your own brand.
So take a look at your business, your goals and your customers. See which solution offers the best fit for you. Something you don’t currently offer. Use this opportunity and your knowledge to assess the best option for you to grow your business, build reputation, create a new revenue, and at the same time also help your customers solve their challenges.