ERP Stratup Targets Smaller Manufacturers

OpenMFG executives said manufacturing companies with annual sales of $150 million or less are underserved.

"They are typically the 'forgotten' manufacturers," said Ned Lilly, president and CEO of OpenMFG, based here. "For example, we have one customer that is a 100-year-old refrigerator component manufacturer. We have another that makes sophisticated chemical-free water-purification systems."

Such customers may have a rudimentary order-management or inventory system in place,often a home-grown one, Lilly said. They may rely heavily on faxes and phone calls to sell products and close deals, he added.

"We want to get them a system they can grow with," Lilly said. "Partners will be able to go back to a client six months later and say, 'You might be ready for bar-coding or full-tilt [manufacturing resource planning.' That's a pattern and a way of doing business that fits in really well with this level of the market, and a significant part of our value proposition for VARs."

OpenMFG's software lets companies better understand their costs, business processes, inventory and financial operations. It integrates with accounting software from RealWorld, acquired by Great Plains in 2000 and now part of Microsoft since its 2001 acquisition of Great Plains.

What's more, the product source code will be made available to partners, Lilly said. "That gives the subset of VARs that want to be involved in software development a real powerful tool," he said. "We will project-manage all the changes and contributions and decide what goes in the main release."

ERP systems creation has been a focus of Acumen since its inception more than a decade ago. Phil Perkins, founder and CEO of the Richmond, Va.-based solution provider, said his clients range from those with a few million dollars in annual sales to one with $16 billion in revenue.

"There has not been an offering with solid functionality and clear return-on-investment and a relatively short time-to-value [for the smaller manufacturer," Perkins said. "Some [vendors have tried, but they usually come in with a tier-one or tier-two mentality."

In other words, ERP vendors such as Baan, PeopleSoft and SAP that are attempting to retrofit enterprise products for use in the midmarket are at a disadvantage to companies with products geared toward smaller clients from the start.

Another early OpenMFG partner, Bruce Meyer and Associates, has specialized in implementing accounting packages from vendors such as AccountMate and RealWorld for clients, half of which he estimates are involved in manufacturing. Bruce Meyer and Associates also offers hardware and networking services.

"The frame of reference in which OpenMFG was developed is companies with five or 10 or 20 terminals," said Bruce Meyer, founder and president of his self-named company. "Oracle and SAP would not talk to anybody that small."

OpenMFG offers two pricing methods. An annual site license and support for up to 15 users costs $15,000 per year.

A per-user perpetual license costs $2,000 per year. Support and maintenance are available for additional fees.

"Our folks will be in that five- to 10- user range," Meyer said. "This could start as a small environment and get much bigger. I don't anticipate that we are going to put much of a dent in the SAPs and Oracles of the world, but we are going to go after the small manufacturing clients."