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xTuple Open-Source Community Provides An Edge In ERP

In the commoditized ERP market, xTuple has achieved differentiation by building an active community of users around its open-source ERP product.


Company:

Headquarters: Norfolk, Va.

Technology Sector: Software

Key Product: Postbooks ERP

Year Founded: 2001

Number of Channel Partners: 30 North America, 40 worldwide

Ideal Channel Partner: Business process consultant

Why You Should Care: In the commoditized ERP market, xTuple has achieved differentiation by building an active community of users around its open-source ERP product.

The Lowdown: As enterprise resource management software becomes commoditized, vendors are looking for new ways to add value that go beyond feature sets. xTuple, a purveyor of open-source ERP software, has managed to achieve this by cultivating a community of users that contribute to the development of its products.

Small and midsize companies looking to dip their toes into ERP represent xTuple's sweet spot, and many choose to kick the tires on Postbooks, its free open-source ERP product, to see if it's right for them. Postbooks, which is available on Sourceforge.net, has a vibrant community of users, something that ERP competitors haven't been able to duplicate.

"Features and functionality in ERP are becoming commoditized, but what gives us the long-term advantage is our active community of users, many of whom we don't have any commercial relationship with," said Ned Lilly, CEO of xTuple, Norfolk, Va.

xTuple started out in 2001 with a plan to build commercial ERP software on top of open-source components, a path that many software startups have taken to generate revenue while minimizing costs. That strategy led to the creation of OpenMFG, xTuple's commercially licensed ERP system.

But in the summer of 2007, xTuple decided that a completely open-source model would be more effective, and launched Postbooks with this in mind. Unlike other vendors using elements of open source, xTuple chose not to cripple or limit the functionality of Postbooks, Lilly said.

"Instead of carving off a piece of OpenMFG and making it open source, we chose to make the open-source piece the core, and kept the same code base," Lilly said. Since then, xTuple's business "has taken off like a rocket ship," according to Lilly, who says xTuple's revenue grew 250 percent year-on-year in 2008.

The fact that xTuple stands alongside the open-source community helps ensure continuity and longevity of support for the system, says Will Bralick, president and CEO of Paladin Logic, an xTuple partner in Irving, Texas. "Additionally, the explicit commitment to the Mac, Windows, and Linux platforms helps us leverage a growing segment of the SMB customer base," Bralick said.

xTuple also offers two commercially licensed ERP products: one aimed at distribution and retail, the other at high-end manufacturing firms that require advanced serial tracking and tracing features. The graphical user interface for all three ERP products is identical, Lilly said.

xTuple's typical channel partner has the experience and skills necessary to successfully deploy ERP, which has long been notorious in the IT industry for high project failure rates, said Lilly. "ERP is different from other software because it's so pervasive in the organization, and the selling process is equal parts business process consulting and technology," he said.

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