ERP
As a quick reminder, ERP stands for enterprise resource planning and is the software that helps companies run their operations, anything from inventory to invoices. Originally sold as expensive packages to Fortune 500 firms, the ERP market has trickled down to include medium, small and even micro businesses. OpenBravo is following this trend by making ERP accessible to the smallest businesses, yet scalable up to larger enterprises.
The Bleeding Edge
OpenBravo entered the ERP market with two major innovations for the industry: first, all their code is open source, making it is accessible and modifiable by anyone, and second, the interface is web-based, so it can theoretically be used from any computer, anywhere. The second innovation seems appropriate for our times, as everything is moving to the web, and the rapidly increasing richness of browser functionality provides them an ever-growing playground in which to make their product more functional and usable while keeping compatibility with the maximum number of clients possible.
Open Source
The open source innovation is more radical, and was a gamble for the company. On the one hand they've potentially recruited an army of developers to work on their product at no charge. On the other hand they've exposed the minute details of how their works, even to competitors. However this hasn't stopped companies like Red Hat and MySQL from turning software into profit so why should it stop OpenBravo? The benefits of opening their source code to the world is the sharper side of this double-edged sword.
Dual-Pricing or "Freemium"
OpenBravo has released a community edition of their system that can be downloaded by anyone for free. What is the point in giving away your software for free? The result is a much larger user base than it would have otherwise, and each of these users is combination of tester, focus group, promoter and potential contributor to the source code. In this way they are using the micro-business -- who normally wouldn't pay for a complete ERP system -- to work for them in earnest and make OpenBravo a more marketable product for those who would pay.
Support Services
OpenBravo has decided to provide support services through a network of certified business partners. This has one enormous drawback: because the implementation of ERP software is a complicated but critical service it essentially places the success of their product in the hands of another company. However there is a reason for this decision: it also makes the provision of services highly scalable to a degree that would be very expensive to do in-house. For a start up like OpenBravo it has the potential to allow them grow quickly before the competition has a chance to catch up. Quality of service is maintained indirectly by training the business partners and putting them through a certification process. The quality of this program is a key success factor for OpenBravo.
Report Card
It appears that OpenBravo is following a viable business model. They are taking advantage of the under-penetrated micro-business segment to benefit their software product in other segments. By being open source, they have the potential to be the most widely-used ERP product in the world, just as MySQL is the world's most popular database. Their decision to outsource all services will help them grow quickly, but at the expense of control over their brand and long-term consulting revenues. At some point they may be wise to develop this capability in-house and compete with their own business partners, as large software companies like Microsoft and Oracle do.
