451 Research: OpenMFG adds CRM as it releases version 2.0 of core product

Analyst: Martin Schneider

While some people thought little innovation was left to be seen in the ERP space, a few technology trends have breathed new life into the sector. Software as a service (SaaS) and open source have given even the smallest businesses access to complex back-office functionality. This is possibly most true in the manufacturing space, which has more complex processes to automate, thus making the bulk of the ERP projects here too expensive for SMBs.

OpenMFG, however, has utilized a quasi-open-source model to bring down the total cost of ownership for manufacturing ERP systems. And most recently, the company added a CRM package to the suite, aiming to provide its target market with integrated front- and back-office functionality.

Impact assessment

The message

OpenMFG has released version 2.0 of its ERP suite. The release includes multicurrency support as well as other product and resource planning upgrades, but the most important addition is a new CRM package that is integrated with the core ERP product.

Competitive landscape

There are other open source ERP vendors out there, like Compiere and Openbravo, but these are not as focused on the manufacturing industries as OpenMFG. Microsoft has made headway with its Dynamics line of applications, and hosted vendors like NetSuite offer a low-risk, lower-cost ERP alternative for the SMB space similar to OpenMFG's. SAP has been making moves to better court smaller businesses as well.

The 451 Assessment

We have been watching OpenMFG since it was just getting off the ground, and expect it to continue to grow in the next year. The company expects to double revenue in 2006 versus 2005, and we feel it could do even better. The complex nature of manufacturing ERP systems and the need for deep customization play well into OpenMFG's model. However, we think the company is playing it a bit too conservative, and may want to ramp up the CRM product and front- and back-office process automation independently from customer-funded products. The competition is only increasing here, and OpenMFG needs to keep building out functionality to remain a viable alternative to proprietary products aimed at smaller firms with less resources.


OpenMFG has built out its open source ERP product under the notion that any new functionality is 'paid for' in some way before the code is added to the core product. This means that either a customer has expressed a need and is willing to pay for the addition, or partners or members of the development community have already built and tested the new code. While this insures that a small, open source hybrid like OpenMFG does not spend resources on functionality that is not 100% in demand, it does make for some issues. For example, since the company has just put together a first-generation CRM package (more below), we wonder how long it will take, if only paid projects are prioritized, for the CRM functionality to grow and mature.


Version 2.0 of the OpenMFG product highlights several areas of development. First, the product now includes complete multicurrency support. This addition — beta tested and brought live with customers in Canada, the UK and India — lends a hand to the company's international expansion plans. Second, some specific manufacturing-related issues have been addressed. One is a new master product scheduling and forecasting module. This is a top-down operations planning tool that drives MRP, allowing product planners to forecast even further out than current production processes. Another new functionality set is called 'buffer management,' which is a tool that identifies bottlenecks. It works with existing 'buffers' in inventory, labor time and vendor lead times to adjust to these bottlenecks without getting severely off production schedules.

Apart from the ERP side of things, version 2.0 includes the initial release of CRM functionality in the product. Now this is not a stand-alone CRM suite that handles deep marketing campaign automation, or even offers deep sales force automation capabilities. This is CRM for manufacturers, and it's pretty bare-bones at the moment. The core of the product's functionality is extended contact management. This includes a universal address book, so that a single account can be a customer and also a vendor. Any number of contacts can be associated to a central account. There is also a trouble ticket generation and tracking system that includes a communications log to see which customers had issues, who helped them, and how the issue was resolved and when. And there is a centralized to-do list, so that managers can see who is scheduled to perform what tasks, and plan accordingly.

While the CRM product is not really groundbreaking functionality, it is an important addition for OpenMFG. As potential customers make buying decisions for an ERP system, it is important that OpenMFG have some sort of CRM backbone, since in the manufacturing world, CRM must be very tightly integrated with the ERP data. In lacking a closed loop between CRM and ERP, OpenMFG must have kept itself out of some deals. But the company still has a long way to go to handle complex CRM tasks.


OpenMFG has been building out a decent set of both technology and reseller partners. It has the requisite partnerships with IBM to optimize ERP for those running Linux on xSeries servers. And a partnership with Apple has the OpenMFG product becoming one of the few ERP systems that can run on the Mac OS.

However, we are more interested in OpenMFG's growing partner network. With about 25 partners, most in the US but also partnerships in the UK, the company is starting to broaden its reach. And with a base price of $1,000 a seat for annual subscriptions, we see a lot of potential for the product to win over SMB manufacturers globally. The internationalization features will of course aid this expansion well. And while OpenMFG does not offer a SaaS version, the company says many partners are hosting the product for customers.


Although OpenMFG operates under a hybrid open source model, it says it is not seeing much head-to-head competition from other open source ERP vendors. These include Compiere, which was one of the first open source applications to hit the market, and recent upstart Openbravo. The reason, according to OpenMFG, is because most other ERP vendors in the open source space do not have a product that is truly manufacturing-focused.

The company does say it sees a lot of Microsoft, namely its Dynamics family of products, in competitive deals. While one would think of an open source ERP product as solely a Linux play, the OpenMFG client can run on Windows, even though it only supports a Postgres database.

SAP is still very much a competitive concern with its BusinessOne product. But will SAP become more of a threat on a cost basis if it continues to build out its SaaS offerings to include ERP? SAP's recent Praxis Software Solutions buy lends some credence to this possibility. And on the SaaS front, NetSuite is something of a threat, but still selling to much smaller businesses than OpenMFG is targeting for the most part.

SWOT analysis


Version 2.0 of the OpenMFG product now offers integrated CRM along with the core ERP functionality.


The CRM is still very basic, and since all additions are customer driven, we wonder how long it will take to catch up to other vendors.


A growing partner network and internationalization features are opening up OpenMFG's target market.


SAP has shown more interest in the midmarket with recent acquisitions, and NetSuite is still the best hosted ERP even if it is less manufacturing-focused.

Reprinted with permission from 451 Research