What do you think about all the investing in open-source application companies?
I think the jury is out. I think you will have open-source components making up applications, but I don’t know if you’re going to have open-source applications. With business applications [that run things like call centers, accounting, and human resources], you’re going to want some proprietary-ness to it. They can’t be commodity, and in my logic, commodity is critical, or you don’t have an interesting open-source company.
I have a tough time believing financial applications like enterprise resource planning will ever be open-source. ERP is really complex, and you have companies like SAP (SAP) and Oracle that are being very, very intelligent about adapting their smarts and making them co-exist with open source.
What about selling to smaller businesses that can’t afford Oracle or SAP? That’s what open-source application companies like Compiere, SugarCRM, and MedSphere are doing.
Small to medium-sized businesses are a potential market, sure. You can build a small business that’s incredibly profitable there, but whether you can build a $100 million business, that’s hard in that sector.
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The debate over whether to opt for enterprise resource planning (ERP) or best-of-breed (BoB) specialists for supply chain management (SCM) software has been raging for a while, but the issue is at the forefront of supply chain conversations now more than ever. In the past two years, ERP providers have made increasingly aggressive efforts to boost their presence in the SCM software applications market, traditionally dominated by the best of breed providers. This has left many users with a headache from trying to discern which approach is the better option. One reason for this confusion is the sheer volume of management issues that companies face: the continued misalignment of IT and business functions around the ERP vs. BoB issue; the difficulties of estimating the true costs of integration for both ERP and BoB alternatives; the lack of connection that often exists between corporate executives and supply chain leaders on the importance of logistics and SCM; a frequently poor and frustrating software evaluation and selection processes. Business functions such as transportation, distribution and inventory management, are becoming more important as market forces such as shorter cycle times and customer requirements for real-time information come together. This has led many companies to upgrade their technology support in areas like warehouse or transportation management systems, supply chain visibility and other related SCM software applications. BoB providers have traditionally led the SCM market. In recent years, vendors have developed broader suites that provide integrated support across supply chain processes, such as linking inventory replenishment and transportation management. However, the software buying landscape is changing and there is greater competition between ERP and BoB vendors.