451 Research: IMPACT REPORT xTuple brings commerce to the supply chain

In a business applications world made up of giants, xTuple is a small open source ERP player. Though it may not have the brand power of an Oracle or SAP, the company's small size and open source foundations make it exceptionally nimble and able to innovate, which is something of an oddity in the ERP realm. Having built out its mobile credentials over the past few years, xTuple is now eyeing opportunities involving commerce applications.

In fact, on the surface what the company is doing rapidly is something its larger rivals can only do very slowly and incrementally — adapt to the realities of customer-driven dynamic supply chains. In this report, we look at xTuple today and in particular its digital commerce capabilities. We also consider whether there are lessons here for other business application vendors to consider.

The 451 Take

In our last look at xTuple, we stated that ERP isn't 'sexy' — nothing much has changed, but just because it's not terribly exciting or bouncing with innovation and startups doesn't mean that ERP is any less important than it once was. What it actually means is that ERP has become so embedded in the enterprise that people take it for granted. Open source is not the sexy topic it once was, either, so it is not surprising that it's tough for a firm like xTuple to get noticed. However, that could be set to change as applications are finally beginning to move to the cloud and businesses are embarking on long-delayed digital transformation projects. There is turbulence at the top end of the business apps market, and more change yet to come. If xTuple plays its cards right, it could be set to ride a new wave of business app growth.


Norfolk, Virginia-based xTuple was founded in 2001 and was originally called OpenMFG. The company makes its money from selling a mix of commercial licenses to its half dozen or so software applications, as well as associated maintenance fees. It has no institutional investors and has been bootstrapped from the start. Currently, xTuple counts about 40 employees and we estimate its annual revenue to be roughly $5m.


The company offers a number of products, all built around its core xTuple PostBooks® accounting, CRM and ERP software suite, which is also offered for free as an open source download and as a stand-alone product with support. It also provides xTuple Distribution Edition, which is an integrated, end-to-end software system for users that have more complex inventory control and other needs, including those in distribution and light manufacturing. Additionally, it has xTuple Manufacturing Edition, which is designed for make-to-order, make to-stock and mixed-mode manufacturers. There's also xTuple Enterprise, which has additional enterprise features and capabilities.

But what recently captured our interest was the work xTuple has been doing with its eCommerce product. On the one hand, there is nothing terribly radical or profound about its approach, but few customers today run their commerce sites this way — this way being completely integrated with the core ERP system. Currently, most commerce websites run independently of the vendor's core systems. By essentially layering Web content management — in this case Drupal 7 — on top of the ERP, records are updated accurately and dynamically and inventories are checked in real time. By the same token, if you run a number of different sites for your business, they can integrate at the back end to the same ERP and the same data and records. Simple stuff, but as noted not very commonly seen. However, it is a method that we expect to see more often in the future as Oracle and Microsoft begin to adopt a similar approach to commerce.

On top of all that, xTuple has been fundamentally reengineering its base system: the entire server was reworked, and the company added a middle tier and exposed every object. It is the new architecture that has enabled xTuple to potentially get a lot more granular and modular in how it delivers applications. Of course, as many of its customers are somewhat traditional and conservative, they are not moving to the cloud in droves, nor are they abandoning desktop clients at a rapid pace. So though xTuple offers strong mobile UI options, it recognizes that the desktop is still king in the ERP world; similarly, it offers both on-premises and cloud-hosted options for its products.


The company's customer base largely consists of SMBs, and by default these tend to be inventory-based businesses, often with roots in manufacturing. The firm believes — and we are inclined to agree — that few of these customers have a good eCommerce service in place. So xTuple is convinced that the very basic online shopping process is as ripe for disruption as today it is a stand-alone application unconnected to the supply chain. With xTuple, commerce just becomes another (fully integrated) element of ERP that can be exposed wherever it's needed. And this is the crux of it: it's not only about commerce, it's also about building out applications that can span the entire supply chain, from customer experience and ordering to fulfillment and the back-office processes entailed.


The competitive landscape for xTuple is a complex one. At one level, it competes head to head with fellow SMB favorites Intuit (QuickBase/QuickBooks) and Sage. It also encounters the few other open source ERP vendors, including Openbravo and OpenErp [sic Odoo]. Clearly, Microsoft is a major player and we expect it to get more involved in customer experience and commerce apps in the coming years — so xTuple needs to watch out for the mighty Redmond. If that were not enough to contend with, Oracle has made a huge splash with the release of its Cloud applications, which have been enjoying solid uptake among medium-sized enterprises. Yet if we are to look at the broader ERP market, which is comprised of numerous localized and specialized players, innovation is hard to find. Right now, xTuple finds itself in heady company alongside a behemoth like Oracle that shares its vision.

SWOT Analysis


With its new architecture, xTuple has a clear vision as to how ERP will be leveraged in the future — that's more than many of its competitors can boast.


The company has limited resources due to its small size, and scant market visibility.


Digital commerce presents a huge opportunity for xTuple. As both B2B and B2C continue to grow, the company can offer SMBs modern and affordable alternatives to first-generation, clunky commerce deployments.


Oracle has traditionally focused on enterprise buyers but is moving into the SMB space. Microsoft is also looking to expand its own substantial footprint via more integrated applications.


By 451 Analyst: Alan Pelz-Sharpe

Reprinted with permission from 451 Research