By PJ Jakovljevic
The open source enterprise resource planning (ERP) software provider xTuple has seen steady growth over the past few years and is making headway in carving a solid niche for its open source software products. In this post, Technology Evaluation Centers (TEC) principal analyst PJ Jakovljevic reviews the various editions of xTuple’s open source ERP software for accounting, manufacturing and distribution, and eCommerce, including xTuple 4.10, the latest release of its ERP and CRM package. He also reviews xTuple’s development efforts and its approach to mobility, and introduces the new dashboards and other nifty features of the latest release now available to customers. PJ also sits down with the company’s CEO to get the nitty gritty on xTuple’s research and development (R&D) focus and much more.
xTuple Company Backgrounder
xTuple has been somewhat quiet of late in terms of new product announcements, but that doesn’t necessarily mean that its business has suffered. Quite the contrary, Ned Lilly, the company’s founder and CEO, claims that 2016 was xTuple’s best year to date operationally (since the company’s inception in 2001). He refers to nice revenue growth, strong profits, customer count approaching the 500 mark, and with about the same number of employees (about 30) and partners (about 50) xTuple has had for the past several years. Total user community is north of 75,000 now. Outside the domestic US market, xTuple has customers in Canada, Mexico, UK, China, Australia, and Philippines (those regions tend to be where the vendor has got good partners, of course), with non-US revenue being at about 15%.
The vendor is transparent about its pricing and other comparative info on its editions for its customers. A significant number of xTuple’s new commercial customers were reportedly upgrades from the free PostBooks® version, north of 30% in 2016. Cloud ERP software customers are ticking up as a percentage of new xTuple deals every year, and existing on-premise customers are moving there too. One could imagine almost half of new deals, and maybe 15% of all xTuple ERP software customers so far being in the cloud.
Enter xTuple 4.10
After 18 months of intensive research and development (R&D) efforts, the vendor recently released xTuple 4.10—a major milestone update of its flagship ERP and customer relationship management (CRM) software package. The release reportedly fixed more than 300 bugs reported by the company's open source software community and includes nearly 100 new features. The software is available for download from xTuple's GitHub community repository as well as the xTuple open source project page on SourceForge. The vendor uses GitHub for source control and collaboration with the broader open source world, whereas it uses SourceForge primarily as a distribution hub for binaries (including nightly builds).
Lilly admits to xTuple being very quiet for a while, as the company has frankly been knee-deep in a big R&D push that also has elements of a turnaround. One might have noticed there is not much talk about the Mobile Web client of a few years ago. The previous focus on web browser–based mobility has since been discreetly filed under "learning experiences" and xTuple has since redeployed all of the resources that worked on it. The two primary beneficiaries of that redeployment have been the xTupleCommerce Customer Web Portal and the classic desktop client, which has seen new life as the Qt mobility framework has thrived as an independent open source project once again (after almost dying inside of Nokia).
A New Mobility Approach
On that particular Web client that is now being de-emphasized, xTuple had implemented CRM, time and expense (T&E), and sales order entry, as well as bits and pieces of other capabilities. The original idea had been to re-implement the entire desktop application in this Web framework—but the more xTuple got into it, the less attractive that seemed. The approach works fine, and a number of customers are using it in production, but it is just not the all-in long-term solution that xTuple had originally planned.
Again, the initial decision to go with this Web framework for the mobile client (circa 2012) was based in part on the concerns about the viability of the Qt framework within the corporate chaos at former Nokia. Anyway, the happy news is that Qt is now independent again with a stronger-than-ever open source community behind it, and runs well on iOS, Android, and Windows mobile devices.
So xTuple does have significant mobile app plans—they are just built with Qt instead of being Web-based. The mobile warehouse app is the first such mobile solution, and a large customer in China is currently sponsoring a mobile shop floor app. A simple sales order/point of sale (POS) app is next—and all are leveraging the existing Qt desktop application code. Also, all of them are connecting to the same ERP database and business logic as the desktop client, any mobile web clients, and the aforementioned xTupleCommerce Customer Web Portal.
Dashboards and More
The new dashboards in v. 4.10 are lightweight reporting tools that use embedded Web technologies. They do not necessarily constitute a full business intelligence (BI) stack yet, as they still work opportunistically off the production database (see figure). But like a lot of xTuple tools, they are currently best suited for power users. The vendor will be refining the user interface (UI)/user experience (UX) in future releases with the idea of fine-grained, user-defined dashboards throughout the xTuple desktop client that will feature key performance indicator (KPI) charts and visualizations specific to the end user’s particular job.
Figure. xTuple Dashboards
The Workflow engine is another example of xTuple implementing a framework for “big-boy” ERP functionality with a smaller footprint, with the goal of supporting more complex processes within organizations that might not necessarily have the human bandwidth for them. One of the initial use cases supported by Workflow is the aforementioned mobile warehouse functionality in an updated (Qt-based) mobile—picking, packing, shipping, receiving, put-away, etc.
In addition to major new features, such as Simple Sales Order, VAT/GST Taxation enhancements, and Workflow Management, smaller additions and technology changes are also implemented in this upgrade of xTuple's business management software. In addition, xTuple has already started work on the development cycle for its next milestone, version 4.11, the primary focus of which will be performance improvements throughout the Desktop Client. xTuple has identified a number of bottlenecks in the application and is working hard to resolve them.
xTuple CEO Offers More Insights
Generally speaking, if cloud ERP software can really be licensed for actual use instead of over-licensing for all potential users, the cost difference will be very small and some might no longer see a big future for open source ERP software. The cloud can take out people, hardware, and information technology (IT) building costs, while the upgrades are another issue. Perhaps that is the reason why many more companies are using Azure and AWS rather than open stack infrastructures.
For a highly customized solution world or one-off add-on, open source software still has a place, but I don't think the big ERP players are at major risk. When SAP R/3 and Oracle ERP costs were exploding decades ago, many thought open source ERP software might be a real alternative. But if the cloud ERP can control costs (some vendors even offering “all you can eat” options for an unlimited number of users), open source ERP software must compete on much more than a mere affordability. To that end, we recently asked xTuple’s astute (and witty) CEO Ned Lilly (NL) some pointed questions as follows:
TEC: Did you carve out any particular vertical niches in your 500 customers? Are there any vertical flavors of xTuple ERP?
NL: There are no specifically verticalized flavors, beyond our two distinct offerings for manufacturing and distribution. In manufacturing, we're very strong on mixed-mode/lean/JIT (just in time) manufacturing, but we also handle traditional make-to-order (MTO) and make-to-stock (MTS) environments well. We've got some pockets of concentration in metals, equipment/machinery, electronics, and food.
In distribution, we see a lot of trades that support construction—electrical, plumbing, HVAC (heating, ventilation and air conditioning), etc. But the original concept of going open source ERP software was to be as broad and horizontal as possible—so there are any number of features that we've intentionally implemented in a more generic way, that can be used in completely different manners by companies in different industries.
TEC: Who do you compete the most now with, same old, or some newcomers?
NL: It's still a very, very diffuse market. In addition to open source ERP peers, we see the Microsoft Dynamics and NetSuite products a lot, of course. Some SAP, but not SAP Business One any more. Sometimes Epicor and Infor, usually in a request-for-proposal (RFP) type of process. And Plex Systems when it's a manufacturer that wants cloud ERP software.
TEC: How is the open source ERP software market doing in your view?
NL: Compiere has basically disappeared inside Aptean, and has no real open source community anymore—and it hasn't for years. There are older “forks” such as Adempiere, but we never see them in real deals. Odoo is probably our main open source ERP software competition—they took a fair amount of investment capital and seem to have spent it all on a UI overhaul and partner channel (as opposed to, say, building out real manufacturing capability). Odoo is still much stronger in Europe than in the US, and as I said, aren't super deep on serious ERP functionality. It's still much more of a bag of modules than an integrated system. We generally only "lose" to them when the customer wants software that's totally free.
There's another European open source ERP software company, Openbravo, that we used to at least hear about more—but they seem to have contracted a bit, as well as pulled back on the open source component of their business. There are many more projects out there that take a toolkit type of approach, and a handful of consultancies that work with them, but we regularly hear that we're by far the most productized, "real vendor," out-of-the-box solution among the open source ERP software players. Openbravo has never really had much of a manufacturing focus—or even serious distribution. I get the sense that they're concentrating almost exclusively on retail, and certainly more in Europe than in North America.
TEC: Why and how did your R&D suffer a setback, so you even candidly keep talking about some turnaround?
NL: Oh, I'm just talking about the all-consuming R&D focus on the mobile Web client. If I could go back five years, there would be lots of things I would do differently. But our revenues, customer growth, and retention, have all been steady. The thing is, we were very loud about this Web client being the future of the company—the big strategic push for the next 10 years—and we've quite frankly had to eat a lot of crow on that. The turnaround is really a return to our roots—well-known open source component technologies (Postgres, Qt, Drupal), and a determined focus on customer-driven development (see xtuple.com/GreatestHits and xtuple.com/GreatestHits2 - Volume 3 coming soon!)
With the Web client, we burned through a lot of resources trying to get out in front of something, and just don't have as much to show for it as I would have liked. (The experience definitely didn't kill us, but it has certainly made us stronger.) Seriously, though, one thing we get from Qt is some degree of platform-specific UI decided for us. The Windows client and the Mac client, for example, do have minor UI differences that force a little bit of a lowest common denominator on us. Having said that, there's a new mobile-friendly superset of Qt tools that we're experimenting with for those mobile apps I mentioned earlier, and I suspect that some of that UI/UX work will find its way to the Desktop app too.
TEC: The Internet of Things (IoT) goes hand in hand with mobility. Are you doing anything about the IoT connectivity and big data? Are there any requirements from your customers in that regard?
NL: The IoT is a good example of how our customers leverage our open source approach—we have several customers that have built integrations with devices, sensors, machines, as well as third-party data sources. There are a number of technical options available, but we're promoting our REST API as the best practice. Basically, every single business object in the ERP can be wrapped up in a web service and consumed discretely in real time—it's how we built the xTupleCommerce Customer Web Portal, as integration with the Drupal Commerce CMS and shopping cart.
TEC: Do your customers still develop functionality and give it back to you for the core ERP product?
NL: Absolutely. That continues to be a defining and differentiating thing for us in the market—and you'll see more examples of that in the upcoming Greatest Hits Volume 3. I'm thinking about making it a double live album. ;-)
xTuple and OrangeHRM Team Up
xTupleCon 2014—Why Open Source ERP?
What's In It For Me? Release of xTuple ERP 4.10.0 Final with Major New Features and Technology Changes
xTuple University: Compatibility Matrix
PJ Jakovljevic | Principal Analyst
Predrag (PJ) Jakovljevic focuses on the enterprise applications market. He has over 20 years of industrial experience within the discrete manufacturing sector, including the machinery and...Read More