Opentaps Icebird ERP
The name of the company and people in this case study has been changed at the company's request to preserve its anonymity.
Icebird Corp. is a family-owned manufacturing company based in the United States. Originally founded in the 1950's, it has grown to three business units with nearly 200 employees at multiple facilities, thanks to its ability to control costs, launch new products quickly, and capture highly profitable market niches before its competitors. Today, the company processes over 100,000 orders per year for its customers, many of them for complex and customized products.
From Legacy to Openness
As Icebird grew, it found itself weighed down by an outdated ERP system. The company's ERP system was originally written in RPG for the IBM System/36 mainframe and then converted to run on an IBM AS/400 about ten years ago. Most of the programs still ran in a virtualized System/36 environment with all data stored in flat files, while new code was been written in the AS/400 environment for the IBM DB2 database. New modules were also written in LANSA, .NET, and PHP were added, causing Icebird's data to be spread over multiple applications and several databases, including DB2, MySQL, and pre-SQL flat file databases. In addition, each of the nearly 100 users of the system needed a client side mainframe terminal application installed to access the ERP system. The maintenance of the AS/400 plus all the applications, databases, and client access software eventually took four full time people.
This complicated patchwork of software and hardware was increasingly unable to meet key business needs. As the business grew and acquired other companies, their information was kept and run as separate companies. Commonly used data, such as customer information, were duplicated in various modules. Other key information, such as several hundred customers' pricing contracts, simply could not be maintained in the system at all and had to be kept in paper binders. When customer service representatives entered orders, they had to look up the pricing manually. Finally and most importantly, the system simply could not adapt quickly enough to meet Icebird's needs as business conditions changed.
As a result, Icebird's general manager, Stanley, decided in 2007 it was time to look for a better solution. His key goal was to find an ERP system which would work for Icebird over the long haul: "The main issue was we wanted something that would last a long time and we could use to continually improve our business." Stanley and Icebird had learned about open source from Linux, Apache, MySQL, and PHP, and they felt that open source was the right answer for an ERP solution. Again, according to Stanley: "I believed the open source is the best choice for many types of enterprise software. Google can build a great email application because people are willing to agree on what an email application should look like. It's hard for one vendor to build a great ERP system because it's harder to agree on how an ERP should function, what features it should have, and how it should look. The only way to build a great ERP is to make it easily customizable so that the business using it can adapt it to their specific needs. Clearly, a good way to achieve that is to make it open source."
In contrast, commercial or proprietary software didn't appeal to Stanley, even with all the fancy marketing, because he couldn't really know what was going on: "I hated the idea of buying software I couldn't touch without a consultant standing over my shoulder. Most proprietary vendors don't even show screen shots. When they do demos their always driven by a sales person that only highlights the positives and doesn't really let you dig into the functionality behind the application. I did not want to build my business on an application where I couldn't assess the development effort supporting the project. Proprietary applications can be abandoned by their company and you can't really assess that before you buy. With an open source project it's easy to tell if there is enthusiasm behind the project and you can decide if it's heading in the right direction by reviewing how it's developed over time. Beyond that, because an ERP is open source your developers may evaluate how complicated it will be to customize and there will likely be extensive public documentation on the application. "
After evaluating several open-source ERP solutions, Icebird selected opentaps Open Source ERP + CRM. Important considerations were opentaps's ease of use and customizability. The ease-of-use turned out to be a key contributor to opentaps's success at Icebird, because the company's internal IT team was able to learn much of opentaps's functionality without formal training and in turn help business users transition to the new system. In addition, Icebird also liked the fact that opentaps is a web-based ERP system, because with opentaps it would be able to eliminate expensive client-side software.
Working with its internal team of programmers, Open Source Strategies, Inc., the project manager for opentaps, and a second consulting company, Icebird implemented opentaps during 2008 and went live in the final quarter of 2008. After its first year with opentaps, Icebird found the following improvements:
Consolidated IT Infrastructure
Icebird was able to replace all its old ERP applications with opentaps and do away with all its legacy databases and programming languages. Along with this change, Icebird consolidated its IT infrastructure, reducing the total number of servers from 12 to 7. The IBM Mainframe and four Windows servers were eliminated altogether. In addition, because opentaps is web-based, Icebird was able to eliminate the costly client-side software which it used before with its old AS/400 ERP system, and employees are now able to access its opentaps-based ERP system through the web using a VPN. As an additional benefit, employees could now work from home through the VPN and the web. Finally, Icebird went a step further and replaced its Windows infrastructure with Mac and Linux desktops. The combination of eliminating the AS/400 system, Windows desktops, and client-side access software has helped Icebird save $100,000 per year.
Helped Cut $1.5 Million in Operating Expenses
In the midst of the severe economic recession in 2009, opentaps has helped Icebird trim $1.5 million in operating expenses. "We automated specific tasks in finance, marketing, customer service and order entry because of opentaps," explains Stanley, the general manager of Icebird. For example, Icebird's internal team of programmers was able to consolidate its customer data in opentaps, eliminating duplicate data, reducing the number of steps required to process orders, and reduce the cost of errors associated with them. They were also able to customize existing features in opentaps to support Icebird's contract pricing, again eliminating expensive paper-based processes.
Taking Icebird Global
With opentaps, Icebird was able to integrate several new offshore partners with its US-based operations. Orders could now be taken in the US and immediately become available to partners for value-added processing. Employees at Icebird headquarters, including customer service representatives, could view status of orders in real time as they are processed offshore. When the offshore partners' work is finished, the orders could then be routed back to Icebird's US-based facilities for completion. As a result, even though they are located half the world apart, Icebird and its partners could work together as part of one team. opentaps's easy web based user interface and multi-lingual translations helped make this integration possible. According to Stanley, "One of our business partners told us opentaps is significantly easier to use than any SAP or Oracle installation they ever touched... [The business partner] learned opentaps so fast that we were able to purely focus on the key issues instead of wasting energy trying to train offshore people how to use our ERP."
For more case studies about opentaps, see Opentaps In Action.