There are many benefits of implementing the Enterprise Resource Planning system in an organization. It helps to streamline the flow of data between the various departments in the organization and increase the profitability. ERP software covers all the business requirements and improves the efficiency. The major problem is that ERP implementation is expensive and requires a hefty investment. It also involves high risks in the process. Therefore ERP solutions were mainly used by large organizations who could afford the investment. Now the recent trend is of Open Source ERP for SMEs. This is an alternative for the Small and Medium Enterprises for implementing Enterprise Resource Planning system. Open Source is the perfect solution for the SMEs who cannot afford the traditional ERP solutions. Open Source ERP offers many benefits over the traditional ERP and provides a lot of functionality. It is easy to implement and requires less time for implementation.

The various reasons as to why Open Source ERP for SMEs is getting popular are as follows:

1. Cost: It costs less as it does not need the payment of the hefty license fees. It can be downloaded from the internet and does not require major investment. This makes it approachable by the small and medium enterprises. The software can be downloaded, installed and used for free.

2. Easy: Open source ERP for SMEs is easy to understand and learn. It is very well documented gives an insight as to what ERP system do and how they do it.

3. Implementation time: It is easy to implement and takes lesser time to implement than the traditional ERP for large organizations.

4. Lower Dependence: The source code of the software is also available therefore any modifications and alterations are easy to make by any programmer. One does not have to depend on the vendor for making the modifications required. It can be done without having to depend on the vendor for every small problem. This thereby reduces the chances of clashes with the vendor also.

ERP was being used by the larger companies earlier and now Open Source ERP for SMEs is gaining popularity. There is considerable advantage in using the Open Source Enterprise Resource Planning due to cost and other advantages. This concept aids in reducing the technicalities by providing need based solutions. It allows the company to install some of the functions as needed which are required. One can select the applications needed on a daily basis. In the traditional approach, one has to install all the functions whether required or not. It does not offer the choice like in Open Source for SMEs. The bigger organizations have to store the extra process and idle functions, these limitations are not in the open source. Thus it has made the operations easier for the small and medium enterprises. This concept has been successful and there have been very less failures.

Now it is possible for the SMEs to go in for ERPs at an earlier stage. Some of the Open Source software available in the market is ERP5, Compiere, Fisterra, etc.

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Read information about Advantages of ERP. Also know about ERP Vendors.