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Compiere 3

Chapter 1. Evaluating the Compiere System

Managing an integrated business that requires an ERP system is a challenge in itself, so the defining question when one starts to look at an ERP system is: will an ERP add value to the business and be worth the investment? ERP systems costs money, they require new skills, they require employees and business to adapt, and, ultimately, they take a lot of management time to implement.

Most notably, an ERP system has the purpose of providing management with an integrated information and transaction processing environment. This will provide the required financial and non-financial data and information for insightful reports that inform and underwrite decision making. Information systems must measure the effective and optimum use of enterprise resources, whether they are defined as people, products, services, or assets.

This chapter deals with assisting you in evaluating the Compiere system. In this chapter we shall:

Give you a list of the core functionalities of the Compiere system
Indicate which critical decision factors you must use in evaluating the system
Present an understanding of the different Compiere product editions
Show you where to get more information on Compiere

When do you look at Compiere

The Compiere system is certainly suitable in the following organizational circumstances:

Circumstance

Compiere advantage

Outgrowing existing system

The business is outgrowing its existing systems. Generally, the business was doing fine on a small accounting package, but now requires additional functionality. It may also require a more scalable enterprise database, or the number of users and the complexity of the business is expanding.

Compiere's technology stack offers a growing company the enterprise scalability platform required. Functionality and transactions volumes can be scaled based on specific user needs.

Existing system is old technology

The existing system is so old that support cannot be easily obtained and the technology is just hanging by a thread. This is usually the case with long-standing or older generation management. For example, a family business that has been in existence for many years and the legacy system has just always worked, but finally a decision has to be made as to a new system.

Compiere offers the current Java and web technology platform , which is based on open architecture and standards, throughout its offering.

Dynamic system requirement

More progressive and dynamic management where the underlying technology is as important to the business as the business itself.

Due to its open source nature, Compiere offers a flexible and transparent technology platform.

Value proposition

Large businesses that are evaluating ERP vendor systems and are analyzing the costs versus return.

Compiere provides a competitive licensing model up to large-scale Enterprise levels.

When do you look at Compiere

The Compiere system is certainly suitable in the following organizational circumstances:

Circumstance

Compiere advantage

Outgrowing existing system

Compiere's technology stack offers a growing company the enterprise scalability platform required. Functionality and transactions volumes can be scaled based on specific user needs.

Existing system is old technology

Compiere offers the current Java and web technology platform , which is based on open architecture and standards, throughout its offering.

Dynamic system requirement

More progressive and dynamic management where the underlying technology is as important to the business as the business itself.

Due to its open source nature, Compiere offers a flexible and transparent technology platform.

Value proposition

Large businesses that are evaluating ERP vendor systems and are analyzing the costs versus return.

Compiere provides a competitive licensing model up to large-scale Enterprise levels.

Compiere's core ERP functionality

In differentiating the Compiere product offering from the traditional ERP offering, Compiere is known for its multi's:

Multi-language for Documents and User Interface
Multi-currency for transacting in or reporting in foreign currencies
Multi-tax, supporting different tax systems (Sales, VAT, and combinations)
Multi-costing in parallel (for example, Standard Costing, Average, and Lifo)
Multi-accounting for legal reporting using different accounting principles (selecting Cash, Accrual, or International GAAP principles)
Multi-Tenant and Multi-Organization for different branches, and legal entities, reporting and dimensional structures

The Compiere Core Functionality includes a rich dynamic business functionality framework, and we shall cover some of these aspects in detail in later chapters.

Compiere system administration

System administration functions are the normal administrator functions that you would expect in a system. These functions include:

User administration: Manages the users that can log on to the system, password management, date control, and user preferences.
Role management: What users can do in the system, who can access which windows and processes, and ultimately what users can see into the system.
Tenant setup: Managing the detail of the main legal entities, departments, cost centers, and sales regions.
Document settings: Document formats, document types, and document sequences.
System utilities: Back-up and restore of critical system settings, although mostly this is handled through external database scripts.
System settings and parameters: Includes database location, licensing, user defined control parameters, and formats.
Functional settings: Set-up includes Tax, currencies, units of measure, and payment terms.
The Compiere Application Dictionary (AD): The application dictionary refers to meta-data in the application that determines the context and behavior of windows and data elements across all aspects of the Compiere application. For the non-programmer, this meta-driven model greatly reduces application core program-level customization requirements, and also gives system administrators the power to interact on a business logic point of view.

Sales cycle to accounts receivable

Typical sales cycle functionality includes:

Preparing quotations and sales orders
Sales order to customer invoicing
Sales order to delivery (shipment to customer)
Batch invoicing and printing
Preparing purchase orders from sales orders
Payment receipts at the time of ordering or invoicing

Purchasing cycle to accounts payable

Typical purchasing cycle functionality includes:

Preparing requisitions and purchase orders
Purchase order to vendor invoicing
Purchase order to material receiving
Vendor invoicing (including expense creditors)
Processing payments to suppliers

Business partner management

Business partners include customers, vendors, and employees. Typical functionalities include:

Creating and editing business partners
Classifying and grouping business partners
Creating locations, contacts, and banking information
Credit limit management
Allocating different types of discount schemas to business partners

Financial Accounting Management

Typical functionalities include:

Setting up and maintaining multiple accounting schemas and currencies
Creating, editing, and grouping account elements, and general ledger management
Posting actual and budget entries to accounts through journal entries
Running financial reports, trial balances, and accounts details
Account at various activity and low-level cost detail

Cash management

Typical functionalities of cash management include:

Allocating payments and receipts to accounts receivable / accounts payable orders or invoices
Processing cash journal entries
Managing, correcting, and viewing historic allocations
Open item reporting and aging
Accounting for actual bank statement transactions
Reconciling system entries to the bank statement
Dunning (statement) processing

Customer Relationship Management

Typical functionalities of CRM management include:

Capturing leads and sales opportunities
Opportunity reporting
Converting leads to business partners
Processing requests to action for sales representatives

Inventory and material management

Products are anything in the system that you can purchase or sell and that has a price. Typical functionalities of material management include:

Creating and editing of product and service items
Grouping of products
Managing product pricing and discount schemas
Transactional listing reporting
Serializing of products (lot control)
Creating additional product attributes (size, length)
Costing products to warehouse locations
Accounting for various costing methods (standard, average, and LIFO)
Inventory moves, adjustments, valuations, and write-offs
Auto generation of replenishment orders

Light Production

Typically functionalities of light production include:

Defining and editing Bills of Materials
Creating or editing kits
Processing production work orders

Integrated advanced ERP functionality

Due to its open source nature, all modules or components of Compiere are seamlessly integrated and are available separately or as part of the entire offering:

Advanced Functionality	Description
Request Management	Services Request Management is an integral part of the system.
Workflow	Compiere includes document level and process level workflow at its core.
eCommerce / WebStore integration	An integrated Java JSP webstore is included in the core release.
Data and SOA Integration	Transacting with different systems than your own through Electronic Data Interchange (EDI) or Web Services. Compiere offers this as part of its Enterprise Edition release, and his functionality can also be purchased through the Compiere Exchange.
In-house Programming and Customization	Usually, an end-user has to pay for the privilege of doing in-house programming on their purchased ERP systems. Being open source, this is given with Compiere.
Advanced Material Resources Planning (MRP / MRP II)	This is an additional paid-for Compiere component and offers an integrated MRP process. Functionalities including, route planning, resource scheduling, standard operations, and multi level Bills of Materials.
Advanced Warehousing and Distribution	This is an additional paid-for Compiere component and encompasses advanced warehousing and distribution systems.
Human Resources	This is an additional paid-for Partner component.
Government ERP	Fund Management is an additional paid-for Partner component.

Note

Where applicable, the partner components contact details can be obtained from Compiere directly, or from the Compiere Exchange at the following web address: http://www.compiere.com/partners/compiere-exchange.

Critical ERP decision factors

One of the most critical components in an Enterprise decision process is to ensure that all factors are considered in the evaluation process.

Such factors must include the following:

Budget

Does the enterprise have an allocated budget for the ERP system? Does this budget include licensing, implementation, training, first year support, and, most importantly, up-front pre-evaluation functionality and scope design. Does the enterprise understand what is available in the market prior to setting this budget, and including management scope risks in this process?

What does the ERP budget mean to the organization? Is it a target cost or a strategic fund allocation?

Is the budget agreed with your implementation partner? Usually, if the scope is well-defined with good functional definition, then consulting partners will be happy, and budget should not be a concern. If management is under pressure from a budget point of view, quality may be compromised, and inevitably corners will be cut during the implementation.

Make sure you spend money to save money!

Up-front functional design and data relationships

Don't purchase an ERP system if you have not created a Functional Design of how you want your business to work, or have at least documented how it currently works. Scope creep is usually a major risk factor in any implementation. The reason for this is poor up-front investigation and understanding by management—not of the ERP system, but of the business processes itself.

An Enterprise is measured according to data information and relationships. Document your data relationship entities in as much detail as possible. This does not require a database analyst but will at least ensure that most critical data relationships are identified up-front. Later in the book we will describe the entity relationships in Compiere.

Static out-of-the-box versus dynamic flexible ERP

ERP systems that are more out-of-the-box are usually less flexible. More flexible systems are less out-of-the box.

How important is flexibility now, and what is the experience of the company in its historical systems? Owner-managed businesses require much more immediate flexibility in their systems purely because there is less bureaucracy in the decision-making process and their ground level understanding are much higher. "Safe" decision makers will require a more out-of-the-box solution since this offers a perceived level of comfort.

Internal learning curve and time availability

Managing the internal learning curve is one of the most important aspects of the implementation. The more experienced management is in ERP systems, the easier it will be to manage the learning curve. What is usually quite interesting is that inexperienced management in this area will pay for the system but only want to see the results of the system and not understand what is under the hood.

"Hands-off management" should be aware that the implementation runs a huge risk of failure. It is quite surprising that management will outsource the entire process of implementation and only try to get involved in the end of the project, when the hand-over needs to happen. This is usually too late, and by then the expectation level runs the risk of being out of sync between the ERP implementer and the client.

If senior management don't have the time or inclination to be involved then no matter what system it is, it is going to have its internal political and project challenges throughout the process.

Enterprise readiness

Although ERP changes affect the entire organization, in most circumstances, change is effected through the organization through simple, fast, clear, constant, and concise management decisions and communications.

Employees look up to their management, and key management or owners who have buy-in to the process are worth 100 times more than employee hand-holding sessions.

If the key management is change averse, then simply don't implement an ERP System.

Technology

One of the drivers of the new age is technology. Investing in an ERP system is usually a significant investment. If you are going to invest in a technology , then you should make sure that you understand the underlying technologies of the systems that are going to run those systems.

Technology and proprietary platforms can become out of date or be difficult or even impossible to upgrade or integrate into other systems. Ultimately, the average career for employees is shorter than the technology that is going to be around. In your next organization, you are going to be stuck with the decisions of prior management, and the same truth will prevail about your legacy.

Personal career aspirations

Personal aspirations and career ambitions form quite an interesting dynamic in the entire decision process, and must not be discounted. Employees can be very biased towards their own personal ambitions in terms of technology. Independent thinking should prevail wherever possible.

Brand Loyalty

Take note that most existing brands have been in existence for almost 40 years and in most cases are the sum of diverse acquisitions, and the agility of these brands to adapt to changes in the technology space is recognized to be a major challenge. Evaluate brand loyalty for its emotional or real value context.

Note

Prioritize the selection factors and make sure that you get buy-in from all stakeholders.

Do you evaluate Compiere differently because it is open source?

In evaluating Compiere the question is—should it be evaluated differently because it is open source? In short the answer is: No! However, in understanding the environment, there are many deciding factors and risks to consider when evaluating open source systems in general. Here are some areas to assess:

It must meet your functional needs

Functionally, the ERP software must meet your needs, and must at least have passed your evaluation criteria through either proof of concept or proven functionalities.

It must offer the Assurance Support Levels to suit your needs

Compiere offers traditional open source General Public License (GPL) software as well as commercially licensed and supported versions of the application. The user thus has a choice.

Community-supported edition

Compiere offers a GPL version of their software as a community edition. In its simplistic form it is a form of distribution and exposure of the product to the world at large. In its complex form it is a collaborative, distributed, and transparent development environment. Community editions are good for evaluation, and small-to-medium environments until larger product support and upgrade assurances are required. Because the core of the product editions are the same, this book will cover both the community and paid-for editions.

Paid-for enterprise editions

The enterprise versions of Compiere are certified to be standards-compliant from a software, database, and operating system point of view. Managed by seasoned executives, Compiere invested more into these Enterprise editions for commercial operational acceptance and they are the true, supported versions of the software:

You can purchase support assurance for such versions, including certified upgrades and maintenance, from the software vendor
You can rely on the stability and roadmap of the technology stack
You can manage the responsiveness of the vendor contractually
You can find certified local support and experience
You can find training and documentation
You can still benefit both from the community editions and input
You can have indemnity against possible patent infringements

It must provide an open source advantage

As the open source market is maturing, and while the open source evangelists and the proprietary shareholders each have their stake in the ground, when it comes to sound commercial and risk management decisions the technology environment is now about long term freedom of use, architecture and platform, and not about "free" software.

Within the Compiere environment, the underlying core source code and Java technology is open to inspect and expand upon. Compared to other environments, it is also easy to find developers and support within the Java and Oracle/Postgress database environment. It is impossible to cover the Java J2EE framework environment in conjunction with this book, but is regarded as one of the most prolific and matured development environments available today, and forms the core to technology companies like IBM and Oracle.

The business benefit is that the underlying business logic source code is transparent and it is possible to understand and match it to the precise business functional process.

No integration process is easy, but open source systems provide a dynamic integration with other systems purely from the fact that it is transparent from the technology stack point of view.

Compiere editions

The different licensing options available to end users are as follows:

Edition	Overview
Compiere Community	Core ERP functionality Model-driven Application Platform Platform-independent client-server architecture GPL v2 open source license
Compiere Standard	Stable and supported versions with quality support, bug fixes, and service packs Automated migration to latest versions Traditional Client/Server presentation Commercial license
Compiere Professional	Advanced rich internet web UI architecture Additional enterprise-level functionality Premium support services EULA with indemnification protection Commercial license
Compiere Enterprise	Multi server support Visual Editor and Management Dashboards RESTful Webservices Commercial license

Additional Paid-for Features: Compiere Cloud Editions, Compiere Manufacturing, Compiere Warehouse, and Distribution.

In all editions, source code is supplied under different license agreements.

Key benefits

Successfully implement Compiere, the leading open source ERP business solution, to manage and coordinate all the resources, information, and functions of a business

Efficiently manage business documents such as purchase/sales orders, material receipts/shipments, and invoices

A quick way to evaluate the Compiere software against your needs, or to get a prototype implementation to test with users or management

Written in a clear and concise manner, this book follows a business model case-study example enabling you to learn about Compiere fundamentals and best practices along the way

Description

Compiere is a world leading open source commercially supported ERP system. Very large companies have already chosen Compiere over traditional systems. By its nature ERP is a complex subject and while you may be familiar with ERP this book will introduce you to the concepts of Compiere. Here you will learn the Compiere essentials quickly and concisely.The aim of this book is to get you up and running with Compiere through a practical hands on approach. This book will also give you an overview of the main Compiere business process aspects. This book will help you get comfortable with using and exploring the Compiere system as you prepare for a roll out in your organization.Maturing from an open source project to a leading edge competitor in the ERP space, Compiere offers what other traditional big name systems lack. Offering its best of class functionality on a model driven architecture, the latest enterprise platform independent web technologies (GWT, Java, JBoss, Oracle, Postgress), while maintaining openness, value, flexibility, scalability and most of all an integrated ERP platform that can be extended upon with ease.In this book we will introduce you to understanding Compiere functionality exploring the different essential business processes. We will cover the setup, the business processes of sales, purchasing, inventory, financial management as well as advanced aspects like workflow, project planning and migration.Every chapter is illustrated by example so as to facilitate quick and practical reading. This is not a Java programming manual and the book’s aim is to take your basic knowledge of the ERP environment and ensure a proper practical understanding of the critical functional aspects during the Compiere implementation process.

What you will learn

Explore the critical factors that you must use to evaluate an ERP system

Manage and monitor your Compiere instance

Deal with all the aspects of sales process management relating to master data management, order fulfillment, invoicing, and shipments

Learn about material management in Compiere including Warehousing, adjusting product quantities, and moving inventory

Create procurement documents including order requisitions, purchase orders, material receipts, vendor invoices, and vendor payments

Effectively handle post-production activities and documents such as quotations, bank statements, sales orders, shipments, and invoicing

Explore advanced aspects including User and security setup, application dictionary and workflow processes.

Plan your project implementation and beyond.

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