Wednesday, June 16, 2010

Consona-Compiere

So mixed emotions here in the ERP Graveyard today. Our sometimes cohorts in the world of open source ERP, Compiere, have been acquired by Consona - the Infor wannabe funded by Battery Ventures and Thoma Bravo that has previously rolled up midmarket packages like Made2Manage, Intuitive, and the like. (See the Scorecard for a full roster)

Here's the press release. A few thoughts, and I'll trust you, gentle reader, to recall my more than usual conflict of interest in commenting on this.

There are two names that are not mentioned in the press release. That of the Compiere author and founder, Jorg Janke - who was Compiere for years and years, and can quite reasonably take credit for the "modern architecture," etc., that Consona highlights. It's true that Jorg didn't always see eye-to-eye with the open source community he helped create, and this was one of many factors that led to the Adempiere fork of the Compiere software.

Of course, probably the major factor was the initial VC investment from NEA back in 2006. And as is often the case when the VC's come in, Jorg was moved aside at some point to make way for Don Klaiss and some other managers transplanted from Oracle. But it was particularly graceless of Consona not to mention Jorg at all here; he deserves better.

The second name not mentioned, of course, is Klaiss - the (presumably outgoing) Compiere CEO. I think it would be fair to say that his tenure at Compiere was not an overwhelming success. On his watch, the company further alienated their dwindling open source community, including many of their reseller partners, by driving new product development in a more closed direction and not making source code available for new modules.

NEA put a great deal of money into Compiere, and since the value of the deal wasn't disclosed, we can only speculate about their return on that investment. But it's clear from talking to people who have become xTuple customers and partners over the past few years that they burned through a lot of money, and didn't have a great deal to show for it:
  • huge overseas development projects for new binary-only commercial products
  • salaries for a ballooning management team
  • multiple office relocations, presumably to be ever-nearer to the various centers of gravity in the California VC/software industrial complex
  • and, oh yes, just 130 customers. And that number's even lower than it sounds.
Lots of people will be asking what this means for open source, software business models, and of course, one of the core tenets of this humble Graveyard: that with all the crazy, finance-fueled M&A activity in the ERP software space, open source is a powerful defense for companies concerned about the longevity of their ERP investment.

I would humbly submit that the fate of Compiere (please don't even ask me to comment on Consona's plans for the product - see also the Infor SOA offering and Nixon's secret plan to win the war) stands as an object lesson in support of that theory.

Compiere failed as a company because it turned its back on open source - on its community of free users, and partners and customers who wanted to be full participants in the ongoing development and maintenance of the software. It's just especially ironic that the bullet was fired by someone like Consona.

More thoughts soon.

Update: Interesting questions from Frank Scavo at the Enterprise System Spectator...