Let’s Talk xTuple: Behind the Software with CEO Ned Lilly

If you think you think all ERP systems are the same, then you haven’t tried xTuple yet. We spoke with Ned Lilly, CEO of xTuple and author of blog The ERP Graveyard, and he filled us in on how xTuple is applying open source ethos to the business software world. Read on to learn how xTuple is tackling its next big endeavor: taking xTuple’s open source solution entirely mobile.

You head up an ERP company, but you have a blog called The ERP Graveyard. On the surface that seems like a little bit of a conflict, don’t you think?

xTuple is a different sort of ERP company. We started with the proposition that there were an awful lot of ERP systems out there, and the world didn’t necessarily need another one unless we were going to do something differently. The primary thing that we do differently is embrace the open-source software methodology and community. Open source, as a way of making software, worked its way up from system level infrastructure, operating systems, databases, web servers, and those sorts of things further up the information technology stack into applications.

What was the inspiration behind xTuple? How did you get started?

We, like a lot of people, kept an eye on what was happening with open source over the past 10 years or so, and came to the conclusion in the summer of 2007 that it was time to embrace open source fully. The company was originally formed as Open MFG. As the name would suggest, we had a specific focus on manufacturing companies. We had a hybrid approach to how we did things; it wasn’t open source, but it was built on open-sources pieces. We had a community source, where all our customers and partners got the full source code, which we managed like an open source community, but there wasn’t a free version. By the time 2007 rolled around, we had been asking ourselves for a while if people were really asking for this. If the market really wanted an open source ERP software, what does the business model look like? How do you engage the community? What’s the value exchange? We got pretty good at the mechanics of managing a group of users that were active, hands-on contributors to the development of the product, and felt like we were ready to make that leap. We changed the name of the company at the same time. We frequently had people in distribution, retail, professional services, and some other fields saying “I like your software, and I like your approach, but I’m not necessarily a manufacturer.” So we made up the name xTuple, carved out a totally free open source core of the product, and put it out there in SourceForge, and the rest is history.

So xTuple has moved away from just being a manufacturing ERP. Do you have a typical customer now?

I would say the bulk of our customers are still in manufacturing, but we’re doing an awful lot more in distribution, which is sort of the next group over – very inventory-centric. That’s the hardest part of ERP, and that’s where a lot of people are choking right now; they have too much inventory sitting around, without knowing how much they have, what it’s worth, or being able to fulfill customer orders in a timely fashion. I would say manufacturers are still probably the bulk of our customers – and they have a costing model that’s pretty unique, but distribution, retail, professional services are also important. The majority of our commercial customers are concerned with inventory, that’s the defining characteristic. There are plenty of people who use our software to run any kind of business, particularly the free PostBooks Edition – but inventory is where you often realize the greatest value.

Do you think that xTuple works better for small businesses, large ones, or somewhere in between? Is it a one-size-fits-all solution?

I don’t think there is such a thing as a one-size-fits-all. But hopefully we are a product and a set of technologies that people can grow with. So the core open source of our product, which we call xTuple Post Books (as in post-some other type of accounting software that has the word “books” in it), is the totally free and open source version of the product. It’s been downloaded over a million times. It’s been translated into 27 different languages around the world and localized by people in just about every country you can imagine. There are somewhere in the neighborhood of 15,000 to 20,000 companies actively using it to run their business.

Besides being open source, which is unique on its own, what sets xTuple apart from the competition? Is there any feature that makes your customers love your product?

Well, it really starts with open source. It’s not just because you can download it for free, or that you can get in there and mess with the source code itself. That kinds of pervades everything about us as a company, our product, and community of users. Our source code is out there, our bug tracker is public on the website, and we list our pricing on the website for the commercial editions of the software. The common thread through all that is transparency and openness.

ERP as a category has a pretty well-deserved bad reputation for hiding the ball during the sales process. The failure rates of the ERP implementation projects – depending on who you talk to – can be as high as 70 or 80 percent. All of that speaks to an industry that had gotten a little too comfortable with itself. People aren’t super happy with SAP and Oracle, even Microsoft in the mid-market. The whole reason the ERP Graveyard blog exists is because there are a handful of companies that have been doing nothing but buying up old ERP companies for years and years – Infor now owns 80-some different legacy ERP products. It’s all driven by private equity money that goes and rolls up all these old companies into one big holding company. They immediately fire half the product development and support people, and try to consolidate the costs. The customers are like, “Great, what do we do?”
The whole point of doing something differently with xTuple with the open source approach is to say “Look, you can have control over your software. Not everything is going to be free – you can certainly download the software for free and do whatever you want, but you’re going to have a commercial relationship with a software vendor and/or the vendor’s local partner.” We have 50-some partners around the world. But the most important thing is that you as a user are going to be in control. You’re going to be a member of this global community of users, who are very smart ERP people, and who are very engaged and knowledgeable about the product. We’re based in Virginia – even if the eastern seaboard falls into the Atlantic Ocean tomorrow and xTuple the company goes away, all our customers and open source community users have a level of insurance and security that the most pampered customer of SAP doesn’t have today.

Our whole approach is to say, “Look, this is not rocket science. This kind of software has been around for a while. Accounting is accounting. You have your debits and credits.” A lot of this is on its way to being commoditized, which means you shouldn’t have to pay a premium for something that everybody does the same. Just by virtue of being around and being collaboratively developed by a community of thousands of people who have used every other ERP product in the universe, we’ve learned a few things about the user experience. But at the end of the day, you’re doing the same stuff. You look at some of these other mature categories, like Office software – who needs Office 2013? Frankly, what’s new in 2013 that the version from 10 years ago doesn’t do reasonably well?

Mobile optimization is increasingly important with tablets and smartphones playing such a huge role in people’s lives. Is there anything that xTuple has had to do differently to accommodate the popularity of the devices?

It’s interesting that in the first 10 years of the company, our product has been essentially been client-server technology. It’s a desktop client that talks directly to a database on the server – an open source database called PostgreSQL, which is kind of roughly to Oracle what Linux is to Unix. There’s no middle tier. It’s been very simple to set up and install. The desktop client – this GUI, graphical user interface client, that we’ve had for 10 years has been pretty simple, slick, pretty fast. It’s also built with an open source toolkit called QT, which among other things allows us to have a native client on Windows, on Mac, and on Linux that looks and feels and acts exactly the same. So that’s been cool, and it’s been one of our differentiating things over the years.

We started off looking for something like QT, the framework that we used on the desktop, where we could write once and deploy everywhere on all these platforms – Android, iOS, etc. What we came to was a handful of next-generation HTML5 frameworks. Just this past December, we released our first mobile web client. All of the CRM functionality inside of the xTuple system is now available for any modern tablet of phone. The UI is completely designed for a “mobile first” interface. Very slick, very fast – I never thought I would say that a mobile web client is actually faster than the desktop GUI client, but it actually is. It’s 100 percent Javascript. What we’re doing now is over the course of version 4.x of the xTuple suite, we will replicate all the functionality in the application in the mobile web client. And because most of the business logic is still in the database, that was a design decision we made at the outset. So this is really just another client interface for us, but it’s the first time we’ve made a commitment to replicating the entirety of the application. So that’s what we’re going to be doing over the next year and a half, two years.

What do think are some of the biggest challenges that the commercial open source industry, especially with business software like ERP, is anticipating in 2013?

We don’t hear objections to open source anymore, which is nice. I think the business world by and large has crossed that chasm. More and more now when we talk to people about open source, it’s in a conversation about how we’re able to do what we do. We’re not in the mode of educating the market anymore. At the end of the day, because of the nature of business management software, the easiest thing for anybody to do is nothing. The smaller the company, the harder it is to get the rocket off the ground of a software project. The owners and managers and principals can all know that they have these aching business needs, but it’s so damn hard to get one of these projects started if you don’t have a dedicated staff to do this sort of thing. That’s part of what we’re trying to address by simplifying the application and making it easier to get started in a cloud-based environment. What we’re going to be engaged in over the course of this 4.x series is making it a lot easier for people to get started with just one piece if that’s what they want to do. If all you want to do is get your sales people set up on the common infrastructure, CRM is a good place to start. If all you want to do is start invoicing, just turn on the AR component. If you want to jump into the whole ERP thing, obviously we can do that, too. But because we have all those different pieces and because it’s designed in such a modular way, you can start with whatever piece is the most important to you, and plug in the rest later on.

That kind of segues into my next question – what is xTuple most excited about for 2013?

Mobilizing the full application is going to be our overarching focus. We’re continuing to build out new functionality for some particular markets. For instance, there are a couple of slices of the distribution world that have some unique requirements. Back to the whole ERP Graveyard thing, there’s nothing but two packages left. One’s owned by Epicor, and one’s owned by Infor. They’re both 20 years old and stink. You find those little opportunities. Many companies instantly understand the value proposition of open source, of not being tied down to this multibillion dollar company that doesn’t even know who you are.

Is there anything else you’d like to tell Business-Software readers?

We’re confident in our product and our users; and we put everything out there. Some people tell us we put too much out there. You can download the whole thing and try it yourself. You can read all the documentation. You can go through our bug list. Yes, we have bugs, but we fix them faster than anyone else. So if people are looking for a business software experience that treats you like a grownup, like you know what you’re talking about, I think they might find us pretty interesting.

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Find more information about xTuple and download their products at xTuple.com