Sometimes it’s better to do it yourself
E-commerce site ‘I Want One of Those’ (IWOOT), which specialises in gifts and gadgets, adopted open source software because commercial applications had consistently let it down.
Set up in 1999, IWOOT’s early years saw it quickly outgrow numerous business software packages, one of which – named Priam – ‘died in spectacular fashion,’ explains Angus Gow, the company’s programme director. The application buckled under the weight of orders the company was receiving, leaving it unable to fulfil them.
Value of IT
Gow says that the problems caused by the program nearly caused the company to go bankrupt. As a result, IWOOT began to understand how important IT was to its business and pledged serious money to fix the problem. It chose an enterprise resource planning (ERP) package which seemed like a useful business tool to help the company grow.
While the price tag was acceptable, the company failed to realise how much it would cost to update the system. ‘It got to the ridiculous state where changing a field name would cost us £20,000,’ says Gow.
In December 2006, the company’s ERP collapsed during an exceptionally busy Christmas. ‘We ended up with a two-year backlog of orders,’ recalls Gow, who began to realise the company had to take application design in its own hands.
Gow weighed up commercial ERP packages and a free-to-use, open source alternative named Open for Business (OfBiz). With commercial offerings, not only was the initial outlay expensive, but licence fees would increase as the company grew. With OfBiz, the outlay was comparable but there would be no extra licence cost so it would in fact get proportionally cheaper as sales increased. The only real cost was for a support services contract.
For Gow, though, lower cost is only part of the benefit of open source.
More importantly, it puts IWOOT’s IT department in charge of its own innovation. ‘There is a reduced risk in trying things out; if something is not working we can scrap it because we have not committed to paying any more licences.’
Gow’s argument is backed up in the company’s operational performance. When its previous ERP package was in place, the dispatch warehouse employed 120 people working 14-hour days. The proportion of incorrect mailings was around 1.3 per cent; the subsequent complaints required IWOOT to hire 90 agents in its call centre.
Following the deployment of OfBiz, the dispatch warehouse employs just 55 people, and the incorrect mailing rate is down to 0.003 per cent. That has allowed the call centre staff to drop to 46 agents.
‘Even if we don’t get the same volume as we did Christmas last year,’ explains Gow, ‘it will still be much easier for us to make a profit.’