OPEN SOURCE SOFTWARE AND LEVERAGING OF BUSINESS
EFFECTIVENESS IN SMES
A Case Study
Steven Butler, Dotun Adebanjo
Management School, University of Liverpool, Chatham Street, Liverpool, U.K.
Hossam Ismail
Management School, University of Liverpool, Chatham Street, Liverpool, U.K.
Keywords: e-Business, Open Source Software, Small-to-Medium Enterprise (SME).
Abstract: This research investigated the issues that impact on an SME adopting e-Business. It was found that many
barriers may exist for e-Business adoption in an SME. One of which is limited financial resources to
purchase internet technology required for e-Business adoption and development. However, open source
technology has grown in popularity for a number of years, with governments, business firms, military and
educational organisations incorporating open source software. This paper provides an overview on open
source technology which could be adopted for e-Business architecture for the development of e-Business
applications. Furthermore, it provides two action research case studies on SMEs adopting open source
software for the development of e-Business capabilities. It was found the projects were successfully
developed and implemented for each case study company. Although successful, the research team found
that more research is required in open source software for the development of e-Business applications.
1 INTRODUCTION
In the United Kingdom (UK), Small-to-Medium
Enterprise, (SMEs) provides a significant
contribution to the economy. Some authors report
the contributions to Gross Domestic Product (GDP)
up to 40 percent (Taylor and Murphy, 2004). The
world economy is changing, with growth in
emerging markets and developing economies
continuing to outstrip that in developed economies,
(Jutla et al, 2002). This has resulted in more pressure
on SMEs to discover ways in which to deliver its
products and services more effectively, and improve
operations activities to remain competitive.
The growth in the internet and e-Business
applications has provided organisations with new
opportunities to offer products and services, share
information with business partners and meet
customer demands. Therefore, e-Business
applications and the internet have the potential to
increase the competitiveness and growth of small
firms, (Paliwoda, 2004). E-Business applications
provide an organisation with the opportunity to
extend business functionality by providing users,
such as employees, suppliers and customers to
access business logic through a browser, or
commonly referred to as ‘business though a
browser’.
E-Business applications and architecture uses a
three-tier client server model, as illustrated below in
figure 1. A three-tier client server model is where
the client is mainly used for display with application
logic and the business rules partitioned on the server,
which is the second tier, and a database server is the
third tier. (Chaffey, 2004).
Figure 1: Three-tier architecture.
Although e-Business can provide so many
opportunities, many barriers may exist, preventing
93
Butler S., Adebanjo D. and Ismail H. (2008).
OPEN SOURCE SOFTWARE AND LEVERAGING OF BUSINESS EFFECTIVENESS IN SMES - A Case Study.
In Proceedings of the International Conference on e-Business, pages 93-100
DOI: 10.5220/0001911400930100
Copyright
c
SciTePress
an organisation adopting e-Business. The effective
adoption and implementation of ICT may rely quite
a lot on individual factors such as organisational
size, structure, mix of available human and financial
resources and capabilities (Pavic et al, 2007).
This is further supported by resource issues
relating to finance, skills and personnel are expected
to impact on the decision to adopt e-Business, (Fillis
et al, 2004). Research has found that there are a
number of barriers and success factors associated
with e-Business adoption for an SME. (Taylor &
Murphy, 2004) identified high initial set-up costs of
ICT and e-Business can act as a barrier for an SME.
Clearly, SMEs are presented with a number of
challenges to realise the benefits e-Business that can
provide to an organisation. However, open source
technology may provide a solution by providing
access to technology which may not be cost
prohibitive.
1.1 Open Source
Open source is a development method for software
that harnesses the power of distributed peer review
and transparency of process. The promise of open
source is better quality, higher reliability, more
flexibility, lower cost, and an end to predatory
vendor lock-in (Open Source Imitative OSI, 2008).
Open source software has grown in popularity in
recent years, with governments, business firms,
military organisations, and educational entities
incorporating open source software into their
enterprise functions to counter tightened budgets and
rising operational expenses (Hedgebeth, 2007). Any
reservations that exist regarding security may be
short-sighted, with financial services institutions
such as Experian, embracing open source software
recently, (Ferguson, 2008). It appears open source
popularity will continue to grow, with predications
that by 2012, more than 90 percent of enterprises
will use open source in direct or embedded form,
(Judge, 2008).
Open source appears to be here to stay, but what
open source software is available which can be used
to develop e-Business applications, based on an e-
Business three tiered architecture (Figure 1).
2 TECHNOLOGY REVIEW
The research team identified various Database
Management Systems (DBMS) which could be used
in the data tier of the three-tier architecture. The
research team analysed SQL Server, Microsoft
Access and MySQL to consider suitability for e-
Business applications for the case study.
Microsoft Access is a DBMS developed by
Microsoft Corporation and belongs to the Microsoft
Office family of products. Microsoft Access
includes database functions that allow users to
perform database queries and has some very good
reporting interface. Microsoft Access is a flexible
package and is suitable for organisations that have
small database requirements and require few
database records. In a database environment with
multiple users, connections and queries, Microsoft
Access will probably become unreliable and slow.
However, Microsoft Access can be less expensive
than some other DBMS on the market.
Microsoft SQL Server is another Microsoft
package, but this product is primarily marketed
towards large organisations with large database
requirements. SQL server is an enterprise-level
database system and is widely used in organisations
that require a database that can handle high use,
multiple transactions and offers high reliability.
Microsoft SQL server is certainly a viable option for
large organisations and the cost highlights this,
while SQL server is an expensive option and
requires a lot of training to be able to use the product
effectively.
MySQL is an open source project which has
been publicly available since 1996, but has a
development history going back to 1979, (Welling &
Thomson, 2003). MySQL is a relational database
management system (RDBMS), which enables data
storage, searching, sorting and retrieval. MySQL has
many attractive features which include speed, ease
of use, query language support, capability,
connectivity, security and portability (DuBois,
2003). MySQL has become a popular database
solution as its popularity within the database
community has increased and would probably suit
most database needs.
It should be noted that there are several database
options available and the views expressed by
authors, practitioners and application developers on
available database systems varies significantly.
Many developers and practitioners may have a bias
towards database systems with which they may have
had previous experience. It is clear that the choice of
database system will depend on a number of factors
such as price, speed, efficiency, etc. The database
comparison table illustrated below in Table 1
highlights the differences in the most suitable
database systems available.
The research team analysed suitable scripting
languages for the business logic layer of the three-
ICE-B 2008 - International Conference on e-Business
94
tier architecture. The research team analysed ASP,
ASP.NET and PHP to consider suitability for e-
Business applications.
Table 1: Database Comparison.
Access SQL
Server
MySQL
Cost Inexpensive Expensive Free
Speed Weak Strong Strong
Efficiency Weak Strong Strong
Users Few Many Many
Connections Few Many Many
ASP is a server-side scripting language
developed by Microsoft to run dynamically
generated HTML pages. ASP was originally
introduced with Microsoft’s server platform and
utilises VBScript, a variation a Visual Basic
Language, consequently both Microsoft products.
Although scripting languages have been changing
rapidly, many competing technologies have
introduced new integrated features, while ASP has
been lacking in this area. However, many business
environments have Microsoft servers. This is
probably a major driver for the continued use of
ASP and ASP supports Microsoft SQL server, which
is also widely used.
ASP.NET is part of Microsoft's .NET platform
and should not be confused with ASP. Although
both are developed by Microsoft, the only other link
between both technologies is that they both use
VBScript. ASP.NET can be used to build dynamic
web sites, web applications and XML web services.
ASP.NET offers developers the ability to build
pages using controls such as buttons or labels, with
properties assigned to the controls. The controls
produce segments of code, e.g. HTML for forms.
This concept introduces the idea of all the code
behind the page. This may reduce development time,
but it is fair to conclude that programmers and/or
developers will always need a deep understanding of
the technology, even with the .NET concept of code
behind the page.
PHP is an open source scripting language and
was originally started as a hobby, this programming
language has grown in popularity and use in recent
years. It can be imbedded into HTML pages and
allows communication with a database. A number of
databases support PHP, which include MySQL,
dBASE, Microsoft SQL Server, Oracle and many
more. PHP supports most back-end databases, but it
is most commonly known for its seamless
integrations with MySQL. It can also run on a
number of operating systems such as Windows,
Linux, MAC OS and most varieties of Unix.
Furthermore, it is well supported by several PHP
discussion groups and communities. PHP has grown
from a set of tools for a personal home page
development to the world’s most popular web
programming language, and it now powers many of
the Web’s most frequent destinations (Shiflett,
2006).
The choice of ASP, ASP.NET or PHP will
ultimately come down to the application
requirements and the hosting provider environment.
The choice will also include the developers’
familiarity with programming language. If the
developer is familiar with C, Java, JavaScript, etc,
then PHP may be the best choice. If however, the
developer has little experience of programming
languages the choice may be the .NET concept of
code behind the page. ASP.NET or PHP would be
more suitable for e-Business applications, as
software support and updates for ASP becomes
redundant in the future. The technology comparison
table illustrated below in Table 2 highlights the
differences in the most suitable technologies
available.
Table 2: Scripting Language (Source: Oracle).
ASP.NET PHP
Cost Free Free
Platform Cost Expensive Free
Speed Strong Weak
Efficiency Strong Weak
Security Strong Strong
Platform Strong Weak (IIS Only)
A number of technology options exist for e-
Business applications and only a handful have been
analysed due to suitability and requirements for the
e-Business applications to be developed in this
paper. This paper investigates the use of open source
software for e-Business applications as access to
financial resources can be limited in an SME.
The research team found that MySQL would be
the most suitable database option for each case study
organisation due to cost, stability and security.
MySQL is a true open source database management
package. As a result, the research team decided that
PHP would be the most suitable scripting language,
as it works seamlessly with MySQL and, once more,
it is an open source product.
Therefore, the research team agreed to develop
the e-Business applications using MySQL and PHP
for the data layer and business logic layer,
respectively. MySQL or PHP do not require a
commercial licence and all are battle-proven on high
volume websites. Apache was selected to provide
the web server environment. The apache web server
OPEN SOURCE SOFTWARE AND LEVERAGING OF BUSINESS EFFECTIVENESS IN SMES - A Case Study
95
open source project was developed and as an open
source HTTP server for operating systems such as
Unix and Windows. Apache has been the most
popular web server on the internet since 1996
(Apache, 2008). Apache is also the most popular
web server and has the largest market share, used on
over 50 percent of web servers, (Netcraft, 2008).
The software selected for the development of e-
Business applications are Apache, MySQL, and PHP
are open source software and are known collectively
as AMP.
3 CASE STUDY
Organisation A was a micro-size manufacturing
organisation based in the UK. The research team
also found that the case study company was
experiencing sustainable growth, with a year-on-
year sales change of more than forty percent. The
case study found that the organisation was suffering
from ‘growing pains’ in a number of areas of the
business. The research team carried out interviews,
process review meeting and structured walk-through
to understand business operations and indentify
improvement opportunities. It was found that the
organisation used office applications and had a
legacy system for stock management, but many of
its key processes were paper-based and manual. It
was found that the organisation was becoming
inefficient in a number of its key processes. The
research team and management reviewed all
improvement opportunities to identify ‘urgent
improvements’. A key process in the dispatch
department was causing a bottle neck and affecting
other areas of the business. This was identified for
improvement actions. The process was know as the
‘verification process’, was critical to the business,
and directly affects the organisations ability to
service customers.
This process was a manual process. It required
personnel in the dispatch department to validate the
data on six documents against a master data sheet to
ensure all the data on the documentation matches
that on the master data sheet. Once complete, a
manager would then be required to repeat this
process to verify all the documentation was correct,
and data was not overlooked accidently. This
activity was required to be completed on every
product. It was a critical step, as the data and
information contained on the documentation
comprised of product information, safety data and
certified values.
Organisation B case study was a medium-size
car finance broker based in the UK. This
organisation has been established for some time,
with a growing finance portfolio. The primary role
of this organisation was to link car dealerships and
finance organisations able to provide funding for
vehicle leasing and purchasing, acting as an
intermediary. The organisation used a proprietary off
the shelf software package to support its operations.
The software did allow some customisation, but it
was found this had its limitations.
Through management briefings, conducting
interviews and process reviews at each visit, it was
possible to identify issues and problems with
business processes. The research team identified
issues with current business processes, data
integrity, processing time and legacy system. The
organisation rely on external parties, (car
dealerships), to provide legible and complete
information for finance proposals. It was found that
proposals are hand written by car dealerships and
then faxed to the contact centre for processing. Once
received, employees were required to transfer the
information on each proposal onto the legacy
system. However, if an application has not been
hand written in a legible format employees were
expected to decipher information on the proposal,
presenting the organisation with data integrity
issues.
Furthermore, it was found that because proposals
were faxed this affected the quality of information
on a proposal. The organisation team were fully
aware of this problem and were keen to resolve this
issue through the use of technology. The research
team identified this as an area of improvement, as
improvements, or elimination of data integrity
problems would provide the organisation with clear
and accurate information and more efficient business
processes.
The organisation offers products which require a
decision of acceptance or decline within two hours.
It was found that sometimes this is exceeded due to
incomplete or incorrect data collection, which
necessitated follow up actions and telephone calls by
employees resulting in extended processing time. It
was found that if the processing time extended
beyond two hours then a dealership would source
finance from a competitor, resulting in lost
commission for the organisation.
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96
4 RESEARCH AIMS &
OBJECTIVES
The overall aim of this study was to determine ways
in which open source software may be used to
develop e-Business applications to improve business
processes in each case study organisation. The
research focuses on identifying suitable open source
software to develop such applications. The research
then moved onto proposing solutions utilising
internet technology, and then developing e-Business
applications. To achieve this aim, a number of key
objectives would have to be met. These key
objectives include:
Identity open source software for e-
Business applications.
Determine ways in which solutions can be
developed using internet technology.
Develop e-Business applications for each
case study organisation.
Identify benefits e-Business provided each
organisation.
Use findings in the paper for the
development of an e-Business framework
for an SME adopting and implementing e-
Business.
5 RESEARCH METHODOLOGY
The primary research for this paper is based on a
case study of two UK based SMEs, the first is in the
manufacturing industry, and the second is involved
in the financial services industry. Two case study
organisations were selected for this paper so that
research could be completed on a manufacturing
organisation and non-manufacturing organisation.
The case study is action research lead in both cases.
In first case study the research team spent more than
18 months working with the case study company on
an e-Business development programme, to develop
e-Business capabilities and implement operations
management tools and techniques. An associate
from the research team was based at the case study
company throughout the programme.
The second case study company is a medium-
size enterprise based in the UK. The organisation
investigated the use of internet technology in both
front and back end activities to improve business
operations to minimise processing time and data
integrity issues to improve competitiveness of the
organisation.
The research team carried out several face-to-
face interviews with stakeholders from case study A
and B. The interviews with case study A were
primarily carried out with key stakeholders, but this
was then extended to include employees involved in
business processes to better understand each process.
Once each process was fully understood, the
research team then began identifying areas for
improvement through the development of a web-
based system.
In respect of case study B, initial interviews were
held with senior management (directors), and the
Information Technology (IT) manager. The research
team began with understanding existing business
processes. This process enabled the research team to
understand finance proposal process from initial
enquiry to release of funds.
In case study A and B the research team was
involved in the system analysis and development
process for each web-based solution. In case study
A, the research team designed web-based
applications to improve existing process, data
handling and reduce resource requirements. In case
study B the research team designed a new e-
Business application to link car dealerships and the
case study company to improve operational
activities and enable information sharing. In both
cases the research team developed the e-Business
applications using open source software, which had
been designed for each case study organisation.
6 FINDINGS
Organisation A
It was decided that a web-based verification
application would be developed by the research team
to improve the ‘verification’ process for organisation
A. The study had already identified that access to
financial resources for technology development
would be a constraint. This resulted in the
stakeholders agreeing that the ‘quick win’ project
should be developed through the utilisation of
barcode and open source technology. This was the
perfect opportunity for both the research team and
the organisation to witness the viability and
suitability of open source technology, which was a
new concept to the case study company.
The web-based application would be developed
so that barcode data on a product master data sheet
could be scanned and stored on a database. The data
required for validation would be stored in barcodes
on product documentation when printed. An
OPEN SOURCE SOFTWARE AND LEVERAGING OF BUSINESS EFFECTIVENESS IN SMES - A Case Study
97
employee could then use the verification application
to complete data verification checks using a barcode
scanner. The application would check the barcode
data on the documentation, against the master data
stored in the database, informing the employee of a
pass, or fail. This would result in eliminating
management from this process, as the employee
would not be required to perform data verification,
thus eliminating human error from the process.
The application successfully developed with
open source technology (APACHE, PHP and
MySQL). It was successfully implemented and
replaced the existing manual process, thus
improving the process significantly. It was found
that the new application provided several benefits,
such as more efficient business processes within the
dispatch department because the current bottle neck
had been eliminated. This in turn helped speed up
the dispatch of goods from the department.
Furthermore, through better utilisation of human
resource management, more time can now be spent
in other areas of the business, which could provide
even more cost savings or help improve revenue
streams through new product development.
The total project cost for the application was
calculated at £4006.35. This included hardware,
software, training and development costs. The new
process provided a resource saving of fifty percent
and a noticeable improvement in throughput time.
This was calculated as a total cost saving of
approximately £20K in the first year, providing an
approximate five hundred percent Return on
Investment (ROI) for the case study company.
It was found that the verification system
provided a number of benefits which could not be
fully quantified. Some of which included the ability
of the case study to eliminate the bottle neck
observed in the department. This in turn helped
increase the throughput of goods in the dispatch
department. Furthermore, through better utilisation
of human resource management, time can be spent
in other areas of the business, which could provide
even more cost savings or help improve revenue
streams through new product development. The
process was de-skilled, resulting in any employee
being able to perform verification using the web-
based system, after initial training.
In addition, the development of the web-based
application includes the storage of data, using the
MySQL database. As a result, management can use
the data to monitor the process and retrieve
historical data to help make business decisions.
Finally, the research team found that knowledge and
understanding of e-Business application had been
positively witnessed and experienced by the entire
organisation. Management and personnel involved
in the verification process have commented that
without the adoption of the system, it would have
been impossible to meet current customer demands
using the existing approach.
Organisation B
The research team and employees from the
organisation reviewed several web-based
applications used by competitors and organisations
providing financial services. This provided the initial
concept of a web-based application to the
organisation. The research team held focus group
meetings to discuss, and identify desirable
functionalities of the proposed web-based
application. It was agreed that the application would
also include finance quotation tools for dealerships
to use whilst using the web-based proposal form. It
was thought this would enhance value proposition to
dealerships, thus encouraging adoption. The web-
based proposal form would include validation
functions to ensure that all required information was
completed on the form before submission, thus
ensuring data integrity and minimising errors, thus
reducing processing time.
It was agreed to develop and implement the
solution in phases. In the first phase the solution
developed would store all the proposal information
in a database. The proposal would then be encrypted
and emailed to the organisation for processing, this
would replace the fax. The next stage of
development would look at identifying solutions to
allow data sharing between different operating
systems and programming platforms.
The organisation successfully implemented a
web-based e-Business application using open source
software (PHP & MySQL). The application
improved information flows between the car
dealerships and the organisation, replacing the paper
passed proposal application process. The application
was first released to field sales staff for review and
testing, before being released to car dealerships.
However, it was identified that the next stage of the
development may be more difficult, as the
application would be required to share data directly
with legacy systems, posing a security risk.
Furthermore, a dealership has requested information
sharing between both organisations to simplify the
proposal process. If the organisation can provide a
solution, the dealership as agreed to complete all
business transaction with the case study company.
This has resulted in the proposal for the application
to be developed further, into a web service.
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98
7 DISCUSSION
Although both case study organisations had
implemented e-Business applications successfully
using open source software, the research team found
that a number of barriers existed, which included
access to skills, key personal and business culture
issues.
It was found that Case Study A had little
knowledge of e-Business, e-Business applications or
the benefits and opportunities that could be realised
by an organisation adopting e-Business. The
research team managed to involve as many
employees as possible in the development of the e-
Business application, to help deepen knowledge and
understanding and encourage buy-in at all levels of
the organisation. It was also found that the
organisation lacked the necessary skills and
knowledge to develop e-Business applications.
Moreover, the research team found that access to
personnel required to implement and deploy the
application was limited, due to personnel involved in
other business activities. Once the e-Business
application was successfully implemented, the
research team arranged a feedback meeting to
ascertain personnel experience of e-Business. It was
found that the approach to involve personnel had
been received positively, as personnel felt that e-
Business knowledge and understanding was now
evident throughout the organisation.
It was found that Case Study B Company did
have knowledge of e-Business applications, but did
not fully understand how internet technology could
be deployed to improve operational activities. The
research team found that the organisation did have
an information technology department, which were
highly skilled in a number of areas, but did not
possess the necessary skills to develop e-Business
applications. Moreover, it was found that access to
personnel was limited, similar to the first case study
organisation. Clearly, key stakeholders must
appreciate that access to personnel is required,
which may remove personnel from daily business
activities. The project feedback meeting found that
all involved had a positive experience and found
open source could provide significant benefits to the
organisation. This organisation is now looking to
develop the e-Business application into a web-
service for its dealership network. This will also be
developed using open source software.
This paper had already indicated that access to
software can be cost prohibitive, but this was
overcome through the utilisation of open source
software. However, a number of other barriers for
each organisation were observed by the research
team, and these need to be considered by academics
and practitioners involved in e-Business
development projects for SMEs. Although many
barriers may exist, each organisation experienced e-
Business benefits, as illustrated below in Table 3 and
Table 4.
Table 3: Case Study A - e-Business Benefits.
Cost Saving Process Effects Culture Effects
£20K (year 1) Bottle neck
removed
e-Business
knowledge &
understanding
Data integrity e-Business buy-in
Increased
throughput
Positive
experience of
open source
software
De-skilled
process
Open-source
buy-in
50% human
resource saving
Table 4: Case Study B - e-Business Benefits.
Cost Saving Process Effects Culture Effects
N/A Information
sharing
e-Business buy-in
Legible data Positive
experience of
open source
software
Reduced
processing time
Open-source
buy-in
8 CONCLUSIONS & FURTHER
WORK
The case study found that SMEs face a number of
challenges, and that e-Business can provide
opportunities for organisations to improve business
operations, information sharing and remain
competitive. However, they may face several
barriers to e-Business adoption, one of which is
access to technology. It is found that access to new
technology can be cost prohibitive, or existing
legacy system costs may prevent further investment
in technology. This may be overcome by the use of
open source technology.
The research team found that open source
software can be used for the development of e-
Business applications, namely MySQL and PHP. E-
Business applications were developed and
implemented for two case study organisations, to
OPEN SOURCE SOFTWARE AND LEVERAGING OF BUSINESS EFFECTIVENESS IN SMES - A Case Study
99
support business processes and enable information
sharing. Supporting the view of (Bocij, 2003) e-
Business is aimed at using information and
communications technology to integrate and
enhance processes. In a value-chain context, the
efficiency of processes is enhanced, which should
result in lower-cost, higher quality products so
giving the customer better value.
Although open source technology may provide
an SME with an opportunity to develop low cost e-
Business applications, access to personnel with the
skills, experience and knowledge of such technology
is still required. Therefore, more research into access
to open source skills is required to ensure that open
source technology development can be supported in
the future.
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