[Quick Five] ERPNext on its product upgrade and sales push

Mumbai-based Web Notes Technologies, developer of ERPNext, a web-based open source application that enables small businesses to manage their accounting, inventory and customer support, recently rejigged its product (screenshot below) and go-to-market strategy. The company started out in 2008 with a services offering and its product was initially branded Web Notes ERP. In 2010 it became a full-fledged product-only company and rebranded the product to ERPNext. The entry package, for a solo user, is available at $99 per year. We caught up with founder and diehard geek Rushabh Mehta for an update on how business has been since the rejig.

1. What are the specifics of the changes that have been undertaken with ERPNext?

First change is that we have moved from monthly to annual plans for our SAAS offering. We also brought back 30-day free trials so that customers could evaluate our product before paying for annual plans. Another big change is that now our own website is generated by our ERP. So we are integrating our entire codebase into one big product. We’ve released this feature for our customers too. Websites for small businesses is not a solved problem and a website generated from an ERP makes sense since the entire product catalogue, etc. is already in your ERP and it saves a lot of duplication to recreate it on the website.

2. What prompted you to introduce these changes?

There were two main motivators. One, since we are small team, it was getting harder to maintain multiple softwares (SAAS platform and product). So merging the two made sense and now our ERP is the platform that powers our own business. This has given a significant boost to our productivity. The other benefit is that we have a great website generation module that becomes a springboard for an e-commerce layer on top of the ERP.

Two, in India there are no payment gateways that manage recurring billing. How Google Adwords is able to do it is a mystery, but it’s not possible for commoners. Monthly billing was annoying for our customers and many were already paying us in advance for many months. We decided to simplify the process and move to annual plans. In our annual plans, we reduced the per-user price significantly and introduced an unlimited user plan, so our customers were happy to switch. We were happy to get most of our cash upfront. Since the beginning of 2012 we are cash positive and that is a healthy sign.

3. What kind of traction are you seeing in the market following the changes?

We are seeing significant increase in the volume and quality of conversations we are having and much better cash flows. We are getting a lot more interest from international customers since our Wikipedia page got approved (thanks to the efforts of our existing customers). A decision to buy an ERP is a long and deep one so we do not expect any immediate increase in numbers. We also closed our first deal for commercial open source support recently and are hoping to close another one very soon.

4. How have you funded the company so far? Any plans to raise venture capital?

My family has been kind enough to support this venture so far. There are two major reasons we did not raise funds. We want to build a world class product first and it requires near infinite patience that financial investors are not likely to have. The second issue is that we tried raising funds a couple of years back, but got rejected. Our proposal or communication was not attractive enough to make it attractive to investors. Also, personally I was looking for more mentorship than only investment. Unfortunately no one thought we were worthy of their time. I am thinking things might be a bit different right now, since we have improved considerably. But we have no specific financial needs right now.

5. Who would you say are your three closest competitors? How are you different?

Our product is a category breaker in many ways. We have three categories of competition:

  • Top players: SAP, Microsoft Dynamics, Sage – who have products at a much higher pricing (10X)
  • Web apps: Zoho, Freshbooks, Xero – who have single module products that are not integrated.
  • Open Source: OpenERP, Open Bravo – again much more expensive and not very easy to use.

Today there is no affordable option for a small business that needs an integrated offering on the web. Our customers tell us that the problem with our product is that “it is too good to be true!” We have to fight off the perception that since our product is so affordable, it is cheap in terms of quality.¬†We are trying to cover the gap, but doing our best to educate our users.

Image: StartupCentral

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1 Comment on "[Quick Five] ERPNext on its product upgrade and sales push"

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  1. knowiterp says:

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