HR Technology: Open-Source Solutions for HR

Rich Berger isn’t sure open-source HR software is ready for widespread use, but he’s keeping an eye on it. "It is too early to judge open source, but it is not something to close the door on," says Berger, HR information systems (HRIS) director at Citrix Systems Inc., a Fort Lauderdale, Fla.-based developer of software for application delivery infrastructure. The enticing cost benefits from open source are drawing the attention of HRIS professionals such as Berger, a member of the board of directors of the International Association for Human Resources Information Management. The organization takes no position on any technology.

Open-source software has no license fees, and with information technology budgets disappearing faster than Arctic ice, the option should not be overlooked. During the downturn of 2001-02, many IT staffs opted for open-source Linux over costly proprietary operating systems for their data centers. Some observers say the current recession will similarly drive adoption of a first generation of open-source applications in customer relationship management, enterprise resource planning and HR.

"It is inevitable for open source to take off now," predicts Oliver Marks, founder of Oliver Marks & Associates in San Francisco, a Web 2.0 consulting firm. With IT funding drying up, Marks says open source for HR and other vertical applications will find adopters the way Linux did.

But there are caveats: There’s no critical mass of open-source HR applications or distributors yet; for the model to work in HR, a much larger developer community is needed. And, despite the lack of licensing fees, open source is not free—customization, maintenance, training and cost of risk must be evaluated.

An Emerging Model

Open source means the software is free and its source code is accessible—typically not the case with proprietary products. Anyone can download the code from the Internet and use open-source software or improve it without paying license fees. The user typically joins one or more free online open-source forums, where users share problems and solutions. The more people who work on the product, the faster it improves, and a community of developers grows around it.

There are also for-profit distributors of open-source software, a popular choice for organizations that don’t have internal expertise. Red Hat Inc. of Raleigh, N.C., distributes Linux for desktops and servers, deriving revenue from a subscription model that offers maintenance and support to users of the products Red Hat distributes. Some variation of this model is found among other for-free open-source distributors, thereby speeding adoption.

In human resources, open source is in its infancy. There’s an open-source HRIS—OrangeHRM—used by hundreds of organizations, and at least one other under development. Open-source software is available for performance management, payroll and other HR functions. Accurate adoption rates are unavailable but appear to be small.

Many HR organizations benefit from open-source software without knowing it: Linux or other open-source software may be in their IT infrastructure. Commercial HR software developers often use some open-source components in their products. And some vendors of HR software-as-a-service (SAAS) use open source in their hosting environments. For example, Workday Inc. in Pleasanton, Calif., sells proprietary HR modules on the SAAS model and has a hosting infrastructure built entirely of open-source software including Linux and MySQL, a database, according to Workday’s Chief Technology Officer Stan Swete.

Community Building

Those who might be interested in open-source software for HR face several issues: few products, few distributors with proven business models and few developers. This prompts the wait-and-see attitude, says Berger. "We’re at the front end of the open-source curve," he maintains.

Even open-source proponents agree that HR, and other vertical applications, aren’t fully advanced. "HR is in the middle of the pack," says Danese Cooper, a senior director of Open Source Initiative, a nonprofit advocacy group. "By comparison, there are a lot of other verticals with no open source yet. There’s not much in the supply chain area, for example."

Open source in the data center found early success because operating systems, server software and databases are components everyone needs, Cooper says. She was initially surprised at any demand for vertical applications but now expects many for the same reason open-source software gained ground in infrastructure applications: "Traditional software development is no longer responsive to customer needs," she says. "And there’s a lot of buzz around some of these new applications."

Cooper informally advised OrangeHRM Inc., a Secaucus, N.J.-based developer of an open-source HRIS. Unlike Red Hat and other distributors that don’t initially develop the products, technicians in this startup company wrote all code, decided to make it open and are now building a community of developers while evolving a business model.

OrangeHRM developers have built basic HR modules with room for extensibility that customers will pay for, Cooper explains. "The basic product is a Volkswagen, and if you want a Ferrari, they do it for a fee."

Moving to Open Source

OrangeHRM has modules for performance, administration and other functions. It does not include payroll, but integrates with any payroll system. The software has been downloaded more than 180,000 times, and officials in 700 organizations identify themselves as production users in surveys, according to company founder and Chief Executive Officer Sujee Saparamadu. OrangeHRM has 250 customers who subscribe to its support services.

Many users are in organizations with a dozen or fewer employees, and most migrate to open-source software from paper or spreadsheets. A few user companies have more than 2,000 employees, including some that had been using commercial software, Saparamadu says. Most users run the software on their own servers, but OrangeHRM recently began a hosted model.

OrangeHRM’s staff of 18 includes HR process experts and software programmers, the latter mainly in Sri Lanka, one of a growing number of nations whose government policies support development of open-source software. The company recently began to build an outside community of developers and HR experts to contribute to the initiative.

One adopter is M. Luiza Coelho, HR manager for Edmonton City Centre Church Corp. in Edmonton, Alberta, Canada, an independent, nonprofit social services agency.

When she joined the agency last year, personnel records for 250 workers were on paper. Coelho asked her IT staff to find options for an HR system, knowing that a commercial HRIS like one she had used when working for a previous employer was not in the budget. But she wanted to automate personnel details, such as vacation and sick time and emergency contacts.

She adopted OrangeHRM in September 2008 and paid $900 for the first year’s e-mail or phone support from OrangeHRM. "I had them customize it a bit," she adds. Her IT staff downloaded and installed OrangeHRM. Loading the MySQL database has been the biggest chore, she notes.

At least one other open-source HRIS is being developed. OpenHRIS is conceptually designed by HR professionals in Turkey, who still need to find programmers to write the code, according to Ugur C. Yildiz, a founder of the project. The motivation, he says, is that commercial HRIS are too costly and complicated for smaller companies.

Open-source software for other HR functions is in use or under development. Organizations with a total of 1.7 million employees use open-source payroll software from TimeTrex Payroll Services in Westbank, British Columbia, Canada, according to CEO Mike Benoit.

TimeTrex offers modules for payroll, scheduling, attendance and job costing. There’s a growing community of developers, whose contributions are vetted by TimeTrex. The average client has about two dozen employees, but some user organizations have as many as 2,500 workers. The company makes money providing support and other services.

SynchSource Inc. in Oakland, Calif., is developing open-source modules for various workplace applications, including HR, according to Gary Durbin, chief technology officer and a longtime HRIS developer. The modules his company is building, with three large beta-testing companies, will work on any HRIS, including commercial products. Durbin expects to begin marketing efforts later this year. The company will derive revenue from services and support.

Open, Not Free

Despite some interest in the marketplace, HR open-source software may not take off until the next decade, says Zach Thomas, senior analyst at Forrester Research Inc. in Cambridge, Mass. Thomas urges any potential adopter to size up costs that might offset the license savings, including training, maintenance, roll-out costs and the potential costs of risk. "Open source does nothing to mitigate change management. Change management issues are software-independent," Thomas says.

HRIS analyst Clay Scroggins has seen no demand for open-source HR software. "I have done needs analyses over the past 15 years for 1,000 to 1,500 organizations," says Scroggins, president of CompareHRIS.com, a web site and consulting firm in Seminole, Fla., that offers comparative analysis of about three dozen HR management systems and generates leads for vendors. "There has been no interest expressed in open source, and rarely does anyone ask about getting access to the source code of commercial products."

Deciding between open-source and proprietary software does not get HR professionals off the hook for doing proper due diligence, says Naomi Bloom, a strategic HR consultant and managing director of Bloom & Wallace in Fort Myers, Fla. "You need to evaluate open-source HR applications the same way that you evaluate commercial applications, with scripted scenarios to test functional fit and a careful look at the vendor who will support it, that vendor’s viability and the open-source product’s road map."

At the very least, it would seem that HR open-source software should be on HR professionals’ radar screens, as it is for Berger.

Citrix, he says, will keep its commercial HRIS for now, but maybe not forever: "I like the idea of open source for business reasons," he says. "You are not as beholden to a specific vendor. If it works, [it’s] like Lego[s] to put in and pull out."

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