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Micah Fairchild Open Source Payroll: The Great Access and Choice Debate

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 By Micah Fairchild

Open Source Payroll: Why Aren’t There More Choices?

As far back as 2009, an Accenture report (Accelerating the Benefits of Open Source Software), suggested that, “Thanks to the maturation of OSS [open source software], historical concerns over enterprise use have largely become non-issues. …previous risks, such as availability of support and the potential for patent violations, have now been addressed and become positive drivers for adopting OSS over proprietary software”. My question though, is that if this was the case three years ago (i.e. that the industry’s concerns have been answered and open source use was poised for a breakthrough to the mainstream) why then are there so comparatively few open source payroll solutions? After all, is payroll really all that different from HR applications…or CRM technology…or ERP software?

Granted, open source payroll software isn’t exactly rare. In fact, a search for the term “payroll” on the download website reveals 16 available applications that are payroll or payroll-related; the best-known of which is probably the TimeTrex package. Similarly, there are at least three open source enterprise resource planning (ERP) systems (i.e. OpenPro, Compiere and ERP5) that include a payroll module. As such, I’ll be the first to admit that the open source payroll market certainly has choices. But compared to the search results for ERP (240), CRM (225) and HR (69), you have to admit that it’s a fairly poor showing comparatively speaking. Add to this that the main HR management system on the open source marketplace, OrangeHRM still lacks a payroll module (and despite requests and inquiries among its user community, appears to have no public plans to develop one) and it’s difficult to avoid a tentative conclusion that open source is unattractive to payroll software developers.

Don’t get me wrong, highlighting this situation is in no way intended to imply that open source payroll software is any better than the many commercially available, proprietary payroll software solutions; but the truth of the matter is that open source does carry some practical and value-oriented benefits—a fact that has puzzled me about why its use seems to be so under-utilized in the payroll arena.

What is Open Source?

Before addressing some of the more major issues associated with open source payroll (and broader open source business applications), it’s important to understand what exactly open source software is. Well, put simply, "open source" describes software for which the license includes free access to the source code (the underlying program and backbone on which a system is built). This encourages use, modification, customization and redistribution without the overt restrictions common to proprietary software. The source code's availability allows collaborative development by loose-knit global communities of programmers and open source advocates claim this ‘shared-ideas’ approach results in cheaper, more reliable and secure programs. However, the big question is whether the benefits that apply to well-known open source applications such as Linux, Apache and Firefox also apply to open source payroll solutions, or indeed HR software in general. To answer that question, we’ve asked 3 more of our own to help provide a foundational understanding for you—hopefully resulting in the ability to decide whether open source payroll is an option your organization should pursue further.

A Brief Review of Open Source Payroll’s Pros & Cons

The main touted plus points of leveraging open source software for business purposes are:

  1. Cost savings (often open source applications are available for free download, dispensing with a license fee);

  2. Improved security (when developed via a “traditional” community of programmers engaged in peer review collaboration, the open source solution may have fewer vulnerabilities to deliberate attack than its commercial rivals); and
  3. Vendor stability (although an open source vendor may be no more viable than any other software house, the open access to the code allows for wider and more flexible support that can “outlive” the original developer).

Be that as it may, detractors to the use of open source software highlight that this type of payroll technology contends with:

  1. Strict licensing (open source license provisions are as strict as any other and any mixing of ‘open’ code with in-house solutions could have privacy and copyright implications);

  2. Non-community development (often open source business software is developed under “non-community” conditions, similar to its closed competitors and so the peer-review benefit is lost); and
  3. Integration issues (there can be issues of technical incompatibility between open and closed source solutions).

An Open Source Payroll Solutions Drought?

As can be seen above, there isn’t really a clear-cut case for or against open source payroll software, a fact that could be the very factor that is acting like a brake on its adoption. Still, potential other issues include:

  • The market in stand-alone open source payroll has so far been focused on the small (or even micro) to medium-sized business client. It’s possible that the development or bring-to-market costs of producing something on a grander scale are too high.
  • Payroll software is big commercial business and developers are reluctant to give it away for free. For example, TimeTrex may offer freeware, but that is still a gateway version to their Business and Pro editions.
  • When managing payroll, penalties for non-compliance with legislation can be steep and developers may be less willing to risk liability (a particularly salient area of risk for open source payroll software), whereas a commercial software developer specializing in payroll (or as part of an ERP /HRMS solution) is better covered.
  • Technical incompatibility issues mean that organizations prefer open source payroll when it is part and parcel of an open source ERP system—capable of incorporating seamlessly integrated payroll, scheduling, leave management, and time & attendance modules.

Open Source Payroll Options– Final Thoughts

As can be seen from what we’ve pointed to above, the potential reasons for open source payroll’s lack of wide-scale adoption is varied. Still, the fact remains that when it comes to open source options, payroll lags behind in terms of both its number of offerings and customer appetite. And without continued support and customer uptake, it’s possible that it’s in danger of becoming a closed circle; meaning that the lack of choice reduces adoption, which in turn diminishes the incentive to develop applications; which does nothing to broaden the choice available, and so on. As Ernst & Young pointed out in their 2011 report Open Source Software in Business-Critical Environments, “The question is therefore not whether companies and public institutions will use open source software in the future, but rather how they will do so”. Clearly so far though, professional use of open source has focused on areas other than payroll management. End

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Add to this that the main HR management system on the open source marketplace, Orange still lacks a payroll module – and despite requests and inquiries among its user community, appears to have no public plans to develop one – and it’s difficult to avoid a tentative conclusion that open source is unattractive to payroll software developers.”



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