"The fear factor around open-source software has really dissipated," Lilly says. "When we started the company in 2001, at that point, you were still educating people about what open source really means."

In the European and Asian markets, however, customers are more savvy about open-source and have pursued business systems based on the model as way to prevent vendor lock-in, says Don Klaiss, CEO of open-source ERP vendor Compiere, which released an upgraded version of its solution today.

"There are parts of the world, particularly in Europe and Latin America, where there is a very strong bias in favor of open source," Klaiss says. "Customers are very tired of paying high license fees and maintenance fees."

While open-source seems well-suited to the task of ERP software, the demand is also due to the well-publicized failures of the traditional proprietary software, says Matt Aslett, enterprise-software analyst with The 451 Group .

"The ERP space is ripe for disruption given the amount of consolidation that has occurred in recent years, the ongoing tales of failed projects, and the relative failure of the enterprise vendors to break into the SME (small and medium sized enterprise) space," Aslett says.

Revenues are booming. Compiere saw 300 percent growth in sales in 2007 and expects a similar jump this year, Klaiss says. xTuple's Lilly predicts that sales for his company will double as well. Another open-source vendor, Openbravo, which started as a project in 2001 and as a company received $6.4 million in venture capital funding 2006, estimates that revenues will triple this year and the size of the company will double from 70 employees today.

For the open-source vendors, having a community built up around their product code multiplies their development efforts many times. Openbravo's partners and customers, for example, are currently localizing the product for 50 different countries.

"The future looks great," says Openbravo's COO Josep Mitja. "I think we are one of the companies doing our job better, but no matter how successful Openbravo is, open-source ERP companies, in general, will see significant growth in the next few years."

The growth numbers, however, should be taken with a grain of salt, says analyst Aslett. "ERP is one of the last areas of enterprise IT infrastructure that is relatively untouched by open source, and the open-source vendors can be expected to grow revenue over the next year and a half," Aslett states. "However, it must be remembered that these vendors are starting with revenues of next to nothing, while the revenues of the established vendors are measured in billions of dollars."

Yet, Openbravo's Mitja believes that what open-source ERP vendors are selling is something that proprietary vendors will not be able to match: Freedom from another company controlling your critical systems.

"With open source, you can take the code and do whatever you need to do," Mitja says. "There basically is this notion that you control your destiny."