Introduction: Open Source ERP is considered as a viable alternative of proprietary ERP paradigm. Open Source ERP is getting more and more acceptance among Small and Medium Sized Enterprises (SMEs) recently. Majority of Proprietary ERP vendors are changing their strategy nowadays and extend their focus on SMEs, even though SMEs are not that interested in Proprietary ERP systems. The factors that may motivate SMEs to select an Open Source ERP over proprietary ERP are not identified empirically in previous researches. Few researches raised the issue of cost and thus proposed that Open Source ERP is appropriate for SMEs. The other factors than cost involved in the selection process are yet to investigate empirically.

Purpose: The overall purpose of this thesis work is to contribute in knowledge domain of Open Source ERP. Open Source ERP is an emergent area but it has the potential to attract many organizations to implement this kind of ERP Systems. The issue under investigation throughout this research will be the selection process of Open Source ERP in Small and Medium Sized Enterprises (SMEs). The focus will be to identify mutually most important factors, from the perspective of SMEs and Suppliers that may motivate the Small and Medium Sized Enterprises (SMEs) to select OS ERP.

Method: Data obtained from the respondents is quantified in the research. Information gathered from the SMEs who have implemented Open Source ERP and from the Suppliers through web based survey. Two separate questionnaires comprised of various questions related to different factors in selecting of Open Source ERP solutions were made and sent to both SMEs and Suppliers of Open Source ERP. Opinion from an Open Source ERP expert is obtained regarding different factors motivate SMEs to select Open Source ERP. The results obtained from respondents through empirical findings were analyzed thereafter.

Conclusions: SMEs were investigated regarding the importance of various rationales when they were selecting Open Source ERP solutions. The degree of importance of various factors in selection process might be diverse from organization to organization. It might be dependent on the size, geographical location of the organization or many other issues. Despite all this, there might be some common factors that may be always considered as foremost factors which influence SMEs to select an Open Source ERP over proprietary ERP.