ERP Business Software: A brief history

The modern day ERP Business Software automates the business processes in an organization. But the underlying concept was evolving for a long time beginning with MRP systems...

 

Evolution from MRP

Though the term ERP was new when first used in 1990 (by Gartner), the underlying concept for the modern day ERP Business Software was evolving for a long time. MRP systems (Material Requirements Planning) developed in its infancy stage in the 1960s and as the name signifies they were about computing material requirements and ordering. They were expensive because of costly computing resources at that time and requirement of large technical support.

 

MRP-II

MRP systems evolved into the coming years to Manufacturing Resource Planning (MRP-II). An MRP-II system takes a step further than MRP and helps in the effective planning of all resources of a manufacturing company in contrast to just materials planning. It is understood that the computers make an essential part of a MRP-II system as the overall process of planning, calculating material requirements and ordering the materials is very complex and it is impossible to imagine MRP system without the use of computers.

MRP therefore was the precursor to ERP which extended later beyond manufacturing since there are businesses beyond manufacturing and not all of the ERP software packages are from a manufacturing core. With the advancement in the field of computing technology (hardware), the befitting ERP software packages with advanced features evolved and accomplished automation in more and more enterprise functions.

ERP Software Packages

90s saw the rapid growth of ERP market and several ERP software packages were adopted by the companies, to name a few major ones – Baan, JD Edwards, Peoplesoft, and SAP. These systems date back their origin to 1970s and 80s but their capabilities and market reach grew exponentially during this period.

The ERP systems addressed almost all the core business functions of an organization and their suitability led to their adoption not only by corporations but NGOs, non-profit organizations and government departments also.

The ERP systems automated back-office business processes to improve operational efficiencies which involved companies’ employees only. The front-office functions which involved company partners like suppliers and customers, e-commerce, e-governance, etc. were out of the scope of ERP due to lack of technology to provide user interface and experience throughout.

ERP Business Software as Suite of Applications

With the progress in the area of web-technologies and internet communication, new opportunities surfaced by the web-enablement of ERP software packages and ERP systems could venture into the new territory – front-office functions and integrated Customer Relationship Management (CRM), Supplier Relationship Management (SRM), etc into the mainstream ERP.

ERP application software vendors prefer to call the new systems ‘Enterprise Application Suite’ instead of ERP – the conventional ERP application being one of the components of the suite e.g. Oracle E-business Suite, SAP Business Suite.

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