For many of today’s established organizations, the path to success and the evolution of business management technology are closely interwoven. The advancement and diversification of enterprise resource planning (ERP) software have enabled businesses to integrate new technologies into their supply chain processes to drive forward their performance, leading to a variety of benefits.
The last half-decade has seen ERP solutions evolve into versatile and multi-faceted tools that help small, medium and large organizations run their business. However, ERP technically has a long history that can be traced back to the 1960s, when early software systems were based on automation for individual functions, such as inventory management.
This began with Material Requirement Planning (MRP) in the 1970s and 1980s. MRP further evolved and was called MRP II. While MRP was primarily concerned with materials, MRP II was concerned with the integration of all aspects of the manufacturing process, including materials, finance, and human relations.
The Right People at the Right Time
Most business systems at that time focused on one particular business process, and as a result, companies purchased different systems for each business process and ultimately had to move data from one system to another to get information to the right people at the right time. This led to numerous human errors, slow processes, inconsistent information, and ineffective reporting.
The term “Enterprise Resource Planning” was only coined in the 1990s by The Gartner Group to describe the next generation of MRP software. The purpose was to integrate all facets of the business enterprise under one suite of software applications. The definition of ERP would be broadened to include almost any type of large integrated software package.
During this time the basic models that are the mainstay of ERP software were introduced and firmly embedded into the design. These included the now-familiar system architecture in which the client’s computers are wholly separate from the server. This allows hosting of resources such as databases, in central locations and distributing resources, like user interface and reporting services, to other locations.
Digital ERP Revolution
In the 2000s ERP II was established as new, internet software gave real-time access to ERP solutions. With this new software came access to other functionality outside of the business, such as customer relationship management (CRM) and supply chain management (SCM). In addition, the continuing digital revolution and increasingly affordable computer processing power have brought changes to virtually every area of business operations.
In 2010 the evolution of Internet technologies and programming languages has finally reached the cloud, where businesses can operate efficiently and have entire infrastructure moved into it. This was perhaps the biggest boost to the expansion and evolution of ERP software capabilities and driven by the universal availability of the Internet and the simultaneous development of web-based technologies. This allowed the possibilities of having data stored, managed, and accessed from anywhere with an Internet connection.
This solution brings the benefits of full functionality that ERP Software has to offer without purchasing and maintaining an entire IT infrastructure. The systems offer a high degree of flexibility that allows the users to manage their businesses anytime and anywhere.
Many organizations are either already in the cloud or have plans to migrate their ERP in the near future. While on-premise applications are by no means dead, there will likely be a much larger shift in businesses moving to the cloud in the coming decades.
Today’s ERP software barely resembles that of past decades. Businesses of all sizes and specialties have the ability to tailor these systems to fit their unique needs, improving efficiencies, production and a long list of other benefits. What has held true throughout its life span, is that ERP continues to control, monitor, analyze and forecast the health of every part of the business as a whole.