The History of ERP

Enterprise Resource Planning system has a long history which stretches way back to the 1950s. It has evolved drastically over the last 50-60 years to cope with the changing demands of people in various departments of business. Technology was not a very friendly face in the 1960s. Thus, the very idea of software was unknown to most people. The earlier systems were based on automation for individual functions like financial account or inventory management. Reasonable growth of the Enterprise Information System could be detected.  We see that as technology develops, people’s demands keep on changing. It becomes more progressive. This led to the formation of ERP.

        The process of a more efficient method for maintaining records was started by the Manufacturing industry. ERP is born out of Manufacturing Requirements Planning (MRP). The initial MRP solutions were extremely costly. They required a large number of personnel to support the mainframe computers on which they run. The ERP system functions extended beyond the internal use of an individual’s manufacturing firm. The benefits of the system were soon recognised by the people. By the 1970s when computers became a more common face this system became popular. MRP utilizes software applications for scheduling the production processes. It generates schedules for the operations and purchase of raw materials based on the production requirements of finished goods, the structure of the production system, the current inventories levels and the lot sizing procedure for each operation. It tapped into the master production schedule and allowed businesses to plan the parts and product requirements.

The 1980s saw a new and more refined system in the form of MRP II. It was a more accessible tool. This software coordinated materials and production requirements extending services to:

• The shop floor
• Finance
• Human Resource
• Engineering
• Project Management
• Distribution Management

MRP II was made more universal. The purpose behind the new additions made was to make the software more user friendly with more than one approach to business.

       The 1990s experienced an explosive growth of technology. It marks the advent of ERP which was an extended version of MRP II. Multi-module application software for improving the performance of the internal business processes was used. It includes application modules supporting marketing, finance, accounting and human resources. It uses a single database for storing all the data that keeps the process running smoothly, thereby ensuring visibility, accessibility and consistency.

Today the growth of ERP systems is phenomenon. It can be used in all forms- computers, laptops, cell phones, clouds and analytics. It is no longer outside the budget of small firms. It has been adopted universally.  It covers every aspect of business. The extended ERP systems include- Customer Relationship Management (CRM), Supply Chain Management and Advance Planning and Scheduling. The evolution is indeed remarkable. 

Contributor: Sidhanth