If you’re unsure about the development of ERP (Enterprise Resource Planning) systems, and how they evolved, read on…
ERP systems evolved from 1960s Material Requirements Planning (MRP) software for manufacturing, which grew into Manufacturing Resource Planning (MRP II) in the 1980s by including more business functions like finance and human resources.
The term ‘ERP’ was coined by Gartner in 1990 to describe the expansion of these integrated systems beyond manufacturing to all enterprise functions. And now, modern cloud-based ERP systems are now AI-enabled and integrate data across all business functions, productivity tools, and customer solutions.
Here is a brief history of ERP systems:
1960s: Material Requirements Planning (MRP)
The focus: Inventory management and control for manufacturers.
- Functionality: Tools to calculate reorder points and economic order quantities.
- Innovation: Early systems provided a foundation for production planning.
1970s-1980s: Manufacturing Resource Planning (MRP II)
The focus: Expanding from inventory management to broader production processes.
- Functionality: Added financial, scheduling, and other management capabilities.
- Innovation: Integrated various departments and processes, moving closer to a unified business system.
1990s: Enterprise Resource Planning (ERP)
The focus: Integrating all major business functions into a single system, beyond just manufacturing.
- Functionality: Included modules for accounting, HR, procurement, and more.
- Innovation: The term “ERP” was coined by Gartner to reflect this comprehensive approach, and early on-premise systems required significant infrastructure.
2000s: Internet and Cloud ERP (ERP II)
The focus: Leveraging internet technology to connect global operations.
- Functionality: Added new modules like Customer Relationship Management (CRM) and supply chain management.
- Innovation: The advent of cloud-based ERP made systems more accessible, scalable, and reduced the need for extensive on-premise hardware.
Present day: AI-enabled, Cloud-based ERP
The focus: Providing real-time insights and advanced capabilities across the business.
- Functionality: Integrates data, productivity tools, and customer engagement solutions with AI capabilities.
- Innovation: Offers greater flexibility, scalability, and real-time data analytics.
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