ERP Software – Everything about its Origin and Evolution
No software or system's future can be acknowledged without diving deep into the history and evolution of the said system or software. This blog analyzes the origin and development of ERP software in detail and assesses its impact on the future.
The Origin of ERP Software
In the 1960s, cloud computing took place, and the journey started from there. The increase in factory production demand augmented the need for product management. There was also a need to maintain customer demands, and Material Requirement Planning (MRP) Software was designed to manage all the processes from manufacturing to production to delivery. This process of only stocking up the needed inventory helped the companies invest and utilize resources better.
By 1975 many companies started using MRP Software, but an important point to note was that the system's operational cost was affordable only to larger businesses.
In the 80s, MRP 2 software came in and was a more advanced and sophisticated solution than the previous one. It assisted inventory management in terms of inventory and procurement of raw materials and encompassed advanced production scheduling abilities with better coordination amongst every department of production.
In the 1990s, a highly advanced extended version of MRP and MRP 2 software, Enterprise Resource Planning (ERP). This system and functionalities included Project Management, CRM, HRM, Accounting and Engineering.
The Evolution of ERP Systems in the 21st Century
In the 2000s, the ERP system evolved in its software advancement. The entire solution was deployed on the internet then and was able to integrate with several other software.
This system has further evolved in today's era, and now most of the ERP Software for companies is cloud-based. Moreover, the ERP system is now being used with the SaaS model. Considering the ubiquitous dependence on mobile, most ERP solutions are mobile-friendly and can be used in remote locations and web access.
How Far Has It Come?
From the 1960s to the present era, ERP solutions have evolved mainly. It has brought ease and comfort in managing almost every business process. In the last 60 years of its origin, ERP software has evolved in terms of:
Inventory Management and Supply Chain Control – the solution helped recognize the supply requirement and goal-setting. It also helped look over the usage of items and the status report.
MRP (Material Requirement Planning) looked after scheduling productions, operations, production structure, raw material, inventory understanding, and sizing of the stock lot procedure.
MRP 2 improved the coordination between various departments and assisted the organizations in managing and controlling product planning, inventory, spare parts purchasing, and distribution of products.
ERP – this is a multi-application software and is integrated to advance primary business management departments like accounting, finance, marketing and others.
Extended ERP – this extended version is connected to supply chain management, product lifecycle management, and CRM and is popular with e-commerce and multi-vendor marketplace platforms.
ERP System and the Future
After 60 years of development, the modern ERP system can manage all the primary departments and sectors of an organization. It manages everything from accounting, HR, customer relations, supply chain, inventory, and other essential aspects.
More advanced ERP solutions include sales automation, advanced reporting and analysis, marketing, customer support, training and more. With the rise in demand for ERP software and its benefits, there is no question that the market share of ERP solutions will grow exponentially, with the current growth rate of 15%. It is predicted by 2023 that, this number will reach $86 billion.
The origin of the ERP system is traced back to 1960, and with every update, the system has enhanced and become a boon to the businesses then and now.