A Brief History of ERP

Businesses adapt to new systems and tools that will strengthen their workforce despite unforeseen circumstances like the COVID-19 pandemic. These business tools should align with the company’s goals and must help increase work productivity.

Enterprise resource planning assists companies in their critical processes to make them more efficient for employees and customers. The ERP solution streamlines the supply chains and significantly enhances sales and customer support performance.

Early History

The ERP industry began in 1940. It was first used in controlling and monitoring a firm’s inventory. Several companies were looking for something to calculate machines and assist the entire operation. Hence, inventory management and control were developed, combining information technology with business-critical processes. Then, in 1960, Material Requirement Planning (MRP) solutions emerged and were widely considered the predecessors of the modern ERP system.

The original MRP system runs on large, complex computers that are costly to maintain. Therefore, it is only used by those who can afford the technology. Many companies that focused on creating cost-effective software solutions were established in the 1970s. They allowed MRP technology to provide more functions for manufacturers.

During the 1990s, ERP was used in a variety of business types. The ERP system has been integrated with the internet to make ERP more cost-effective and efficient for businesses.

The Cloud ERP Era

Cloud ERP became popular in the 2000s. It is slowly replacing on-premises ERP. Moreover, it is much cheaper than traditional ERP because private servers are no longer required. This made enterprise software solution attractive to small and medium businesses (SMEs), which increased the market’s competition.

Software as a Service (SaaS) offers ERP solutions, especially for small and medium-sized businesses, allowing them to subscribe to their ERPs instead of paying for expensive servers. It is an essential advantage for organizations looking to scale up their businesses.

Here is an infographic from Integral Management for more information.   

enterprise resource planning