A Brief History of Enterprise Resource Planning (ERP) Software
Learn about the history of enterprise resource planning (ERP) solutions and discover how this essential software has evolved to support business processes across a wide variety of industries.
Contents
Enterprise resource planning (ERP) software systems were first made available to very large organizations, having grown out of the manufacturing resource planning (MRP) systems that had been in use since the 1960s. These early software systems, which also tended to include functions that would likely be found in product lifecycle management (PLM) software systems today, were initially developed as in-house, proprietary programs by large automobile manufacturers, defense contractors, and the like.
Just as the origins of ERP software lie in the manufacturing industry, modern ERP systems that emerged during the 1990s first found their footing among very large manufacturers that had long been making use of computerized manufacturing.
During that early period of ERP evolution, solutions began integrating finance and accounting functions with human resources and equipment maintenance management—the focus was no longer exclusively on manufacturing. In fact, by the mid-1990s, some government agencies and even large non-profits had begun to use ERP systems.
Roughly a decade after these developments, ERP software vendors began scaling down their products in order to appeal to small- and medium-sized businesses (SMBs). Many new software products were launched with a focus on this market. In addition, the advent of the internet and the increasing availability and lower cost of broadband paved the way for cloud-based ERP, which led to increased adoption of ERPs by smaller organizations.
Not only have the number of vendors and the range of solutions they offer been increasing, but there has also been a broadening and deepening of the applications’ capabilities. In other words, the number of functional areas has continued to grow. For example, you can find ERP software with functional modules such as financials, inventory management, procurement management, human resources management, and more.
Within each functional area, technological development and user demand have led to more and more features being introduced over time. For example, early inventory management capabilities included technology such as barcode scanning and storage or radio frequency identification tags (RFID); today that has expanded with the introduction of the Internet of Things (IoT). In addition, the continuing digital revolution and increasingly affordable computer processing power has brought changes to virtually every area of business operations.
Perhaps the biggest boost to the expansion and evolution of ERP software capabilities was driven by the universal availability of the Internet and the simultaneous development of web-based technologies. This allowed the development of cloud-based software and opened up the possibilities of having data stored, managed, and accessed from anywhere with an Internet connection.
To get a sense for the many different categories of ERP software available today, as well as to begin organizing and prioritizing the functions and features necessary for your business, it can be helpful to work with a request for information (RFI) template. Templates for many different specialized categories of ERP are available from the TEC Store.
What Is ERP? Definition and Introduction
5 Benefits of Using an ERP System
Are Companies Shifting to Open-source ERP?
Just as the origins of ERP software lie in the manufacturing industry, modern ERP systems that emerged during the 1990s first found their footing among very large manufacturers that had long been making use of computerized manufacturing.
During that early period of ERP evolution, solutions began integrating finance and accounting functions with human resources and equipment maintenance management—the focus was no longer exclusively on manufacturing. In fact, by the mid-1990s, some government agencies and even large non-profits had begun to use ERP systems.
Roughly a decade after these developments, ERP software vendors began scaling down their products in order to appeal to small- and medium-sized businesses (SMBs). Many new software products were launched with a focus on this market. In addition, the advent of the internet and the increasing availability and lower cost of broadband paved the way for cloud-based ERP, which led to increased adoption of ERPs by smaller organizations.
Expanding Choices
Because early ERP software tended to include only a small number of functional areas and the number of competing vendors and products was limited, the task of ERP software selection was relatively straightforward and simple in the early days. However, the choices have proliferated in recent years to the point where selecting the right ERP solution—one that is well-matched to the particular requirements of your organization—necessitates careful planning.Within each functional area, technological development and user demand have led to more and more features being introduced over time. For example, early inventory management capabilities included technology such as barcode scanning and storage or radio frequency identification tags (RFID); today that has expanded with the introduction of the Internet of Things (IoT). In addition, the continuing digital revolution and increasingly affordable computer processing power has brought changes to virtually every area of business operations.
Perhaps the biggest boost to the expansion and evolution of ERP software capabilities was driven by the universal availability of the Internet and the simultaneous development of web-based technologies. This allowed the development of cloud-based software and opened up the possibilities of having data stored, managed, and accessed from anywhere with an Internet connection.
To get a sense for the many different categories of ERP software available today, as well as to begin organizing and prioritizing the functions and features necessary for your business, it can be helpful to work with a request for information (RFI) template. Templates for many different specialized categories of ERP are available from the TEC Store.
Selecting an ERP System
Throughout the history of ERP, these solutions have underpinned many vital business functions. That’s why it's essential that any software selection project be undertaken carefully and follow proven methodology and established best practices. If you need help, TEC has a variety of resources available, as well as experienced and impartial selection experts who can offer as much or as little assistance as you need to get your selection project moving toward a successful completion—one that results in finding the ERP system that can best match your requirements. Contact us for more information.Related Reading
ERP System ExamplesWhat Is ERP? Definition and Introduction
5 Benefits of Using an ERP System
Are Companies Shifting to Open-source ERP?