Definition of Enterprise Resource Planning (ERP)
ERP stands for "Enterprise Resource Planning" and refers to a type of software or system used by a business to plan and manage daily activities such as supply chain, manufacturing, services, financials and other processes. Enterprise Resource Planning software can be used to automate and simplify individual activities across a business or organization, such as accounting and procurement, project management, customer relationship management, risk management, compliance, and supply chain operations.
Individual ERP applications can offer software as a service (SaaS), while a complete suite of ERP applications forms an ERP system that can be used to effectively communicate and bring together business processes to enable a flow of data between the applications, typically through common databases either on-site/on-premise or in the cloud.
ERPs connect every aspect of an enterprise. An ERP software system allows for better performance and project management that helps plan, budget, predict and accurately report on an organization’s financial health and processes.
A History of ERP (Enterprise Resource Planning)
The term “ERP” was first used in the 1990s by the Gartner Group, but enterprise resource planning software and systems have been used in the manufacturing industry for over 100 years and continue to evolve as industry needs change and grow.
- 1913: An engineer named Ford Whitman Harris developed the Economic Order Quantity (EOQ) model, a paper-based manufacturing system for production scheduling.
- 1964: Toolmaker Black and Decker adopted the first Material Requirements Planning (MRP) solution that combined EOQ with a mainframe computer.
- 1970s-1980s: Computer technologies evolved and concept software handled business activities outside of manufacturing, including finance, human resources data, and customer relationship management (CRM).
- 1983: MRP II was developed and featured “modules” and integrated core manufacturing components, and integrated manufacturing tasks into a common shared-data system.
- 1990s-2000s: Gartner Group coins term “ERP” to differentiate from MRP-only systems. ERP systems expanded to encompass business intelligence while handling other functions such as sales force automation (SFA), marketing automation and eCommerce.
- 2000-2005: Cloud-based ERP software solutions arrive when ERP software makers create “Internet Enabled” products, providing an alternative to traditional on-premise client-server models.
- Today: Software-as-a-Service (SaaS) and Anything-as-a-Service (XaaS) offer new delivery models for ERP. Remote web-based access for cloud ERP solutions provide mobile solutions, security, and integration with the changing industries and smart technologies, including integrations with the Internet of Things (IoT), Internet of Everything (IoE), and even social media to provide comprehensive solutions for every industry