Enterprise Resource Planning Systems – Part I

Background

Enterprise Resource Planning (ERP) Systems started in 1970s the years’ when business and markets were heavily focused on mass production of materials and industrialization was on the peak. The so called enterprise, five to six decades back was in need of automation of industrial materials and their effective plus efficient management. The prime focus remained on materials and resources management.

In this fast changing business environment and heavy dependency of businesses on automated processes running using various IT Systems; the value and need for a reliable ERP System is constantly on rise.

ERP Systems have evolved over several decades and still continuing to evolve to become more fit for today’s business needs.

Legacy Systems

Legacy systems are generally any systems that are old systems built using software and hardware platform that is more than a decade old. Systems that are built using old programming languages like ‘COBOL’ and are running on mainframes, considered legacy systems. In some organisation such systems are still in use as they are complex, costly and difficult to replace. Legacy systems are difficult to interface with and make changes.

In organisations systems that are archived or not actively used and kept for audit purposes are also referred to as Legacy systems. These systems normally were built and used 7 or more years back and consist of business transactions and information that are of use for historical referencing. Older ERP systems are also termed as legacy if they are kept running and used for historical transactions referencing.

ERP System Contents

The enterprise resource planning system is software package that brings together various business processes by automating plus integrating them and maintaining a central database with all relevant master data and transaction data. One of the Key benefits of using ERP systems is they are normally having real time availability of information which is key for businesses.

Enterprise resource planning systems cover a wide range of business processes management namely Manufacturing, Supply Chain, Financials, Human Resources, Projects and Customer Relationship.

ERP Systems structure is made up of various modules ideally focused on respective functional domain like Manufacturing, Finance, Supply Chain, Human Resources. The system needs one central database which consists of Master and Transactions data for various modules.

Decades of ERP Evolution

ERP Systems have evolved over 4 decades. If we look at the evolution in each decade major steps happened.

1970s – MRP

In 1970s all systems were standalone and separate systems. Given the ear of industrialization 1970s ERPs started with MRP systems called Material Requirements Planning System. MRP offered production planning which helped businesses in inventory management. In the same decade the standalone financial and human resource systems evolved.

1980s – MRP II

In 1980s MRP systems where further enhanced as MRPII which helped bringing inventory management and production management together. In the same decade for financials management, FMIS systems arrived.

1990s – ERP

In 1990s major evolution happened and ERP Systems emerged which offered one integrated MRP, FMIS and HR system. In the same decade Supply Chain Management systems emerged to take care of planning, scheduling and distribution of products. As this was also the decade of Internet boom customer facing systems like e-commerce, sales force automation and customer relationship management emerged.

2000s – ERP End 2 End

In last decade (2000s) ERP systems have become robust and evolved as one end to end system covering the entire business portfolio needs. ERP systems took a turn to become industry based and various standard industry best practice based industry specific solutions emerged. In the same decade ERP vendors increased focus on making ERP systems web based and making it available as viable out of the box solutions for small and medium enterprises.

Continued in Part II …

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