Enterprise resource planning systems, better known as ERP, have become increasingly popular in recent years as more and more companies, especially SMEs, have embraced digital transformation as a key to their growth. However, the origin of this business management solution is not in the corporate environment, but in the military.
A computer program in the hands of the U.S. military
To learn about the origins of ERP, we have to go back in history to the 1950s, specifically after the Second World War. At that time, the army was the only one with computer hardware and software at its disposal, which was used to manage administrative, production and logistics tasks. These planning tasks are the forerunner of ERP.
However, it was not until the 1960s that companies gained access to the first computer hardware. These computers came with basic software and, depending on the company’s capacity, it could request a customized development. From this period are the first basic applications: BOM (known as Bill of Materials software) and other more sophisticated applications such as IMC (Inventory Management and Control) software. For the first time companies could begin to automate some process and take greater control of their management. Also in this decade, seeing the growing demand, companies specialized in software development began to proliferate and sell these programs, similar to today’s vendors.
1970s: MRP (material planning system) arrives.
The development of these computerized management solutions progressed at a good pace, so that in 1970 the material resource planning system, better known as MRP, began to be marketed. This system was a great step forward for business profitability, but not for all companies, but only for large companies, since huge central computers were needed, whose costs were very high, within the reach of few.
This information system was a breakthrough for companies, as it was able to automate the tasks that are part of the production process (essential for products to reach the customer in time and form): planning the requirement of raw materials used in the manufacture of products, to know exactly when it is necessary to purchase new material and in what quantity; inventory control; scheduling tasks for production management, among other functions. MRP came from the multinational company IMB.
In this same decade, two important ERP providers emerged, namely SAP (in 1972) and Oracle, five years later. SAP (Systems, Applications and Products) launched its first financial accounting software a year after its incorporation. Its main objective was to create business management software that worked in real time.
1980s: emergence of MRP-IIs
The arrival of the 1980s was accompanied by an improvement in MRP systems. In addition to planning raw material requirements, these systems incorporated a major advance: the administration of economic resources (planning of raw material costs, logistics costs, labor and organization), which is why they came to be known as MRP-II.
It was in 1981 when Sage was founded, starting its activity with the development of an ERP focused on financial payments.
Year 1990, the first time the term ERP is used
To talk about ERP (Enterprise Resource Planning) as it is known today, we have to go back to the 1990s, by the consulting firm Gartner. At the beginning, this business management system was focused on production, accounting, finance, human resources and project management functions.
The beginning of the century came with the popularity of ERP, increasingly used by companies. Starting in 2000, the Gartner Group expanded its functionality to include supply chain management (SCM), customer relationship management (CRM) and business intelligence.
2000 is a year that will be marked by the emergence of one of the leading companies in business management software, Microsoft. In that year it acquired Great Plains and two years later Navision, the predecessors of Microsoft Dynamics ERP.
The present and future of ERP
A significant change came in 2005, with the appearance of software solutions in the cloud (at a lower cost than installation on servers), which meant that smaller companies have been able to access this solution, thereby improving their productivity, with the consequent reduction in costs, and easy to implement today with ERP consultants such as Emiral.
Another step forward in this historical journey has been the arrival of Open Source ERP, which allows suppliers to access the code and edit it without the need for a license.
The present and future of ERP is linked to artificial intelligence, machine learning, robotics, virtual reality and augmented reality. These are technologies that will allow the collection of large amounts of data from multiple devices, leave decision making in the hands of computers based on their learning and have secure channels for the exchange of information, as in the case of blockchain.
At Emiral we know how much your company is worth, whether it is small, medium or large. That’s why we want to offer you the best ERP management solutions to keep your business growing.
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