History of ERP & How it Has Evolved

ERPEcialis serif;”>nterprise resource planning started off as MRP (materials requirement planning) during the 1960s. Its main purpose at that time was to manage the levels of ordering and demand faced by businesses. It was not concerned with timing – the only factor it took cognizance of was need of clients and customers. MRP II developed during the 1970s. It tried to include in the planning process factors such as demand as well as time phasing of the same. It was during that very period that accounting management solutions were becoming more important than ever. It was at this juncture that ERP appeared for the first time.

order serif;”>The early days

store serif;”>In its initial stages ERP was basically a combination of MRP II and various financial applications. The aim behind developing this system was to come up with a complete solution that could help companies manage their inventories, human resources, and the cash at their disposal.

The 1940s

This was when the planning for what eventually turned out to be ERPs actually started off in the earnest with people focusing on calculating machines. J. I. Case and IBM built the first ERP in partnership. J. I. Case was a maker of construction machinery such as tractors. At first, they came up with MRP. It was an application software and helped to devise methods with which companies could schedule and plan materials that were going to be used for manufactured products that were complex in nature.

The 1970s

To start off, the first-generation MRPs were large, cost a lot of money, and unorganized. A lot of technical staff was necessary in order to lend support to the mainframe computers that were being used to operate them.


The organization named SAP (Systemanalyse und Programmentwicklung) was born at Mannheim, Germany owing to the efforts of a group of five engineers. The main aim behind creating this organization was to create and sell standardized software that could be used for making integrated business software.


Lawson Software was started by Richard Lawson, John Cerullo, and Bill Lawson. They wanted to create enterprise technology solutions, which were pre-packaged and were supposed to replace the enterprise technology solutions.


Management requirements planning became a basic concept in the context of control and management of production processes in companies.


JD Edwards was formed by Jack Thompson, Ed McVaney, and Dan Gregory. The company’s name derived from the names of all the owners. In the same year Oracle Corporation was started by Larry Ellison.


The Baan Corporation was started by Jan Baan. It dealt in administrative and financial consulting services.


The first-ever SQL relational database management system, to be used on a commercial scale, was being sold by Oracle.


JD Edwards started to emphasize on IBM System/38 in the early part of this decade. This was when MRP evolved into MRP II. It became a more convenient extension for distribution management and shop floor-related activities.


As their primary operating system Baan started to use UNIX. In 1982 the company came up with its initial software product.


Oracle starts to sell a VAX mode database alongwith database that has been completely written in C keeping in mind the factor of portability.


Baan changes the focus of its developmental activities to manufacturing.


JD Edwards comes to be known as the top supplier in the industry of applications software. Its IBM AS/400 computer, which is highly successful, acts as a catalyst of the recognition. The AS/400 is a direct successor of System/38.


Dave Duffield and Ken Morris establish PeopleSoft.


PeopleSoft develops its Human Resource Management System or HRMS.


Baan Software starts operations across 35 countries by way of indirect sales channels. This is also the time when the word enterprise resource planning comes into being. It happens after MRP II expands to include areas such as engineering, human resources, finance, and project management in their fold.


PeopleSoft starts an office at Canada. This ensures that they are present and active in Europe, South and Central America, Asia, Pacific Rim, and Africa.


Baan has at least 1000 employees and in excess of 1800 customers across the world.


JD Edwards gains 4700 customers alongwith presence in more than 100 countries. Oracle has 41,000 customers across the world including 16,000 in the United States of America itself. At least half of the global market for human resources is using the software made by PeopleSoft. SAP becomes the biggest inter-enterprise software organization in the world. It is also regarded as the fourth biggest independent software supplier on a global scale. The company also employs at least 20,500 workers across at least 50 countries. By this time, almost 4800 sites across the world have implemented more than 2800 enterprise systems made by Baan.


Thanks to the events of 9/11 ERP systems experience a dip in demand.


Majority of the ERP systems start the process of making their products internet-friendly. The main purpose of this new direction is to make sure that customers across the world are able to get direct access to the ERP system of a supplier.


ERP vendors work towards achieving SOA or Services Oriented Architecture. Thanks to this architecture it is now possible for systems to communicate with each other.


This is the time when main names in the industry start to take over other companies and consolidate their positions in the industry. Oracle buys E-Business Suite, JD Edwards, PeopleSoft, and Seibel, Microsoft purchases Navision, Axapta, Great Plains, and Solomon, Infor takes over Baan, Mapics, and a host of other products marketed by other companies, and Sage acquires the finest software in the world.

Which direction will it take in future?

It is expected that in the days ahead the major names in the industry such as SAP, Infor, Oracle, and Microsoft will carry out more such activities that will strengthen their position in the market. They will also attempt to expand their product lines. One expects that merged products will be the way to go in the days to come.

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