The history of ERP dates back to the 1960s and, today, it is the main tool for competitive and profitable companies. The enterprise resource planning software (Enterprise Resource Planner) allows you to manage all business processes and have all the information centralized in the same application, thus offering multiple advantages for the company.
But how does a computer application become the center of an organization where every operation begins and ends? Let’s review the history of ERP to find out where it came from and try to find out where it is going, at a time when digital transformation is key to the sustainability of companies.
In this day and age there is nothing similar, not even remotely, to the power of an ERP tool. But in the first half of the decade a company was founded, IBMwhich would be key to the future development of computing, and also of management software.
Still far from the emergence of the ERP, the vision of the business management in four aspects that will influence the history of ERP:
- Planning, taking into account and combining the resources of organizations to produce projects.
- The organization, an important issue to combine all the resources that the company has to make them work together and obtain the optimal result.
- Communication, as a transfer of vital information to improve results.
- Management control, carrying out a constant evaluation of the processes so that they are executed in a harmonious and complementary way between the components of the company.
With the end of World War II, the computer programs for military use. The United States begins to use applications that allow managing complex production and logistics processes. This constitutes the true beginning of ERP software that, for the moment, would only be used by military institutions since they were almost the only ones that had computers in these years.
American statistical quality control methods spread throughout the world, but it is the Japanese who integrate Eastern emotional intelligence with Western rational intelligence. Thus arise the continuous improvement methodologieswhich require the maximum knowledge of the processes, a premise that drives the creation of the first ERP precursors in the following decades.
In the 60s of the last century, the first commercial computers, which little by little are making their way into the main companies as a tool to manage business information. Although it was usual for the software to be integrated with the hardware, custom developments became popular over time to adapt it to the specific needs of each organization.
In this way, the first list of materials (BOM) or inventory control (IMC) applications arose, which were a basic adaptation of the military “ERP” to the civil world; and with them, the first companies dedicated to the development of business software.
In a decade marked by crisis, IBM creates the first material requirements planning (MRP) to deal with the scarcity of raw materials suffered by companies. This type of application allowed, in addition to controlling how to use the materials, anticipating when they would be needed and in what quantity. This meant a leap in quality in the performance of the first ERPs that led to the birth of SAP, Oracle, JD Edwards and Baan, all of which are still recognizable brands in the sector.
The 80s saw the emergence of information technology, among other innovations, due to the emergence of the MRP-II, the production resource planners that integrated financial aspects (labor costs, acquisition costs of raw materials and logistics costs, among others).
With these advances, companies such as PeopleSoft or Sage emerged, the latter starting on the basis of programs more focused on the financial field of business. And above all, Navision, created to make the software as simple as possible, which integrates features that soon elevate it above the competition: client / server, multi-user environment, report designer and analytical functionality by dimensions (similar to OLAP tools). .
Although we have already come a long way in the history of ERP, it is at the end of the century when we can talk about enterprise resource planning systems themselves. Gartner was the first company to coin the term to define programs that went beyond that vision centered on manufacturing and finance to propose a global approach to a company as a whole: human resources, sales, administrative management, etc.
Thus, MRPs give way to ERPs, taking them to all types of companies in any sector. And with this, companies dedicated to adapting systems to the specific needs of different sectors or tasks also arise; as well as alternative programs focused on meeting the needs of companies of a specific size, sector, needs, geographical area, etc.
At the end of the decade, Salesforce was created, a company that, despite being dedicated to CRM software, would mark the future of ERPs due to its commitment to the cloud.
The popularity of ERP continues to grow and with it, the integration of applications that respond to increasingly specific situations. In this scenario, the integration of CRM and SCM programs in the main management software begins, giving birth to what is known as Extended ERP.
Microsoft strengthens its leadership position in business applications with the purchase of Great Plains and the leading ERP for small and medium-sized businesses, Navision. It is the starting signal for the system that will revolutionize business management, Microsoft Dynamics (NAV, AX, 365 BC…).
Also noteworthy is the emergence of the first open source ERPs, such as OpenERP, which help to extend this type of application to a significant number of companies that, due to capacity, previously could not access its services.
Just a few years before entering 2010, the large software companies strengthen their position in the Business Intelligence market, which in the new decade will also be integrated into ERPs, giving even more power to management systems.
The trend towards the cloud continues unstoppable and the SaaS model It is consolidated as an alternative to the local installation. This is also a challenge in terms of connectivity and security, which means that new applications and companies specialized in storage, specialized applications, mobility or cybersecurity come into play.
At the end of the decade, Microsoft Dynamics 365 Business Central was released, a new evolution of Dynamics NAV (previously Navision). It is the first ERP mobile-first Y cloud first that includes all the power of a business solution that has been shaped and improved over 35 years.
The present is marked by the history of ERP, a history of continuous evolution and change, which now focuses on providing solutions to the main challenges of the future, such as eCommerce integration, Dashboards with predictive analysis, automation of low added value, digitization of documents, availability in any place and device, etc.
The future will be marked by the influence of new technologieswhich are already being integrated into the main ERPs on the market to strengthen the competitiveness of companies: Internet of Things, machine learningartificial intelligence, augmented reality, etc.