Enterprise resource planning (ERP) is a business management system that uses integrated computer software. ERP software applications collect, interpret, manage and store various business activities. They give companies a real-time view of core business processes.
The Role of Enterprise Resource Planning
Using a database management system (DBMS), ERP applications track product development, resources, manufacturing, shipping, delivery, inventory, marketing, sales and payments. They share data across several departments such as manufacturing, purchasing, sales and accounting. ERP aids the information flow between business functions and stakeholders.
Enterprise system software is a vital tool for most companies because it integrates various business systems and organizes data. It also enables error-free transactions. ERP systems are different from traditional ones because they run on various computer hardware and networks. Most of the time, a database serves as the information repository.
The History of Enterprise Resource Planning
An American information technology (IT) company known as the Gartner Group first used the ERP acronym in 1990. It was a natural extension of materials requirement planning (MRP), manufacturing resource planning (MRP II) and computer-integrated manufacturing (CIM). Over time, ERP came to represent the integration of business applications beyond manufacturing.
By the mid-1990s, enterprise system software addressed all core business functions, including accounting, human resources and maintenance. Government agencies and non-profit organizations also began to use these management systems.
The 1990s indicated a rapid growth for enterprise system software, and the year 2000 (Y2K) problem prompted many companies to replace their old systems with ERP systems. Software that initially focused on back office functions soon integrated with front office functions like customer service, e-commerce, telecommunications and e-finance.
Enterprise Resource Planning Today
In 2000, Gartner Publications coined the phrase “ERP II” to describe Web-based software with real-time access. This new role expanded traditional enterprise planning and processing. In fact, it leveraged the information it managed to help enterprises collaborate with other businesses. The new ERP is more flexible than the first-generation system as it interacts with other systems.
Today, ERP integrates with mobile devices. It also covers more roles and functions from decision-making and stakeholder relationships to standardization and globalization. Technology Group International (TGI) is an example of a company that offers enterprise system software solutions for the new millennium.