What is ERP?

The term "ERP" is officially the abbreviation of "Enterprise Resource Planning." It was coined back in 1990, long before the development of comprehensive solutions that today dominate the manufacturing and distribution software market. In its infancy days, ERP systems were software solutions developed in-house at manufacturing companies to meet the complex demands for information. An ERP system was synonymous with material requirements planning (MRP) and computer-integrated manufacturing. It replaced written logs and spreadsheets with a more efficient way to track back-office functions, like inventory.

How ERP Became Indispensable

In the 1980's and 1990's, many companies believed that "My company is so unique that no pre-packaged software could run it." They hired their own IT specialists and programmers to create solutions using the best technology of the day. ERP evolved as the technology evolved, from Cobol and Fortran languages with indexed files to SQL relational databases and client-server databases. The approaches to data management were as diverse as the companies and programmers who created them. As the year 2000 approached, it became apparent that many of these custom-programmed solutions existed in inflexible databases with 6-character date fields. This became a big driver for technology upgrades for Y2K. Also, as the databases grew, it became clear that these business assets carried significant liabilities. Companies could not find enough programmers, power-outages wiped systems, and other things could catastrophically impact the system's integrity and accessibility. Most businesses did not have the resources to be appropriately prepared. When software companies like SAP, Oracle, and Made2Manage (now Consona Corporation) offered a standard business application software and business continuity resources, industry-oriented organizations were ready. They began to capitalize on "real-time" business processes with this new generation of pre-packaged and semi-configured ERP which sets the standard today.

Modern ERP Components: Front-End and Back-End

ERP is a category of business management applications that tracks all business resources. It consists of a database backend and an application frontend where users input data and retrieve information.

On the backend, ERP systems use a range of database applications. Large multi-level organizations need databases for lightning-fast data analysis and retrieval, and mid-size organizations prefer more cost-effective databases designed for smaller data loads. ERP companies now supply solutions tailored to all sizes and types of organizations.

The frontend applications on modern ERP systems are accessible from any web-enabled device and highly customized to the system's specific user's needs. This is the part of an ERP system that everyone sees – so it tends to get the most attention!

What Do Modern ERP Systems Manage? Everything...

ERP is a broad term that encompasses many types of software designed to meet niche company needs. These solutions include engineer-to-order software, mixed-mode software, MRP software, project-based software, and countless industry-specific packed solutions. The software packages modules include inventory management, customer management (CRM), vendor management, quality management, production management, human resource management, and financial management. Businesses of every size and industry depend on ERP as their core business application.

ERP touches every employee and supplies all the information needed to make critical business decisions. Select your ERP partner carefully, thoughtfully implement with your team and empower your employees with continuous training for a nimble organization capable of competing in any market.