What is ERP?
Enterprise Resource Planning or ERP is an industry term for integrated, multi-module application software packages that are designed to serve and support multiple business functions.
- ERP provides the backbone for an enterprise-wide information system.
- Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer.
- At the core of this enterprise software is a central database which draws data from and feeds data into modular applications that operate on a common computing platform, thus standardizing business processes and data definitions into a unified environment.
Brief History of ERP
The focus of manufacturing systems in the 1960′s was on Inventory control. Most of the software packages then (usually customized) were designed to handle inventory based on traditional inventory concepts. In the 1970′s the focus shifted to MRP (Material Requirement Planning) systems that translated the Master Schedule built for the end items into time-phased net requirements for the sub-assemblies, components and raw materials planning and procurement.
In the 1980′s the concept of MRP-II (Manufacturing Resources Planning) evolved which was an extension of MRP to shop floor and Distribution management activities. In the early 1990′s, MRP-II was further extended to cover areas like Engineering, Finance, Human Resources, Projects Management etc i.e. the complete gamut of activities within any business enterprise. Hence, the term ERP (Enterprise Resource Planning) was coined.
Why is it Necessary?
- By becoming the integrated information solution across the entire organization, ERP systems allow companies to better understand their business.
- With ERP software, companies can standardize business processes and more easily enact best practices.
- By creating more efficient processes, companies can concentrate their efforts on serving their customers and maximizing profit.
Market Leaders
The top five ERP vendors, SAP, Oracle Corporation, Peoplesoft, Inc. (now Oracle Corp.), JD Edwards & Company, and Baan International, account for 64 percent of total ERP market revenue. These vendors continue to play a major role in shaping the landscape of new target markets, with expanded product functionality, and higher penetration rates. SAP dominates the $6.7 billion ERP applications market in Europe with 39% market share. Oracle and PeopleSoft come second and third respectively, followed by SAGE Group and Microsoft Business Solutions.
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