Growth of ERP

Enterprise resource planning (ERP) is the integrated management of key business processes, often in real time and mediated by software and technology. Enterprise Resource Planning (ERP) is commonly referred to as a category of business management software – usually a set of integrated applications – that an organization can use to collect, store, manage and interpret data from many business activities. ERP systems can be on-premises or cloud. Cloud-based applications have grown in recent years because information is easily available from anywhere with access to the Internet.

ERP provides an integrated and constantly updated view of core business processes using shared databases maintained by a database management system. ERP systems track business resources – cash, raw materials, and production capacity – and the status of business obligations: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. Enterprise Resource Planning (ERP) facilitates the flow of information between all business functions and manages communications with external stakeholders.

An ERP system integrates diverse organizational systems and facilitates error-free transactions and production, thus enhancing the efficiency of the organization. However, ERP system development is different from traditional system development. ERP systems run on a variety of computers and network configurations, and typically use a database as a repository of information.

Not all ERP packages are developed from a manufacturing core; ERP vendors have variously begun to bundle their packages with finance, accounting, maintenance, and human resources components. By the mid-1990s, enterprise resource planning (ERP) systems addressed all core enterprise functions. Governments and non-profit organizations have also begun to use ERP systems. “ERP system selection methodology” is a formal process for selecting an enterprise resource planning (ERP) system. Current methodologies include: the Kuiper funnel method, the web-based Dobrin 3D decision support tool, and the Clarkston Potomac methodology.

Expansion
ERP systems experienced rapid growth in the 1990s. Because of the Y2K problem, many companies took the opportunity to replace their legacy systems with an ERP system.

ERP systems initially focused on automating back-office functions that did not directly impact customers and the public. Front office functions, such as customer relationship management (CRM), deal directly with customers, or e-business systems such as e-commerce and e-government – or supplier relationship management (SRM) became integrated later, when the Internet simplified communication with external parties.