The below diagram shows the ERP evolution over the last 5 decades.
Prior to 1960s, business had to depend on classical inventory management of scientific inventory control methods to ensure smooth functioning of organization.
In the 1960’s, the concept of ERP was limited to the fact that Organizations wished to integrate all departments and functions in order to increase revenues. The emphasis was initially on inventory control and inventory management.
During the 1970’s the focus shifted to Material Requirement which resulted in developing Material Requirements Planning (MRP) systems. MRP system involved mostly planning the product or parts requirements according to the master production schedule.
Progressively, ERP concept had been introduced to Distribution Management activities for the period of 1980’s. The new software systems named Manufacturing Resources Planning (MRP II) were introduced in this period to optimize manufacturing processes by synchronizing the materials with production requirements. MRP II included areas such as project management, shop floor and distribution management, finance, HR and engineering.
In the 1990’s those efforts were made to integrate all functions of an Organization. ERP systems first appeared in the late 1980s and the beginning of the 1990s with the power of enterprise-wide inter-functional coordination and integration.
In the 2000s, Extended ERPs came into the market which offers extended services like complete Procure-to-Pay, Order-to-Cash etc. During the later half of the decade, ERPs on cloud was introduced by some cloud computing companies to attract the small companies. ERPs on Cloud offer only some specific functionalities based on the user’s requirement at a much cheaper cost.
ERP has improved and evolved over the past decades and will keep on evolving in the coming years to cater increasing demand of the organizations.