Enterprise Resource Planning-A Brief History

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Oct 30, 2013 (3 years and 8 months ago)

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1

Enterprise Resource
Planning
-
A Brief
History

Jacobs, F. R., and Weston Jr, F. C.
2007. Journal of Operations
Management, 357
-
363.

2

Introduction


ERP is defined as a framework for
organizing, defining, and standardizing the
business processes necessary to
effectively plan and control an organization
such that the organization can use its
internal knowledge to seek external
advantage.

3

History


In 1960’s primary focus was cost and
hence product
-
focused manufacturing
strategies based on high
-
volume
production, cost minimization.


MRP (manufacturing resource planning)
-
the predecessor to and backbone of MRP II
was born in late 1960s.

4

History


This early MRP application software was state
-
of
-
the
-
art method for planning and scheduling
materials for complex manufactured products.


Initial MRP solutions were big, clumsy and
expensive.


They required large technical staff to support the
mainframe computers (IBM 7094, IBM 360, IBM
370)

5

History


In late 1970s, primary thrust was shifting
towards marketing which resulted in
adoption of target
-
market strategies.


MRP became established as the
fundamental parts and materials planning
concept used in production management
and control.

6

History


IBM's COPICS (communication oriented
production information and control system), which
was a series of concepts that outline an approach
to an integrated computer
-
based manufacturing
control system was designed to run on IBM’s
model 360 mainframe computer


The movement towards MRP II manufacturing
resource planning was underway.

7

History


Mid 1970s saw the birth of major software
companies that later became ERP vendors.


In 1972 five engineers in Mannheim, Germany
started SAP (Systemanalyse und
Programmentwicklung)


JD Edwards (founders were Jack Thompson, Dan
Gregory and Ed McVaney) and Oracle (Larry
Ellison) were established in 1977.


Oracle offered the first commercial SQL relations
database management system in 1979


8

History


Baan Corp was established in 1979 in
Netherlands by Jan Baan


In 1975 IBM offered MMAS (Manufacturing
Management and Account System) which was
considered by many as precursor of ERP.


MMAS created ledger postings, job costing,
forecasting updates of inventory and production
transactions.


MMAS could also a generate manufacturing
orders, customer orders

9

History


Developments in hardware and software
made earliest MRP systems see obsolete.


With improving hardware and software
development practices, it was possible to
add functions to MRP systems that could
access centralized database.


10

History


In 1978 SAP released SAP R/2 which took
advantage of the current mainframe
computer technology allowing for
interactivity modules as well as additional
capabilities as order tracking.

11

History


J.D. Edwards began focusing on writing software
for IBM System/38 in the early 1980s.


Term MRP II was coined to identify newer
systems capabilities.


MRP II software were called “Business
Requirements Planning” tools


MRP II enabled integration of sales, inventory and
purchasing transactions and updated inventory
and accounting information systems (hence stand
alone systems were replaced)

12

History


The term ERP was coined in early 1990s


Definition of ERP included the criteria for
evaluating the extent that software was actually
integrated both across and within the various
functional silos.


SAP R/3 was released in 1992.


The feature that distinguished R/3 from other
previous versions of SAP was the use of its client
-
server hardware architecture.


This allowed the system to run on variety of
computer platforms (UNIX, Windows NT)

13

History


R/3 was also designed with open
architecture approach allowing third
-
party
to develop software that would integrate
with SAP R/3.


In 1990s the dominance of IBM had slipped
as J.D Edwards, Oracle, Peoplesoft, Baan,
and SAP controlled the ERP software
market.

14

History


SMEs were quick to adopt the new ERP
offerings as one way to tackle the fixes to
legacy system software that was not Y2K
compliant.


In 1997 the Decision Sciences Institute
(DSI) had its first introduction to ERP at
their annual meeting


15

History


Y2K was arguably the single event that signaled
the maturing of the ERP industry and the
consolidation of large and small ERP vendors.


In 2002 major players in order of size were SAP,
Oracle, Peoplesoft, and J.D. Edwards.


Peoplesoft and J.D Edwards merged in June
2003.



Oracle took over Peoplesoft in January 2005 and
this left the ERP software industry with two major
players
-
SAP and Oracle.

16

Future


Consolidation within the ERP industry is an
ongoing process.


Examples

-
Oracle acquired Siebel in September 2005
which invented the CRM application.

-
Baan is now a part of SSA