Evolution of ERP Systems
ERP Systems didn't just happen overnight. Rather. they are an outgrowth. or the next generation, of materials requirements planning (MRP) sy tern and manufacturing resources planning (MRP II), which were developed and introduced within the manufacturing function in the late 1960s and 1970s, and which are discussed in detail in Chapter 18.
MRP systems provided the manufacturing function with a common database and software platform to link all of its areas, which included purchasing, planning, materials, and operations. Prior to the introduction of MRP systems, each of these individual areas was managed more or less as an independent operation, which often resulted in excessive inventories
of materials and slow, inefficient. and often erroneous transactions. MRP II systems were a first attempt to integrate operations, marketing, finance, and engineering. Just as MRP systems provided a common software platform and database for the manufacturing function, ERP systems, as mentioned previously, now link all of the functional areas within an organization by providing a common software platform and shared database. The adoption of ERP systems by major corporations was accelerated in 1998 and 1999 by possible "Y2K problems" that existed in older legacy computer systems that dated back to the 1970s. For many firms, the cost of installing a new, state-of-the-art ERP system was comparable to fixing the old legacy systems. By choosing to install an ERP system, these firms were able to update their entire information technology infrastructure. instead of merely patching up their existing and much older systems. The leading ERP software vendors are shown in Exhibit -1-.5.