Brief Historical Overview of Evolution of erp

1. 2017
DFT-6 | NIFT GANDHINAGAR

2. First and foremost, I would like to thank to our Faculty, Ms. Amisha Mehta for the
valuable guidance and advice. She inspired us greatly to work in this project. Her
willingness to motivate us contributed tremendously to our project.
Finally, an honourable mention goes to our families and friends for their understandings
and supports on us in completing this project.
- Abhishek Gupta
& Amrit Raj
(DFT-6)

3. Enterprise resource planning (ERP) is an integral component of today’s complex global
marketplace. ERP software helps companies streamline business processes, including:
 Product planning, cost and development
 Manufacturing or service delivery
 Marketing and sales
 Inventory management
 Shipping and payment
ERP (Enterprise Resource Planning) is the evolution of Manufacturing
Requirements Planning (MRP) II. From business perspective, ERP has expanded from
coordination of manufacturing processes to the integration of enterprise-wide backend
processes. From technological aspect, ERP has evolved from legacy implementation to more
flexible tiered client-server architecture.

5. 1960s
INVENTORY MANAGEMENT & CONTROL
Inventory Management and control is the combination of information technology and
business processes of maintaining the appropriate level of stock in a warehouse. The
activities of inventory management include identifying inventory requirements, setting
targets, providing replenishment techniques and options, monitoring item usages, reconciling
the inventory balances, and reporting inventory status.
The earlier generation EIS packages were based on individual business function automation
such as inventory management and financial accounting systems.
Also, the focus of manufacturing systems in the 1960s was on inventory control. Most of the
software packages then (usually customized) were designed to handle inventory based on
traditional inventory concepts. Evolution of Enterprise Information Systems (EIS)
1970s
MATERIAL REQUIREMENT PLANNING (MRP)
Materials Requirement Planning (MRP) utilizes software applications for scheduling
production processes. MRP generates schedules for the operations and raw material
purchases based on the production requirements of finished goods, the structure of the
production system, the current inventories levels and the lot sizing procedure for each
operation.

6. This system helped in translating the master production schedule into requirements for
individual units like sub-assemblies, components and raw materials. MRP systems helped
determine what to order, how much to order, when to order and when to schedule delivery.
Drawbacks of MRP Systems
 These soft wares were helpful in manufacturing process. Their benefits did not extend to
other Sectors.
 MRP solutions attained more fame. In fact it became a hallmark of the manufacturing
setups. The MRP solutions did not render the expected results due to exorbitant costs and
practical work problems
 MRP also requires for a huge pool of technical expertise in terms of manpower and
machines.
1980s
MANUFACTURING REQUIREMENTS PLANNING (MRP II)
Manufacturing Requirements Planning or MRP utilizes software applications for
coordinating manufacturing processes, from product planning, parts purchasing, inventory
control to product distribution.
MRP-II supported efforts to optimize the entire plant production system by supporting
capacity planning, shop floor control, and distribution management activities. MRPII was
further extended to support areas like Finance, Human Resources, Engineering, and Project
Management etc.

7. MRP II software emphasized an optimized manufacturing process that coordinated materials
and production requirements, extending services to:
 The shop floor
 Finance
 Human resources
 Engineering
 Project management
 Distribution management
As MRP-II like systems were adopted by non-manufacturing enterprises like banks and
airlines to support cross-functional coordination and integration of business processes, the
“M” no longer fit, thus the name ERP was coined.

8.  In the early 1990s, MRP-II was further extended to cover areas such as engineering,
finance, human resources, sales and distribution, and projects management, that is, the
complete gamut of activities within any business enterprise.
 Hence, the term ERP was coined. ERP is focussed within an enterprise.
 MRP-II was based on mainframe technology and hence was highly centralized and
server-centric. ERP is based on client-server computing architecture and hence distributed
in nature.
Benefits of ERP Systems:
 Improving integration, flexibility
 Fewer errors
 Improved speed and efficiency
 More complete access to information
 Lower total costs in the complete supply chain
 Shorten throughput times
 Sustained involvement and commitment of the top management
Causes of ERP Failures:
 Expensive (can costs 100 thousands to millions of dollars)
 Business managers and IT professionals underestimate the complexity of the planning,
development, and training needed.
 Failure to involve affected employees in the planning and development phases.
 Trying to do too much too fast in the conversion process.
 Failure to do enough data conversion and testing
BEFORE ERP

9. PROBLEMS FACED:
 Delays
 Lost Orders
 Keying into different computer systems invite errors
AFTER ERP

10. 2000s and Beyond
 Extended ERP systems include:
• Customer relationship management
• Supply chain management
• Advanced planning and scheduling
 Continuing ERP trends include capabilities for:
• Cloud
• Mobile
• Analytics
21st century – ERPII
 ERPII is the name some now use to describe ERP like systems that are evolving to
support inter-organizational business processes across the supply chain.
 ERPII is a business strategy and a set of collaborative operational and financial
processes internally and beyond the enterprise
 New multi-enterprise business models like Value Collaboration Networks, customer-
centric networks that coordinate all players in the supply chain, are becoming popular as
we enter the 21st century
 These new business models reflect an increased business focus on external integration
 There is movement away from Client-Server System to Internet Based Architecture
New Technologies in ERPII
 E-Commerce (Electronic Commerce)
 M-Commerce (Mobile & Wireless Technologies)
 C-Commerce (Collaborative Commerce)
 Middleware
 Enterprise Portal Technologies
 Web Services

11.  RFID
 Analytical Capabilities (Data Warehousing & Data Mining)
 CRM, SCM, SRM
 Knowledge Management
 Business Intelligence
ERP II is a solution that includes the traditional materials planning, distribution, and order-
entry functionality strengthened by capabilities like customer relationship management
(CRM), human resources management (HRM).
Such a system can quickly, accurately and consistently operate an entire organization.
 It delivers information in an instant to the people who need it.
 It manages the access to that information by establishing security roles and ratings
that define which employees can use certain pieces of information.
 It also addresses the issue of multiple office locations by making the solution web-
based, so employees can access the system worldwide.
Difference between ERP & ERPII
Keys ERP ERPII
Role Traditional ERP was
concerned with optimizing
an enterprise, Internal
optimization.
ERP II systems are about
optimizing the supply chain
through collaboration with
trading partners.
Domain ERP systems focused on
manufacturing and
distribution.
ERP II systems will cross all
sectors and segments of
business.
Function As ERP systems cross
sectors and segments, they
will no longer be able to
present all things to all
people.
ERP II vendors to pick the
industries in which they’re
going to play, and focus on
providing deep functionality
for those users.
Process In ERP systems, the
processes were focused on
the four walls of the
enterprise.
ERP II systems connects
with trading partners, to take
those processes beyond the
boundaries of the enterprise.

12. Architecture Old ERP systems were
monolithic and closed.
ERP II systems will be
Web-based, open to
integrate and interoperate
with other systems that
allow users to choose just
the functionality they need.
Data Information in ERP systems
is generated and consumed
within the enterprise.
Same information will be
available across the supply
chain to authorized
participants.
THE EVOLUTION OF ERP
System Primary Business
Need (S)
Scope Enabling Technology
MRP Efficiency Inventory
Management and
Production planning
and control.
Mainframe computers, batch
processing, traditional file
systems.
MRPII Efficiency,
Effectiveness and
integration of
manufacturing
systems
Extending to the entire
manufacturing firm
(becoming cross
functional).
Mainframes and Mini
computers, real-time (time
sharing) processing ,database
management systems
(relational)
ERP
Efficiency
(primarily back
office),
Effectiveness and
integration of all
organizational
systems.
Entire organization
(increasingly cross
functional), both
manufacturing and
non-manufacturing
operations
Mainframes, Mini and micro
Computers, Client server
networks with distributed
processing and distributed
databases, Data warehousing,
and mining, knowledge
management.
ERPII Efficiency,
Effectiveness and
integration within
and among
enterprises.
Entire organization
extending to other
organizations (cross
functional and cross
enterprise--partners,
suppliers, customers,
etc.)
Mainframes, Client Server
systems, distributed computing,
knowledge management,
internet technology (includes
intranets and extranets).
Internet, Web Service
Architecture, wireless
networking, Middleware, M-
commerce, E-commerce

13. NEXT GENERATION ERP
As ERP has evolved, its business case has also changed. Consequently, it has become even
more important that companies get the right solution to suit their needs. Offerings vary and
different models suit specific organisational structures.
The next generation ERP is based on 2 fundamental shifts:-
 The first is a shift to cloud based ERP.
You no longer need to invest in having a system of your own – instead, you can buy it
as a service straight from the service provider, safely and securely, while ensuring that
the data is always kept in the home country, if so desired.
 Another, even more remarkable shift when it comes to next generation ERP systems
is the access to real-time data. This has not been possible earlier

14. 1. http://www.erpwire.com/erp-articles/erp-evolution.htm
2. http://www.sysoptima.com/erp/history_of_erp.php
3. https://faculty.biu.ac.il/~shnaidh/zooloo/nihul/evolution.pd
4. http://www.ctnd.com/a-brief-historical-look-at-the-evolution-of-enterprise-resource-planning/
5. The Evolution of ERP Systems: A Historical Perspective
- by Mohammad A. Rashid, Massey University–Albany, New Zealand,
Liaquat Hossain, Syracuse University, USA
Jon David Patrick, University of Sydney, Australia
6. Introduction To Erp-An Overview
Author: Deepak Dembla ; Vetter: Prof. M.S. Turan