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What Led To The Evolution of ERP Software?

The ERP in the term ERP software stands for Enterprise Resource Planning.  Taken together, it is a program, which integrates a company’s core functions such as accounting, manufacturing, sales, marketing, and customer service.  The purpose is to enable managers to share information across the board in real time not only to keep abreast with what is happening in the organization, but more importantly to manage customer needs and expectations in a more efficient manner.  This is why the ERP software has been laced in recent years with a module called Best Practices, which shapes the organization’s various processes and procedures according to established or proven methodologies.

Historically, the first ever ERP software was actually an MRP, short for Manufacturing Resource Planning.  This is because the first ever application of this management tool occurred in the manufacturing department of a company. Proving its usefulness, the application would naturally evolve into a full-fledged computer-based system encompassing virtually all the major management functions.

Credit goes to the Gartner Group, which in 1990 was responsible for coining the term ERP.  At the heart of every ERP software is a robust database, kind of like Microsoft Access, only more complicated and usually top heavy with up-to-date customer information.  Thus, it becomes more and more cumbersome to operate.  This will explain why from a consultant’s inception to a few years of operation, a team, or even a separate department may actually be setup just to manage and secure a burgeoning database.

The great irony of the ERP software is that while it is usually setup by an outsourced firm, it needs to be highly customized to the needs of an organization. How a consultant does this is precisely the skill set for which his or her worth will be entirely based.  Therefore, such external adviser may fail in other capabilities, but not the customization part.  To do his or her job, so-called modules are used, which are capsulated subroutines addressing a particular function or department, such as accounting, marketing, or customer relations.

For most organizations, especially the big ones, the ERP software is a necessary evil in terms of cost and functionality.  Expensive as it is to maintain, without it the management function can screech to a halt.  Worse, executives could be reduced to the position of chickens running without heads.  It is precisely this indispensability, which makes the future of the ERP software so bright.  Indeed, it has come a long way from a manufacturing software to an organizational database to a Web-based application dubbed ERP II.  By evolving so perfectly through the years, the ERP software cheated the destiny of dinosaur computers and even of the dinosaur species.

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