Candidate No.

(From Campus 2301168

Year: 3

Course Code MN3535

Course Tutor: Dr. Asmat Monaghan

Assignment No.: 1

Degree Title: BSc Business management

Title: Individual Assignment

Word count 1520

This essay discusses the past, present and Future of Enterprise resource planning systems.
ERP refers to the capability of providing a comprehensive set of business applications that
operate in a unified manner. These tools are designed to have a process and data structure,
which enables them to handle various processes across different departments such as HR,
distribution, finance, manufacturing service and supply chain. In this essay I will discuss over
how ERPs have changed over time and the organizations responsible for the breakthroughs
that allowed them to go from being accessed only from giant mainframe computers to being
accessible from anywhere in the world (Gartner , 2023).

The beginning of ERP

The term Enterprise Resource Planning was first used in 1990s by the Gartner group, before
this there were systems in place which can be traced back to 1960s. The first system was built
in 1960s, it was a joint effort by J.I. Case, a manufacturer of tractor and construction
machinery, partnered with IBM and these systems were built to manage their own internal
business process. These systems were inventory management and control, these systems
were used to automate the inventory requirements, monitor the usage of inventory and help
managers set targets for their products (VersaCloudERP, 2023). This led to development of
new systems and software called Material Resource Planning in the 1970s. MRP systems
helped to plan raw materials requirements for manufacturing, helped with sales and
purchasing transactions and market strategies. By mid 1970s lots of large companies with
deep pockets integrated this technology within their business, as these systems were huge
mainframe computers which were very expensive so, these system and technology were
limited to companies with budgets and resources for in-house developments in case there
were problems with the systems. At the same time there were software companies such as
Oracle and J.D Edwards were building software's to make this accessible to many businesses
as possible (Katuu, 2020).

Now leading ERP providers SAP launched their first system in 1972 and by 1975 they had
built applications for financial accounting, invoice verification and inventory management.
1980s was the breakthrough year for ERP as MRP II was introduced, these systems were
more advanced and supported manufacturing operations beyond raw materials and inventory
as it helped business synchronize various departments in manufacturing and production
(SAP, 2022). 1990s was the evolution period for the ERPs as these systems were no more
just used for manufacturing but this technology was used increase the efficiency of their
entire operations. At this point ERP acquired their current persona or identity as a database
for information across all business activities. Now ERP systems included other business
operations such as sales, accounting, engineering and HR to serve as a central platform for all
accurate data the employees needed.

The ERP continued to evolve in 90s until 1998 when NetSuite offered a breakthrough
innovation of Cloud ERP, this was seen as an improvement from on-premises systems as now
business no longer needed huge systems or upfront investments to have this service as the
ERP now was accessed through internet. This led to small and medium sized business to get
access to these systems to improve their business operations (McCue, 2020). In 2000s
Gartner introduced the idea of ERP II which was internet abled and now can gather data from
other sources such as front-office applications, CRM, ecommerce and marketing automation,
all while even integrating the backend application such as Supply Chain Management and
HCM. This was a big advancement since the more information that goes into the ERP
system, the easier it is to recognize and solve issues and capitalise on possibilities for
more development.

The Present of ERPs

The revolutionary cloud- based started getting transaction in 2000s and continued till 2010s.
Then postmodern ERP started where previous years ERP iterations were loosely coupled with
each other for different solutions. For E.g.: ERP system would provide automates and links
between different departments and business owners to streamline the process. Present trends
also include mobile based ERP apps, SaaS models for business (Katuu, 2020). The main
focus is on cloud-based ERP systems, as business now prefer them over on-premises systems.
This is because the cloud-based ERP systems have lower initial costs, are easier to implement
, and can be accessed through the web browser over an internet connection. The Cloud- based
ERP systems let the, IT department focus on innovations and running of the business more
effectively, as the infrastructure and maintenance of the ERP is all handled by the cloud host.
The cloud host is also responsible for ensuring the smooth operation of ERP systems and
securing the data, while also allowing any customizations or changes to ERP systems. This is
preferred over the most commonly used on-premise systems and hybrid system, which
require huge initial capital investments and a department specially to maintain and look after
the systems. New innovations to these systems will be expensive as they have replace the
existing ERP systems, that’s the reason Cloud-based is preferred. Even though cloud-based
ERP has seen almost 80% increase in demand since 2018. It still only makes up 30% of the
overall market and 70% of the ERP market is still on-premise as the large corporations prefer
this model as it allows them for continuous control and high data security inside the
organization. It is estimated the growth would increase by 2030 this would change as
developing countries and emerging markets take on these services (Grand View Research,
2021).

USA ERP market analysis

The Top providers of ERP are NetSuite, Oracle ERP cloud ,SAP and SYSPRO. ERP global
market sized valued at $54.76 billion and is expected to compound yearly at 11% for the next
7 years till 2030. The need for exceptional outcomes, transparency and data driven decision
process in business has caused the demand for ERP systems to increase exponentially. It is
expected that the growth might stagnant as the demand for ERP system is high but for cloud-
based (Grand View Research, 2021).

The map below shows the ERP system implementation in Global scale with North America
having the highest revenue. On the map you can see the emerging markets, which are
growing at exponentially like China, India , Australia etc.
 Figure 1: ERP Market in USA (Grand View Research, 2021)

The future of ERPs

The future of ERP is transforming and moving towards value creation rather than just control.
There are many technologies associated with future ERP but the stand out of all the
technology trends going on are integration of artificial intelligence and internet of things. The
ERP solutions now can be predict identical patterns and trends in the business and draw
conclusions on how to improve and prevent the loss of efficiency happening (McCue, 2020).
It eliminates human errors and manual tasks of predicting business trends as more customer
data gets fed into the system the ERP becomes more effective in predicting buying patterns,
shifts in demand for products and optimizing the sales process by sending personalized
emails and offers to increase sales. On the backend process of the business the ERP will now
be capable of identifying fraudulent transactions much quicker and can report on damaged
goods before sale to reduce return orders. In brief, AI enables firms to make quick decisions
that lead to success. IoT devices likes sensors, cameras and tracking devices have become an
important source of information for ERP. As these can help manufactures and distributes
make decisions in real-time of their assembly or supply chain. E.g.: The IoT devises can track
the goods coming in and out of the warehouse. Alert managers if any problems with the
machinery in manufacturing. Thus, reducing the overhead costs for the business
(Softwareconnect , 2023).
Some researchers have predicted that the future of ERP will not only be AI or IoT, they
believe the integration of social networks with the ERP system will take place. This
essentially is to reduce the implementation period of new products and services, fewer
investments required and higher ROI, this is because of the rapid growth and widespread
adoption of social networks by consumers has led to an increased usage of this channel as a
marketing by business (Elragal, 2012). It is estimated that in 2022, a significant portion of
consumers, specifically 84% of customers in China and 32% in United states have made
purchases using social networks. This makes it easier for business to target their customers
easily (Geyser, 2022).

Below diagram illustrates the current position of ERP.

Figure 2: The current technological ERP transformation. (Katuu, 2020)

Conclusion

To conclude ERP systems have come a long way since its introduction in 1960s and have
continued to transform since and the present ERP technology is a proof of how fast the
technology has been developed. The present ERPs are already so sophisticated and it helps
business make more comprehensive decisions and have helped reduce the number of manual
work or human errors as most of the business process are automated. The future of ERP looks
promising with the integration of new technologies as business are looking for exceptional
outcomes, transparency, data- driven decision making and process. ERP systems will play
crucial role in fulfilling this demand.

Bibliography

Elragal, A., 2012. The Future of ERP Systems: look backward before moving forward. Science
Direct, Volume 5, pp. 21-30.
Gartner , 2023. Enterprise Resource Planning. [Online]
Available at: https://www.gartner.com/en/information-technology/glossary/enterprise-
resource-planning-erp
[Accessed 27 January 2023].

Geyser, W., 2022. Key Social Commerce Statistics You Should Know in 2023. [Online]
Available at: https://influencermarketinghub.com/social-commerce-stats/
[Accessed 5 February 2023].

Grand View Research, 2021. ERP Software Market Size, Share & Trends Analysis Report By
Function (Finance, HR, Supply Chain, Others), By Deployments, By Enterprise Size, By
Vertical, By Region, And Segment Forecasts, 2023 - 203. [Online]
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[Accessed 30 January 2023].

Katuu, S., 2020. Enterprise Resource Planning: Past, Present, and Future. Information
networking , 25(1), pp. 37-46.
McCue, I., 2020. The History of ERP. [Online]
Available at: https://www.netsuite.com/portal/resource/articles/erp/erp-history.shtml
[Accessed 3 february 2023].

SAP, 2022. From Inventing the Enterprise Software Sector to Helping the World Run Better.
[Online]
Available at: https://www.sap.com/uk/about/company/history.html?pdf-asset=b8b97eef-
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[Accessed 6 February 2023].

Softwareconnect , 2023. The History of ERP Systems: The Past and Future. [Online]
Available at: https://softwareconnect.com/erp/history/
[Accessed 3 February 2023].

VersaCloudERP, 2023. The history of ERP systems- then, now and the future?. [Online]
Available at: https://www.versaclouderp.com/blog/history-of-erp-systems/
[Accessed 25 January 2023].