The ERP solutions we’re familiar with today can trace their roots back to the 1960s. The rapid increase in modern factory production meant businesses needed to find new and effective ways to manage production and balance it with customer demand. This happened to coincide with the spread of computing across the business world. The product of this was Materials Requirements Planning (MRP) systems, which helped plan manufacturing, purchasing and delivery, keeping stock levels down and minimizing the amount of money tied-up in inventory. Initially, and through the 1970s, MRP solutions were only really affordable for larger businesses. This would change however, as IT in general developed and became more accessible.
The 1980s saw the development of MRP II. This updated system had the addition of more manufacturing processes and increased capabilities. But it wasn’t until the 1990s that Gartner first used the term ‘ERP’ to describe the next stage in MRP’s evolution. MRP solutions were extending to encompass other business functions - typically those regarded as ‘back office’ processes such as finance and accounting, HR, project management and engineering. This lead Gartner to use the term ‘Enterprise Resource Planning’, as these solutions had more of a general appeal and now looked after so much more than manufacturing.
By the mid-90s, ERP solutions were available from major suppliers, helping businesses to manage core business functions. But, again it was typically only larger organizations that were investing in such solutions. This all changed with the looming threat of the Y2K bug, with many businesses taking the opportunity to update legacy systems with a view to mitigating against potential Y2K chaos by replacing their incumbent systems completely. For many businesses, this meant investing in ERP systems, thus helping to secure ERP’s wider presence in businesses across the world.