ERP definition - a new name for an old process

What is an accurate ERP definition? Surprisingly it just a new term for something that has always been a part of business operations management. It is the process of determining how company resources – people, tools and equipment – are going to be utilized on a daily, weekly and monthly basis.

Enterprise resource planning existed before the advent of computerized business accounting software and management information systems. Back then performance data was gathered from different sources within an organization and information was compiled manually.

For example, in the sixties I worked with a team of engineers developing airborne radar at a UK company (the “enterprise”).

At the start of every project the drawing office created a critical path analysis – a plan for project activities and timelines mapped out on a big roll of drawing paper. The CPA was dovetailed with other projects on a chart which the management team used to forecast resource requirements.

Engineers kept their own notebooks and provided verbal progress reports at weekly meetings. A secretary took notes in shorthand and transcribed them on a manual typewriter, making carbon copies for each member of the management team. The managers reviewed the progress reports and adjusted their forecasts accordingly.

The people in the accounting department recorded all of the company’s transactions by hand in big green ledgers. Cash was used for payroll and each employee received a little brown envelope at the end of the week containing money and a handwritten pay slip.

This was the ERP definition back then.

The 1970’s brought business accounting systems and the development of project management software, as well as industry specific process management programs. All the tools were now in place for computerized enterprise resource planning, albeit through non-integrated systems.

In this information age, every industry and every large corporation or small business is looking for a system that is capable of generating enterprise wide operational and financial data in real time with minimal overhead.

That is why the ERP software systems of today were developed - modular systems that provide the ability to manage product planning, parts purchasing and inventories as well as interact with suppliers, provide customer service and track orders. ERP systems are also known as business intelligence software, CRM-ERP or Manufacturing ERP and some systems include industry specific functionality. They all have integrated accounting to manage the financial aspects of a business.

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