ERP is a collection of software that manages the business process, including finance, purchasing, sales, manufacturing, and inventory. It helps in optimizing the flow of information within the company. ERP system records the data needed for planning, analysis, reporting, and efficiently managing the process from order to cash.
Impact of ERP during Covid-19
According to google trends, the term “enterprise resource planning” has shown an upward graph from June 2020 to December 2021. This graph touched 100 searches a day post-December 2021.
The study was performed for a range of five years from 2017 to 2021. in these 5 years, it can be witnessed that, till mid-2020, there was a gradual drop in the graph. Post the covid situation, since June 2020, the graph has grown, and the upward rise was steady.
So it can be observed that:
The interest in ERP has grown double in the last five years.
The major reason for the searches post-Dec-2021 was for supply chain management.
The phase after covid-19 has shown massive growth in the interest level of enterprise resource planning.
Evolution of ERP
Everything has a beginning and gradually grows and scales till it gets enormous. The same goes for the world of ERP. Enterprise Resource Planning today has developed and is the go-to software for all businesses. But it started way back in the 1960s and 70s.
Material Requirement Planning (MRP) – It was developed in the 1970s, and used primarily for production planning and scheduling in industry. It functions in providing material information in producing the right quantity on time. It was a process controlling stock demand, that automatically led to procurement for purchasing or production. The function of MRP was to determine the material, quantity, and time required for the process.
Manufacturing Resource Planning (MRP II) – Developed in the 80s, MRP II was an extension of MRP in the entire manufacturing company. The system encourages cross-functional interactions between all functional areas in the business. It facilitates sales and marketing by providing promising capability. It is a vast resource coordination system that involves other departments like marketing, finance, and HR.
Enterprise Resource Planning (ERP) – Introduced in the 90s, in-built with the capacity to manage daily business operations for all functional areas. It was a regular business software for large-scale industries. It was a set of applications that strategizes communities in enabling operational and financial processes. ERP software for Manufacturing Industry centralizes information and workflow processes by data management and storing it all in one place.
Enterprise Resource Planning (ERP II) – It was invented in the 2000s, and ERP II is addressed as ERP. A business strategy that processes financial and operational services collaboratively for internal enterprises and beyond. These business models by internal integration help increase the focus on business. Data can be published and subscribed internally and externally by ERP II. Modules like CRM, SCM, and other stakeholder modules are included.
ERP – Past, Present, and The Future
At one stage the ERPs were highly expensive and unaffordable to many businesses. Time has changed, and cloud computing has made this software reachable for many enterprises. The journey from providing only financial business functions to expensive large-scale business solutions to affordable and complete business solutions is worth discussing.
The Beginning
It all started with calculating machines in the 40s, and the idea of ERP began then. As business needs grew, ERP started evolving, and computing solutions arrived in the 60s. Introduction of inventory managing applications took place and jointly manufactured by IBM. The collaboration was followed by the invention of Materials Requirement Planning (MRP). It helped in planning the requirement of raw materials for manufacturing, delivery, and purchasing purposes.
The Early Days
Large-scale industries could only use the MRP software due to high cost, back in 1975. The companies that use mainframe computers are expensive but with incomparable capacity. SAP was established in 1972 and started its version that enabled real-time reporting. It released its financial accounting system in 1973.
MRP evolved to MRP II or Manufacturing Resource Planning in the 80s. It adds manufacturing processes and converts to a one-stop solution for production purposes.
ERP – The Term
Enterprise Resource Planning was first used as a term in the 1990s. It was compatible with engineering, finance, accounting, project management, and HR departments. It used modular applications with the latest features. The system used a legacy on-premise module until 1996. An ERP system arrived that functions like its predecessor but was not on-premise and worked on the internet.
The 21st Century brought ERP software that operates over the internet and provides real-time reports. It was capable of solutions like supply-chain management, customer relationship management, and business intelligence.
The arrival of The Cloud software
2005 brought the arrival of cloud-based software while moving on from the traditional server-based model. Cloud software provides the same functions as on-premise software at a lower cost. The cost-cutting was possible due to the multi-tenant user system and affordable server-based software. Cloud-based software does not require IT infrastructure apart from a computer and an internet connection. Small and mid-scale industries benefitted from this software.
Although data security initially got questioned, now cloud-based ERP system provides data security better than on-premise software at an equal cost. Apart from security uptime issues, ease of use issues, upgradations, access, and coding are benefits that cloud solution provides.
The introduction of applications enables cloud software to operate from mobile devices and provide web-based access. Presently, cloud-based systems ensure advanced reporting, analytics, real-time data on the go, and business intelligence services to users. As per business forecasting, cloud-solution can get integrated with IoT, IoE, and social media for better security competence.
Importance of ERP
The importance of ERP for businesses took place during uncertainty like the pandemic or crisis. Below is listed the evolution of the effect of ERP on business.
Pre-Covid: Efficient business operations for E-Commerce and other business facilities popularize the use of ERP software before covid. As business operation increases with the rise in labor cost, ERP system got popular and valuable for efficient functioning.
First-Year after Covid: In early 2020, covid worsen the market, and companies were not willing to spend on business, instead focussing on survival. ERP projects were unreliable due to the time it takes to implement on business. Google trend data got impacted hence. However, with employees starting to work remotely, e-commerce grew, and cloud ERP systems gained popularity. Remote access to the ERP system became important, resulting in boosting sales.
Late 2020 and Early 2022: Covid-19 lockdowns and the Ukraine War affected supply chain management. Interest in ERP systems rises due to fast operational adjustment in organizations. It helped in decision-making during the crisis for business owners.
The Future: The new normal (remote) doubled the interest in ERP systems in the market. Companies are focused on achieving efficiency, profit, and agility in business operations, ensuring the safety of employees.
Conclusion
Businesses will get disrupted due to the arrival of the ERP system and its fast-changing operations. To efficiently use the ERP system, owners must understand the business needs and the benefits ERP could provide. The evolution of ERP not only changed the functioning of businesses but also complicated the system. Organizations must develop patience and adaptability within departments to benefit from the software. Business disruptions can be avoided by prior planning that is necessary before formulating the linking of an ERP system in the business. Business operations need proper backup planning simultaneously providing software training to manage operational disruption.
