Enterprise resource planning systems or enterprise systems are software systems for business management, encompassing modules supporting functional areas such as planning, manufacturing, sales, marketing, distribution, accounting, financial, human resource management, project management, inventory management, service and maintenance, transportation and e-business.

The architecture of the software facilitates transparent integration of modules, providing flow of information between all functions within the enterprise in a consistently visible manner. Corporate computing with ERPs allows companies to implement a single integrated system by replacing or re-engineering their mostly incompatible legacy information systems.

Evolution of ERP

Figure summarizes the historical events related with ERP

• The evolution of ERP systems closely followed the spectacular developments in the field of computer hardware and software systems.
• During the1960s most organizations designed, developed and implemented centralized computing systems, mostly automating their inventory control systems using inventory control packages (IC).
• These were legacy systems based on programming languages such as COBOL, ALGOL and FORTRAN.
• Material requirements planning (MRP) systems were developed in the 1970s which involved mainly planning the product or parts requirements according to the master production schedule.
• Following this route new software systems called manufacturing resources planning (MRP II) were introduced in the 1980s with an emphasis on optimizing manufacturing processes by synchronizing the materials with production requirements.
• MRP II included areas such as shop floor and distribution management, project management, finance, human resource and engineering.
• ERP systems first appeared in the late 1980s and the beginning of the 1990s with the power of enterprise-wide inter-functional coordination and integration.
• Based on the technological foundations of MRP and MRP II, ERP systems integrate business processes including manufacturing, distribution, accounting, financial, human resource management, project management, inventory management, service and maintenance, and transportation, providing accessibility, visibility and consistency across the enterprise.
• During the 1990s ERP vendors added more modules and functions as “add-ons” to the core modules giving birth to the “extended ERPs.”
• These ERP extensions include advanced planning and scheduling (APS), e-business solutions such as customer relationship management (CRM) and supply chain management (SCM).

Different types of ERP architectures.

• Two-tier: server handles application and database duties. Clients are responsible for presenting the data and passing input back to the server.
• Three-tier: application, database, and presentation are separated into layers that communicate with each other.
• N-tier: any number of tiers defined in an architecture.
• Web Services: splitting the presentation tier in two additional layers, Web Services and Web Brower.
• SOA (Service Oriented Architecture): object-oriented architecture that can extend beyond the corporate firewall onto the web.

An ERP system is required to have the following characteristics:

• Modular design comprising many distinct business modules such as financial, manufacturing, accounting, distribution, etc.
• Use centralized common database management system (DBMS)
• The modules are integrated and provide seamless data flow among the modules, increasing operational transparency through standard interfaces
• They are generally complex systems involving high cost
• They are flexible and offer best business practices
• They require time-consuming tailoring and configuration setups for integrating with the company’s business functions
• The modules work in real time with online and batch processing capabilities
• They are or soon they will be Internet-enabled

Different ERP vendors provide ERP systems with some degree of specialty but the core modules are almost the same for all of them. Some of the core ERP modules found in the successful ERP systems are the following:

• Accounting management
• Financial management
• Manufacturing management
• Production management
• Transportation management
• Sales & distribution management

• Human resources management
• Supply chain management
• Customer relationship management
• E-Business

The modules of an ERP system can either work as stand-alone units or several modules can be combined together to form an integrated system. The systems are usually designed to operate under several operating platforms such as UNIX, MS Windows NT, and Windows 2000, IBM AIX, and HP-UX systems. SAP AG, the largest ERP vendor, provides a number of modules with its famous R/3 ERP system.