By: Zach Hale on December 3, 2019
In the midst of all this change, how can an organization navigate the ERP labyrinth and do it with confidence? The short answer is that ERP isn’t going anywhere, but it will continue to evolve—just as your ERP initiatives should.
The future of ERP lies in a business’ ability to adapt, and those that prioritize integration and emerging ERP technologies will ensure the long-term viability of their investment.
Let’s take a deeper dive into ERP’s past, present, and future.
To understand where the market is going, you have to know where it started.
While its roots extend back to the manufacturing resource planning (MRP) systems of the ’60s and ’70s, the official birth of ERP was in 1990, when Gartner coined the term to reflect the software’s expanding scope. By that point, MRP was expanding beyond simple manufacturing processes to include enterprise-wide functionality—applications such as accounting, human resources, and customer relationship management. (For a detailed look at the timeline, check out our History of ERP infographic.)
Throughout the ’80s and ’90s, which Gartner calls the best-of-breed era, this early iteration of ERP was defined by complex and fragmented solutions (full content available to Gartner clients). Basically, ERP was an assortment of systems that carried out processes separate from one another, with little coherence or communication between them.
As ERP matured in the late ’90s and into the early 2000s, businesses began to implement larger applications that expanded beyond “enterprise” solutions to include more agile, industry-specific functionality. This is known as the monolithic era.
Fast forward to the 2010s—the postmodern era—when technology evolved to permit communication between different software through system integration. This is ERP software as we know it today: an increasingly customizable system of specialized business applications from multiple vendors.
Today’s ERP software barely resembles that of past decades. Businesses of all sizes and specialties have the ability to tailor these systems to fit their unique needs, as the market evolves into something virtually unclassifiable.
As Gartner notes in the article linked above, “enterprise resource planning is no longer solely focused on ‘resources’ or ‘planning.’ It is slowly changing focus away from ‘the enterprise.’ It is evolving to be something much more expansive. As such, the terminology used to describe it needs to begin to change as well.”
Gartner’s proposed terminology? “Enterprise business capabilities (EBC).”
Despite this shift toward integration and customization, the emerging EBC era has several hallmarks:
We’re already seeing many of these concepts in action, yet we’ve barely scratched the surface: By 2023, Gartner predicts that 65% of businesses will use ERP applications that employ one or more of these fourth-era hallmarks.
Despite the changing nature of ERP software, its mission today is the same as it was in 1990: ensuring business value.
There’s no need to abandon your current investments or initiatives—not if you’ve already optimized your ERP system to maximize adaptability. The important thing is that you guide your ERP strategy with a 21st-century mindset, using a framework propelled by AI and automation to achieve the best possible outcomes for your business. In other words, today’s businesses can leverage ERP technology to guide and optimize their strategy on the fly.