The Rise And Fall Of The Term 'ERP'

The Rise And Fall Of The Term 'ERP'

With Sage’s recent announcement that they would be dropping the acronym ‘ERP’ from their flagship business management solution, Sage X3

we started thinking about the history of the term and the many different shapes it has taken over the years.

Whether it’s ERP or business management software or a mixture of both, the big software companies can’t seem to settle on just one name. Depending on the company you are looking at, the terms can be applied to a whole host of software products with varying functionality. In this post hopefully we will debunk some of the jargon surrounding business software and reflect on the many different names we have seen it be called in our 25 plus years’ experience of the software industry.
 

ERP Origins


If we rewind to the 1960’s the predecessor to the business software we know today would be the original MRP systems. Originally this stood for Manufacturing Requirements Planning and was born from the need for manufacturing companies to plan and schedule production times. Over the years this would develop to cover everything that was needed throughout the manufacturing process, including time, materials and machines. It was then decided that the acronym would be more reflective of the system’s functionality if it stood for Manufacturing Resource Planning instead.

Sage X3 | History of ERP | Mysoft

From here we can already see the main problem that software companies faced, and are still facing; trying to make the name of the product reflect its core functionality in one, simple name. This is, of course, easier said than done and has resulted in a proliferation of terminology every time technology evolves or new functionality is added. Software solutions cover a whole array of functionality so summing them up in a couple of words is a tricky task to tackle.  
 

Developing Functionality


In the 1980’s these MRP systems would often be integrated with financial and accounts focussed software. These systems were, again, known by a variety of different names, whether it be ‘accounts and distribution systems’, ‘commercial systems’ or simply ‘business systems’. These systems provided financial management benefits that all companies could take advantage of, not just those in the manufacturing industry.

Companies then began to provide these systems combined in one package, covering financial management, MRP, customer data and supplier information. Manufacturing, therefore, became a limiting term for these more industry wide solutions and ‘Enterprise’ began to be used instead, giving us the ERP acronym we see so often today. MRP is still used for manufacturing focussed solutions but for those that began to include wider functionality ‘Enterprise’ became more relevant. Click on the image to zoom in:

With rapid technology advancements ERP systems started to become a base for a whole host of business management tools. Various different solutions began focussing on different areas of business. CRM, or Customer Relationship Management, software focussed on managing the sales and marketing funnel. SRM, or Supplier Relationship Management, focussed on managing the flow of goods and services through the supply chain. With the explosion of the internet e-business software also started to pop up, managing finance and commerce straight from the internet. Larger software options, such as Sage ERP X3, began to include all of this software in one ERP package.
 

The New Internet Based ERP 


The internet then saw the changing shape of software with the rise of web based ‘Saas’ solutions, instead of traditional hardware hosting. The internet enabled modern systems to include real-time data and intelligent data analysis. Saas meant that companies could pay a monthly subscription to use a software via the internet, with the software itself being centrally hosted by the software provider. This trend of hosting software off-premise widely became known as hosting software in ‘the cloud’. Saas and cloud computing allowed companies to outsource the cost of hardware and software maintenance to their providers.

Sage X3 | History of ERP | Mysoft

The modern consumer was not only internet savvy but also now owned a smartphone, tablet, laptop and/or all of the above. They expected systems to be able to travel with them in their modern ‘mobile’ working environment, not be limited to the office hardware. Forward thinking software providers began making sure their solutions could be accessed through any device, could be hosted on the cloud and were able to be bought through the Saas subscription payment model.
 

'Sage ERP X3' Changes To 'Sage X3'


The new cloud based, web accessible, user intuitive systems were a world away from their large and clunky MRP origins. Modern ERP systems, such as Sage ERP X3, covered all business processes including customer management, accounting, project management and business intelligence. The modern incarnation of Sage ERP X3 had become an internet based, flexible and mobile solution that could manage every aspect of business. It included advanced business intelligence tools and had the option of being used as a Saas based cloud solution. It barely resembled the systems that were first coined ‘ERP’ and so it was decided that another name change was needed.

Sage X3 | History of ERP | Mysoft

So Sage ERP X3 has evolved beyond ERP, and become Sage X3; a modern, flexible and mobile business management solution that manages every process in your business as well as providing intelligent insights into how to improve efficiencies and grow your company


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"The main problem that software companies face is trying to make the name of the product reflect its core functionality in one, simple name. This is, of course, easier said than done and has resulted in a proliferation of terminology every time technology evolves or new functionality is added."

., .

"So Sage ERP X3 has evolved beyond ERP, and become Sage X3; a modern, flexible and mobile business management solution that manages every process in your business as well as providing intelligent insights into how to improve efficiencies and grow your company"

., .