ERP Systems

Enterprise Resource Planning Systems

Enterprise Resource Planning Systems first came onto the market in the early 1990s, and were adopted by manufacturing firms as a means of unifying multiple software programs onto a single integrated platform. With enterprise resource planning systems in place, large industries could coordinate back office functions related to accounting, human resource management and payroll. Enterprise resource planning systems also allowed the coordination of activities directly related to the shop floor, such as warehousing, order processing, billing and shipping. With a method in place to increase the efficiency of raw material and product movement, waste could be reduced and human capital more productively deployed.

Enterprise resource planning systems gain rapid popularity in the manufacturing sector after the resolution of a few troubling kinks in early system models. And within a few years, other industry sectors began adopting enterprise resource planning systems as well. Large providers like oracle and Microsoft began installing enterprise resource planning systems for government offices and large university systems to help these organizations streamline their back office functions and improve communication between departments.

Enterprise resource planning systems are now finding a foothold in the small business market as well. Once financially out of reach to small organizations, enterprise resource planning systems are becoming more accessible as providers are beginning to customize and scale down their products and services to appeal to businesses with more restrictive budgets. At the same time, system capabilities have improved vastly over the last decade, and several new independent providers have arisen who have been able to successfully challenge the dominant providers for a portion of small business market share.

In a relatively recent development affecting the market for enterprise resource planning systems, hosting solutions and SaaS, or software service providers, have found methods of offering back office software integration to business owners who cannot afford the startup cost or maintenance involved in owning their own server architectures. These small business owners stand to gain by renting, rather than buying, space on a shared server and access to accounting and customer relationship management applications. Hosting solution providers also stand to gain, and traditional software providers may stand to gain as well, if hosting services can be contracted to provide applications produced by these firms.

This three way relationship can prove to be highly beneficial to all parties involved, but it remains to be seen how this will affect the market value of traditional enterprise resource planning systems. Meanwhile, in the current challenging business climate, small organizations are looking for ways to cut existing software costs and take advantage of affordable new business technologies. Meeting the needs of these small clients may mean the difference between success and failure in the coming decade.

Written by :

Amy Cruz