In the current issue of APICS Magazine (Sep/Oct 2014) consultant and writer Dave Turbide (also an APICS state chapter president and CPIM master instructor, and pictured at left) has penned a few thoughts worth repeating on the evolution of ERP systems, their heritage and some of the challenges they face today. We’ll devote our last two posts this month to Dave’s thoughts.
As Turbide points out, ERP planning is not what it was ten years ago, or even two years ago. In fact, it’s merely “the current incarnation of a long line of offerings that date back to inventory management and bill of material software programs” first developed over 50 years ago. Material requirements planning (MRP) begat manufacturing resource planning, eventually evolving into today’s Enterprise (ERP) systems.
Companies that adopted these systems in the 70s and 80s still use them today in many cases, but utilize new versions with added functionality and modules added along the way. Occasionally, a major update occurs which can run from full code rewrites to new data tools, interfaces and connectivity options. Today, new deployment methods are evolving, like cloud and proliferation of the new mobile technologies.
Software is typically released with enough functionality to distinguish it from competitive offerings, notes Turbide. Eventually, the “feature-function rivalries” begin. This quest to stay ahead is always good news for users, as ERP gets broader and deeper.
Meanwhile, the history of the ERP market itself is one of acquisitions. Startups emerge and eventually get consumed by larger companies. (Our own reselling firm has seen this in dramatic sweeps – only one product we sell today (out of four) is conveyed by its original publisher; large publishers like Infor, Sage and Microsoft predominate in the SMB space today, proffering products invented long ago, by others.) Sometimes products are combined; sometimes features are borrowed; sometimes a “super ERP” becomes a logical upgrade path from many or all of the acquired products. In the end, this evolution has led ERP to become the “preferred information management backbone for companies worldwide,” Turbide points out.
The article notes the adoption of software-as-a-service or cloud computing as yet another stage in ERP evolution, whereby technology resources like computers and servers are outsourced, since these aren’t typically within a manufacturer’s core competency. The licensing method reduces up-front capital costs and the hardware can be scaled quickly to user requirements.
However, manufacturing as a whole has been reluctant to adopt cloud services. That’s because many manufacturers already have IT infrastructure in place, and the “unwillingness among risk-averse executives” to trust the firm’s vital information to “a remote custodian and long-distance telecommunications link.” Thus, Turbide notes that only about one-fourth of companies looking at a system purchase opt for that approach.
In our next post, we’ll take a look at what APICS’s Dave Turbide has to say about tools, technology and building a system. Stay tuned…