ERP to Cloud Open Source ERP: The Evolution (Part 1)

ERP Evolution - Union Mercantile Solutions

Union Mercantile Solutions by Union Mercantile Ltd is an IT solution company with an agenda to serve the low-cost IT service where on hand experience was gathered by working for in house IT solutions for our valuable customers. As Enterprise Solution Provider, we have analyzed the data about the satisfaction of different software’s, ERP, Solutions, IT infrastructure of the various company in Bangladesh and found out that the satisfaction rate is not quite sufficient and the root cause is lack of information for the right solution for the right infrastructure. Most of the companies are investing a vast amount of money in their IT but end product and results still require much to be desired. In this course, we are enlightening on the topic “ERP to Cloud Open Source ERP: The Evolution”



The acronym ERP stands for Enterprise Resource Planning and refers to creating a more efficient, leaner, better-automated and integrated business through sophisticated technology solutions.

ERP, or enterprise resource planning, can also be described as a modular software system designed to integrate the main functional areas of an organization’s business processes into a unified system.

An ERP system includes core software components, often called modules, that focus on essential business areas, such as finance and accounting, HR, production and materials management, customer relationship management (CRM) and supply chain management. Organizations choose which core modules to use based on which are most important to their particular business.

An ERP refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.

ERP software then, is a business management technology solution that businesses and manufacturers use to collect, store, manage, and communicate data across all functions of the enterprise. Users interact with the software via visually-collaborate dashboards. Typically, ERP dashboards contain color-coded bar charts and graphs, along with other visual descriptions of data that give users a fast look at key metrics. It is crucial that ERP users have access to dashboard metrics because they track and measure data that leads to business process improvement.

ERP systems are designed around a single, defined data structure (schema) that typically has a common database. This helps ensure that the information used across the enterprise is normalized and based on common definitions and user experiences. These core constructs are then interconnected with business processes driven by workflows across business departments (e.g. finance, human resources, engineering, marketing, operations), connecting systems and the people who use them. Simply put, ERP is the vehicle for integrating people, processes, and technologies across a modern enterprise.

A key ERP principle is the central collection of data for wide distribution. Instead of several standalone databases with an endless inventory of disconnected spreadsheets, ERP systems bring order to chaos so that all users—from the CEO to accounts payable clerks—can create, store, and use the same data derived through common processes. With a secure and centralized data repository, everyone in the organization can be confident that data is correct, up-to-date, and complete. Data integrity is assured for every task performed throughout the organization, from a quarterly financial statement to a single outstanding receivables report, without relying on error-prone spreadsheets.

How ERP works


An ERP system, also called an ERP suite, is made up of different enterprise resource planning applications that talk to each other and share a database.


Each application (aka ERP module) typically focuses on one business area. You can combine different modules to meet the needs of the organization. Finance, human resources, sales, and logistics are popular starting points. There are also modules specific to industries – from manufacturing to retail. At its most fundamental level, ERP software integrates information from all areas of a business into one complete enterprise system so data can be shared across departments in real-time in order to streamline processes and automate common tasks. At its core, an ERP system is a database management system, creating and managing a database of business processes including:


Accounting and Finance


The accounting and finance module track the company’s finances, including budget and expense planning, core accounting, revenue management and tax management.


Customer Relationship Management (CRM)


With the CRM module, businesses can manage their client-facing operations, such as sales, marketing and customer service. Employees can track sales prospects and customer pipelines. Users can also manage marketing tasks, including advertising and lead generation campaigns.


Supply Chain


The supply chain module tracks products from manufacturing to warehouse to distributors to customers. Features include supplier scheduling, purchasing, inventory, claim processing, shipping, tracking and product returns.


Inventory Management


Using the inventory management module, businesses can monitor materials and supplies through inventory control, purchase orders, automatic ordering and inventory scanning.




Manufacturers and other production-oriented facilities can use the manufacturing module to manage their shop floors, looking at elements such as work orders, bill of materials, quality control, engineering, manufacturing process and planning, and product lifecycle management.


Human Resources


The human resources module helps organizations manage their hiring cycles from recruitment to succession. Companies can take advantage of the following features: applicant tracking, payroll, time and attendance, performance management and learning management.


Business Intelligence


A business intelligence module collects and analyzes data from multiple sources and helps users make better business decisions. Some features include customizable dashboards and visualization tools, ad-hoc and scheduled reporting, and real-time data access.


ERP systems rely on a centralized relational database, which collects business information and stores them in tables. Having the data stored centrally allows end users, such as from finance, sales and other departments, to quickly access the desired information for analysis.


Instead of employees in different departments managing their own spreadsheets and reports, ERP systems allow for reporting to be generated from a single, centralized system. Information updated in one ERP module, such as CRM, HR and finance, is sent to a central, shared database. The appropriate information in the central database is then shared with the other modules.


ERP software also offers some degree of synchronized reporting and automation. Instead of forcing employees to maintain separate databases and spreadsheets that have to be manually merged to generate reports, some ERP solutions allow staff to pull reports from one system. For instance, with sales orders automatically flowing into the financial system without any manual re-keying, the order management department can process orders more quickly and accurately, and the finance department can close the books faster. Other common ERP features include a portal or dashboard to enable employees to quickly understand the business’ performance on key metrics.


A Brief History of ERP


Gartner invented the term “enterprise resource planning” in 1990. ERP is preceded by Material Requirements Planning (MRP), developed by IBM engineer Joseph Orlicky as a system for calculating the materials and components needed to manufacture a product.


From Paper Cards to Mobile Devices


The history of ERP goes back more than 100 years. In 1913, engineer Ford Whitman Harris developed what became known as the economic order quantity (EOQ) model, a paper-based manufacturing system for production scheduling. For decades, EOQ was the standard for manufacturing. Toolmaker Black and Decker changed the game in 1964 when it became the first company to adopt a material requirement planning (MRP) solution that combined EOQ concepts with a mainframe computer.


MRP remained the manufacturing standard until manufacturing resource planning (called MRP II) was developed in 1983. MRP II featured “modules” as a key software architectural component, and integrated core manufacturing components including purchasing, bills of materials, scheduling, and contract management. For the first time, different manufacturing tasks were integrated into a common system. MRP II also provided a compelling vision of how organizations could leverage software to share and integrate enterprise data and boost operational efficiency with better production planning, reduced inventory, and less waste (scrap). As computer technology evolved through the 1970s and 1980s, concepts similar to MRP II were developed to handle business activities beyond manufacturing, incorporating finance, customer relationship management, and human resources data. By 1990, technology analysts had a name for this new category of business management software—enterprise resource planning.


Past: 1990s to the New Millennium: From on Premises to the Cloud


From the 1990s until the beginning of the twenty-first century, ERP adoption grew rapidly. At the same time, the costs of implementing an ERP system began to climb. The hardware required to run the software was typically on company premises, with big machines in a server room. Both the hardware and the software licenses required capital investments and depreciated over 5 to 10 years. In addition, organizations nearly always wanted to customize their ERP systems to fit their specific needs, entailing an additional expense of software consultants and training.


Meanwhile, ERP technology was evolving to embrace the internet, with new features and functionality such as embedded analytics. As time went on, many organizations discovered that their on-premises ERP systems couldn’t keep up with modern security demands or emerging technologies such as smartphones.


Today: A New ERP Delivery Model: Software as a Service (SaaS)


Today, ERP has expanded to encompass business intelligence (BI) while also handling “front-office” functions such as sales force automation (SFA), marketing automation and ecommerce. With these product advancements and the success stories coming out of these systems, companies in a broad range of industries—from wholesale distribution to ecommerce—use ERP solutions.


Enter the cloud—specifically, the software-as-a-service (SaaS) delivery model for ERP. When ERP software is delivered as a service in the cloud, it runs on a network of remote servers instead of inside a company’s server room. The cloud provider patches, manages, and updates the software several times a year—rather than an expensive upgrade every 5 to 10 years with an on-premises system. The cloud can reduce both operational expenses (OpEx) and capital expenses (CapEx) because it eliminates the need for companies to purchase software and hardware, or hire additional IT staff. These resources can instead be invested in new business opportunities, and the organization is always up-to-date on the most recent ERP software. Employees can shift their focus from managing IT to more value-added tasks such as innovation and growth.


Source: Internet