Integrated enterprise resource planning (ERP) software solutions became synonymous with competitive advantage, particularly throughout the 1990's. The idea behind ERP systems was to replace "islands of information" with a single, packaged software solution that integrates all traditional enterprise management functions like financials; accounting; payroll; human resource (HR) management; and manufacturing and distribution, and thereby ensure enterprise-wide transaction system coherency. Knowing the history and evolution of ERP within the broader enterprise applications concept is essential to understanding its current use and its future developments. The following is the genesis of enterprise applications by era.
ERP systems should help companies become leaner by integrating the basic transaction programs for all departments, allowing quick access to timely information. However, ERP inherited MRPII's basic drawbacks, which are the assumption of infinite capacity and the inflexibility of scheduling dates, preventing companies from taking full advantage of speedy information flow.
This brings us to the still ongoing phase of users' disillusionment and their consequent wising up, while the vendors had to take the school of hard knocks and adapt accordingly or fail. Namely, the growth and heydays of ERP throughout the most of the 1990s had been a direct result of the fierce global competition, shortening product life cycles, highly distributed operations, and information-driven management that largely characterize today's business environment. The vast majority of companies have always hoped to purchase an information system as a product, not as a collection of technologies, components and services. Leading ERP vendors have been relatively successful at that stage because they had attempted to build such a product.
A typical ERP system indeed now offers broad functional coverage nearing the best-of-breed capabilities; vertical industry extensions; a strong technical architecture; training, documentation, implementation, and process design tools; product enhancements; global support and an extensive list of software, services and technology partners. While it is not a system-in-a-box yet, the gap between its desired and actual features is becoming smaller every day.
However, ERP vendors have by and large not fared so well lately. The initial plight of the vast majority of ERP vendors was mostly attributable to the Y2K-problem caused market slowdown that started in the fourth quarter of 1998 and continued in full force throughout 1999 and 2000. Indications of it winding down finally surfaced late in 2000.
Particularly affected was license revenue, and the market (with some honorable exceptions) was dramatically less expanding and profitable during 1999 and 2000 than in 1998, measured in the total raw dollar revenues and net income. But, the 2000s have proven to be even more adverse years in the entire enterprise applications market. Following the whopping growth rates of the late 1990s, and the short-lived spending surge on sexy e-business-related technology in 2000, hard times worldwide and in almost all sectors have since subsequently morphed into harrowing times for all enterprise systems providers alike. While the biggest and richest vendors have been able to hang onto flat new sales, potentially modest declines, or in other cases, potentially modest growth, only the lucky or the most apt few with a true differentiation in a selected number of markets (such as warehouse management systems [WMS]/supply chain execution [SCE] or strategic sourcing) (see Glossary*) have bucked the trend and have recently shown some enviable growth (see The Hidden Gems of the Enterprise Application Space).
ERP systems should help companies become leaner by integrating the basic transaction programs for all departments, allowing quick access to timely information. However, ERP inherited MRPII's basic drawbacks, which are the assumption of infinite capacity and the inflexibility of scheduling dates, preventing companies from taking full advantage of speedy information flow.
This brings us to the still ongoing phase of users' disillusionment and their consequent wising up, while the vendors had to take the school of hard knocks and adapt accordingly or fail. Namely, the growth and heydays of ERP throughout the most of the 1990s had been a direct result of the fierce global competition, shortening product life cycles, highly distributed operations, and information-driven management that largely characterize today's business environment. The vast majority of companies have always hoped to purchase an information system as a product, not as a collection of technologies, components and services. Leading ERP vendors have been relatively successful at that stage because they had attempted to build such a product.
A typical ERP system indeed now offers broad functional coverage nearing the best-of-breed capabilities; vertical industry extensions; a strong technical architecture; training, documentation, implementation, and process design tools; product enhancements; global support and an extensive list of software, services and technology partners. While it is not a system-in-a-box yet, the gap between its desired and actual features is becoming smaller every day.
However, ERP vendors have by and large not fared so well lately. The initial plight of the vast majority of ERP vendors was mostly attributable to the Y2K-problem caused market slowdown that started in the fourth quarter of 1998 and continued in full force throughout 1999 and 2000. Indications of it winding down finally surfaced late in 2000.
Particularly affected was license revenue, and the market (with some honorable exceptions) was dramatically less expanding and profitable during 1999 and 2000 than in 1998, measured in the total raw dollar revenues and net income. But, the 2000s have proven to be even more adverse years in the entire enterprise applications market. Following the whopping growth rates of the late 1990s, and the short-lived spending surge on sexy e-business-related technology in 2000, hard times worldwide and in almost all sectors have since subsequently morphed into harrowing times for all enterprise systems providers alike. While the biggest and richest vendors have been able to hang onto flat new sales, potentially modest declines, or in other cases, potentially modest growth, only the lucky or the most apt few with a true differentiation in a selected number of markets (such as warehouse management systems [WMS]/supply chain execution [SCE] or strategic sourcing) (see Glossary*) have bucked the trend and have recently shown some enviable growth (see The Hidden Gems of the Enterprise Application Space).
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