ERPs are misnomed. It should have been ERM standing for Enterprise Resource Management. It’s a class of enterprise software that support many routine operations of a company. When it comes to choose an ERP, one must first understand the design and driving forces behind those products.
How did ERPs come about? During the 70’s, it gradually became obvious that electronic records were cheaper, faster and more reliable. ERPs followed on as the result of two key inventions: the barcode reader and relational databases. Firstly, the barcode reader made it possible to record product data in a matter of mere seconds. Secondly, with relational databases SKUs could now be organised along with products and POs. This meant that it was suddenly possible to do a number of operations automatically, which historically had been very expensive, requiring entire armies of clerks.
The actual term of “Enterprise Resource Planning” was coined by Gartner in the 1980’s. However, it can be said to be somewhat of a misnomer due to the fact there is actually very little planning that takes place, as everything is fully automated - the systems are transaction centric, much the same as a CRM is client centric.
Choosing an ERP certainly frames a company. Lidl famously wasted half a billion euros trying to move from one system to another. We debate why so many businesses decided to take a monolithic approach. With the advent of interconnected apps and the vast number of products on the market, we discuss how a business can navigate all this to make the right choices.
To conclude, we talk about what small businesses can do to choose a correct system that will work for them, hopefully avoiding unexpected and debilitating costs in the future.
00:22 When did the ERP systems first come about?
02:37 Where does the name ERP come from?
05:07 What were the core capabilities that the early ERPs had?
09:52 How much have ERPs changed over the years?
13:15 Where do the economic interests of the vendors lie?
17:03 How do you choose between what is a good approach that a company can take and what is a bad one?
19:58 How easy is to move from one ERP to another?
22:44 How much confidence can you place in those smaller companies?
27:22 As a final point, what should companies be looking for in terms of ERPs?