Short History of Business Software (culminating in ERP systems)

Phase I – 1955 to 1965 Computers are new and far more expensive than

people Software comes from the hardware manufacturer

(bundled) or written in house in FORTRAN or COBOLPhase II – 1965 – 1983

Software ‘unbundled from the manufacturer’ The golden age of software Great economic justification for applications – stand

alone, i.e. payroll, general ledger, inventory control

Most systems and applications separate – the age of the silo

Modular (integrated) systems are leading edge

Short History of Business Software (culminating in ERP systems) (2)

Phase III – 1983 – 2000 PC networks kill off mini-computers, dominate the

field People now much more expensive than hardware –

software development costs skyrocket ERP systems grow in popularity due to: 1. high

development costs 2. high risk of failure for in-house development 3. concentration on “core competencies”

Phase IV – 2000 – present All but strategic systems outsourced or handled

internally with commercial ERP software

ERP systems defined (for this class)

Characteristics of ERP systems Modular – multiple applications (application =module) from a

single vendor can be purchased individually and integrated at any time

Purchased from a vendor, not developed in house Modules are for common business applications (functions) Confusingly, stand alone systems (BI, CRM) can also be ERP modules.

If built in-house or purchased from specialty software developers rather than from SAP or other ERP vendor - then they are NOT ERP systems.

ERP counter examples The Nevada DMV system is a highly specialized custom written

system – not an ERP Most applications for Financial companies and commercial banks are

custom written Many real estate valuation and sales and insurance programs are

custom