In 1999, the Economist questioned whether the enterprise resource planning (ERP) business model could adapt to internet computing. ERPs were software systems that businesses could use to manage the coordination of transactional processes across functions within an enterprise, typically with modules for supporting each department or business unit, such as finance, accounting, human resources, supply chain, and more. Ultimately each module would connect to a central, well-structured database, allowing it to communicate with the other modules. Those using ERP had expectations that it would help keep correct inventory levels; improve interactions with suppliers and integrate the supply chain; achieve and manage compliance and document workflow; evaluate and improve productivity and efficiency; provide real-time data to facilitate decision-making; improve the customer experience through better communication, order filling, shipping, and so on; and lower operating and labor costs. In terms of strategy, the system was expected to offer a competitive advantage.
This case traces the history and development of ERPs, from their roots in financial accounting software and HR management, through their transformation to software as a service (SaaS) in the internet age, and finally to their adaptation to and utilization of artificial intelligence and cloud computing. It has been taught at Darden in the second-year elective Digital Operations course in a module on digital technologies and software infrastructure.
