Maximizing Return on Investment Using ERP Applications

IT’S ALL ABOUT THE BACK OFFICE: GETTING A SINGLE VERSION OF THE TRUTH (1970–1990)

In the early 1970s, a group of IBM engineers proposed to integrate all of these functions into a single application, where the logical implications of each action taken in a business were automatically and, for the most part simultaneously, posted to each of the areas affected. This was the origin of integrated business systems, known today as ERP, and was the concept that resulted in the founding of SAP. For the first time, a quantity of inventory that the inventory control system showed as in stock could be automatically multiplied by the standard cost stored in an accounting record (actually, an accounting view of a master data record for the material), and stored in the general ledger, at the same time. For the first time, there would be agreement between what inventory records showed and what accounting showed. Now, there was a single version of the truth.

IT workers continued to work within their functions, learned new skills required by the new systems, and added other programming skills to their resumes. With limited functionality, however, emphasis remained on defining relatively easy relationships between functions. The need for higher-level cross-functional integration design skills was only starting to be hinted at. Beyond basic integration, proprietary programming was still done by IT groups working exclusively with their functional partners. The touch and feel for programs were much ...