How a 1913 formula for ordering stock became the system that runs the world’s companies: MRP, MRP II, ERP, the cloud and now AI agents, with the vendors that shaped each era and the market as it stands in 2026.
Each generation kept the one before it and planned from a wider set of data.
Enterprise resource planning (ERP) is the software that keeps a company’s core processes, such as finance, purchasing, inventory, production, sales and people, on one shared set of data. A sale, a goods receipt and a journal entry become three views of the same event instead of three records kept by three departments.
ERP did not appear from nowhere. Each generation answered a bigger question than the one before: how much to order (1910s), which materials to buy and when (MRP, 1964), whether the plant and the money can support the plan (MRP II, 1983), how to run the whole company on one system (ERP, 1990) and now how much of the work the system can do by itself.
One idea runs through all of them: record each fact once, plan from it, and let every department see the same numbers.
Pick an era to see the question it answered, what it added and the names to know. The sections below go deeper into each one.
The question it answered
How much should I order, and when?
Tabulating machines, then mainframes running nightly batches.
The question it answered
Which materials do I need, how many, and by when?
IBM mainframes and weekly batch regeneration.
The question it answered
Can the plant actually build the plan?
Online terminals reach the shop floor and the purchasing office.
The question it answered
Do the plan, the plant and the money agree?
Minicomputers and midrange systems such as IBM System/38 and AS/400.
The question it answered
Can the whole company run on one system?
Client-server computing and relational databases.
The question it answered
Can customers, suppliers and the web join in?
Web browsers and multi-tenant cloud software.
The question it answered
Can we see it in real time, and keep only what we need?
In-memory columnar databases and browser-based apps.
The question it answered
Can the system act, not just record?
Public and private cloud, large language models and agent runtimes.
1890 – 1963
For the first half of the twentieth century, planning meant managing each item on its own: keep enough in stock, reorder when it runs low. Machines helped count, but not think ahead.
Herman Hollerith’s tabulating machines counted the 1890 US census. His company later became part of IBM, and punched cards ran stock records, payroll and billing for decades.
Ford W. Harris published the order size that balances the cost of placing an order against the cost of holding stock.
EOQ = √(2DS / H)D annual demand · S cost per order · H holding cost per unit per yearEach item is reordered when stock falls below a set level: the usage expected during the lead time, plus a safety margin. Simple and robust, but blind to what the factory will build next.
British caterer J. Lyons & Co. ran LEO I, the first computer put to routine office work, on valuations, payroll and stock. Through the 1950s, mainframes took over inventory files in nightly batches.
Programs such as IBM’s BOMP stored product structures on the computer: which parts and quantities go into each product. That data made the next step possible.
The limit of order points. They treat every item as if its demand were independent. But nobody buys a bicycle wheel on its own: the number of wheels needed depends on how many bicycles are planned. Calculating that dependent demand is what MRP does.
1964
In 1964 Joseph Orlicky, an engineer at IBM, set out the principles of MRP, and Black & Decker became the first company to put them to work. Instead of watching each item’s stock level, MRP starts from what the company plans to build and works backwards to every part it needs.
It takes three inputs and produces one plan:
The output is a time-phased list of planned orders: what to buy or make, how much, and when to start so it arrives on time.
| Item | Lead time | In stock | Week 1 | Week 2 | Week 3 | Week 4 | Week 5 | Week 6 |
|---|---|---|---|---|---|---|---|---|
| Bicycle | 1 week | 0 | Start 100 | Due 100 | ||||
| Frame (×1) | 3 weeks | 30 | Order 70 | Need 100 | ||||
| Wheel (×2) | 2 weeks | 40 | Order 160 | Need 200 |
The same logic, 60 years later. In SAP S/4HANA it runs as MRP Live (MD01N), and its output is still planned orders and purchase requisitions.
1970s – 1983
The first MRP systems assumed the factory could build anything on time. In the 1970s the APICS “MRP crusade”, led by Orlicky, George Plossl and Oliver Wight, pushed for closed-loop MRP: check the plan against the capacity of each work centre, and feed what really happened on the shop floor back into the next run.
In 1983 Oliver Wight extended it into manufacturing resource planning (MRP II), adding sales and operations planning, master scheduling, rough-cut capacity planning and the money: costs and budgets from the same plan. The “II” only tells it apart from the first MRP, which shares the initials.
Feedback: receipts, confirmations and delays flow back, and the next planning run starts from reality.
Finance: standard costs, budgets and cash projections come from the same plan, so operations and finance finally speak the same numbers.
By the end of the 1980s MRP II was a billion-dollar software market in the United States alone, sold by vendors such as IBM (MAPICS), JD Edwards and, in Europe, SAP with R/2.
1990s
By 1990 the research firm Gartner was calling the next generation of MRP II enterprise resource planning: one system and one database for finance, human resources, sales, distribution and purchasing, not just the factory. Client-server computing and relational databases made it affordable, and SAP R/3, released in 1992, became the reference design.
The decade ended in a rush. Facing the year 2000 problem, many companies replaced home-grown systems with packaged ERP instead of fixing two-digit years. That turned the late 1990s into a boom and the early 2000s into a slump, and taught the industry hard lessons about projects that change processes, not just software.
Founded by five former IBM employees. R/2 (1979) on mainframes, R/3 (1992) on client-server.
Today: independent; SAP S/4HANA since 2015.
The database company moved into financial applications in the late 1980s, later sold as Oracle E-Business Suite.
Today: bought PeopleSoft (2005) and NetSuite (2016); Fusion Cloud ERP.
ERP for IBM midrange computers (System/38, then AS/400), popular with midsize manufacturers and distributors.
Today: PeopleSoft (2003), then Oracle (2005); still sold as JD Edwards EnterpriseOne.
A strong rival to SAP in manufacturing during the 1990s.
Today: Invensys (2000), SSA Global (2003), Infor (2006).
Started with human resources, then finance; known for client-server applications that users liked.
Today: Oracle, after a hostile bid, in January 2005.
Accounting and ERP for small and midsize companies, sold through partners.
Today: Microsoft (2001 and 2002), now Dynamics 365.
| MRP | MRP II | ERP | Cloud and AI ERP | |
|---|---|---|---|---|
| Main question | What to buy and make, and when | Can the plant and the money support the plan | Can the whole company run on one system | Can the system act on its own |
| Scope | Materials | Manufacturing: materials, capacity, costs | Every department | The company, its partners and AI agents |
| Main users | Planners and buyers | Production, planning, finance | Everyone in the company | Everyone, with agents doing routine work |
| Finance | Not included | Costs and budgets from the plan | Integrated general ledger, posted in real time | Continuous close and predictive figures |
| Technology | Mainframes, batch runs | Minicomputers and midrange systems | Client-server, relational databases | Cloud, in-memory databases, language models |
| Planning rhythm | Weekly regeneration | Daily net change | Real-time posting, overnight MRP | Live MRP on demand |
1998 – 2019
Once the whole company ran on one system, the next questions were how to open it to customers and suppliers, how to stop running servers, and how to see the numbers the moment they happen.
NetSuite, founded as NetLedger, offers the first ERP delivered over the internet.
Gartner describes ERP II: ERP opened to customers, suppliers and the web, with CRM, supply chain and e-commerce around the core.
After Oracle takes over PeopleSoft, its founder Dave Duffield and Aneel Bhusri start Workday, a cloud-only suite for HR and finance.
SAP ERP 6.0 (ECC 6.0), the long-lived release behind most SAP systems before S/4HANA.
Oracle ships Fusion Applications, and SAP’s in-memory database SAP HANA becomes generally available.
Gartner coins postmodern ERP: the monolith splits into a core plus loosely connected cloud applications.
SAP S/4HANA arrives, built for HANA, with one journal for finance and controlling: the Universal Journal, ACDOCA.
Microsoft launches Dynamics 365, and Oracle buys NetSuite.
The vendor runs the software for many customers at once and updates everyone on the same schedule. Companies trade some freedom to customize for lower running costs and regular releases.
With data held in memory, totals can be calculated on the fly. Aggregate tables and overnight reports disappear, and the data model gets simpler: one line item feeds every report.
2020 – 2026
The large vendors now sell ERP as a cloud subscription. SAP packaged the move as RISE with SAP (2021) and GROW with SAP (2023), and in 2025 renamed its cloud editions SAP Cloud ERP (public) and SAP Cloud ERP Private. The watchword is a clean core: standard processes in the ERP, extensions built beside it.
Gartner’s newest label, composable ERP, describes the same shift: business capabilities assembled from building blocks joined by APIs, mixing cloud and on-premise. On top of that core, AI moved from assistants that answer questions (SAP Joule and Microsoft Copilot, both 2023) to agents that do the work.
At Sapphire, SAP presented the SAP Autonomous Suite: more than 50 Joule Assistants across finance, supply chain, procurement, HR and customer experience, coordinating over 200 specialised agents, such as an assistant for the financial close.
Oracle released 25 Fusion Agentic Applications across Fusion Cloud ERP, HCM, supply chain and manufacturing, and customer experience, running on a new agent runtime.
Dynamics 365 Finance gained an Account Reconciliation Agent; Business Central ships Sales Order and Payables agents and lets customers design their own.
For the many companies still on SAP ERP 6.0, three dates frame the move to SAP S/4HANA.
ERP software sales grew 11% in 2025, to about $146 billion. Oracle and SAP are almost level at the top, yet the ten largest vendors hold less than a third of the market: ERP is still served by thousands of regional and industry specialists.
Source: Apps Run The World, August 2026 (estimates). It counts every ERP application, so accounting software (Intuit) and industry systems (Constellation Software, FIS, Roper) rank next to the ERP suites. Counted by suites alone, the order changes.
Sources: SAP Business One 83,000+ (SAP, December 2025) · SAP ERP (ECC) about 35,000 customers, most of them moving to S/4HANA (Gartner, March 2025) · Infor 60,000+ (Infor, 2026) · Oracle NetSuite 44,000+ (Oracle, 2026) · Oracle Fusion Cloud ERP 11,000 (Oracle, October 2025) · Dynamics 365 Business Central online 55,000+ (Microsoft, April 2026) · Epicor 23,000+ (Epicor, 2024).
Each vendor counts its own customers, in different years and not always per product. A company that runs two products is counted twice. These are companies, not users.
Magic Quadrant for Cloud ERP for Product-Centric Enterprises, October 2025
Both named Leaders for the fourth year in a row in the Magic Quadrant for Cloud ERP for Service-Centric Enterprises, October 2025
Company size still decides most shortlists. Pick a segment to see the main products in it.
Global groups with many countries, legal entities and industries. Long projects, deep localization and industry solutions.
| Product | Vendor and origin | Best known for | Deployment |
|---|---|---|---|
| SAP S/4HANA (SAP Cloud ERP, SAP Cloud ERP Private) | SAP · Germany, 1972 | Finance, controlling and manufacturing in depth; industry solutions and country versions for multinational groups | Public cloud, private cloud, on-premise |
| Oracle Fusion Cloud ERP | Oracle · USA, 1977 | Cloud-native finance, procurement, projects and performance management, updated every quarter | Public cloud |
| Microsoft Dynamics 365 Finance and Supply Chain Management | Microsoft · USA | Close ties to Microsoft 365, Power Platform and Copilot | Cloud |
| Workday Financial Management | Workday · USA, 2005 | Finance and HR on one platform for services, education and the public sector | Public cloud |
| Infor CloudSuite | Infor · USA, 2002 | Suites by industry: distribution, manufacturing, healthcare | Cloud |
| JD Edwards EnterpriseOne and Oracle E-Business Suite | Oracle · USA | Long-running on-premise suites with large installed bases | On-premise or hosted |
Growing companies and subsidiaries of larger groups. Faster projects, cloud first, strong fit for one or two industries.
| Product | Vendor and origin | Best known for | Deployment |
|---|---|---|---|
| Oracle NetSuite | Oracle · USA, 1998 | The original cloud ERP; fast-growing companies and subsidiaries | Public cloud |
| Epicor Kinetic | Epicor · USA, 1972 | Discrete manufacturing and distribution | Cloud or on-premise |
| IFS Cloud | IFS · Sweden, 1983 | Asset-heavy industries: aerospace, energy, field service | Cloud or on-premise |
| Acumatica | Acumatica · USA, 2008 | Cloud ERP priced by resources rather than users; owned by Vista Equity Partners since 2025 | Cloud |
| Sage Intacct and Sage X3 | Sage · United Kingdom, 1981 | Intacct for cloud financials, X3 for manufacturing and distribution | Cloud or on-premise |
| Unit4 ERP | Unit4 · Netherlands, 1980 | People-based services: professional services, public sector, non-profit | Cloud |
| Plex | Rockwell Automation · USA | Manufacturing ERP joined to execution on the shop floor | Cloud |
Companies that outgrow accounting software. Quick to start, priced per user or per app, often sold and run by a local partner.
| Product | Vendor and origin | Best known for | Deployment |
|---|---|---|---|
| SAP Business One | SAP · Germany | Small companies and small subsidiaries of SAP groups, sold through partners | On-premise or partner cloud |
| Microsoft Dynamics 365 Business Central | Microsoft · USA, 2018 | Successor of Navision, for firms already on Microsoft 365 | Cloud or on-premise |
| Odoo | Odoo · Belgium, 2005 | Open-source core with dozens of apps; version 19 released in September 2025 | Cloud or self-hosted |
| TOTVS (Protheus, RM, Datasul) | TOTVS · Brazil, 1983 | Leader among smaller Brazilian companies, with Brazilian tax built in | Cloud or on-premise |
| ERPNext | Frappe · India | Fully open-source ERP with a large community | Cloud or self-hosted |
| QuickBooks and Xero | Intuit · USA; Xero · New Zealand | Accounting software where most small firms start before an ERP | Cloud |
Every generation removed duplicate records, from card files to the Universal Journal. Fewer copies mean fewer reconciliations.
MRP only worked because the bill of materials described the product. Bad master data still breaks the best ERP.
The projects that failed in the 1990s mostly failed on people and processes, not code. Standard processes and a clean core age better than custom ones.
MRP still runs inside every ERP, and AI agents act on the same integrated data. The foundations matter more, not less.
MRP plans materials: what to buy and make, and when, from the production schedule, the bill of materials and stock. ERP runs the whole company on one system, including finance, sales, purchasing and HR, and contains MRP as one of its functions.
Manufacturing resource planning. Oliver Wight introduced it in 1983 as MRP extended with sales and operations planning, capacity planning and finance. The “II” distinguishes it from material requirements planning, which has the same initials.
The research firm Gartner, around 1990, for systems that extended MRP II beyond manufacturing to the whole enterprise. The method underneath goes back to MRP in 1964.
It depends on what is counted. By revenue, Apps Run The World puts Oracle first with 6.7% of 2025 ERP revenue and SAP second with 6.6%. By number of companies, SAP leads: about 118,000 customers for its ERP products (83,000+ on SAP Business One), roughly twice the 55,000+ that Oracle publishes.
Mainstream maintenance of SAP ERP 6.0 ends at the end of 2027 and optional extended maintenance at the end of 2030. The SAP ERP private edition transition option runs to the end of 2033 for large, complex landscapes moving to SAP S/4HANA.
Gartner’s term for building ERP from interchangeable business capabilities connected by APIs, instead of one monolithic suite. In practice it means a stable core plus cloud applications and extensions that can change without touching it.
Not on current evidence. The agents that SAP, Oracle and Microsoft released in 2026 work inside the ERP, on its data and its rules. They change who does the routine work, not where the records live.
Your vote could not be sent. Please try again.