History of business process software

1890 to today · 15 chapters · 39 dated events · 31 sources

The short answer

Business process software started with payroll and bookkeeping. J. Lyons ran the first routine office job on its LEO computer in November 1951, and General Electric installed the first computer at a US business in 1954. Manufacturers added MRP in the 1960s. SAP, founded in 1972, pushed records that update the moment something happens. Gartner named ERP in 1990. CRM, MES and monthly subscriptions then split the work across separate systems, so most shops today run the loop from quote to invoice across several of them.

Enterprise resource planning (ERP): Software that keeps a company’s core records, from orders and inventory to purchasing, production and the books, in one database. The research firm Gartner named the category in 1990.

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The story

Today· Your shop

Where it starts

Every shop runs the same loop. A customer asks for a price. You quote it. They order. The work goes to the floor, gets built, ships, and gets billed. For 75 years, people have written software to run that loop. This is the story of how it was split into pieces, and what it takes to put it back together.
1890 to 1950· The tab room

Before software

Before software, there were cards. In 1890, Herman Hollerith’s punched cards counted the American census. His company later became part of IBM. By the 1930s, big companies had tab rooms: clerks punching holes, machines sorting and adding them. One card held one record. A customer, a part, an hour of labor. The machines could count. Deciding what to count was still a person’s job.
1951· London

The tea shop computer

The first office computer was built by a tea shop company. J. Lyons ran bakeries and tea rooms across Britain. In November 1951, their machine, LEO, took over the bakery valuations. Two years later, it ran the payroll. A clerk took about 8 minutes to work out one person’s pay. LEO took about a second and a half.
1954· Louisville, Kentucky

Payroll comes first

Payroll came first almost everywhere. In January 1954, General Electric installed a UNIVAC at its Appliance Park plant in Louisville. It was the first electronic computer at an American business, and payroll was its first big job. It took until 1956 to get right. Meanwhile, a small New Jersey company called Automatic Payrolls was running other companies’ payroll for them. It became ADP. HR software starts with the paycheck.
1964· Material requirements planning

What do we need, and when?

Then came the hardest question in a factory. What do we need, and when? Joseph Orlicky worked out an answer at J.I. Case in the early 1960s. In 1964, Black & Decker ran it on an IBM 1401. Start from the finished product and the week it is due. Break it into parts. Subtract each part’s lead time. Now you know what to order, and when. Who did it first is still argued. The logic has not changed since.
1968· Office and floor

Two computers in one plant

In 1968, the plant got two computers that did not speak to each other. In the office, IBM published PICS, its plan for running production on the mainframe. On the floor, Dick Morley’s team built the Modicon 084 for General Motors, the first programmable controller. One planned the work. The other ran the machines. For decades, a person with a clipboard carried the news between them.
1972· Germany

Five engineers leave IBM

In 1972, five engineers left IBM in Germany and started SAP. Their first customer was the chemical company ICI. Their idea was simple. Most systems saved up the day’s work and ran it overnight, in a batch. SAP wanted the books updated the moment something happened. The R in their product names stood for real time.
Around 1980· MRP II

Closing the loop

MRP told you what parts to buy. It did not ask whether you had the machines, the people, or the money. Around 1980, Oliver Wight called the fix MRP II. Plan the business, check capacity, run the floor, then feed the results back into the plan and the books. In the same years, VisiCalc put a spreadsheet on a desk computer. Every gap the big systems left, a spreadsheet would fill.
1956 to 1993· Customer relationships

Customers on cards

Customers lived on cards too. The Rolodex arrived in 1956: a wheel of names, numbers, and notes on the salesperson’s desk. In 1987, ACT! put that wheel on a personal computer. In 1993, Tom Siebel founded Siebel Systems and sold it to whole sales teams. The industry gave it a name: customer relationship management, or CRM. The customer had moved into software. The order still lived somewhere else.
1990 to 1999· Enterprise resource planning

One database

In 1990, the research firm Gartner gave the next step a name: enterprise resource planning. One database for the whole company. SAP shipped R/3 in 1992, built for the new client-server machines. PeopleSoft, founded in 1987, did the same for HR. Then the year 2000 problem gave everyone a deadline, and thousands of companies replaced old systems at once. Some of the ERPs installed that decade are still running.
1990 to 2000· Manufacturing execution

The missing middle

ERP planned the week. Machines ran the second. Nobody owned the shift in between. In the early 1990s, analysts at AMR Research named that gap the manufacturing execution system, or MES. Which job runs where, with what material, by whom, and what came off the line. In 2000, the ISA-95 standard drew the levels: business planning on top, operations in the middle, control at the bottom. The middle is where the travelers lived.
1999· MQTT

A pipeline, by satellite

The next piece came from oil and gas. In 1999, Andy Stanford-Clark of IBM and Arlen Nipper of Arcom needed to watch pipeline sensors over satellite links that charged for every byte. They wrote a small messaging standard called MQTT. A device publishes a reading once. Anyone who cares subscribes. The smallest message header is 2 bytes. It was built to be cheap, and to survive bad connections.
1998 to 2005· Rented by the month

No software

At the same time, software stopped being bought and started being rented. NetSuite began in 1998. Salesforce started in 1999 and was soon campaigning against software itself. In 2005, Oracle bought PeopleSoft, and PeopleSoft’s founder started again with Workday. No servers to run, nothing to install. You paid per user, every month, for as long as you used it. Your data lived on their computers.
2010 to 2023· Publish and subscribe

The machines learn to talk

On the floor, MQTT spread. IBM made it free to use in 2010. It became an OASIS standard in 2014. In 2016, Cirrus Link, Arlen Nipper’s company, published Sparkplug, a shared way to name machines and readings. It became an international standard in 2023. A press can now tell anyone listening its count and its temperature the moment they change. The machines learned to talk. The office was still on a different system.
Today· Your shop

Under one roof

So here is the shop today. A CRM for the quote. An ERP for the order. Spreadsheets for the schedule. Maybe an MES, maybe a clipboard. Payroll somewhere else. Each one rented, each with its own copy of the customer. Seventy-five years of software, split into pieces. The loop is still the same: quote, order, build, ship, invoice. It can run on one system. One you own.

Key dates

Where reputable sources disagree on a date or on who was first, the row says how.

Year	Thread	What happened
1890	Business systems	Hollerith cards count the US census. Punched cards and electric tabulators count the 1890 census. Hollerith’s company later merges into the business that becomes IBM. Source
1928	Business systems	The 80-column card. IBM’s card settles at 80 columns and 12 rows. One card holds one record for the next 40 years. Source
1949	HR & payroll	Automatic Payrolls, Inc.. Henry Taub starts a payroll service in Paterson, New Jersey. It is renamed ADP in 1958. Source
1951	Business systems	LEO runs bakery valuations. J. Lyons & Co. puts its LEO I computer on routine office work in November 1951. It is usually called the first business computer job. Source
1953	HR & payroll	LEO runs the Lyons payroll. Regular payroll moves to LEO by late 1953. A clerk took about 8 minutes per employee; LEO took about 1.5 seconds. Source
1954	HR & payroll	UNIVAC arrives at GE Appliance Park. January 1954, Louisville. The first electronic computer at a US business. The payroll program took until 1956 to run reliably. Sources differ: Sources differ on when the GE payroll first ran successfully: 1954 or 1956. Source
1956	CRM	The Rolodex. Arnold Neustadter’s rotating card file. For 30 years it is where a company’s customers live. Source
1958	HR & payroll	Automatic Payrolls becomes ADP. Automatic Data Processing, renamed as it starts using machines for clients’ payroll. Source
1962	MRP	Orlicky at J.I. Case. Joseph Orlicky works out net-change requirements planning at J.I. Case in Racine, Wisconsin, then joins IBM. Sources differ: Some histories credit J.I. Case with the first MRP system, others Black & Decker. Source
1964	MRP	Black & Decker runs MRP. Usually cited as the first MRP implementation, on an IBM 1401. Sources differ: Some histories credit J.I. Case with the first MRP system, others Black & Decker. Source
1968	MRP	IBM publishes PICS. The Production Information and Control System: IBM’s plan for running production planning on the mainframe. Source
1968	MES	The Modicon 084. Dick Morley’s team builds a programmable controller for General Motors. Relay panels on the floor start to become software. Source
1972	MRP	IBM COPICS. Communications Oriented PICS, first edition March 1972, published in 8 volumes. Source
1972	Business systems	SAP is founded. Five former IBM engineers in Germany. First customer: the chemical company ICI. The goal: real-time processing instead of overnight batches. Source
1975	MRP	Orlicky’s book. Material Requirements Planning is published and the American production society, APICS, campaigns for MRP across US plants. Source
1977	Business systems	Oracle is founded. Started as Software Development Laboratories. Its database later sits under many ERP systems, and Oracle later buys several of them. Source
1979	Business systems	VisiCalc. The first spreadsheet for a personal computer. The tool that fills every gap the big systems leave. Source
1980	MRP	MRP II. Oliver Wight’s name for closed-loop planning: materials, capacity, the shop floor and the money in one plan. Sources differ: Dated to around 1980; sources give years from 1979 to 1983. Source
1987	CRM	ACT!. Contact management on the personal computer. The Rolodex moves onto the desk computer. Source
1987	HR & payroll	PeopleSoft is founded. Dave Duffield and Ken Morris start with HR software for client-server machines. Source
1990	Business systems	Gartner names ERP. Enterprise resource planning: one database for the whole company, past manufacturing into finance, HR and sales. Source
1990	MES	MES gets its name. AMR Research names the manufacturing execution system: the software between the plan and the machines. Sources differ: Sources date the term to 1990 or 1992. Source
1992	Business systems	SAP R/3. SAP’s client-server release. With the year 2000 deadline, it becomes the standard large-company ERP. Source
1992	Business systems	QuickBooks. Intuit’s small-business accounting. For many small shops, the system of record, with spreadsheets around it. Source
1993	CRM	Siebel Systems. Tom Siebel sells customer management to whole sales teams. The category gets its name: CRM. Source
1997	MES	MESA’s 11 functions. The MES trade group lists what execution software does: dispatching, tracking, labor, quality, and more. Source
1998	Business systems	NetSuite. Founded as NetLedger. Accounting and ERP delivered over the web. Source
1999	CRM	Salesforce. Founded in March 1999. CRM by subscription, in the browser. Its “No Software” campaign is documented from 2000. Source
1999	MQTT	MQTT is written. Andy Stanford-Clark (IBM) and Arlen Nipper (Arcom) build it to watch oil pipelines over satellite links. Source
2000	MES	ISA-95. The standard for how business systems and plant systems talk. Business planning on top, operations in the middle, control below. Source
2005	HR & payroll	Oracle buys PeopleSoft. After an 18-month hostile bid, completed January 2005. Source
2005	HR & payroll	Workday. PeopleSoft’s founder starts again: HR and finance by subscription. Source
2006	CRM	Oracle buys Siebel; HubSpot starts. Siebel is folded into Oracle. HubSpot starts selling CRM and marketing to smaller companies. Source
2010	MQTT	MQTT made royalty free. IBM publishes MQTT 3.1 for anyone to use. Source
2014	MQTT	OASIS standard. MQTT 3.1.1 is ratified by OASIS in November 2014. Source
2016	MQTT	ISO/IEC 20922 and Sparkplug. MQTT becomes an ISO standard. Cirrus Link publishes Sparkplug: shared names and payloads for plant data over MQTT. Source
2016	Business systems	Oracle buys NetSuite. The web ERP joins the database company. Source
2019	MQTT	MQTT 5. The current major version. Source
2023	MQTT	Sparkplug becomes ISO/IEC 20237. Sparkplug 3.0 is published as an international standard in late 2023, kept by the Eclipse Foundation. Source

Questions

What was the first business software?

The first routine business job ran on LEO I, built by the British tea shop and bakery company J. Lyons & Co. In November 1951 it took over the bakery valuations. By late 1953 it ran the company payroll.

When was ERP invented?

The research firm Gartner named enterprise resource planning in 1990. It grew out of MRP in the 1960s and MRP II around 1980. SAP released R/3, the client-server ERP many large companies adopted, in 1992.

What does the R in SAP R/3 stand for?

Real time. SAP was founded in 1972 by five former IBM engineers in Germany, and built its R/1, R/2 and R/3 systems to update records as each transaction happened, in place of overnight batch runs.

When did business software move to monthly subscriptions?

NetSuite started in 1998 and Salesforce in 1999, both selling software used in a web browser and paid per user, per month. Workday followed for HR in 2005.

Why do small manufacturers run several systems?

Each kind of software grew up on its own: payroll in the 1950s, MRP in the 1960s, ERP and MES around 1990, CRM in the 1990s. Each was sold separately, now often rented, and each keeps its own copy of the customer and the job.

Sources

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Write to us

The short answer

Watch the film

The story

Where it starts

Before software

The tea shop computer

Payroll comes first

What do we need, and when?

Two computers in one plant

Five engineers leave IBM

Closing the loop

Customers on cards

One database

The missing middle

A pipeline, by satellite

No software

The machines learn to talk

Under one roof