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NAICS is an acronym for the North American Industrial Classification System. It's a numeric method of classifying companies by their main line of business for the purpose of monitoring industry performance. It also fosters the development of tools such as industry ratios that allow for the precise comparison of one company against its peers. The NAICS program was launched in 1997 to replace its predecessor, the SIC.
SIC, or Standard Industrial Classification, is also a numeric method of classifying companies. However, this system was created in 1937 and in the 1990s it became increasingly difficult to classify companies involved in emerging technologies like cellular phone or Internet Service providers. Hence, the NAICS was created to supplant it.
The NAICS system is more current and should be used when possible.