CHAPTER 3: Enterprise System Architecture

Reference Book:
“Enterprise Systems for Management”

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 Learning Objectives
• Examine in detail the enterprise systems modules and architecture.

• Understand the effects of a well-designed architecture on ERP

implementation.

• Know the various types of ERP architectures and the related benefits
and drawbacks of each architecture.

• Learn about the Service Oriented Architecture and its impact on ERP
systems.

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 Preview
• Once ERP systems are integrated and implemented successfully in a company, they
become the cornerstone of the organization
– because every single transaction will be processed through this system.
• In addition to the Systems Integration, it is also necessary to focus on:
– Business process architecture.
– Business requirements.
– Budget.
– Project management.
– Commitments from top management.
– Continuous communication with employees informing them about future changes.

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 Why Study Enterprise Systems Architecture?

• Help management and the implementation teams

– understand in detail the features and components of the enterprise system.

• Provide a visual representation of the complex system interfaces among the ERP
application and databases, operating systems, legacy applications, and
networking.

• Management can develop a better IT plan if …

– the requirements for system infrastructure, training, change management, and
business process reengineering are clarified.
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Components of the Enterprise Systems Architecture
• Functional
– Defines the ERP modules that support the various business functions of the
organization. Examples include:
• Accounting
• Human Resources
• Procurement
• Fulfillment ….etc.

• System
– Defines the ERP architecture through the physical components of:
• hardware,
• software, and
• networking angle.
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Figure 3-1 Enterprise Systems Architecture (ESA) Model

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 ERP Modules
• The key role of an ERP system is
– to provide support for such business functions as
• accounting, sales, inventory control, and production.

• ERP vendors, including SAP, Oracle, and Microsoft, etc.

– provide modules that support the major functional areas of a business.

• The ERP software embeds best business practices

– that implement the organization’s policy and procedure via business rules.

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Figure 3-2 Typical ERP Modules

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 Table 3.1- ERP Modules From Three Vendors
Function SAP Oracle/ Microsoft Dynamics
PeopleSoft

Sales Sales and Distribution, Sales Marketing and Sales, Retail POS, Field
Opportunity Supply Chain Management Service Management

Procurement Purchasing, Supplier Procurement and Supplier Supply Chain

Relationship Management Relationship Management Management

Production MRP, Product Life Cycle Manufacturing Manufacturing

Management

Accounting Financial Accounting Financial Management Financial

Management

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Table 3.1- ERP Modules From Three Vendors (Cont’d)

Function SAP Oracle/ Microsoft Dynamics

PeopleSoft

Distribution Warehouse Management Supply Chain Distribution

Management Management

Customer Service CRM CRM CRM

Corporate Governance, Risk, and Corporate Analytics

Performance & Compliance Management Performance
Governance Management

Human Resources Human Capital Human Capital HR Management

Management Management

Miscellaneous Banking Campus Solutions E-commerce,

Portals

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 Overview of Modules
• Production
– Helps in the planning and optimizing of the manufacturing capacity, parts, components,
and material resources using historical production data and sales forecasting.

• Purchasing
– Streamlines the procurement process of required raw materials and other supplies.

• Inventory Management
– Facilitates the processes of maintaining the appropriate level of stock in a warehouse.

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 Overview of Modules (Cont’d)
• Sales and Marketing
– Implements functions of order placement, order scheduling, shipping, and invoicing.

• Finance
– Can gather financial data from various functional departments and generate valuable financial reports.

• Human Resource
– Streamlines the management of human resources and human capitals.

• Miscellaneous Modules
– Non-traditional modules such as business intelligence, self-service, project management, and e-commerce.

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 ERP Architecture

• ERP system architecture is organized in layers or tiers

– to manage system complexity in order to provide scalability and flexibility.

• Three-layer architecture (the most reliable, flexible, and scalable architecture) is the
most prevalent today and includes:
1. Web Servers.
2. Application Servers.
3. Database Servers.

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 Infrastructure Requirements
• Traditional networks
– require upgrading prior to the deployment of ERP systems
– must be a component of the overall budget

• A high-availability network is a requirement for a fully functioning ERP system, one that
– grows with the user population and
– supports continued expansion and integration of a supply chain.

• Integration with partner and customer systems

– allows a company to manage important parts of the business
• such as order tracking, inventory management etc.

• Online analytical processing (OLAP)

– provides the ability to access, present, and analyze data across dimensions.
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 Three-Tier Architecture
• Most of the current ERP implementations follow a three-tiered architecture, which consists of
a Web tier, an application tier, and a data tier.

• Benefits
1. Scalability - Easier to add, change, and remove applications.
2. Reliability - Implementing multiple levels of redundancy.
3. Flexibility - Flexibility in partitioning is very simple.
4. Maintainability - Support and maintenance costs are less on one server than it would be to
maintain each installation or upgrade on a desktop client.
5. Reusability – Easier to implement reusable components.
6. Security - IT staff has more control system to provide higher security.
• Limitations
– Can be very expensive and complex.
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 Tiers
1. The Web Tier

– Web-based portal allows users the ability to access and analyze information through their Web browser.

2. The Application Tier

– Consists of a Web browser and reporting tool where business processes and end-users interact with the system.

– It shields the business users from the inner workings of an ERP system, but still provides the information
relevant to their job and business process.

3. The Data Tier

– Focus is on structure of all organizational data and its relationships with both internal and external systems.

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Figure 3-5 A Three-Tier ERP Architecture

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 Web Based Architectures
• Web-based architecture often described as
– a fourth tier where the Web tier is split into …
1. Web Services tier and
2. Web Browser tier

• The ERP systems focus on the Internet

– to provide a powerful new functionality for Internet-based access and integration.

• This functionality is primarily supported through the following Internet access technologies:
• Web Server
• ERP Portal
• Back-end Server Integration
• Browse Plug-ins or Applets
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 Benefits and Drawbacks
• Benefits

– Large numbers of end-users have access to ERP applications over the Web.

– Easily integrate ERP applications with existing systems.

– Server-centric— No complex, expensive client software installation. The server-centric

architecture enables secure end-user access to ERP application.

– Client-centric— Architecture has better response time because user requests are mostly processed
on the client’s computer.

– Web-based architectures also allow better system-to-system integration.

• Drawbacks

– Client-centric architectures lack security.

– Server centric is slower.

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 Service-Oriented Architectures
• Also known as object-oriented architectures for Web platforms.

• Breaks the business tier into smaller, distinct units of services, collectively supporting an
ERP functional module such as …

– producing data

– validating a customer

– providing simple analytical services

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 Service-Oriented Architectures
• SOA is a software development model based on a contract between a consumer
(client) and a provider (server) that specifies the following:

1. Functional description of the service.

2. Input requirements and output specifications.

3. Precondition environment state before service can be invoked.

4. Post condition environment state after service has been executed.

5. Error handling when there is a breakdown.

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Figure 3-7 A SOA Architecture

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Benefits of Service-Oriented Architectures
• Business-level software services across heterogeneous platforms.
• Complete location independence of business logic.
• Services can exist anywhere (any system, any network).
• Loose coupling across application services.
• Granular authentication and authorization support.
• Dynamic search and connectivity to other services.
• Enhances reliability of the architecture.
• Reduces hardware acquisition costs.

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 Business Value Benefits of SOA
• Increases the ability to meet customer demands more quickly.
• Lower costs associated with the acquisition and maintenance of technology.
• Empowers the management of business functionality closer to the business units.
• Leverages existing investments in technology.
• Reduces reliance on expensive custom development.

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 Drawbacks of Service-Oriented Architectures
• SOA implementations are costly and time-consuming.
• Requires complex security firewalls in place to support communication between
services.
• Performance can be inconsistent.
• Requires enterprise-level focus for implementation to be successful.
• Security system needs to be sophisticated.
• Costs can be high because services needs to be junked very often.

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 Implications for Management

• Enterprise architecture is an important technology for the long-term functioning of

the organization.

• ERP architecture decisions are complex because …

– Their impact goes beyond systems and technology to people, organizational policy,
and business processes.

• ERP architecture must be flexible to support a diverse set of hardware and software
platforms.

• Management must learn how to filter out the hyped technologies that do not provide
value to their organization.
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 Summary
• System architecture provides answers to questions like:
– What will the system look like?

– How will the system work?

– How will it be developed?

– Do we have the required infrastructure to support the system?

– Can the system be used for any business function or just for a specific business
function like human resources?

• System architecture includes ERP modules and ERP architecture.

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 Summary (Cont’d)
• Major vendors provide modules to support basic business functions as accounting,
finance, marketing, and HR to such advanced business functions as self-service,
compliance management, business intelligence.

• ERP systems have traditionally been organized in three-tiers or layers providing

flexibility and scalability: data, application, and presentation.

• There are various types of layered architecture.

• Two-tier architecture is the simplest form.

• Three-tier architectures separate application from the presentation layer.

• Web-based architectures facilitate better integration with Internet technologies.

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 Summary (Cont’d)
• Service-oriented architecture
– separates the service provider from the service consumer
– similar to object-oriented system architecture which has a higher degree of
separation.

• Management must be involved in the design of the architecture

from the very beginning of the ERP implementation project
– because the system has a wide and long-lasting implication on the
organization.

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