ENTERPRISE SYSTEM

ARCHITECTURE
Overview
• Chapter 3 will discuss what will the system look like and how will
the system work and how will it be developed, and also the
required infrastructure to support the system.
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.
• Learn about cloud architecture and its impact on ERP
systems.
Contents
• ERP Modules
• ERP Architecture
 Introduction
• 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.
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.
 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.
Figure 3-1 Enterprise Systems
Architecture (ESA) Model
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.
Figure 3-2 Typical ERP Modules
ERP Modules From Three Vendors
Function SAP Oracle/ Microsoft
PeopleSoft Dynamics
Sales Sales and Marketing and Sales, Retail POS,
Distribution, Supply Chain Field Service
Sales Management Management
Opportunity
Procurement Purchasing, Procurement and Supply Chain
Supplier Supplier Management
Relationship Relationship
Management Management
Production MRP, Product Life Manufacturing Manufacturing
Cycle
Management
Accounting Financial Accounting Financial Financial
Management Management
ERP Modules From Three Vendors
(Cont’d)
Function SAP Oracle/ Microsoft
PeopleSoft Dynamics
Distribution Warehouse Supply Chain Distribution
Management Management Management
Customer Service CRM CRM CRM

Corporate Governance, Risk, Corporate Analytics

Performance & and Compliance Performance
Governance Management Management
Human Human Capital Human Capital HR
Resources Management Management Management

Miscellaneous Banking Campus Solutions E-commerce,

Portals
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.
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
– Nontraditional modules such as business intelligence, self-
service, project management, and e-commerce.
Benefits of Key ERP Modules
• Self Services
– Flexible support for employees’ businessfunctions.
– Simplified access to relevant information.

• Performance Management
– Delivery of real-time, personalized measurements and metrics.
– Provides executives with access to such information as business
statistics and key performance measurements.

• Financials
– Ensure compliance and predictability of business performance.
– Gain deeper financial insight and control across the enterprise.
– Automate accounting and financial SCM.
– Rigorous support for financial reporting—SOX Act.
Benefits of Key ERP Modules
(Cont’d)
• HR Management
– Attract the right people, develop and leverage talents, align efforts
with corporate objectives, and retain top performers.

– Increase efficiency and help ensure compliance with changing global

and local regulations by using standardized and automated workforce
processes.

– Enable creation of project teams based on skills and availability,

monitor progress on projects, track time, and analyze results.

– Manage human capital investments by analyzing business outcomes,

workforce trends and demographics, and workforce planning.
 Benefits of Key ERP Modules
(Cont’d)
• Procurement and Logistics Execution
– Sustain cost savings for all spending categories by automating such
routine tasks as converting requisitions into purchase orders and by
allowing employees to use electronic catalogs to order products and
services.

– Reduce costs through process automation, integration of suppliers, and

better collaboration.
– Improve resource utilization with support for cross-docking processes
and data collection technologies. (RFID and bar codes).
– Enhance productivity of incoming and outgoing physical goods
movements.
– Reduce transportation costs through better consolidation and
collaboration.
 Benefits of Key ERP Modules
(Cont’d)
• Product Development and Production
– Shorten time to market.
– Deliver higher quality products and ensure timely delivery.
– Real time visibility and transparency (availability check).

• Sales and Service

– Higher number of sales orders processed and reduction in administrative
costs.
– Easy access to accurate, timely customer information.
– Cost-effective mobile access for field employees.
– Reduce travel costs by using online functions.
– Adhere to environmental, health, and safety reporting requirements.
– Improve the management of incentives and commissions.
– Realize more effective real estate management.
 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:
– Web Servers.
– Application Servers.
– Database Servers.
Layered Architecture Example
(Info.Net)
• The Layered ERP architecture generalizes the functional
layers to allow it to change with newer technologies.

• A Web-based user interface is provided.

– Users can access the application via the Internet.
– The PC needs to be capable of running a Java-enabled Web browser.
– The PC is connected to both Intranet and Internet to be able to use one of
Info.Net’s servers.
– The user interacts with the Java Virtual Machine™ Interface layer to establish
a secure connection via a secure socket layer (SSL) connection.
– The user is then communicating with the server through the applications
software layer (ASL).
Figure 3-3 Example of Info.Net
Architecture
 Infrastructure Requirements

• Traditional networks require upgrading prior to the

deployment of ERP systems and 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.
 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
– Scalability - Easier to add, change, and remove applications.
– Reliability - Implementing multiple levels of redundancy.
– Flexibility - Flexibility in partitioning is very simple.
– Maintainability - Support and maintenance costs are less on one server.
– Reusability - Easier to implement reusable components.
– Security - IT staff has more control system to provide higher
security.
• Limitations
– Can be very expensive and complex.
Tiers
• The Web Tier
– Web-based portal allows users the ability to access and analyze
information through their Web browser.

• 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.

• The Data Tier

– Focus is on structure of all organizational data and its
relationships with both internal and external systems.
Figure 3-4 A Three-Tier ERP
Architecture
 Web Services Architectures
• Web-based architecture often described as a fourth tier
where the Web tier is split into Web Services tier and
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.
Figure 3-5Example of PeopleSoft’s Server-
Centric Internet Architecture
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.
 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.
• Allows message interaction between any service consumer
and service provider.
• A consumer from a device using any operating system in any
language can use this service.
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:

– Functional description of the service.

– Input requirements and output specifications.
– Precondition environment state before service can be invoked.
– Post condition environment state after service has been
executed.
– Error handling when there is a breakdown.
Figure 3-6 A SOA Architecture
 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.
 Benefits of Service-Oriented Architectures (Cont’d)

• Accelerates movement to standards-based server and

application consolidation.
• Provides a data bridge between incompatible
technologies.
• Provides the ability to build composite applications.
• Creates a self-healing infrastructure that reduces
management costs.
• Provides truly real-time decision-making applications.
• Enables the compilation of a unified taxonomy of
information across an enterprise.
 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.
 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.
 SOA and Web Services
• Web services basically are interfaces that allow different software
application and components to be operated together.
• According to IT industry standards, different applications can
interact with without communication problems.
• The only method of interaction by Web services is by receiving
and sending messages.
• Services are developed using open standards such as WSDL (Web
Services Description Language), UDDI (Universal Description,
Discovery, and Integration), and SOAP (Simple Object Access
Protocol).
• The protocols used in Web services are XML-based.
 Enterprise Content Management and SOA

• Enterprise content management deals with enterprise software

products that usually store, preserve, manage, and deliver
content connected to business processes.

• Enterprise content management also about supporting

business goals, not just managing content.

• Vendors have come to an understanding that content

management takes advantage of technology and information
assets across the business and is no longer application specific.
 Cloud Architecture
• Cloud computing is basically a software service provided
over the Internet, securely, by a service provider on a
monthly or yearly lease.

• Companies leasing CC services save money by replacing

their purchased software that requires a license fee per
seat.

• Some cloud computing providers also let you build your own
applications using their engines and then they would host those
applications for you as part of the service.
 Cloud Architecture
• The cloud computing platform provides a great alternative
for organizations that do not want to:
– Purchase, install, or maintain software applications.
– Worry about security, privacy and legal issues associated with
data storage.

• The cloud computing platform is risky for organizations as

it forces them to rely on external vendors for reliability,
security, and continuity of enterprise applications.
 Benefits of Cloud Computing
• Pay for subscription, not for licenses and upgrades.
• Reduced capital and operating expenditures for IT
equipment and support personnel.
• Accessed from everywhere, as long as you have an
Internet connection.
• No need to install anything on the user’s computer.
• Dynamic scalability available on demand.
• No maintenance fees for software or hardware.
• Promotes green computing environment as servers in cloud
run on clean energy.
• Guaranteed reliability.
Drawbacks of Cloud Computing
• Data security.
• Vulnerability.
• Possible conflict of interest, if the company who stores
your applications decides to create a similar application
to what you created on their servers.

• Not suited for all highly competitive industries like

biotech where intellectual property cannot be protected
easily.
 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.
Lesson Overview
• Once ERP systems are integrated and implemented in a company, they become the
cornerstone of the organization. With a successful implementation, every single
transaction will now be processed through this system.
• In addition to systems integration, it is also necessary to focus on business process
architecture, business requirements, budget, project management, commitments from
top management, and continuous communication with employees informing them
about future changes.
• If the ERP software is installed with a focus only on the system architecture, you may
have a successful installation of software, but an unsuccessful implementation.
• An ERP implementation isn’t just about the software. It’s easy to install a new system.
The hard part is changing the business processes of the people who will use the
system. Nobody likes process change, particularly when they don’t know what is
coming. It is important to include the people in planning whose processes you are
changing.
• Keep the communication lines open while the project is in the works and measure the
level of acceptance before, during, and after the rollout. Remember the integration
points. It isn’t enough to simply install new systems; you need to make sure that both
the system and people communicate efficiently and effectively with each other. Update
your budget projection at regular intervals to stay on target for the project.
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.
 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.
 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.
Question & Answers