CHAPTER 3

ENTERPRISE
SYSTEMS
ARCHITECTURE

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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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 ERP Modules From Three Vendors

Function SAP Oracle/ Microsoft

PeopleSoft Dynamics

Sales Sales and Marketing and Retail POS,

Distribution, Sales Sales, Supply Chain Field Service
Opportunity Management Management

Procurement Purchasing, Supplier Procurement and Supply Chain

Relationship Supplier Management
Management Relationship
Management
Production MRP, Product Life Manufacturing Manufacturing
Cycle Management

Accounting Financial Accounting Financial Financial

Management Management

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 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

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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
– Nontraditional modules such as business intelligence, self-
service, project management, and e-commerce.
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 Benefits of Key ERP Modules
• Self Services
– Flexible support for employees’ business functions.
– 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.
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 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.

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 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.
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 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.
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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:
– Web Servers.
– Application Servers.
– Database Servers.

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Figure 3-3 Example of Info.Net Architecture

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Figure 3-4 A Three-Tier ERP Architecture

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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.
• 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.

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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:

– 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.

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Figure 3-6 A SOA Architecture

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 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.

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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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