Lecture 5

ENTERPRISE
SYSTEMS
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
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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Table 3.1- 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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 Lecture 6

ERP Architecture

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 ERP Architecture for 1 mark

• 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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 Layered Architecture Example
(Info.Net) 1 mark

• 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). 19
Figure 3-3 Example of Info.Net
Architecture

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 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.

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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
– 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.

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 Tiers for 5 mark

• 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.

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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 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.

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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.
• 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 3-7 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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 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.

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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. 37
 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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