ENTERPRISE SYSTEMS

DEPARTMENT OF INFORMATION TECHNOLOGY

 SAP's R3 was introduced in 1992 and many companies worldwide have implemented it, including Nestlé USA.
 Nestlé USA has seven business divisions and its ERP implementation, called BEST, had an estimated cost of $210
million with an IT staff of 250.
 The project's goal was to use common business processes, systems, and organizational structures across the
autonomous divisions within the United States to create savings and facilitate data sharing.
 The stakeholder team for implementing the SAP did not include members from the groups that would be directly
affected by the new business process, causing rebellion and resistance from employees, confused and angry
divisional executives, and a high employee turnover rate.
 The project team overlooked the integration points between modules to account for the Y2K deadline, causing
chaos and a halt in the rollout in the beginning of 2000.
CASE STUDY (CONT)

 The company reconvened the stakeholder team and restarted the SAP implementation process from scratch,
starting with the business requirements and ensuring support from key divisional heads and communication with
employees about the changes.
 With SAP in place, Nestlé USA achieved a significant return on investment, reducing inventory and redistribution
expenses, achieving more trustworthy demand forecasts for its products, and signing a $500 million, five-year deal
with IBM for server hardware, software, and IT services.
 Nestlé is standardizing on a common ERP system globally and rolling out a common e-procurement solution
licensed from SAP, with plans to transition e-procurement system management to its own data centers in 2007-
2008.
PREVIEW

 ERP systems become the cornerstone of an organization, but successful implementation requires focus on business
processes, requirements, budget, project management, top management commitment, and continuous
communication with employees.
 ERP implementation isn't just about software, it's also about changing people's business processes, which requires
involving people whose processes are changing, keeping communication lines open, and measuring the level of
acceptance before, during, and after rollout, while also considering integration points and updating budget
projections regularly.
WHY UNDERSTANDING OF ERP ARCHITECTURE IS IMPORTANT?

 Understanding ERP system architecture is crucial for management and implementation teams to:
 comprehend the components and features of the system,
 visualize the complex interfaces
 clarify the system infrastructure requirements
 training requirements
 change management requirements
 business process reengineering requirements.
ERP MODULES

 ERP systems provide support for various business functions and modules are selectively implemented based on
feasibility.
 The data entered in the system is integrated across all modules and accessible based on organization's business
rules.
 ERP vendors provide modules that support major functional areas of business and embed best practices into the
software, however, customization may be necessary during implementation.
SOME ERP MODULES
PRODUCTION MODULE

The production module of an ERP system supports manufacturing processes by providing tools for planning,
scheduling, and controlling production activities. Benefits of using an ERP production module include:
 Improved visibility and control over production processes
 Better planning and scheduling, leading to reduced lead times and improved on-time delivery
 Increased efficiency and productivity through automation of tasks and better resource utilization
 Enhanced quality control and reduced waste through better tracking and monitoring of production data
 Better collaboration and communication among different teams involved in the production process.
PURCHASING MODULE

The purchasing module of an ERP system streamlines the procurement process and manages vendor relationships.
Some benefits of using a purchasing module in an ERP system include:
 Improved efficiency: With the purchasing module, organizations can automate the entire procurement process
from requisition to payment, reducing the time and effort needed for manual processing. This can lead to
significant cost savings and improve productivity.
 Better inventory management: The purchasing module provides real-time visibility into inventory levels, which
helps organizations to make better purchasing decisions and avoid stockouts or overstocking.
 Enhanced supplier management: The module enables organizations to manage their supplier relationships by
tracking vendor performance, negotiating better terms, and identifying potential risks. This can help organizations
to reduce costs, improve quality, and build better relationships with their suppliers.
INVENTORY MANAGEMENT MODULE

The Inventory Management module of ERP helps businesses keep track of their inventory levels, location, and
movement. Some of its benefits include:
 Improved Inventory Control: The module enables real-time tracking of inventory levels, so businesses can avoid
stockouts and overstocking, reducing the risk of lost sales and unnecessary carrying costs.
 Cost Savings: The module enables businesses to optimize their inventory levels and reduce the amount of working
capital tied up in inventory. This can result in significant cost savings, such as reduced storage costs, lower
insurance premiums, and fewer write-offs due to obsolescence.
 Enhanced Productivity: With inventory information available in real-time, businesses can improve their planning
and scheduling, reducing downtime and improving productivity. The module can also automate many inventory-
related processes, such as cycle counting, order generation, and replenishment, freeing up employees to focus on
more value-added activities.
SALES AND MARKETING MODULE

The sales and marketing module of an ERP system provides a comprehensive view of customer interactions and
supports the sales process from lead generation to order fulfillment. Its benefits include:
 Improved Customer Relationship Management (CRM): The module enables businesses to maintain a centralized
customer database, manage leads and opportunities, and track sales activities to enhance customer satisfaction and
loyalty.
 Enhanced Sales Performance: The module streamlines the sales process, from generating quotes and proposals to
order processing and invoicing, which can help improve sales performance, increase revenue, and reduce the sales
cycle time.
 Real-time Analytics and Reporting: The module provides real-time data on sales activities, customer behavior, and
market trends, which can help businesses make informed decisions, identify opportunities, and develop effective
marketing strategies.
FINANCE MODULE

The finance module of an ERP system automates financial management tasks, such as general ledger accounting,
accounts payable and receivable, budgeting, and financial reporting. Some benefits of using the finance module in
ERP include:
 Improved accuracy: With automation, there is less room for human error, leading to more accurate financial data.
 Faster financial reporting: The finance module can generate financial reports quickly and accurately, giving
management up-to-date information for decision-making.
 Better compliance: An ERP system's finance module can help ensure compliance with accounting standards and
regulations by providing controls and auditing features.
HUMAN RESOURCE MODULE

The human resource module of ERP typically includes functionality for managing employee data, payroll, benefits,
and performance evaluations. Some benefits of this module include:
 Streamlining HR processes: The HR module can help automate tasks such as onboarding, benefits administration,
and time tracking, freeing up HR staff to focus on more strategic initiatives.
 Improved decision making: With a centralized database of employee information, managers can easily access data
on staffing levels, compensation, and performance to make more informed decisions.
 Enhanced employee experience: The HR module can provide employees with self-service tools to view and
update their personal information, request time off, and access company policies and benefits information, which
can improve engagement and satisfaction.
ERP ARCHITECTURE

 ERP applications are deployed in a distributed manner with a layered architecture that manages complexity and
scalability, including the common three-layer architecture of web, application, and database servers, and the term
"N-tier client-server architecture" is used to describe it.
LAYERED ARCHITECTURE
THREE TIER ARCHITECTURE

 Three-tier architecture is a client-server architecture consisting of three separate and distinct tiers or layers: the
presentation tier, application tier or logic tier, and the data storage tier. The presentation tier is the user interface,
the application or logic tier handles processing and business logic, and the data storage tier is responsible for
storing and retrieving data. This architecture provides scalability, flexibility, and separation of concerns in
software development.
THREE TIER ARCHITECTURE – APPLICATION TIER

 The application tier of a 3-tier architecture is responsible for processing logic and business rules.
THREE TIER ARCHITECTURE – DATA TIER

 The data tier of a 3-tier architecture stores and manages the application's data.
THREE TIER ARCHITECTURE – WEB TIER

 Web tier in a 3 tier architecture serves as a user interface and connects the user with the application tier.
PROS AND CONS OF THREE TIER ARCHITECTURE

 The benefits of a 3-tier architecture include scalability, flexibility, reliability, security, and easier maintenance and
upgrades, as well as the ability to separate user interface, application processing, and data storage layers, enabling
each layer to be developed, deployed, and scaled independently.
 Some limitations of 3-tier architecture include increased complexity and cost due to the need for additional
servers, potential performance issues due to network latency, and increased security risks due to the use of
distributed components. Additionally, the need for specialized skills and expertise to design, develop, and maintain
the system can also be a challenge.
WEB SERVICES ARCHITECTURE

 Web service architecture is a software architecture that is used for creating web services using open protocols such
as HTTP, XML, SOAP, and others. It involves the creation of self-contained modules that can be accessed and
reused over a network, making it easier to share data and functionality between different applications and
platforms. The benefits of web service architecture include increased interoperability, platform independence, ease
of integration, and the ability to reuse existing components, reducing development time and costs. It also enables
the creation of distributed applications that can be accessed from anywhere with an internet connection.
SERVICE ORIENTED ARCHITECTURE

Service-oriented architecture (SOA) is a software design approach that emphasizes the creation of loosely coupled
and reusable software services. Some of the benefits of SOA include:
 Increased flexibility and agility: SOA allows for the creation of modular and reusable services, which can be
quickly assembled and reconfigured to meet changing business needs.
 Improved interoperability: By using open standards and protocols, SOA allows services to communicate and
interact with each other across different platforms and technologies.
 Enhanced scalability: SOA's modular design allows for the scaling of individual services to meet changing
demands, without affecting the rest of the system.
 Better cost efficiency: SOA's emphasis on reuse and modularity can lead to a reduction in development costs and
maintenance efforts, as services can be leveraged across different applications and projects.
CLOUD ARCHITECTURE

Cloud architecture refers to the design and deployment of software applications and services on cloud computing platforms. Some of the benefits
of cloud architecture include:
 Scalability: Cloud architecture provides the ability to easily scale resources up or down as needed, allowing organizations to quickly respond
to changing business requirements.
 Cost efficiency: Cloud architecture eliminates the need for organizations to invest in expensive hardware and infrastructure, which can
significantly reduce costs.
 Flexibility: Cloud architecture enables users to access applications and data from any device with an internet connection, providing greater
flexibility and mobility.
 Disaster recovery: Cloud architecture offers built-in disaster recovery capabilities, including automatic backup and recovery of data, reducing
the risk of data loss and downtime.
 Improved collaboration: Cloud architecture enables users to share and collaborate on data and applications in real-time, improving
productivity and efficiency.
 Security: Cloud architecture provides advanced security features, including data encryption, access controls, and threat detection, which can
improve overall security posture.