SYSTEM INTEGRATION &

ARCHITECTURE 1
CHAPTER 4 : ERP SYSTEM
AND PROCESS
WHY STUDY ENTERPRISE SYSTEM ARCHITECTURE?
• ERP system architecture provides a foundation for both
the functional and the technical needs of the organization
and adapts to future business challenges. It articulates the
relationships among the complex information technology
components, which include hardware, software, and data
with such complex organization components as company
structures, business rules, and people.

• For example, ERP hardware can range from multimillion-

dollar mainframe computer systems to complex
networking and security equipment. ERP software
similarly requires operating systems, a database, and
other software in place for them to function properly.
WHY STUDY ENTERPRISE SYSTEM ARCHITECTURE?
• Enterprise Resource Planning
(ERP) programs: Core software
used by companies to
coordinate information in every
area of business
– Help manage companywide
business processed
– Use common database and
shared management reporting
tools
• Business process: Collection of
activities that takes some input
and creates an output that is of
value to the customer
 ERP MODULES
• 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.
 ERP MODULES
Table 3-1 ERP Modules from Three Vendors
Oracle/PeopleSoft Microsoft Dynamics
Function SAP Modules
Enterprise Modules Modules
Sales Sales and distribution, Marketing and sales, Retail POS, field
sales opportunity supply chain service 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
Distribution Warehouse Supply chain Distribution
management Management Management
Customer services CRM CRM CRM
Corporate Governance, risk, and Corporate Analytics
performance and compliance performance
governance management Management

Human resources Human capital Human capital HR management

management, Management
Miscellaneous Banking Campus solutions e-Commerce, portals
 OTHER ERP MODULES
• Production – Helps in the planning, scheduling 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. Handles
purchasing of goods and services, supplier
management, and purchase orders.
• Inventory Management – Tracks stock levels, manages
warehousing, and handles product distribution.
Facilitates the processes of maintaining the appropriate
level of stock in a warehouse.
 OTHER ERP MODULES
• Sales and Marketing Module – Revenues from sales are the
lifeblood for commercial organizations. The sales module
implements functions of order placement, order scheduling,
shipping, and invoicing.
• Finance Module – The financial module benefits both for-
profit organizations and non-profit organizations. The
financial module is the core of many ERP software systems.
(accounting, budgeting, Financial Reporting)
• Human Resource – The human resources (HR) module is
usually the first model implemented by many companies.
The HR module streamlines the management of human
resources and human capital. (manage employee
information, payroll, recruitment, and performance
evaluations.)
Benefits of Key ERP Modules – The following
details some of the key benefits touted by such ERP
vendors as SAP and Oracle for the various application
modules:

A. Self – Services
– Enable flexible support for employees’ business functions
with views of information tailored to their needs
– Empower employees and managers through simplified
access to relevant information for HR management,
financials, operations, and analytics, while boosting
motivation, productivity, and efficiency
 OTHER ERP MODULES
B. Performance Management
– Improve business insight and productivity by delivering real-
time, personalized measurements and metrics
– Provide executives, managers, and business workers with access
to such information as business statistics and key performance
measurements presented in the context of business tasks
C. Financials
– Ensure compliance and predictability of business performance
– Gain deeper financial insight across the enterprise and tighten
control of finances
– Automate financial and managerial accounting and financial
supply chain management
 OTHER ERP MODULES
D. HR Management
– Attract the right people, develop and leverage their talents, align
their 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
E. Procurement and Logistics Execution
– Sustain cost savings for all spending categories by automating
such routine tasks as determining sources and 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
 OTHER ERP MODULES
F. Product Development and Manufacturing
– Shorten time to market through streamlined new-product
development and introduction Processes
– Deliver higher-quality products and ensure delivery of promised
orders through optimal planning, scheduling, and sequencing on
the factory floor
– Improve visibility and transparency in real time across all shop
floor processes, including availability checking and costing
G. Sales and Service
– Increase the number of sales orders processed and reduce
administrative costs through automation of sales order
management and the use of such profitable Internet-based
solutions as e-commerce
– Deliver greater customer satisfaction by providing easy access to
accurate, timely information
ERP Architecture
– In today’s business environment, ERP
applications are most commonly
deployed in a distributed and often
widely dispersed manner. While the
servers may be centralized, the clients
are usually spread across multiple
locations throughout the enterprise.
ERP system architecture is organized.
 THREE – TIER ARCHITECTURE
a Web tier, an application tier, and a data tier. The segmentation
of these tiers allows for the system as a whole to be more
scalable and reduces resource utilization. It also provides higher
security due to the separation of resources.

1. Data Tier
– The data tier focus is on the structure of all organizational
data and its relationships with both internal and external
systems. Companies often change applications and data
requirements incrementally, making it necessary for this
tier to maintain flexibility. In the ERP architecture, this tier
generally consists of the SQL Inquiry and Report Writer
tools that are available for advanced users who have the
authorization to filter, process, or filter and process the
data from any table in the database.
2. Application Tier
– This tier is where data are entered and shared with other
components of 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. Web Tier
– A Web-based self-service portal allows users the ability to
access and analyze information through their Web
browser. These portals allow the viewing of many
independent systems (e.g., an ERP system), and external
third-party applications. Integration is common at the
portal layer, but as stated earlier, it is integrated only from
the user-interface perspective, and not from a process
perspective. Portals provide the ability to customize views
for every function within an enterprise.
 Benefits and Limitations
Three-tier applications provide several benefits over traditional
client–server applications including the following:

(Benefits)
Scalability. Three-tier architecture allows easier architecture to
add, change, and remove applications because the user interface
and database are not affected by upgrades to applications
Reliability. Three-tier architecture makes it easier to increase
reliability of a system by implementing multiple levels of
redundancy. In addition, scheduling and prioritization of jobs can
be managed better from a central location.
Flexibility. By separating the business logic of an application
from its presentation logic, three tier architecture makes the
application much more flexible to changes. Flexibility in
partitioning can be as simple as “dragging and dropping”
application code modules onto different computers.
Maintainability. Support and maintenance costs are less on a
single server than it would be to maintain each installation or
upgrade on a desktop client because the middle layer adds
scheduling and prioritization for work in progress.
Reusability. Separating the application into multiple layers
makes it easier to implement reusable components.
Security. Three-tier architecture provides higher security
because there is less software on the client machines, which
means the IT staff has more control over the ERP system
Three-tier applications also have some limitations,
including the following:

Economics. Three-tier applications require additional

hardware and software infrastructure to support the middle
layer, which can increase the overall platform costs.

Complexity. A key limitation with three-tier architectures is

that the development environment is reportedly more difficult
to use than the visually oriented development of two-tier
applications.
Web Services Architectures
• In the last decade, many ERP vendors have introduced Web (or
Internet)-based architecture for their systems. This is often
described as a fourth tier where the Web tier is split into services
tier and browser tier. The ERP systems focus on the Internet to
provide a powerful new functionality
• for Internet-based access and integration. This architecture
leverages a number of Internet technologies and concepts to
deliver simple, ubiquitous access to ERP modules and enable the
open flow of information between systems. This functionality is
primarily supported through the following Internet access
technologies:
• Web server
• ERP portal
• Back-end server integration
• Browser plug-ins or applets
Service Oriented Architecture
• Service-oriented architectures represent object-oriented
architectures for Web platforms. The first service-oriented
architecture for many people in the past was with the use of
distributed component object model (DCOM), an extension of
the component object model that was introduced in 1996 on
Microsoft Windows platform. A service is a function that is
well defined, self-contained, and does not depend on the
context or state of other services.
• A service-oriented architecture is essentially a collection of
services. From an ERP perspective SOA decomposes the
business tier into smaller, distinct units of services. These
services collectively support an ERP functional module.
Implication for Management
• Managers implementing ERP systems should remember the
following advisories.
• Enterprise architecture is an important technology for the
long-term functioning of the organization. It provides the
information system foundation on which all the employees
and other stakeholders of the company will depend for critical
information and for the decision-making
• process.
• ERP architecture decisions are complex because their impact
goes beyond systems and technology to people,
organizational policy, and business processes. Management,
therefore, must not leave these decisions for the IT
department, and instead work together with IT staff in
selecting the architecture.
Implication for Management
• ERP architecture must be flexible to support a diverse set of
hardware and software platforms. From a systems’
perspective, management first needs to be aware that in
order for diverse technologies to operate smoothly the IT
group must have standards and policy for technology
decisions.
• Do not get carried away with ERP technology hype. With new
technologies and architectures constantly touted by vendors
and consultants, it is very easy to end up with a very
sophisticated architecture and system, and yet have a major
implementation failure.