1 CHAPTER 3 ENTERPRISE SYSTEMS ARCHITECTURE. 2 Learning Objectives Examine in detail the enterprise systems modules and architecture. Understand the implication.

1

CHAPTER 3

ENTERPRISE SYSTEMS

ARCHITECTURE

2

Learning Objectives

• Examine in detail the enterprise systems modules and architecture.

• Understand the implication of good 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.

3

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.

• ERP implementation isn’t just about system software. It is easy to install 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).

4

Why Study Enterprise Systems Architecture?

• ERP architecture should provide a foundation for both the functional and the technical needs of the organization and adopt the future business challenges.

• Thus we should understand the ESA as it will:• Help management and the implementation teams understand in

detail the relationship between complex IT (Hardware, Software, people) and complex organization components such as company structure, business rules, people. This will help

• Managers and implementation teams understand in detail the feature and components of 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 system infrastructure requirements, training requirements, change management requirements, and business process reengineering requirements, among others are clarified.

5

Enterprise Systems Architecture (ESA) Model

• Enterprise System Architecture can be viewed from two different angles:

1. Functional angle: define ERP modules that support the various business functions.

2. System Angle: defines the ERP architecture through the physical components of Hardware, Software, and networking.

6

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 provides the same functionality to the users(the silo system to the users), but the data is integrated or sharable across all the ERP modules. Means, data needs to be entered into the system once, and depending on the organization’s business rules, it is made available to users either inside or outside the organization.

• ERP vendors, including SAP, Oracle, and Microsoft provide modules that support the major functional areas of a business (accounting, production, financial management, HR, sales order processing, and Procurement) to implement business processes for these functions.

• The ERP software set in the best business practices that implement the organization’s policy and procedure via business rules.

7

ERP Modules From Three Vendors

Function SAP Oracle/

PeopleSoft

Microsoft Dynamics

Sales Sales and Distribution, Sales Opportunity

Marketing and Sales, Supply Chain Management

Retail POS, Field Service Management

Procurement Purchasing, Supplier Relationship Management

Procurement and Supplier Relationship Management

Supply Chain Management

Production MRP, Product Life Cycle Management

Manufacturing Manufacturing

Accounting Financial Accounting Financial Management Financial Management

8

ERP Modules From Three Vendors (Cont’d)

Function SAP Oracle/

PeopleSoft

Microsoft Dynamics

Distribution Warehouse Management

Supply Chain Management

Distribution Management

Customer Service CRM CRM CRM

Corporate Performance & Governance

Governance, Risk, and Compliance Management

Corporate Performance Management

Analytics

Human Resources Human Capital Management

Human Capital Management

HR Management

Miscellaneous Banking Campus Solutions E-commerce, Portals

9

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. It automates the processes of identifying potential suppliers, negotiating price, awarding purchase orders to the supplier and billing processes.

• Inventory Management

Facilitates the processes of maintaining the appropriate level of stock in a warehouse

10

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. HR modules maintain a complete employee database including contact information, salary details, attendance, performance evaluation and promotion.

11

Benefits of Key ERP Modules

• Self Services– Enable flexible support for employees’ business functions with

view of information tailored to their needs– Simplified access to relevant information

• Performance Management– Delivery of real-time, personalized measurements– Access to such information as business statistics and key

performance measurements

• Financials– Ensure predictability of business performance– Gain deeper insight across the enterprise– Automate accounting and financial SCM– Rigorous support for financial reporting

12

Benefits of Key ERP Modules (Cont’d)

• HR Management– Attract the right people, develop and leverage their talents, align

efforts with corporate objectives, and retain top performers– Increase efficiency through using standardized and automated

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

monitor progress on projects, track time, and analyze results

• Procurement and Logistics Execution– Cost savings for all spending categories by automation such as

routine tasks– Reduce costs through process automation, integration of suppliers,

and better collaboration– Improve resource utilization (RFID and bar codes)– Enhance productivity of incoming and outgoing physical goods

movements– Reduce transportation costs through better collaboration

13

Benefits of Key ERP Modules (Cont’d)

• Product Development and Production– Shorten time to market– Deliver higher quality products and ensure timely delivery– Improve visibility in real time (availability check)

• Sales and Service– Higher number of sales orders processed and reduced

administrative costs– Easy access to accurate, timely customer information– Cost-effective mobile access for field employees– Reduce travel costs by using online functions– stick to environmental, health, and safety reporting requirements

14

ERP Architecture

• ERP applications are most commonly deployed in a distributed and often widely dispersed manner. While servers maybe centralized, the client are usually spread to multiple locations throughout the enterprise.

• ERP system architecture is organized in layers or tiers to manage system complexity in order to provide scalability and flexibility via plug-n-play systems capability.

• If server is capable of handling 10 users simultaneously on a simple two layer client server architecture, your network will be limited to only 10 users. By adding one more layer of a server in the middle (assuming this server handle 10 users) you can scale the number of users to 100 without replacing the original server or client. This is an example of hardware layering. This why N-tier client server architecture is other term to describe ERP.

• Traditional ERP architecture generally has three layers, with each responsible for a particular system function.

– Data Tier (responsible for Data Management): provide central repository for all the data that is shared

– Business Tier (provide components to apply business logic of functional modules). The components are reusable objects of business process rules.

– Presentation Tier (responsible for End-User Interface—GUI)• The business tier feeds data into the presentation tier.

15

Layered Architecture Example

• 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 (Explorer). The user interact with JVM interface layer to establish secure connection through secure socket layer (SSL) connection.

• The user communicating with the server through the applications software layer (ASL), where all business process logic and functionality are resides for either manufacturing, distributing, etc.

• Three tiers are provided.– The data tier focus is on structure of all organizational data and its

relationships with both internal and external systems.– The database access layer (DAL) extract the data from the

database for ERP modules. – The application tier consists of a Web browser and reporting tool

where business processes and end-users interact with the system.– Via the presentation tier, a Web-based portal allows users the ability

to access and analyze information through their Web browser.

16

Example of InfoNet Architecture

17

Types of ERP Architectures

• Two-Tier Architecture– The server handles both application and database duties. The

clients are responsible for presenting the data and passing user input back to the server.

• Benefits– Easy-to-use and access to information and services– Low cost in terms of infrastructure requirements– High performance with a limited number of workstations

• Drawbacks– Inflexible in terms of adding more clients and software– Requires expensive middleware for integration– Changes or modifications in database affect applications– Limited flexibility in moving program functionality from one server to

another

18

A Two-Tier ERP Architecture

19

Types of ERP Architectures (Cont’d)• Three-Tier Architecture (for thousands of users)

– The application, database, and presentation layers are separated into independent operating units. The layers are independent, but they are communicate with each other through standard interfaces such as Application Programming Interface (API), ODBC, JDBC,...There is no requirement for middleware in this architecture.

– The 3-tiers arch allocate the middle layer for applications to run on a shared host environment rather than in the client environment.

– Application layer dose not drive the GUI, rather it shares business logic , computation and data retrieve engine.

• 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

• Drawbacks– Can be very expensive and complex.

20

A Three-Tier ERP Architecture

21

Web-Based Architectures• Web (Internet) -based architecture often described as a fourth tier where the

Presentation tier is split into Web Services tier and Web Browser tier.• The functionality is supported by the following Internet access technology:

– Web server – ERP Portal – Back end Server Integration – Browser Plug In or Applets

• Using Internet Architecture, end users can access ERP applications over the web browser, as well as more easily integrate their applications with existing internal system and external trading partner system.

• The Internet architecture can be servercentric (only need access to the Internet and a standard browser) or clientcentric (need installation of Software Development Kits (SDK)).

• Benefits– 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.– 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.

22

Example of PeopleSoft’s Server-Centric Internet Architecture

23

Service-Oriented Architectures

• Also known as object-oriented architectures for Web platforms. It is a collection of services (functions) to support ERP functional module. They can be individually be distributed anywhere in the system; however, SOA encourages these services to fulfill with certain design principles, yet to evolve independently from each other.

• SOA goes beyond sharing basic data and methods to sharing business logic

• 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.

24

A SOA Architecture

• SOA is a software development model based on a contract between a consumer (client) and 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

25

Benefits of Service-Oriented Architectures

SOA offers the following benefits over traditional approaches to distributed computing:

• Business-level software services across heterogeneous platforms

• Complete location independence of business logic• Services can exist anywhere (any system and any network)• Loose coupling across application services: The consumer

of the service is required to provide only the stated data on the interface definition, and to expect only the specified results on the interface definition. The service is capable of handling all processing (including exception processing).

• Granular authentication and authorization support

• Dynamic search and connectivity to other services

26

Benefits of Service-Oriented Architectures (Cont’d)

Short term benefits of the SOA are:

• Enhances reliability of the architecture

• Reduces hardware acquisition costs

• Leverages existing development skills

• Accelerates movement to standards-based server and application consolidation

• Provides a data bridge between incompatible technologies

27

Benefits of Service-Oriented Architectures (Cont’d)

Long term benefits of SOA:• 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

28

Benefits of Service-Oriented Architectures (Cont’d)

Business value benefits of SOA:

• Increases the ability to meet customer demands more quickly

• Lower costs associated with 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

29

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

30

Drawbacks of Service-Oriented Architectures (Cont’d)

• 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

31

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.

32

Summary

• 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, and business intelligence.

• ERP systems have traditionally been organized in three-tiers: 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.

33

Summary (Cont’d)

• Service-oriented architecture separates the service provider from the service consumer.

• Object-oriented system architectures have a higher degree of separation.

• Top management must therefore be involved in designing the architecture from the very beginning of the ERP implementation project.

34

Review Questions

1. What is necessary for the ERP implementation to be successful?

2. What is ERP system architecture?3. Why is it important to have good enterprise system

architecture?4. What is the role of architecture in ERP implementation?5. List five of the major functional modules of ERP.6. Discuss the different types of ERP architectures.7. List benefits and limitations of one ERP architecture.8. What is service-oriented architecture and how is it

different from Web services architecture?9. What are the key benefits and limitations of systems

integration?10.What is the role of management in designing enterprise

systems integration?