Enterprise System Lecture05

Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
(Week 5) Lecture 10-11
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
 Learn about Layered Architecture and its impact on ERP systems.
Resources: Beside these lecture handouts, this lesson will draw from the following
Text Book: Enterprise Systems for Management by J. Thompson and Luvai

F. Motiwalla (2nd Edition)
Reference book: Concepts in Enterprise Resource Planning by Bret Wagner

and Ellen Monk (4th Edition)
Enterprise Systems Architecture

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.
Understanding the enterprise system architecture is important for several reasons. First, it helps
management and the implementation teams understand in detail the features and components of
the enterprise system. Second, it provides a visual representation of the complex system
interfaces among the ERP application and databases, operating systems, legacy applications, and
networking. Finally, understanding the enterprise systems architecture, by clarifying the system
infrastructure requirements, training requirements, change management requirements, and
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business process reengineering requirements, among others, can help management in developing
a better IT plan.
The enterprise systems architecture (Figure 1-1) can be viewed from two different angles: (1) the
functional angle that defines the ERP modules that support the various business functions of the
organization and (2) the system angle that defines the ERP architecture through the physical
components of hardware, software, and networking. In this lecture, you will learn more about the
typical ERP modules, the system architecture and components, types of ERP architecture, and,
finally, the role of architecture and its impact on the implementation stage of the project.
FIGURE 1-1 Enterprise Systems Architecture (ESA) Model
ERP MODULES
The key role of an ERP system is to provide support for such business functions as accounting,
sales, inventory control, and production for the various stakeholders of the organization.
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Organizations often selectively implement the ERP modules that are both economically and
technically feasible. ERP provides the same functionality to the users (e.g., the silo systems of
the past), but the data are integrated or shareable across all the ERP modules. This means the
data need to be entered into the system once, and, depending on the organization’s business
rules, they are made available to users either inside or outside the organization. In today’s
organization, teams are not limited to employees of the company; teams can include employees
from various functional areas as well as employees of business partners and even customers.
ERP systems, therefore, provide access to the data as defined by the organizations’ business
rules.
FIGURE 1-2 Typical ERP Modules
In general, ERP vendors provide a comprehensive range of enterprise software applications and
business solutions to empower every aspect of business operations, identify new business
opportunities, and enable the organization to respond to changing business realities. In addition,
they include functionality to optimize business operations and resources to extend best practices
to the entire value chain. Table 1-1 provides a high-level overview of the usual modules provided
by major ERP vendors.
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The functional and module list is not exhaustive and does not include all the enterprise software
applications provided by these vendors. The following is a brief overview of some of these ERP
modules.
Production Module
The production module helps in planning and optimizing the manufacturing capacity, parts,
components, and material resources using historical production data and sales forecasting.
Purchasing Module
The purchase module 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. The purchase module is tightly
integrated with the inventory control and production planning modules.
Inventory Management Module

The inventory module facilitates the processes of maintaining the appropriate level of stock in a
warehouse. Inventory control identifies inventory requirements, sets targets, provides
replenishment techniques and options, monitors item usages, reconciles the inventory balances,
and reports inventory status
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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. The sales
module is closely integrated with an organization’s e-commerce Web sites.
Finance Module
The financial module benefits both for-profit organizations and nonprofit organizations. The
financial module is the core of many ERP software systems. It can gather financial data from
various functional departments and generate valuable financial reports (e.g., budgets, balance
sheet, general ledger, trail balance, and quarterly financial statements).
Human Resource Module

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. The HR
modules routinely maintain a complete employee database, including contact information, salary
details, attendance, performance evaluation, and promotion.
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:
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
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
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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
• Provide rigorous support for financial reporting
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
• 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
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
• Reducecoststhroughprocessautomation,integrationofsuppliers,andbettercollaboration
• Improve resource utilization with support for cross-docking processes and data
collection technologies such as radio frequency identification (RFID) and bar codes
• Enhance productivity of all activities related to incoming and outgoing physical
goods movements
• Reduce transportation costs through better consolidation and collaboration
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
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• Improve visibility and transparency in real time across all shop floor processes,
including availability checking and costing
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
• Streamline processes that facilitate cost-effective mobile access for field employees
• Improve the management of incentives and commissions to maximize productivity
and boost sales
• Reduce travel costs by using online functions for planning, booking, and expense
accounting while ensuring that company policies are applied to all processes
• Realize more effective real estate management, supported by tools that streamline and
manage every stage of the real estate life cycle
• Adhere to environmental, health, and safety reporting requirements
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
in layers or tiers to manage system complexity in order to provide scalability and flexibility via a
plug-n-play systems capability. This is highly essential in an enterprise-level system. Three-layer
architecture is the most prevalent today and includes Web, application, and database servers. It is
the most reliable, flexible, and scalable architecture. You can scale the number of users from 10
to 100 by adding servers. This is one example of simple hardware layering that has a significant
impact on scalability. What if the layering is done at both the hardware and software
environments? The scalability would have been 20-fold instead of just 10-fold. It is important to
understand, therefore, that layering is merely a model of dividing the hardware and software in
an information system. It is not limited to three tiers, but often supports many tiers. Hence, the
term “N-tier client–server architecture” is often used to describe enterprise system architectures.
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In the term N-tier, N implies any number (e.g., three-tier, four-tier, or, basically, any number of
distinct tiers used in your architecture).
Layered Architecture Example

An example of a layered ERP architecture is the Info.Net architectures shown in Figure 1-3. This
architecture generalizes the functional layers to allow it to change with newer technologies. This
architecture provides a Web-based user interface (i.e., user can access the applications via the
Internet through a PC). The PC needs to be capable of running a Java-enabled Web browser
(e.g., Internet Explorer or Firefox). 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).
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FIGURE 1-3 Example of Info.Net Architecture
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. These tools allow users to develop complex SQL table joins for
exception reporting on areas not covered by standard reports. The ASL is where all the business
process logic and functionality resides for manufacturing, distribution, or service industries. This
layer also determines where data will be stored. The relational database is where this information
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will be kept. This layer is what links together a sales order, items, delivery, and remarks on an
order. The database access layer (DAL) extracts the data from the database for the ERP modules.
It also includes a data dictionary that explains the different database functions for Info.Net
applications.
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. The users can download the data on their PC for any
changes they may require that are relevant to their position and share information in real time
within an extended enterprise. This seamless integration will allow for strategic decisions based
on intelligence rather than on circumstance.
WEB TIER
Employees rarely interact with SAP through an application 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. Each function of
an organization is able to see relevant data in real time and to alter and share information from
within an extended enterprise. This collaboration, enabled by the Web, truly demonstrates the
power of an ERP system. Information is shared instantaneously across oceans when a single user
enters and saves a piece of data. Through this customization and sharing of content, experience is
developed, reporting is made more strategic, and efficiencies are gained. For example, a sales
manager will only be interested in information relevant to his or her role (e.g., how to increase
sales and help project future revenue). For this reason, user roles are set up in the system to
define access rights for each and every functional user of the system. The portals allow
customization of the page such that a sales manager can monitor such information as sales
revenue, representative performance, or any elevated support issues. This helps to eliminate time
wasted sifting through useless data and facilitates the seamless transfer of information across job
functions.
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INFRASTRUCTURE REQUIREMENTS
An ERP system places tremendous load on the corporate network. Users form a wide variety of
connections that access the network. According to AT&T’s Web site, users can connect within
the corporate local area network, whereas international or regional offices gain access through
the wide area network. Partners or remote users gain connection through network cable or DSL
connections to the Internet. All of these scenarios make the network and capacity planning for
the network as crucial as the planning and deployment of the ERP system.
The implementation of an ERP system has its own infrastructure requirements that includes
internal network and desktop requirements that a Web-based system requires. In addition, there
are infrastructure requirements that provide anytime, anywhere access. This is where many
implementations fail or not realize their benefits. Implementation of such an enterprise system as
SAP requires more than just supporting the infrastructure requirements of these applications; it
requires an extended enterprise that enables the sharing of this information. This is where the
network comes into play. Leading up to the production rollout, network managers are provided
with a very limited view from which they must size and estimate the required network. For
example, there are times the implementation team is not aware that an interface on the
application layer also requires bandwidth to support the sharing of data. According to Gartner
Research, large companies in the Fortune 1000 lose on average up to $13,000 per minute every
time their ERP system is down. The cost of downtime is extremely high. An important step in
implementing an ERP is overall infrastructure planning. As is in most cases, traditional networks
require upgrading prior to the deployment of ERP systems and must be a component of the
overall budget. It is a “pay me now or pay me later” scenario. Up-front planning will provide for
a stable and reliable environment, adding to the ERP implementations success.
If the network connection through which the end users access the application has problems, the
user will experience poor performance. This poor performance leads to a loss of productivity;
therefore, a high-availability network is a requirement for a fully functioning ERP system,
especially one that can grow as the user population grows and support the continued expansion
and integration of a supply chain.
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Enterprise System - CS556

Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768

(Week 5) Lecture 10-11

Text Book: Enterprise Systems for Management by J. Thompson and Luvai

Reference book: Concepts in Enterprise Resource Planning by Bret Wagner

Enterprise Systems Architecture

FIGURE 1-1 Enterprise Systems Architecture (ESA) Model

FIGURE 1-2 Typical ERP Modules

Inventory Management Module

Human Resource Module

Benefits of Key ERP Modules

PROCUREMENT AND LOGISTICS EXECUTION

PRODUCT DEVELOPMENT AND MANUFACTURING

SALES AND SERVICE

Layered Architecture Example

FIGURE 1-3 Example of Info.Net Architecture

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