College of Computing and Informatics

Information Technology

Enterprise Systems
Enterprise Systems
Week 2
Enterprise Systems and Enterprise Resource Planning
Required Reading
1. Chapter 1 (Enterprise Process Management Systems:
Engineering ProcessCentric Enterprise Systems using
BPMN 2.0 by Vivek Kale)
Recommended Reading
1. Dunn, C., Cherrington, J., & Hollander, A. (2005). Enterprise
information systems: A pattern-based approach (3rd ed.)
Weekly Learning Outcomes

1. Introduce the concept of Enterprise Systems (ES) and

Enterprise Resource Planning (ERP)
2. Describe the importance of business processes in enabling
flexible and adaptable enterprise-wide cross-functional
integration.
Contents

1. Evolution of Enterprise Systems

2. Extended Enterprise Systems
3. Enterprise Resource Planning (ERP)
4. Enterprise Business Processes
1. Evolution of Enterprise Systems
1. Evolution of Enterprise Systems

• Enterprise systems (ES) are an information system that integrates

business processes with the aim of:
1. creating value
2. reducing costs
• Achieved by making the right information available to the right
people at the right time
➢Result – Making good decisions in managing resources proactively and
productively.
• ES have evolved from simple materials requirement planning (MRP)
to ERP, extended enterprise systems (EES), and beyond.
1. Evolution of Enterprise Systems
Table 1.1: Evolution of Enterprise Systems (ESs)
 1.1 Materials Requirement Planning (MRP)

• MRP is a heuristic based on three main inputs:

1. the Master Production Schedule, which specifies how many products are going
to be produced during a period of time

2. the Bill of Materials, which describes how those products are going to be
built and what materials are going to be required

3. the Inventory Record File, which reports how many products, components, and
materials are held in-house.
 1.1 Materials Requirement Planning (MRP)
• MRP employs backward scheduling,
➢lead times are used to work backwards from the due date to an order release
date.

• While the primary objective of MRP was to compute material

requirements, the MRP system is also a useful scheduling tool.
1.2 Closed-Loop Materials Requirement Planning

• Real-time (closed loop) MRP systems replaced regenerative MRP systems in

response to:
1. Changing business needs
2. Improved computer technology
➢ Time-sharing replaced batch processing as the dominant computer processing mode.

• This closed the control loop with timely feedback for decision-making by
incorporating current data from the factory floor, warehouse, vendors,
transportation companies, and other internal and external sources
➢Gives the MRP system the capability to provide current information for
better planning and control.

• The transformation of MRP into a planning and control tool by closing the
loop, planned and controlled various manufacturer resources that led to MRP
II.
1.3 Manufacturing Requirement Planning II

• The MRP system evolved from a “material” requirements planning

system into a planning and control system for resources in
“manufacturing” operations.

• MRP II systems became more widespread and sophisticated,

particularly when used in manufacturing to support and complement
computer-integrated manufacturing.
1.3 Manufacturing Requirement Planning II

• Databases started replacing traditional file systems, allowing for

better systems integration and greater query capabilities to support
decision-makers.

• Telecommunications networks became an integral part of these systems

in order to support communication between distributed systems
components.
1.3 Manufacturing Requirement Planning II- Cont.

• MRP II was developed based on MRP principles, but incorporated some

important operational restrictions such as available capacity, maintenance
turnaround time, and financial considerations.

• MRP II introduced simulation options to enable the exploration

and evaluation of different scenarios.
1.3 Manufacturing Requirement Planning II- Cont.

• MRP II is defined as business planning, sales and operations planning,

production scheduling, MRP, capacity requirements planning, and the
execution support systems for capacity and material.

• MRP II integrated financial considerations, improved management

control and performance of operations and made different manufacturing
approaches comparable.
1.4 Enterprise Resource Planning (ERP)
• New advances in information technology (IT), such as local area
networks, personal computers, and object-orientated programming
allowed some of MRP’s deterministic assumptions to be relaxed.

• Early ERP systems typically ran on mainframes like MRP and MRP
II, but many migrated to client/server systems where networks
were central and distributed databases were more common.
2. Extended Enterprise Systems (EES)
2. Extended Enterprise Systems (EES)

• Businesses are looking beyond the enterprise.

• Enterprises look for ways to support and improve relationships

and interactions with customers, suppliers, partners, and other
stakeholders.

• While integration of internal functions is still important and, in many

enterprises, still has not been achieved to a great extent, external
integration is now receiving much attention.
2.1 Extended Enterprise Systems Framework

The conceptual framework of EES consists of four distinct layers:

•Foundation layer
Consists of the core components of EES, which shape the underlying architecture
and also provide a platform for the EES systems.

•Process layer
The central component of EES, is Web-based, open, and componentized and may
be implemented as a set of distributed Web services.
2.1 Extended Enterprise Systems Framework
•Analytical layer
Consists of the corporate components that extend and enhance the central ERP
functions by providing decision support to manage relations and corporate issues.

•Electronic business layer

The portal of the EES systems and this layer consists of a set of collaborative
components.
2.1 Extended Enterprise Systems Framework – Cont.
Table 1.2: Four Layers of EES
2.2 Extended Functionality

• The capability of Web services to allow businesses to share data,

applications and processes across the Internet may result in ES of the future
relying heavily on the idea of service-oriented architecture, within which
Web services are created and stored, providing the building blocks for
programs and systems.
2.2 Extended Functionality
• The use of “best in breed” Web service-based solutions might be more
palatable to businesses, since it might be easier and less risky to plug-in a
new Web service-based solution than replace or add on a new
product module.

• While the “one source” alternative seems most popular at present, the
“best in breed” approach will be good if greater interoperability/integration
among vendor products is achieved.

• There is a need for greater “out of the box” interoperability, thus a need
for standards.
2.3 Traditional vs. ES Software Implementations
The traditional software implementation involving the development
of applications was characterized by the following:

1. Requirement-driven functional decomposition

2. Late risk resolution
3. Late error detection
4. Use of different languages or artifacts at different phases of the project
5. Large proportion of scrap and rework
6. Adversarial stakeholder relationships with non-IT users
7. Priority of techniques over tools
8. Greater emphasis on current, correct, complete, and consistent
documentation
9. Greater emphasis on testing and reviews
2.3 Traditional vs. ES Software Implementations -cont.
ES software implementations are characterized by the following:

1. Primacy of the architecture, process-oriented configurability

2. Primacy and direct participation of the business user
3. Early risk resolution
4. Early error and gap detection
5. Iterative life-cycle process, the negligible proportion of scrap and rework
6. Changeable and configurable functionality
7. Participatory and cohesive stakeholder relationships with non-IT users
8. Priority of functionality over tools followed by techniques
9. Quality of the functional variability and flexibility of the available
functionality
2.3 Traditional vs. ES Software Implementations– Cont.
Off-the-shelf packages and especially enterprise-wide solutions such as
ES were considered to be the best approach due to:

1. ES ensure better validation of user requirements directly by the user.

2. ES ensure consistent quality of delivered functionality.
3. ES provide a cohesive and integrated information system architecture.
4. ES ensure a fair degree of standardization.
5. ES provide consistent and accurate documentation of the system.
6. ES provide outstanding quality and productivity in the development and
maintenance of the system
3. Enterprise Resource Planning (ERP)
3.1 The Concept of Enterprise Resource Planning
• The main focus of ERP has been to integrate and synchronize the
isolated functions into streamlined business processes.

• ERP not only coordinates multiple divisions but also requires

companies to enter data only once for the information to be
distributed to all of the integrated business processes.

• ERP systems consist of several integrated suites of software modules,

which share common data and provide connectivity.

• The information about the processes in the company is represented

consistently and is up to date in all business divisions at all times.
3.2 Enterprise Resource Planning System

ERP could be defined reasonably as follows:

“An ERP software applications package is a suite of pre-engineered, ready-

to-implement integrated application modules catering to all of the business
functions of an enterprise and which possesses the flexibility for
configuring and customizing dynamically the delivered functionality of the
package to suit the specific requirements of the enterprise. ERP enables an
enterprise to operate as an integrated enterprise-wide, process-oriented,
information-driven real-time
enterprise.”
 3.2 Enterprise Resource Planning System – Cont.

• At the heart of an ERP system, resides a CASE-like repository that

stores all details of these predeveloped applications.

• These details include every single data item, data table, and software
program that is used by the complete system.

• The major development of the ERP systems over the information

engineering approaches was in terms of providing predefined,
already-built-in comprehensive functionality of the application
systems.
• The success of ERP packages is based on the principle of reusability.
* CASE (Computer-aided software engineering)
3.2 Enterprise Resource Planning System– Cont.

Figure 1.2: Information and material flow in a functional business model

3.2 Enterprise Resource Planning System – Cont.

Figure 1.2: Information and material flow in a business process model

3.3 Characteristics of Enterprise Resource Planning
The distinguishing characteristics of ERP are as follows:
1. ERP transforms an enterprise into an information-driven
enterprise
2. ERP fundamentally perceives an enterprise as a global enterprise
3. ERP reflects and mimics the integrated nature of an enterprise.
4. ERP fundamentally models a process-oriented enterprise.
5. ERP enables real-time enterprise.
3.3 Characteristics of Enterprise Resource Planning - Cont.

6. ERP Elevates Information Technology Strategy as a part of the

Business Strategy
7. ERP Represents a Major Advance in the Earlier Manufacturing
Performance Improvement Approaches
8. Represents the Departmental Store Model of Implementing
Computerized Systems
9. ERP is a Mass-User-Oriented Application Environment
 3.4 Advantages of Enterprise Resource Planning
1. Reconciliation and optimization of the conflicting goals of different
divisions or departments.

2. The ability to know and implement global best practices.

3. Alteration of the function-oriented organization toward a more

team-based, cross-functional, process-oriented enterprise, thus
leading to a more flexible, flatter, and tightly integrated enterprise.

* To see the complete list of advantages of ERP, see the textbook, pages 20 and 21
 3.4 Advantages of Enterprise Resource Planning – Cont.

4. ERP provides a responsive medium for undertaking all variants of process

improvement programs and methodologies including PI (process intelligence),
process improvement, and business process.

5. ERP also provides a responsive medium for quality improvement and

standardization efforts including quality control, quality assurance, and Total
quality movement (TQM(.

6. ERP, being process-oriented, is a fertile ground for implementing activity-based

management efforts, be it for budgeting, costing, efficiency, or quality.

* To see the complete list of advantages of ERP, see the textbook, pages 20 and 21
 3.5 Disadvantages of Enterprise Resource Planning

1. ERP reinforces the silo-oriented functioning of the traditional functional

organizations.

2. ERP enhances team-based operations in the organization, but, often, these teams
remain confined to the traditional functional silos in that they do not cross the
boundaries of the functional departments.

3. ERP implementations render the personnel enabled for system-based operations

but do not necessarily do so for collaborative operations ,especially across
traditional departmental boundaries.
4. Enterprise Business Processes
1. The business Process take inputs (resources) in the form of material,
people, and equipment and transform these inputs into goods and
services for customers.
2. Managing these inputs and the business processes effectively
require accurate and up-to-date information.
3. In the process-oriented model, the flow of information and
management activity is horizontal across functions, in line with the flow
of materials and products.
4. This horizontal flow promotes flexibility and rapid decision-making
and stimulates managers to see the importance of managing
business processes.
5. In the process-oriented model, information flows between the
operating levels without top management’s involvement.
Main Reference
1. Chapter 1 (Enterprise Process Management Systems:
Engineering ProcessCentric Enterprise Systems using
BPMN 2.0 by Vivek Kale)

Additional References
1. Dunn, C., Cherrington, J., & Hollander, A. (2005). Enterprise
information systems: A pattern-based approach (3rd ed.)
Thank You