Architectures and Components

of
Enterprise Resource Planning
--Satish Chinchorkar

Objectives

To

understand

various

components,

terms and basic functioning of ERP.

To recognize various business processes

and secured practices in production and
inventory control such as bill passing
cycle and significance of ERP.

ERP: Consolidated
Approach

COMPONENTS
AND
ELEMENTS

Functions Of Enterprise

Sale
s

Inventor
y

Engineering
Design
Human resources

Enterprise

Production
Planning

Finance
Quality
legal

Maintenance

Controlling

ERP Quadrants

ERP Functions
Production
Planning

Sales,
Distribution,
Order
Management

Integrated
Logistics

Customer/
Employee
Accounting
and Finance
Human
Resources

ERP Modules

Order
Entry

Suppliers

Enterprise Resource Planning

MRP
Purchasing Inbound ManufacturingInventory Distribution
& Accounts Inventory & Production Control & & Accounts
Payable Plant Mgmt. SchedulingWarehousingReceivable

Finance and Accounting

Human Resources

Customers

Demand
ManufacturingLogistics Distribution
Planning Planning
Planning Planning

Typical architectural
components
Interaction
Channels

Web
Internet

Mobile
Wireless

e-Mail

Analytical
Applicatio
ns

Marketing
Intelligence

Sales
Intelligence

Customer
Intelligence

Business
Application
s

Marketing

Sales

Installed Base

eCommerce

Resources

Territories

Call Center
ICM/Telephony
Call Center
Intelligence

OSS

HR

Assignment Engine

CRM
Tasks
Notes
Calendar
1-to-1 Fulfillment
Foundatio
nETCA
Escalations
Interaction History Universal Work Q
Business
Common Data and Object Models, Security, Interfaces, Globalisation
Foundatio
n

Tech Stack

E-business Platform

ERP Evaluation: Mainframe

ERP Evaluation: Standalone

PC

ERP Evaluation: File

Sharing

ERP Evaluation:
Client/Server

ERP Evaluation:
Client/Server

ERP Evaluation:
Distributed

ERP Evaluation: Cloud

Cloud Computing

Layered Cloud Computing

Layered Cloud Computing

Cloud Computing

Cloud based ERP

architecture

ERP Services: Run Time

Architecture

ERP Evaluation Summary

ERP Architecture

ERP Architecture

ERP System Architecture

ERP System Architecture

Client/Server Overview
LAN/WAN
TCP / IP

Client

Server

Client/Server Overview (Logical

Structure)
Data Storage
Application
Logic

Presentation

Server

Basis System: Three-Tier Computer

Hierarchy
Central Database
(Storage of all data)

Access to Dataase:
(Read / Write data)

Database
Input / Output
of data to users

Application

Presentation

Processing of data
using application logic

Presentation of the
processed data to
the user

Client/Server
Configuration
Distributed
Remote
Presentation Presentation
(Thin Client)

Distributed
Application

Remote
Data Mgmt

Distributed
Presentation
(Fat Client)

Data
Data
Data
Data
Data
Management Management Management Management Management
Application
Function

Application
Function

Presentation

k
r
o
Netw
Presentation

Presentation

Application
Function

k
r
o
w
Net

Data
Management

Application
Function

Application
Function

Application
Function

Presentation

Presentation

Presentation

ERP System Configurations:

Client-Server Network Topology
Two-tier

common server handles both application and

database duties
used especially in LANs

First Tier
User
Presentatio
n Layer

Second Tier

Server

Applications

Server

Database

Two-Tier Client Server

Application
and
Database
Layer

ERP System Configurations:

Client-Server Network Topology
Three-tier

client links to the application server which

then initiates a second connection to the
database server
used especially in WANs

User
Presentatio
n Layer

First Tier

Second Tier

Third Tier

Applications

Database

Application
Server

Database
Server

Three-Tier Client
Server

Application
Layer

Database
Layer

User
Presentatio
n Layer

First Tier

OLTP
Second Tier
Applications

Third Tier

Operations
Database

OLTP
Server

OLAP
Server

OLAP
Applications

Operations
Database
Server

Data
Warehouse
Server

Data
Warehouse

Applicatio
n Layer

ERP with OLTP and OLAP Client Server using Data Warehouse

Databa
se
Layer

Internet Computing
Architecture
Applicatio
n

2 Tier
Applicatio
n

Applicatio
n

Applicatio
n

3 Tier

Databas
e
Applicatio
Applicatio
n
n

Browser
Java
Browser

Application
Server

SAP Three-Tier
Architecture

Software Layers
J.D. Edwards
SAP

BAAN

PeopleSoft

ERP Applications

Sequel
Server
AS
4

Database Management System

Oracle
Oracle

Operating System(s)

00

NT

UNIX

ERP & Related

Technologies

Business Process Reengineering (BPR)

the fundamental rethinking and radical redesign of business process to achieve

dramatic improvements in critical,
contemporary measures of performance
such as cost, quality, service and speed
--Dr. Michael Hammer

Data Warehousing

Storage / archive of operational /

transactional data, for business analysis;
over the time period database size
increases & performance degrades

Data Warehouse
System
Order
Entry
System
Purchases
System

Legacy
Systems
VSAM Files
Hierarchical DB
Network DB

ERP
System

The Data
Warehouse

Sales Data
Summarized Annually
Sales Data
Summarized

Operations
Database

Data Cleansing
Process

s
io u
v
e
Pr
s
ar
e
Y
iou
v
e
Pr
er
s art
Qu
u
s
vio
e
Pr
ks
s
ee
W

Quarterly

Current (this weeks)

Detailed Sales Data

ed
v
i
ch
Ar

Tim
r
ve

ERP & Related

Technologies

Data Mining

The process of identifying valid, novel,

potentially useful and comprehensible
knowledge from databases that is used to
make crucial business decisions.

On-line Transaction Processing (OLTP)

System that focuses on processing

transactions such as orders, invoices or
general ledger entries
Generally relies solely on relational
databases

ERP & Related

Technologies

On-line Analytical Processing (OLAP)

Fast Analysis of Shared Multi-dimensional

Information
Provides the technical basis for the
calculations and analysis required by
business intelligence

Business Intelligence (BI)

Broad category of applications and

technologies for gathering, providing access
to and analyzing data for making better
business decisions

ERP & Related

Technologies

Product Life Cycle Management (PLM)

Managing descriptions and properties of

product through its development and useful
life from business and engineering point of
view

Supply Chain Management (SCM)

Managing network of facilities and

distribution options that performs the
functions of procurement of materials,
transformation of these materials into
finished products and distribution of these
finished products to customers

ERP & Related

Technologies

Geographical Information Systems (GIS)

Customer Relationship Management

(CRM)

Procurement, distribution & logistics

Shortest root to deliver goods
Cost involved in procurement

Methods and technologies used by

companies to manage their relationships
with clients

E-Commerce

Business activities using computer network

Business Enterprise

Product
s

Customer

Orders

Material
s

Order Entry
System

Customer
Sales
Account Rec

Customer
Database

Manufacturing
and
Distribution
System

Procurement
System

Production
Scheduling
Shipping

Vendor
Accts Pay
Inventory

Manufacturing
Database

Purchase
Supplier
s

Procurement
Database

Traditional Information System

with Closed Database
Architecture

ERP System Insights

Business
Enterprise
Data Warehouse

Legacy
Systems

ERP
System
On-Line Analytical Processing
Bolt-On Applications
(OLAP)
(Industry Specific Functions)
Suppliers

Customers
Core Functions [On-Line Transaction Processing
(OLTP)]
Sales
Business
Shop Floor
&
Logistics
Planning
Control
Distribution

Operational Database
Customers, Production,
Vendor, Inventory, etc.

SOLUTIONS
AND
INTEGRATION

SAP ERP Modules

Integration
Sales &
Distribution

SD

Material
Management
Production
Planning
Quality
Management
Plant
Maintenance
Human
Resources

Financial
Accounting

FI

MM

R/3

PP

AM

Client / Server

QM

Controlling

CO

PS

PM

WF
HR

IS

Fixed Asset
Management
Project
System
Workflow
Industry
Solutions

ERP Services
Consulting
Selecting,
planning,
training,
implementation, delivery

testing,

Customization
Creating
processes & reports, additional
product training, workflow, specialist advice
to improve how the ERP is used in the
business; system optimization, implementing
Business Intelligence

ERP Services
Support

Project management
Change management
Data migration
Business process analysis/ design/
redesign
Business analysis

ERP services during ERP Life Cycle Phases

ERP
ERP
ERP
ERP

Acquisition (ERP Planning)

Design (Configuration)
Implementation
maintenance

Solutions of ERP

Financial Management
Inventory Management
Purchasing
Sales Management
Production Planning
Advanced Visual Planning
Manufacturing Management

Working of ERP

Working of ERP

Computer-Integrated
Manufacturing

PROCESSES
AND
FUNCTIONS

Business Process
A business process is a sequence of activities
followed by individuals in a business to achieve
some business goal.
Often these are manual activities executed by
employees who play certain roles in the business in
addition to others who are external to the business:
customers, business partners, suppliers etc.

An Example of Business Process

Systems from a Functional Perspective

Examples of Business Processes
Functional Area
Manufacturing
and production

Sales And Marketing

Finance and accounting

Human resources

Business Process
Assembling the product
Checking for quality
Producing bills of materials
Identifying customers
Making customers aware of the product
Selling the product
Paying creditors
Creating financial statements
Managing cash accounts
Hiring employees
Evaluating employees job performance
Enrolling employees in benefits plans

Organization Levels

OLTP & OLAP

TPS & DSS

TPS & EIS

Categories Of Information
System

Different Categories of
Systems
Three main categories of information systems function at
different organizational levels:
1.

Operational - level systems:

Support operational managers keep track of the
elementary activities and transactions.

2.

Management-level systems:
Serve the monitoring, controlling, decision-making,
and administrative activities

3.

Strategic-level systems:
Help senior management tackle and address strategic
issues.

Four Major Types of

Information Systems
Transaction Processing Systems (TPS)
Management Information Systems (MIS)
Decision-Support Systems (DSS)
Executive Information Systems (EIS)

Four Major Types of Information

Systems

Four Major Types of Information

Systems
1.Transaction Processing Systems (TPS)
These are the basic business systems that
serve the operational level.
A computerized system that performs and
records the daily routine transactions
necessary for the conduct of the business.

A Symbolic Representation for a

Payroll TPS

Typical Applications of TPS

Four Major Types of Information

Systems
2. Management Information Systems
(MIS)
These systems serve at management level.

Inputs: High volume transaction level

data
Processing: Simple models
Outputs: Summary reports
Users: Middle managers
Example: Annual budgeting

Management Information Systems

(MIS)

A Sample MIS Report :

Four Major Types of Information

Systems
3. Decision-Support Systems (DSS)

These systems serve at the management level

Inputs: Transaction level data
Processing: Interactive
Outputs: Decision analysis
Users: Professionals, staff
Example: Contract cost analysis

Decision-Support Systems
(DSS)

Four Major Types of Information

Systems
4. Executive Support Systems
(ESS):
Inputs:
Aggregate data
Processing: Interactive
Outputs: Projections
Users: Senior managers
Example: 5 year operating plan

Model of a Typical Executive Support

System

EXECUTIVE SUPPORT SYSTEMS

(ESS)..

Top level management

Designed for the individual senior

manager
Ties CEO to all levels
Very expensive
Extensive support staff

Interrelationships
Among Information systems

ERP Supported Functions

Financial

Human
Resources

Operations &
Logistics

Sales &
Marketing

Accts Receivable

Time Accounting

Inventory

Order Processing

Asset Account

Payroll

MRP

Pricing

Cash Forecast

Personnel Plan

Plant
Maintenance

Sales Reporting

Cost Accounting

Travel Expense

Production
Planning

Sales Planning

General Ledger

Benefits Mgmt

Manufacturing

Catalogue Mgmt

Profit Analysis

Purchasing

Standard Costing

Quality Mgmt.
Shipping

All of these functions. One software package.

One database

Order Management
Process
Process

Propose

Commit Configure

Check
Credit

Deliver

Bill

Collect

Sales & Distribution

Modules

Production
Planning
Financial
Materials
Mgmt

Accounting

Procurement
Process

Demand

Accounts
Payable

Purchase
Requisition

Invoice
Verification

Outline
Agreement

Vendor

Goods Receipt
& Inventory Mgmt.

Scheduling
Agreement

Purchase
Order

Production Process
Schedule/Release

Goods Issue

Order Settlement

Shop Floor

Goods Receipt

Sales Process Trading

Goods

Customer Order

Accounts Receivable

Picking

Packing

Billing

Goods Issue

Sales Process Finished

Goods

Availability
Check
Customer Order

Final Payment

Partial Payment

Goods Issue

Billing

Sales Process Finished

Goods
Availability Check
- Insufficient Independent
Demand

Customer Order

Dependent
Demand

MRP Run
Production
Scheduling

Purchasing

Process Flow
Goods Issue
to Shop Floor

Accounts Receivable

Production

Billing

Goods
Receipt

Goods Issue

TOOLS / TECHNIQUES
AND
SELECTION

Tools

ERP Bolt-on

Third-party application
An artificially intelligent, comprehensive
execution system provides very specific
functionality or technology to
complement ERP software
Employ client-specific business rules to
meet unique needs
E.g. PLM, CRM, e-procurement, order
tracking, data warehousing, data mining
etc.

Middleware

An enabling engine to tie external

applications and ERP together
Removes the need of time-consuming,
costly and difficult to maintain APIs
Data-Oriented Products

ERP integration through sharing data

sources

Message-Oriented Products

Direct data sharing between programs

without the need for data files or database

Vendors

Developing ERP is very complex & timetaking process; lot of skilled resources
needed
The people who have developed the
ERP packages
The people who have invested huge
amount of time and effort in R-&-D to
create the packaged solutions
E.g. SAP, Oracle, Baan, JD, Microsoft,
Tally

Consultants

To successfully setup and implement

ERP package
Understands the business and good at
all the phases of implementation

Package evaluation / selection

Configuration / customization
End-user training / support

Develops techniques and methodologies

for ERP implementation related issues

Case Study: How ERP

Works

Example of How ERP

Works

Step 1 : Brazilian retailer orders, via the

Internet, 1,000 shoes from International Shoe
Co. A sales rep takes the order, routes it to
ERPs ordering module, ERP checks the retailer
credit, price, etc. The order is approved.

Step 2 : Simultaneously ERPs inventory

module checks the stocks and notifies the rep
that half the order can be filled immediately
from stock. The other half will be
manufactured and delivered in 5 days directly
from the factory in Taiwan.

Example of How ERP

Works

Step 3 : ERPs manufacturing module

schedules the production in Taiwan and
instructs the warehouse (in Chinese) to ship
the shoes to Brazil and print up an invoice (in
Portuguese).

Step 4 : ERPs human resources module

calculates labor requirements. Due to a
shortage, the personnel manager in Taiwan is
instructed to get temporary workers.

Step 5 : ERPs material planning module

notifies the purchasing manager about a
shortage of purple dye. A purchase order is

Example of How ERP

Works

Step 6 : The customer logs on via the

extranet to the companys sneakers
division. He can see that 500 shoes
were shipped from the regional
warehouse. This is done with ERP
tracing capabilities.

Step 7 : Based on data from ERPs

forecasting and financial modules, the
CEO can determine both demand and
profitability per product. The financial
module also converts all foreign moneys

Quiz

Which roles and module of ERP is

involved in which step?
In above example are modules are
related with each others? How?
Elaborate workflow in above example
and justify the need of ERP.

Q&

THANK YOU
For Participation in
Architectures and Components of Enterprise Resource
Planning
By
Satish Chinchorkar
chinchorkar@gmail.com 98224 06187