Introduction

 Enterprise Resource Planning (ERP) programs:

Core software used by companies to coordinate information in every area of business
o Help manage companywide business processes
o 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

Functional Areas and Business Processes

 The key role of an ERP system is to provide support for business functions
 To understand ERP, you must understand how a business works
o Functional areas of operation
o Business processes
 Functional Areas of Operation
o Marketing and Sales (M/S)
o Supply Chain Management (SCM)
o Accounting and Finance (A/F)
o Human Resources (HR)
 Business functions: Activities specific to a functional area of operation

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: (Graph)
 MRPICAP
 Sales & Marketing
 Master Scheduling
 BOM (Bill of Materials)
 Shop Floor Control
 Purchasing
 Logistics
 Accounts Payable Re
ERP Modules from Three Vendors
Function SAP Oracle/ PeopleSoft Microsoft Dynamics
Marketing and Sales,
Sales and Distribution, Retail POS, Field
Sales Supply Chain
Sales Opportunity Service Management
Management
Purchasing, Supplier Procurement and
Supply Chain
Procurement Relationship Supplier Relationship
Management
Management Management
MRP, Product Life Cycle
Production Manufacturing Manufacturing
Management
Accounting Financial Accounting Financial Management Financial Management
Warehouse Supply Chain Distribution
Distribution
Management Management Management
Customer Service CRM CRM CRM
Governance, Risk, and
Corporate Performance Corporate Performance
Compliance Analytics
& Governance Management
Management
Human Human Capital Human Capital
HR Management
Resources Management Management

Marketing and Sales

 Functions of Marketing and Sales
o Advertising and Marketing products
o Determining pricing
o Promoting products to customers
o Taking customers' orders
o Helping create a sales forecast
o Customer support
o Customer Relationship Management
 Needs information from all other functional areas

Marketing and Sales

 Customers communicate orders to M/S in person or by telephone, e-mail, fax, the Web, etc.
 M/S has a role in determining product prices
 Pricing might be determined based on a product's unit cost, plus some percentage
markup
 Requires information from Accounting and Finance, and Supply Chain Management data
Marketing and Sales
 Marketing and Sales needs to interact with Human Resources to exchange information on hiring
needs, legal requirements, etc.
 The Marketing and Sales functional area exchanges data with customers and with the Human
Resources,

 Order data
 Sales trend data
 Per-unit cost.
 Travel expense company policy

 Outputs for M/S

o Sales strategies
Marketing and Sales
 Product pricing
 Employment needs

Supply Chain Management

 Functions within Supply Chain Management
o Making the product (manufacturing/production)
o Buying raw materials (purchasing)
o Receiving goods and raw materials Transportation and logistics
o Scheduling production of products
o Plant maintenance
o Needs information from various functional areas
o Production plans based on information about product sales (actual and projected) that
comes from Marketing and Sales

Supply Chain Management

 Sales forecasts: Analyses that attempt to predict the future sales of a product
 With accurate data about required production levels:
 Raw material and packaging can be ordered as needed
 Inventory levels can be kept low, saving money
 Supply Chain Management data and records can:
 Provide data needed by Accounting and Finance to determine how much of each resource was
used
 Support the M/S function by providing information about what has been produced and shipped
 Supply Chain Management interacts in some ways with Human Resources
Supply Chain Management
 The Supply Chain Management functional area exchanges data with suppliers and with the
Human Resources, Marketing and Sales, and Accounting and Finance functional areas.
 Inputs for SCM
o Product sales data
o Production plans
o Inventory levels
o Layoff and recall company policy

Supply Chain Management

 Outputs for SCM
o Raw material orders
o Packaging orders
o Resource expenditure data
o Production and inventory reports
o Hiring information

Accounting and Finance

 Functions within Accounting and Finance
o Recording raw data about transactions (including sales), raw material purchases, payroll,
and receipt of cash from customers, planning & budgeting, cost allocation & control
 Raw data: Numbers collected from those operations, without any manipulation, calculation, or
arrangement for presentation
 Data from Accounting and Finance used by Marketing and Sales and Supply Chain Management
o Sales records are important component of sales forecast
o Sales forecast is used in making staffing decisions and in production planning
o Records from accounts receivable used to monitor the overall credit granting

Accounting and Finance

 Needs information from all other functional areas
 A/F personnel:
o Record company's transactions in the books of account
o Record accounts payable when raw materials are purchased and cash outflows when
they pay for materials
o Summarize transaction data to prepare reports about company's financial position and
profitability
 People in other functional areas provide data to A/F
o M/S provides sales data
o SCM provides production and inventory data HR provides payroll and benefit expense
data
 M/S personnel require data from A/F to evaluate customer credit
 Accounting and Finance
 The Accounting and Finance functional area exchanges data with customers and with the
Human Resources,

Accounting and Finance

 Marketing and Sales, and Supply Chain Management functional areas.
(graph)
 Inputs for A/F

Accounting and Finance

o Payments from customers
o Accounts receivable data
o Accounts payable data
o Sales data
o Production and inventory data
o Payroll and expense data
 Outputs for A/F
o Payments to suppliers
o Financial reports
o Customer credit data

Human Resources
 Functions of Human Resources
o Recruit, train, evaluate, compensate employees, benefits, government compliance
 HR uses sales forecasts developed by the individual departments to plan personnel needs
 Systems integrated using ERP software provide the data sharing necessary between functional
areas
 HR needs information from the other departments

Human Resources
 Tasks related to employee hiring, benefits, training, and government compliance are all
responsibilities of HR
 HR needs accurate forecasts of personnel needs from all functional units
 HR needs to know what skills are needed to perform a particular job and how much the
company can afford to pay employees
 Observing governmental regulations in recruiting, training, compensating, promoting, and
terminating employees
Human Resources
 The Human Resources functional area exchanges data with the Accounting and Finance,
Marketing and Sales, and Supply Chain Management functional areas for HR
 Inputs Personnel forecasts Skills data
 Outputs for HR

Human Resources
o Regulation compliance
o Employee training and certification
o Skills database
o Employee evaluation and compensation
 Production
o Helps in the planning and optimizing of the manufacturing capacity, parts,
components, and material resources using historical production data and sales
forecasting.
 Purchasing
o Streamlines the procurement process of required raw materials and other supplies

Human Resources
 Inventory Management
o Facilitates the processes of maintaining the appropriate level of stock in a warehouse.
 Miscellaneous Modules
o Nontraditional modules such as business intelligence, self-service, project management,
and e-commerce.

Functional Area Information Systems

 Potential inputs and outputs for each functional area described next
 Note the kinds of data needed by each area and how people use the data
 Information systems maintain relationships between all
 functional areas and processes
 Significant amount of data is maintained by and shared among the functional areas
 Timeliness and accuracy of these data critical to each area's success and to company's ability to
make a profit and generate future growth
 ERP software allows all functional areas to share a common database
 Allows accurate, real-time information to be available
Components of the Enterprise System Architecture
 Functional
o Defines the ERP modules that support the various business functions of the
organization. Examples include:
o Accounting
o Human Resources
o Procurement
o Fulfillment.
o Etc.
 System
o Defines the ERP architecture through the physical components of hardware, software,
and networking angle.

Enterprise Systems Architecture

 Architecture helps implementation teams to understand in detail the features and components
of the 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 requirements for system infrastructure,
training, change management, and business process reengineering are

Three-Tier Architecture
 Most of the current ERP implementations follow a three-tiered architecture, which consists of a
Web tier, an application tier, and a data tier.
 Benefits
o Scalability - Easier to add, change, and remove applications.
o Reliability - Implementing multiple levels of redundancy.
o Flexibility - Flexibility in partitioning is very simple.
o Maintainability - Support and maintenance costs are less on one server.
o Reusability - Easier to implement reusable components.
o Security IT staff has more control system to provide higher security.
 Limitations
o Can be very expensive and complex.

Tiers
 The Web Tier
o Web-based portal allows users the ability to access and analyze information through
their Web browser.
 The Application Tier
o Consists of a Web browser and reporting tool where business processes and end-users
interact with the system.
 o 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 Data Tier
o Focus is on structure of all organizational data and its relationships with both internal
and external systems.

SAP - Sales and Distribution

 The diagram shows sub-functionality for Sales and Distribution module. Diagram shows
individual business activities within each sub-functionality and flow of those activities.
 What is Middleware?

● Middleware is any type of software that facilitates communication between two or more
software systems
● Can be simple communication connection between applications
● Can be as sophisticated as information sharing and logic execution mechanisms
● Middleware is a technology that allows us to move information between multiple enterprises

Middleware Models

● There two types of middleware models

1. Logical middleware model
● Depicts how information moves throughout the enterprise conceptually
2. Physical
● Depicts both the actual method of information movement and the technology
employed

Point-to-Point Middleware

● Point-to-point middleware uses a simple pipe to allow one application to link to another
application
● Provides point-to-point connection between a source and a target application
● Disadvantages
● Inability to bind more than two applications
● Lacks ability to house application logic
● Lacks ability to change messages as they flow through the pipe

Many-to-Many Middleware

● Links many applications to many other applications

● Can deal with more than two source or target applications
● This capability make it the best option for application integration
● It provides flexibility and applicability to the application integration problem domain
 Synchronous vs Asynchronous

● Asynchronous middleware moves information between one or many applications in an

asynchronous mode
● i.e., the middleware software is decoupled from the source or target applications
● Applications are not dependent on other connected applications for processing.
● Application can always continue processing, regardless of the state of the other
applications
● Synchronous middleware is tightly coupled to applications
● The applications are dependent on the middleware to process one or more functions
calls at a remote application
● Calling application must halt processing to wait for the remote application to respond
● Asynchronous is preferred over synchronous application integration solution
● Synchronous middleware faces problems such as network or remote server problems
● Therefore, application has to stop processing
● Synchronous middleware eats up bandwidth because several calls must be made across
the network in support of a synchronous function call

Communication Models

● Connection-oriented communication
● Two parties connect, exchange messages and then disconnect
● Typically synchronous process, but it can be asynchronous
● Connectionless communication
● Calling program does not enter into a connection with the target process
● Receiving application simply acts on the request, respond if required
● Direct communication
● Middleware layer accepts the message from the calling program and passes it directly to
the remote program
● Usually synchronous in nature
● Fire and forget
● This model allows the middleware user to “fire off” a message and then “forget” about
it,
● without worrying about who receives it or even if the message is ever received
● The purpose of this model is to allow a source or target application to broad cast specific
type of messages to multiple recipients
 Communication Model: Queued communication

● Generally requires a queue manager to place a message in a queue

● The remote application then retrieves the message, either shortly after it has been sent, or at
any time in the future
● Receiving application need not to be active when calling application sends the message
● Does not block neither remote nor calling application from proceeding with processing

Communication Model: Publish/Subscribe

● Frees an application from the need to understand anything about the target application
● Publisher is the provider of the information about a topic
● Publisher sends information it desires to share to any interested applications (subscribers)
● Publisher does not need to understand anything about applications that are interested in the
information
 Communication Model: Request response

● As name implies, a request is made to an application using request response middleware, and it
responds to the request
● Includes any middleware that can facilitate a response from a request between applications,
such as integration servers or application servers

Types of Middleware

● RPC
● Oldest type of middleware
● Provide ability to invoke a function within one program and have that function execute
within another program on a remote machine
● RPC are synchronous
● i.e., RPC must stop the execution of the program
● They also require more bandwidth than other types of middleware
● Advantage of RPC is its simplicity for mechanism and programming
● Disadvantage is are its huge performance cost and inability to scale
● Message-oriented middleware (MOM)
● MOM is queuing software that uses is messages as a mechanism to move information
from point to point
● MOM uses the notion of messages to communicate between applications,
● Direct coupling with the middleware mechanism and the application is not
required
● MOM rely on asynchronous paradigm
● This allows application to function independently
● i.e., continue processing after making a middleware service request
● Message is dispatched to a queue message, which ascertains that message is
delivered to its final destination.
● Messages returning to the calling application are handled when the calling
application finds the time
● Managing are easy to manage using MOM as it has structure (schema) and content
(data)
● MOM can be thought as one-record database that move between applications
through message-passing mechanisms
● MOM supports two communication models
● Point-to-point
● Message queuing (MQ)

● Distributed objects
● Small application programs that use standard interfaces and protocols to communicate
with one another
● Provide mechanisms for application development, providing enabling technology for
enterprise, or enterprisewide method sharing
● There are two types of distributed objects in market today
● Common Object Request Broker Architecture (CORBA)
● Component Object Model (COM)
● Database-oriented middleware
● Facilitates communication with a database, whether from an application or between
databases
● Can be used as mechanism to extract information to extract from either local or remote
databases
● Works with two basic database types
● Call-level interfaces (CLI)
● Common APIs that span several types of databases, providing access to
any number of databases through a well defined common interface
● Open Database Connectivity (ODBC)
● Native database middleware

● Transactional middleware
● Provides mechanism for coordination information movement and method sharing
between many different resources
● Provides tightly coupled integration
● Requires changes with source and target applications
● Based on concept of transaction
● A unit of work with a beginning and an end
● Application logic is encapsulated within a transaction
● Transaction either completes or is rolled back completely
● Two types of transaction-oriented middleware
● TP monitors
● Provide mechanism to facilitate the communication between two or
more applications as well as a location for application logic
● Provides scalability by sharing and processing transactions among other
connected TP monitors
● Provide connectors to databases, other applications and queues
● These connectors requires some application development in
order to communicate with these various resources
● Once connected these resources are integrated into the transaction and
leveraged as part of the transaction
● As a result, can recover, if failure occurs
 ● Provides two services
● Guarantee the integrity of transactions
● Resource management and run-time management services
● TP monitors greatest performance value is in their load-balancing
feature
● Allows them to respond gracefully to a barrage of transactions
● As demand increases, the transaction manager launches more
server processes to handle the load even as it kills processes
that are no longer required

● Application servers
● Provide application logic sharing and processing and for connections to back-
end resources
● Resources such as databases, ERP applications and even traditional
mainframe applications
● Provide user interface mechanisms
● To deploy applications to the web platform
●

● Integration servers
● Facilitates information movement between two or more resources and can account for
differences in application semantics and platforms
● Without any application necessarily understand anything about other
applications it shares information with
● Can also join many applications by using common rules and routing engines
● Can transform the schema and content of the information as it flows between
various applications and databases
● Can broker messages between two or more source or target systems
 Tough Choices

● RPCs are slow, but their blocking nature provides best data integrity control
● Updates are always applied in the correct order
● Asynchronous layer to access data may seem to be the best solution, as it does not block
processing
● But there is no way to guarantee that an update will occur in a timely manner
● Messaging could provide better performance because the queue manager offers sophisticated
performance-enhancing features as such as load balancing
● Presence of easy-to-use interface will take the power of middleware and place it in hands of the
business user