Enterprise Resource Planning systems are the new solution to
business systems. These systems provide comprehensive business
functionality in an integrated fashion using a state-of-the-art IT
architecture.
It is a software architecture that facilitates the flow of information
among all functions within an enterprise. It sits on a common database and is
supported by a single development environment. ERP systems are customized
to support an organization's business processes.
Nevertheless, the time is pressing, rapid Internet development pave the way for conceptually new forms of business - e-business, when in virtual space are involving more and more traditional business process. E-business is faster, more convenient, and the prime advantage - worldwide business.
So, it seems to outrun traditional business forms in the nearest future.
Web essentially change fundamental business work processes thus implying the system that supports these processes, and the design and development of these systems, also changed.
This paper identifies opportunities of using web-oriented ERP solution, describes essential technologies that used or could be used in these systems. The general spirit of the paper is detailed research in ERP II concept (web oriented ERP), and building the abstract ideal model of web-oriented system. On basis of model and existent systems analysis, in paper made some recommendation for effectiveness increase.
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Contens
ERP evolution
The basic concept of an enterprise resource planning system evolved over
the past 30 years. The American Production and Inventory Control Society
[APICS, 1998b] has been a strong advocate for ERP systems. APICS defines
ERP [APICS, 1998b] as "an accounting-oriented information system for
identifying and planning the enterprise-wide resources needed to take, make,
ship, and account for customer orders. An ERP system differs from the MRPII
system in technical requirements such as graphical user interface, relational
database, use of fourth generation language, and computer-aided software
engineering tools in development, client/server architecture, and open-systems
portability."
ERP is also defined [Russell & Taylor, 1998] as an updated Manufacturing
Resource Planning System (MRPII) with relational database management,
graphical user interface, and client/server architecture. They define MRPII as an
extension of Materials Requirements Planning (MRP) that plans all the resources
necessary for manufacturing; including financial and marketing analysis,
feedback loops, and an overall business plan. MRP is a computerized inventory
control and production planning system for generating purchase orders and work
orders of materials, components, and subassemblies. This brief evolutionary
definition of ERP is depicted in Figure 1. ERP is further defined [CMU, 1998] as a
strategic business solution that integrates all the business functions, including
manufacturing, financial, and distribution
Clearly, an ERP system as defined above, and one that is properly
implemented, can achieve unprecedented benefits for business computing. But
consider also that ERP systems are a catalyst for radical business change that
results in significant performance improvement (i.e., business process
reengineering). With this in mind it is clear that ERP systems should have a
significant impact on industry. Davenport [1998] suggests that "While the rise of
the Internet has received most of the media attention in recent years, the
business world’s embrace of enterprise systems may in fact be the most
important development in the corporate use of information technology in the
1990s".
ERP systems are also being referred to as Enterprise Systems
[Davenport, 1998] and Enterprise Information Systems. ERP systems are
traditionally thought of as transaction processing systems which is, indeed, what
they are. But they are continually redefined based on the growing needs of an
organization. For example, ERP system developers provide non-transaction
based systems as an integral component of ERP systems. Electronic commerce,
data warehouse, supply chain optimization, and advanced planning and
scheduling enterprise solutions are now available from ERP vendors.
ERP and Web Services
In the context of ERP, Web Services offer a two-fold advantage: ease of integration and reduction in costs through the hosted application model.
Ease of Integration
Integration is a major source of expenditure across enterprises. According to figures from the Meta Group, Global 2000 companies rely on an average of 49 enterprise applications, and they spend up to 33% of the IT budget just to get them to talk to one another.
ERP is complex and not intended for public consumption. Now, however, clients and outsourcing vendors are demanding access to the same information employees get through the ERP system - things like order status, inventory levels, and invoice reconciliation - except they want to get all this information simply, without all the ERP software. This is where Web Services come to the rescue, wherein seamless URL calls make it possible to expose just the appropriate amount of material to the authenticated users at the right time.
With the availability of Web Services we can achieve integration with a superior quality of service for reliability, security, manageability, routing, discovery, testing, and effectiveness. Web Services basically use object-oriented technology to "wrap" data and programming elements in Web Service methods to be accessed by different applications. A software bridge of sorts may exist to connect a PeopleSoft human resources package to SAP's R/3 system, but that same bridge won't work for other human-resources packages trying to connect to SAP.
Reduction in Costs through the Hosted Application Model
The deployment of a traditional ERP system can involve considerable business process analysis, employee retraining, and new work procedures. A franchising strategy to adopt Web Services for ERP implementation or enhancement takes advantage of the investment made in the legacy ERP applications and provides them a new lease of life.
Web Services enable proprietary applications to communicate over the Web. The goal of chief vendors is to create "wraps" to access a high-level tool that turns Java or any other proprietary program into a Web Service. Proprietary ERP applications and Web Services can talk to each other by using such high-level tools - HP's E-Speak toolsets; IBM's Dynamic e-business (infrastructure and software); and Sun ONE (Forte technology and iPlanet's ECXpert) - all of which assist data flow and communications between vastly diverse applications.
ERP provides for integrated, multicomponent application software performing multiple business functions. It involves the use of packaged software instead of client-written custom software.
How does Web Services Make ERP Easier?
The enterprise may still require an ERP application for its internal systems to function efficiently together. Web Services allow the enterprise to acquire the information needed to respond effectively, even in situations where tightly coupled application design isn't necessary.
By developing an integrated Internet information solution, ERP systems companies make public information that was never before accessible from the enterprise. Markets created in this way are by definition more efficient, because they permit companies to concentrate their efforts on customer service and profits. As this new technology gains business-wide support, more vendors will venture into product support for these Web Services. Traditional ERP vendors had a hard time building the links between the Web and their software. Most of them are now presenting solutions helpful for bridging the gaps.
The number and functionality of available Web Services is starting to increase and ERP and accounting systems vendors are beginning to tackle the integration problem by introducing what are called Web Service broker hubs. A broker hub offers a portal to provide a user interface for consumers so that they can find, evaluate, subscribe to, cancel, manage, or monitor Web Services.
An increasing number of accounting and ERP vendors are delivering Web Service broker hubs. SAP and Oracle offer them for users of mySAP and Oracle E-Business Suite. Intuit and Peachtree offer them for use with QuickBooks and Peachtree Complete Accounting. And Navision is one of the few ERP vendors that will offer a Web Service broker hub to users of midtier accounting software.
Current State
Major enterprise application software vendors have already embraced the Web Services architecture. Oracle, SAP, and PeopleSoft are on the forefront on this aspect, with many of them already having graduated to the Web Services way of life. SAP and PeopleSoft are pursuing Web Services to help facilitate application integration.
Where Oracle, SAP, and PeopleSoft see Web Services as a foundation for better integrating applications within their own suites, others see Web Services as an industry-standard infrastructure that will facilitate business-logic integration across diverse best-of-breed applications on a global scale.
The following table summarizes the Service Oriented Architecture offerings that some of the major vendors have, with which all of them aspire to capture a piece of the pie:
| Competitor
| Environment
| Expected Date
| Status
| Offerings
|
| SAP
| J2EE and ABAP in the same kernel
| 2002
| Nearly Done
| R3, mySAP.com
|
| Oracle
| Java
| 2002
| EOY
| 11i Suite, Java APIs
|
| Peoplesoft
| Tools for SOAP and UDDI
| 2002
| Nearly Done
| Peoplesoft8
|
| Microsoft
| .NET and Passport
| 2001
| Done
| Bcentral
|
| Siebel
| Business Services
| 2001
| Done
| Siebel7
|
Comparison between Current ERP Systems and Web Services Solutions
This is a comparison between the current day ERP solutions and the Web Service based ERP solutions:
| Parameter
| Traditional Solution
| Web Service Solution
|
| Scalability
| Low
| Very High
|
| Time Frame for implementation
| Very High
| Moderate
|
| Maintainability
| Low
| Very High
|
| Reliability
| Moderate
| High
|
| Portability
| Low
| Very High
|
| Cost to Enter
| High
| Moderate
|
| Cost to Maintain
| High
| Low
|
| Total Cost of Ownership
| High
| Low
|
| ROI
| Moderate
| Very High
|
Economics of ERP Web Services
The TCO for a Web Services solution would be substantially lower than the staggering $53,320 reported by the Meta Group for a "heads-down" user over the first two years after installation of a similar ERP solution. This is due to the fact that the following costs normally incurred in a traditional ERP solution are alleviated or reduced in this approach:
- Deployment costs.
- Consultancy costs.
- Future expenses due to migration and scalability issues.
- Training costs.
- Integration and testing costs. We benefit from the "componentware" paradigm Web Services offer.
- Data Conversion costs.
- Data Analysis costs.
The rapid turn around time of a Web Service solution promises higher yield and ROI, lesser investment, and faster break-even point.
Summary
ERP is a great concept, but like so many of these great ideas, conditions apply. It seems very likely that future ERP applications will not be either products or services, but rather combinations of products, services, and "loosely coupled" applications. These applications are another form of hybrid because they combine locally installed product functions with distributed service functions delivered electronically over the Internet.
Hybrid models offer a best-of-both-worlds solution. They provide fast, locally installed product functions combined with on-demand remote services that take advantage of the Internet. They help maintain private data ownership, while making select data public in a controlled manner. They deliver simple customization of applications through the addition of Web Services channeled via service broker hubs, which focus on the needs of a specific ERP suite.
References
- Using ERP Systems in Education by E. Watson and H. Schneider http://cais.isworld.org
- Web Services Business Strategies and Architectures by Kapil Apshankar http://www.webservicesarchitect.com
- Gartner Research: http://www.gartner.com
- APICS group: www.apics.org
- Russian Enterprise Solutions: www.russianenterprisesolutions.com
- E-commerce RU: http://www.e-commerce.ru
- Accountings Advisor http://www.accountingsoftwareadvisor.com/
- Microsoft Business Solutions Russia www.msbs.ru
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