ERP represents a wide suite of applications covering various enterprise functionalities. It also links together departments and business units. Whereas an ERP system provides a perfect back end system, the organization still needs to interact and collaborate with its suppliers and vendors, where an ERP system plays only a limited role.
Extended ERP: The business functions of an organization are depicted in the diagram below:
Functions depicted in the diagram within the dashed rectangular, represents backend business functions of an organization, which are adequately dealt by an ERP system. But an ERP system can only play a limited role for collaborating with suppliersâ€™ and customers (as depicted outside the dashed rectangular).
The organizations need to collaborate with web customers and suppliers for carrying out activities such as bidding, ordering, payment, sharing inventory information and catalogues, electronically and in real time. This is not possible through traditional Electronic Data Exchange (EDI) functionality of an ERP system. It is, therefore, incumbent on the organizations to invest in collaborative tools such as customer relationship management (CRM), supplier relationship management (SRM), and e-commerce. To drive down cost of supply chain, across vendors, distribution network and customers, various supply chain, warehouse management and transport solutions are deployed.
A limitation of an ERP system is that it provides current status only, such as open order, open entry and it does not depict past instances of data. Decision makers often need to look past current status to find trends and patterns that aid better decision making process. Hence the corporate are also investing in solutions providing business intelligence (BI), corporate performance management (CPM and knowledge management).
Enterprise Application Integration (EAI): Linking of an ERP system with new breed enterprise collaborative and intelligence suites is a cumbersome process, involving many hours of hand coding, due to rigid architecture and coding system of an ERP system. Enterprise Application Integration which provides integration suite to existing ERP system promises to speed the work of linking applications and minimizing the role of custom built code.
Approach to EAI: From a business perspective, it is imperative that ERP and various other applications which an organization deploys should behave as one integrated whole. The popular way of creating such integration is through massage oriented middleware, which is designed to handle all inter programme communications logic by means of message queues. The middleware takes a message such as a transaction and intelligently routes and reformats that message for one or more target systems. These middleware are built over existing parent middleware products/ open standard such as IBM MQSeries for message transport and DCOM/ CORBA for connectivity standard.
Application of Service Oriented architecture (SOA) - SOA has gained popularity in recent years due to its enabling functionality or services to upgrade and extend existing software applications. SOA is an architectural approach to build and deploy software applications that is interoperable by design say generation of a XML document based on a common open standard.
The importance of SOA has grown in recent years due to number of mergers and acquisitions in software industry, particularly by Oracle, Microsoft and Infosys, where companies endeavor to leverage their existing client base and to integrate their acquired software (mostly extended ERP products) with their clientsâ€™ existing ERP system. The netweaver from SAP or Fusion from Oracle, are examples of these organizationsâ€™ SOA initiative whereas Infor is incorporating SOA capabilities in their product lines.
The main advantage of SOA is that software capabilities are connected easily. Unlike EAI no middleware is needed as adoptions of standards enable services to interact directly. It also enhances reusability capacity of software, resulting longer life of existing assets. A successful SOA implementation makes it easier to customize and upgrade existing applications thereby reducing total cost of ownership. In brief SOA application connects seamlessly ERP modules, customization part of ERP modules, industry specific solutions and extended applications such as SCM, CRM and BI.