The State of the art for computer-based technologies used by different types of people for

Enterprise Resource Planning (ERP) applications in the 21st Century.

Abstract

An Enterprise Resource Planning (ERP) solution is a computer program that provides a

general working platform for all departments of an enterprise with their management

functions being integrated into the program. These solutions are used at all the different

levels of an organization (operational, management and strategic) as well as across

functional areas (such as customer care, sales and marketing and manufacturing).

Different technologies have been used in implementing these solutions since they were

first deployed starting from the 3-tier (presentation, application, database) model to the

emerging web-service based technologies. The major ERP software vendors are SAP

AG, Oracle (which has grown its customer base based on acquisitions of other firms in

the same business), Infor Global Systems and now Microsoft.

1.0 INTRODUCTION

Enterprise Resource Planning (ERP), a business integration approach, has been widely

deployed in various kinds of organizations since it was first defined by the Gartner Group

in 1990 as the next generation of Manufacturing Resource Planning(MRP) software.

Today, ERP is considered to be “the price of entry for running a business”(Kumar & van

Hillegersber as quoted in LeRouge & Webb, 2007).

An ERP system is an integrated, configurable, and tailor-able information system which

plans and manages all the resources and their use in the enterprise, and streamlines and

incorporates the business processes within and across the functional or technical

boundaries in the organization (She & Thuraisingham, 2007). According to Lin, Yang

and Lin (2006), ERP is a business management system that integrates all facets of a
business, including planning, manufacturing, sales, purchasing, marketing, and finance,

so they can cross organizational boundary and be more closely coordinated by sharing

information. It can therefore be seen that ERP systems facilitate collaboration in

organizations and thus can help them streamline/optimize their operations and hence

contributing to their successful existence.

Our objective in responding to this question is to give an overview of the state of the art

in the different computer based technologies being used for ERP and particularly to

discuss the developments in this field along with the different software products available

from the major players in the field of ERP software. We also look at the different levels

at which ERP solutions are used in businesses. In order to achieve this, we start by

looking at the history of ERP systems, their architecture and emerging technologies in

this field along with the different kinds of information systems used at the different levels

of a business.

2.0 HISTORY AND EVOLUTION OF ERP SYSTEMS

In order to understand the current technologies, we need to first look at the birth and

growth of ERP and its attendant solutions. The evolution of these systems dates back to

the year 1960 when systems were designed to assist the manufacturing process.

The first software that was developed in this process was Material Resource Planning

(MRP) in the year 1975. MRP was a software based production planning and inventory

control system. This was followed by another advanced version namely MRP II which is

an acronym for Manufacturing Resource Planning. The main emphasis of MRP II(which

was released in the 1980s) was the optimization of manufacturing processes by

synchronizing the materials with production requirements.

ERP came into being with effect from 1990 though the fact remains that many people are

of the opinion that ERP existed from the year 1960 in the form of MRP and MRP II. ERP

systems now attempt to cover all core functions of an enterprise, regardless of the

organization's business or charter. These systems can now be found in non-manufacturing

businesses, non-profit organizations and governments.

From the point of view of some researchers, the ERP technology after 2000 is considered

as “Extended ERP” (Rashid, Hossain, and Patrick, 2002 as quoted in She and

Thuraisingham (2007)) because e-business solutions such as Customer Relationship

Management (CRM) and Supply Chain Management (SCM) are included into the core

modules of the original ERP systems.

Various commercial products including SAP, Oracle, and Baan, are now available in the

marketplace. Furthermore, Web services and service-oriented architectures are the major

underlying technologies for emerging ERP systems (She & Thuraisingham, 2007).

Figure 1: Evolution of ERP solutions

3.0 ERP TECHNOLOGY

3.1 Overview

In simple terms, an ERP solution is a computer program that provides a general working

platform for all departments of an enterprise with their management functions being

integrated into the program. The program runs off a single database so that all

departments can easily share information and better communicate with each other.

Figure 2: ERP systems concept

Ideally the central database contains all data for the different software modules which

would include:

• Supply Chain Management (SCM) – This module is concerned with inventory,

order entry, purchasing, product configuration, supply chain planning. It’s focus is

on helping the firm manage its relationship with suppliers to optimize the

planning, sourcing, manufacturing, and delivery of products and services.

• Customer Relationship Management (CRM) – The focus of this module (system) is

to coordinate all the business processes surrounding the firm’s interactions with
 its customers in sales, marketing, and service to ensure customer satisfaction and

retention thus ensuring a continued revenue stream for the company. It helps the

company unify its customer interactions and provide a means to track customer

information.

• Knowledge Management Systems – This is a system for managing knowledge in

organizations for supporting creation, capture, storage and dissemination of

information. Its major focus is on enabling employees to have ready access to the

organization's documented base of facts, sources of information, and solutions.

• Manufacturing – This module would take care of managing the engineering

processes, preparation of bills of material, scheduling, capacity, workflow

management and any other direct manufacturing process.

• Financials – General ledger, cash management, accounts payable

• Project Management – Costing, billing, time and expense, performance units,

activity management

• Human resources – payroll, training, time and attendance, rostering, benefits

3.2 Architecture of ERP Systems

ERP systems are commonly developed based on a three-tiered client/server architecture

in order to offer the needed functionality, flexibility, scalability, and reliability (Jingsheng

Shi & Halpin, 2003):

• First Tier: Presentation Layer (Front) whose primary purpose is to present

interfaces to various users across the enterprise. Every time a user logs in to the

system, his/her access level and an appropriate user interface through which
 he/she can execute their tasks and duties is presented to them. The different access

levels are assigned usually based on office functions such as human resources,

accounts, administration etc.

• Second Tier: Application Layer (Middle) which is the framework engine

providing system administration and maintaining central intelligence for

facilitating client access to the third layer. It is the bridge between the end users

and applications.

• Third Tier: Database Layer (Back) which is made up of the central database that

manages the operational and business data throughout the whole enterprise. The

database contains equipment information, cost data, project data and any other

business information.

Figure 3: ERP Architecture (Source: She and Thuraisingham, 2007)

3.3 Emerging Trends in ERP technologies

According to Thuraisingham (2006) as quoted in She and Thuraisingham (2007), the

current generation of ERP solutions is the third. The first was related to manufacturing

applications, the second was specialized systems such as supply chain management and

customer relationship management and the third and most current is the one based on

web services.

According to the World Wide Web Consortium (2004), a Web service is a software

system designed to support interoperable machine-to-machine interaction over a network.

It has an interface described in a machine-processable format. Other systems interact with

the Web service in a manner prescribed by its description using Simple Object Access

Protocol (SOAP) messages, typically conveyed using Hyper Text Transfer Protocol

(HTTP) with an eXtensible Markup Language (XML) serialization in conjunction with

other Web-related standards.

The use of Web services eases integration and also reduces costs since clients will be able

to access information without having to go through the ERP front end software.

Additionally, the clients will be able to access the information in obsolete systems

without having to worry about compatibility problems.

And according to Laudon and Laudon (2006), enterprise software vendors are

refashioning their architectures to be more Web-centric so that core systems can work

with the Internet, extended supply chains, CRM systems, and new business-to-business

(B2B) and business-to-consumer (B2C) e-commerce models. This new generation of

extended enterprise applications is sometimes referred to as Extended Resource Planning

(XRP or ERP II).

The major enterprise application vendors also now have tools for creating cross-

application sets of services from existing systems. For example SAP’s version of cross-

application services is called xApps. xApps enables businesses to build and automate

new cross-functional, end-to-end processes atop existing applications, regardless of the

technology platform they use. xApps uses Web services standards to pull together data

from the firm’s SAP software suite, from internal legacy systems, or from external

systems for use in new business processes that span multiple functions and application

areas. The software synchronizes with the existing business processes embedded in these

systems.

4.0 ERP IN THE ORGANISATION

4.1 Organization Levels

Every organization is composed of different levels, different divisions and different

business unit goals and targets. One therefore often finds different information systems

being used in an organization to meet the differing needs of the organization.

According to Laudon and Laudon (2006), a typical organization can be split into three

levels (operational, management and strategic) and then into four major functional areas

(sales and marketing, manufacturing and production, finance and accounting and human

resources) each being served by a different information system. This is illustrated in the

diagram below:
f i l e : / / / H | / c h 2 / c h p t 2 - 1 f u l l t e x t . h t m

F I G U R E Figure
2 - 14: Levels
T y pand
e functional
s o f i areas
n f o inr an
m organisation
a t i o n s y s t e m s
O r g a n i z a t io n s c a n b e d iv id e d in t o s t r a t e g ic , m a n a g e m e n t , a
f u n c t io n a l a r e a s : s a le s a n d m a r k e t in g , m a n u f a c t u r in g a n d p
h u m a n 4.2 Information Systems in Organizations
r e s o u r c e s . I n f o r m a t io n s y s t e m s s e r v e e a c h o f t h e s e

There are therefore three major types of information systems used in organizations to
D if f e r e n t K in d s o f S y s t e m s
serve at the three different levels. At the lowest level are the operational-level systems
T h r e e m a in c a t e g o r ie s o f in f o r m a t io n s y s t e m s s e r v
o p e r a t ithat
o nsupport
a l - operatives
l e v e l by s keeping
y s t tracke m of s the, basic
m aactivities
n a gand e transactions
m e n t of - lthe
e v e l s y s t
O p e r a t io n a l- le v e l s y s t e m s s u p p o r t o p e r a t io n a l m a
e l e m e n organization.
t a r y a Anc texample
i v i t iofe ans operational-level
a n d t r a system
n s a isc thet i ocash
n sregister
o f att ah e o r g a n
d e p o s it s , p a y r o ll , c r e d it d e c is io n s , a n d t h e f lo w o f
p u r p o s supermarket.
e o f s y s t e m s a t t h is le v e l is t o a n s w e r r o u t i
t r a n s a c t io n s t h r o u g h t h e o r g a n iz a t i o n . H o w m a n y
h a p p e n Ate thed next
t o levelM arer the
. Wmanagement
i l l i a mlevels systems
’ s p that a yfacilitate
m e the n tdecision-making
? T o a n s w e r t
g e n e r a lly m u s t b e e a s ily a v a i la b le , c u r r e n t , a n d a c
s y s t e m and s administrative
i n c l u d activities
e a sofy middle
s t e managers.
m t o These
r e systems
c o r dare usually
b a n used
k to d e p o s it s
o n e t h a t t r a c k s t h e n u m b e r o f h o u r s w o r k e d e a c h
provide periodic reports and not instant information. An example of a management-level
M a n a g e m e n t - le v e l s y s t e m s s e r v e t h e m o n i
a n d a d m in is t r a t iv e a c t iv it ie s o f m id d le m a n a g e r s .
s u c h s y s t e m s is t h is : A r e t h in g s w o r k in g w e ll? M a n
system is one that tracks monthly sales figures by supermarket and reports on

supermarkets where sales exceed or fall below anticipated levels.

The highest level of information systems are those that help senior management respond

to strategic issues and long-term trends. An example of such a system is one that

forecasts sales trends in the medium to long term.

The figure below shows the specific information systems that are used at each level:
f i l e : / / / H |/ c h 2 / c h p t 2 - 1 f u l l t e x t . h t m

F I Figure
G U R 5:E Different
2 - 2 information
T h e f o usystems
r m aused
j o at
r the
t y different
p e s oorganizational
f i n f o r m levels
a t i o n s y s t e m s
T h is f ig u r e p r o v id e s e x a m p le s o f T P S , D S S , M I S , a n d E S S , s h
b u s in e s s f u n c t io n t h a t e a c h s u p p o r t s .
Each of these systems is not a stand-alone system but rather exists in a symbiotic
T a b l e 2 - 1 s u m m a r i z e s t h e f e a t u r e s o f t h e f o u
s h relationship
o u ld bin e the n systems
o t e dhierarchy
t h a feeding
t e a data/information
c h o f t h eintod the
i f fsystem
e r e an level
t s y s t e m s m
b y o r g a n i z a t io n a l l e v e ls a n d g r o u p s o t h e r t h a n it s m
f i nabove
d iitn and/or
f o r picking
m a t data i o nfromo the
n system
a n a Mlevel
I Sbelow
, o it.r a m i d d le m a n a g e r m

4.3 Systems Integration to achieve an enterprise-wide view

It is definitely advantageous to integrate these different systems so that information can

flow easily between different parts of the organization and provide management with an
f i l e : / / / H |/ c h 2 / c h p t 2 - 1 f u l l t e x t . h t m ( 4 o f 1 3 ) 0 9 / 0 2 / 2 0 0 6 8 : 3 7 : 4 3 P M

enterprise-wide view of how the organization is performing as a whole. This is where the
enterprise systems come in and provide a cross-level, cross-functional and business

process oriented view of the organization (Laudon & Laudon, 2006). The figure below

shows the setup of these systems in the organization whereby they span the whole

organization and even including customers and key business partners such as suppliers.

Figure 6: Enterprise Applications

5.0 VENDORS & PRODUCTS

The major vendors of ERP products traditionally included SAP AG, Oracle, JD Edwards

(purchased by PeopleSoft which was itself later purchased by Oracle) and Baan

(purchased by SSA Global Technologies which was later purchased by Infor Global

Solutions). After the acquisition of PeopleSoft and JD Edwards in 2004, Oracle gained

approximately 22% of the ERP market share. However, the Microsoft offerings in this

are area also becoming more and more prominent.

5.1 Oracle

Oracle Corporation releases five(5) ERP products of which some are homegrown and the

others were acquired when Oracle acquired different companies. The different ERP

software that Oracle offers include:

• Oracle E-Business Suite – Oracle Corporation markets its homegrown software

applications as parts of the Oracle E-Business suite. It provides pre-integrated

financial and industry-specific processes that ensure it provides consistent

financial and operation information, dynamic planning, budgeting and forecasting

etc. It makes the following applications available as part of the Oracle eBusiness

suite(Oracle, 2009):

o Asset Lifecycle Management – This application enables the organization

to manage all of its assets through all stages of their lifecycle – planning,

acquisition, deployment etc by uniquely consolidate legacy repositories

and catalogs, enable location tracking and monitor network-attached IT

assets including hardware and software inventories.

o Customer Relationship Management – This application keeps one

 centralized database with all customer information enabling all the

different business functions to draw from one central consistent source.

o Enterprise Resource Planning

 Financial Management – This module makes it easy to operate

shared services across businesses and regions since it integrates all

the financial operations as well as delivering pre-integrated

financial and industry-specific processes.

 Human Capital Management – This Human Resources(HR)

management solution enables the company to manage HR globally

on a single system of record. It includes such features as payroll,

workforce scheduling and advanced benefits management.

 Project Management – This module supports the full lifecycle of

project and portfolio management with a single, accurate view of

all project-related activities. Its functionality allows users to select

the best portfolio of initiatives, execute projects in adherence with

methodologies, assign the right global resources, proactively

streamline project delivery, and track profitability via accurate

budgeting, forecasting, and billings/chargebacks.

o Procurement - Procurement is the integrated suite of applications that

dramatically cut all supply management costs. It helps the company

reduce spending on goods and services and streamline procure-to-pay

 processes.

o Product Lifecycle Management - This enables companies to accelerate

product innovation and maximize product profitability by managing the

information, processes, and decisions about products throughout their

lifecycles and across the global product network. It does this by providing

a centralized enterprise product record database. The product record

includes all the information required by an enterprise and its extended

design and supply chain to conceptualize, design, source, build, sell,

service and dispose of products.

o Supply Chain Management – This module aims to help companies build

and operate world-class value-chains for profitable growth. The Oracle E-

Business Suite Supply Chain Management (R12) family of applications

integrates and automates all key supply chain processes, from design,

planning and procurement to manufacturing and fulfillment, providing a

complete solution set to enable companies to power information-driven

value chains. (Oracle, 2009)

o Manufacturing

• JD Edward EnterpriseOne and JD Edwards World – JD Edward EnterpriseOne is

an integrated applications suite of comprehensive enterprise resource planning

software from Oracle that combines business value and standards-based

technology. JD Edwards World provides the Web-enabled applications for the

management of plants, inventories, equipments, finances, and people.

 • Oracle PeopleSoft Enterprise is the business application suite that offers Web

services integration with multivendor and homegrown applications; it is

admittedly considered easier to configure and more flexible than its competitors.

5.2 SAP

The company's main Enterprise Resource Planning product is SAP ERP. The current

version is SAP ERP 6.0 and is part of the SAP Business Suite. Its previous name was

called R/3. The "R" of SAP R/3 stood for real-time - even though it is not a real-time

solution. The number 3 related to the 3-tier architecture: database, application server and

client (SAPgui). R/2, which ran on a Mainframe architecture, was the predecessor of R/3.

Before R/2 came System RF, later dubbed R/1.

SAP ERP is one of five enterprise applications in SAP's Business Suite. The other four

applications are:

• customer relationship management (CRM) - helps companies acquire and retain

customers, gain marketing and customer insight

• product lifecycle management (PLM) - helps manufacturers with product-related

information

• supply chain management (SCM) - helps companies with the process of resourcing

its manufacturing and service processes

• supplier relationship management (SRM) - enables companies to procure from

suppliers
SAP is now offering Service Oriented Architecture (SOA) capabilities (calling it

Enterprise SOA) in the form of web services that are wrapped around its applications.

While its original products were typically used by larger companies SAP is now also

actively targeting small and medium sized enterprises (SME) with its SAP Business One

and SAP Business All-in-One.

5.3 Infor Global Systems

The major ERP product offering from Infor Global is called LN/BaaN and it offers a

wide range of support for order-driven, project-based discrete manufacturing. It is

majorly used to increase operational efficiency, better control processes, better

communication and collaboration, enhance performance and scalability and leverage IT

infrastructure and information assets. It is ideal for companies in make-to-stock,

assemble-to-order, make-to-order or engineer-to-order environments.

5.4 Microsoft

Microsoft, founded in 1975, is the biggest software company in the world with its famous

Windows series products. Microsoft Business Solution Group (MBS) is the department

that focuses on providing ERP solutions, such as Microsoft Dynamics (formerly

Microsoft Business Solutions), which is the integrated business management solution that

includes financials, customer relationship management, and supply chain management.

Microsoft Dynamics has two major products each aimed at different organization types.

For the mid-sized and larger organizations, Microsoft has the Microsoft Dynamics AX

2009 software while for the small and medium-sized enterprises they offer Microsoft
Dynamics NAV. By 2004, MBS had revenue of around $800 million, giving it a 4% ERP

market share (She & Thurainsingham, 2007).

6.0 Conclusions

Based on an analysis of the current ERP products on the market and the evolving

technologies, we can conclude that the software is going to continue evolving to keep in

touch with the evolutionary nature of Information Technology. This will lead to ERP

systems with more coordination/collaboration, more intelligent, web-based and maybe

even mobile phone enabled. As the solutions become more and more crucial to

conducting business, more and more people and organizations will look to use them and

therefore the vendors are having to scale down the cost of their products to make them

attractive to small and medium enterprises.

References

1. Jinghseng Shi, J & Halpin, DW (2003) Enterprise Resource Planning

for Construction Business Management. Journal of Construction

Engineering and Management, 129(2), 214-221

2. Laudon, KC & Laudon, JP (2006). Management Information Systems:

Managing the Digital Firm (10th Ed). Prentice Hall.

3. LeRouge , C & Webb, H.W. (2007). Appropriating Enterprise

Resource Planning Systems in Colleges of Business: Extending

Adaptive Structuration Theory for Testability. Journal of Information

Systems Education, 15(3), 315-326

4. Lin, WT, Yang, HJ, & Lin, MY. (2006) The Implementation of

Enterprise Resource Planning and Product Data Management in

Semiconductor Related Industries: An Empirical Study in Taiwan.

International Journal of Management, 23(1), 117-131

5. Oracle. (2009). Oracle E-Business Suite | Applications | Oracle.

http://www.oracle.com/us/products/applications/ebusiness/index.ht

m. Accessed on 19th October 2009.

6. She, W & Thuraisingham, B. (2007). Security for Enterprise

Resource Planning Systems. Information Systems Security, 16, 152-

163

7. W3C, (2004). Web Services Glossary. http://www.w3.org/TR/ws-

gloss/ Accessed on 23rd September 2009