An enterprise resource planning (ERP) system automates an organization's fundamental business activities while increasing managerial efficiencies to achieve maximum peak performance and optimize productivity.
Modern ERP systems consist of modules, each dedicated to managing and automating specific company functions such as sales, production, accounting/tax accounting/hiring onboarding/customer service CRM warehouse logistics, etc. Their architecture determines how they are displayed to users and how well integrated they work together.
Technical foundations of ERP architecture provide the framework that connects application deployment levels between servers, workstations, interfaces, and software objects, while outlining application deployment levels between servers and workstations, along with interfaces and software objects, into one cohesive whole. An ERP architecture must accommodate new technologies, rather than only offering technical capabilities, platform support and user interface features. To meet future business requirements such as mergers/acquisitions/process adjustments/compliance with legislation changes, etc., ERP Architecture must be flexible and maintainable.
ERP Architecture Systems
Development phase improvements of ERP architecture were dramatically increased, falling into four distinct categories.
Two-tier architecture divides your system into two distinct portions - the server side and the user side.
Add another level to make things even more complicated. All business logic runs within the presentation layer instead of directly communicating between client devices and an ERP database, thus decreasing demands on performance from users' devices.
The third type of architecture is even more intricate in terms of its structure. It is called web architecture and separates presentation layer components, such as web services and browsers, into independent categories for easier use by external organizations. Therefore, access to an ERP built using this sort of structure is possible from outside an organization using it.
Finally, we review the fourth form, or service-oriented architecture (SOA). SOA grows proportional to the services being offered by an ERP system and allows businesses to utilize pre-made modules when adding new services, giving businesses endless potential expansion options when expanding their ERP solutions.
Types Of ERP Architectures: Monolithic And Postmodern Systems
Enterprise Resource Planning (ERP) structures can be divided into two primary architectural styles: monolithic systems and postmodern systems. Both options offer their own strengths and weaknesses, which should be carefully evaluated when considering them based on criteria like scalability, cost-efficiency, and adaptability to business requirements.
Monolithic ERP Systems
A monolithic ERP architecture system central access point and user-friendly features distinguish it from other ERP solutions. This type of system is defined by a uniform framework usually developed by one software vendor. Users find its use straightforward. It provides all-in-one optimization of company procedures through one consolidated access point.
However, monolithic structures present certain shortcomings, particularly regarding adaptability and flexibility. Tailoring these systems to meet specific company requirements may prove costly in terms of both time and resources - or may even prove unfeasible altogether.
Businesses often must accept that complete automation may not be possible or turn to additional third-party software to meet all their operational needs. New ERP vendors need to be found when this occurs as business needs alter over time.
Postmodern ERP Systems
Conversely, postmodern ERP systems boast a more flexible architecture. Their modular nature enables them to expand or contract as necessary and includes various services, increasing upgradeability that would not otherwise be achievable with monolithic solutions.
Users of postmodern ERP systems have the advantage of customizing basic features to fit their company procedures by adding modules specifically tailored for them. This obviates paying for unnecessary functionalities that might otherwise come preinstalled on monolithic ERPs and saves businesses from spending too much money on functionality they don't actually require. Businesses don't waste money purchasing expensive ERPs with features they may never actually utilize and instead opt to add only those functions they actually require to their ERP solution.
Postmodern systems pose unique difficulties as well. Upgrading them requires specific module updates and core feature upgrades; due to this flexibility that draws people towards these platforms, upgrade attempts become challenging undertakings.
Businesses encounter another difficulty when installing postmodern ERP architecture systems: initial configuration and integration into preexisting IT infrastructures. This difficulty stems from having different software modules from various providers installed onto each individual machine. Yet postmodern ERPs remain attractive options due to their adaptability and modularity - providing businesses with more control and options in meeting specific business requirements.
Also Read: Can Architecture Governance Save $10M In ERP Software Development?
What Are The 5 ERP System Components?
As previously discussed, ERP systems offer standard functionality to all platform users. Let us now take a closer look at this basic ERP functionality (and mainly, its five significant modules that make up it):
- Finance: This part of the system oversees financial transactions and assets such as loans, receivables, payment history, company budget and planning for future expenses. By centrally controlling their financial assets using one tool for managing them more wisely while simultaneously automating debt payments to reduce cost items that could potentially be reduced and repay debt obligations automatically.
- Customer Relationship Management (CRM): A CRM provides company employees with comprehensive data about customers: interactions and communications history; complaints made; wishes, preferences and purchases made - information which can help optimize future sales while simultaneously increasing retention rates.
- Supply chain management: automation plays an integral part in modern supply chains and logistics operations, significantly decreasing cost while improving the reliability of implementation processes. Therefore, companies operating within the oil and gas sector will find this component of an ERP system invaluable for planning supply chains and logistic processes efficiently and cost-effectively.
- Business Intelligence (BI): This module can be especially beneficial to companies that struggle to plan their resources effectively, especially using advanced technologies like artificial intelligence and machine learning that will assist companies with allocating assets more intelligently based on key performance indicators (KPIs).
- Human Resources (HR): This module of an ERP system takes on responsibility for increasing the efficiency of managing an organization's HR resources, from making regular payments (salaries, taxes and benefits) to hiring/firing procedures.
Picking The Right ERP Architecture
Selecting between multiple architectures may prove daunting if you are new to ERP software systems, so it makes sense to tailor the selection based on budget, usage format and any possibilities for modernization or flexibility.
Consider whether users from outside your organization will gain access to your system; in such an instance, any future solution must be mobile and allow access permission settings.
Remind yourself that global scaling may pose some security threats to your data. If this interests you in the future, budget for solutions capable of rapid modification from day one.
As a general guideline, your ERP software architecture should depend on company objectives and any processes requiring automation. Therefore, the optimal decision is best reached after conducting an in-depth investigation of business procedures used within your firm and the entities involved. Create a process and relationship diagram before making your selection decision based on this knowledge.
Conclusion
Unfortunately, it's impossible to tell with certainty which ERP system architectural type is the superior option; that decision depends entirely upon your business needs, procedures and financial constraints. For this reason, it would be wise to consult specialists so you make an informed choice; our oil & gas industry team would love the opportunity to collaborate on creating tailor-made solutions tailored specifically towards oil and gas projects.
