Peaceful Coexistence: How SOA Enables ERP and Execution Platforms to Work Together

Nov. 18, 2008
An ERP system is good at planning and doing the books, but when it comes to getting your hands dirty -- managing inventory, people and transportation, an Execution Platform excels.

In any society, you have two core groups that make important things happen: the dreamers and the doers. Both tend to become frustrated with each other. Yet both are essential to any successful society. The same can be said for the enterprise world. In an enterprise, the role of the dreamer is taken by the ERP system. Its function is to help manage the big picture, gathering data that helps set the course for the future. Execution Platforms are the doers. They are the suite of applications, such as warehouse management, retail store operations and transportation management applications that are put in place to streamline the day-to-day operations of the enterprise supply chain. Their focus is on getting things done now -- executing specific work flows to meet the needs of the markets they serve. The problems come when, in the interest of "efficiency," enterprises try to turn one of those platforms into something it's not.

In recent years, there has been a push to give ERP systems responsibility for everything that happens in the enterprise, including day-to-day operations. It made sense in one aspect: if everything is kept on a single platform, it eliminates the integration nightmare that most enterprises faced when they tried to make their ERP systems work with their best-of-breed execution systems. It was also believed that if all functions were kept within an ERP system, any changes made in one area would percolate through the rest of the system.

Yet the reality is that ERP systems often don't have the richness of functionality required to run most operations, nor do they have the agility required to react quickly to changes in the business. For major requirements, it can take years for an ERP system to bring functionality to market. By the time the feature is ready to roll out, the world can change drastically. Just look at the skyrocketing cost of fuel and the downward spiral of the financial market to see how quickly conditions change.

So if shifting execution functionality into the ERP system isn't the answer to integrating the dreamers and the doers, what is? The answer lies in a technology that has received a lot of media attention as a concept but has only recently begun to be implemented in the real world: service oriented architecture (SOA).

Simply, SOA allows both platforms -- the Execution Platform and ERP -- to live side by side while reducing the complexity of IT projects. IT staffers can handle user requests related to business process changes via a configuration change in the Execution Platform, rather than devising a complex ERP coding fix. This results in faster completion of the objective in a less-risky project. SOA enables this because each software platform exposes its capabilities as services and those can be knitted together in standard ways. Here's an example of how it works.

Suppose there is a product recall. Traditionally, the manufacturer would have to look up records to see where the product was shipped, and notify distributors and retailers accordingly. The company would have to issue return merchandise authorizations, contact warehouses and shipping companies, and putting a hold on any inventory. In addition, the manufacturer would have to change the status of the stock keeping unit (SKU) across the enterprise, notify partners, and take other actions.

This process would not only be slow, it would multiply the potential for error dramatically with each entry. (A recall like this would be even more difficult if only an ERP system is being used due to the amount of development that would be involved.)

With an SOA in place, however, the notification could be made in one application, such as the Execution Platform and it would then propagate throughout the system based on business rules. SOA effectively allows business processes to extend through the systems of your business partners. This method saves time, saves labor, improves accuracy and ultimately allows the enterprise to act quickly in reaction to the needs of the business. It also assures that the information is captured in the ERP system so that all of the complex reverse logistics are accounted for accurately in the main planning engine of your business.

The ability of an SOA to re-use services has added other efficiencies as well. Let's look again at the issue of placing a product on hold. There can be any number of reasons to hold a product, from a customer request to a problem with the product itself to a hurricane at the shipping destination. With an SOA, you can create a service for one reason -- then reuse that business functionality for other situations or in other software applications. This decreases the amount of coding required to create business processes.

Just as societies need both dreamers and doers, enterprises need to have their various platforms do what they do best. An ERP system is good at planning and doing the books, but when it comes to getting your hands dirty -- managing inventory, people, and transportation, an Execution Platform excels. Thanks to SOA, both can co-exist within the same enterprise to help drive success.

Mike Verdeyen is the Vice President of Product Development at RedPrairie, focused on supply chain and retail execution technologies. RedPrairie is a consumer driven optimization company, built on an advanced Service Oriented Architecture.

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