Everything You Need To Know About the Functional Architecture of ERP
Updated: Jan 26
Enterprise resource planning (ERP) is a type of software used by organizations to manage their daily operations. Popular ERP systems connect many business processes, from accounting, procurement, warehouse management, supply chain, project management, etc., to a single structure. This enables the flow of data and communication between them.
Organizations must have a broad understanding of ERP systems architecture to implement ERP solutions successfully. When selecting an ERP system, they must consider the various modules that align with their technical, economic, and strategic goals. With this, they can increase efficiency, lower costs and provide organizational flexibility and decision support.
The functional architecture of ERP represents a high level of the ERP software functions from a user perspective. Also, it specifies the interaction of functions and their relevant applications in the business domain. It concerns itself with how ERP systems function to perform end-to-end processes to maximize efficiency.
Functional architecture provides the set of patterns used to implement business functionality and the framework of its execution. In this article, we discuss the functional architecture of ERP, including its benefits and disadvantages.
What Is Functional Architecture?
Understanding functional architecture is vital to business owners. It is an architectural model that identifies system functions, their interactions, and corresponding IT needs. Basically, it defines the transformation of input flows into output flows performed by the ERP system to achieve its mission.
When project managers have information or different solution modules, they can rely on functional architecture to help organize them into an enterprise system. The functional architecture allows you to organize and interface with your finance, inventory, customer management, logistics, etc. Each functional unit handles one aspect of your product or services, such as marketing, research, development, information technology (IT), etc.
Architecture and design are closely intertwined and integral to ERP for manufacturing companies. Also, the functional architecture must be documented to provide the drawings, diagrams, models, and specifications against which the software can be performed and evaluated.
Functional architecture is an important concept and tool for designing complex ERP systems. Its goal is to put together every informational and human resource necessary for business activities in a single place. Also, it aims to support functional and performance test development. Finally, it describes what transactions the software product must carry to satisfy the specified requirements.
ERP Functional Areas
Again, ERP and project management systems connect your business functional areas, processes, and structures. These functions can be linked to one platform for easy assessment and flow of communication.
Architecture project management software is designed to eliminate inconsistencies and duplication of efforts. Some of the functional areas of enterprise resource planning systems include:
1. Marketing and Sales
With an effective functional approach to ERP, your sales and marketing departments can track customer experience from presale activities. These activities begin with contacting the customer to dispatch the customer's order. Employees can keep track of orders, and sales personnel can monitor their individual goals.
2. Supply Chain Management
ERP functional architecture modules supporting supply chain management may feature some important functions. This includes functions for purchasing, supplier scheduling, product configuration, goods inspection, warehousing, claims processing, etc.
3. Accounting and Finance
With ERP, manufacturing companies can automate and streamline tasks related to costs, budgeting, cash management, and other accounting functions.
4. Customer Relationship Management
ERP platforms can incorporate customer relationship management that focuses on how a business communicates with its customers. This can include customer interaction data from departments such as sales and marketing.
5. Human Resource
Human resource models within an ERP system may include tools to gather and interpret data on training, payroll, recruiting, benefits, etc. Human resources managers can also monitor and measure staff key performance indicators (KPIs) for job roles and departments.
Under the ERP manufacturing module system, some core functions include engineering, scheduling capacity, workflow, and product life management.
Understanding the Benefits of Functional Architecture
Knowing the functional architecture of popular ERP systems is like providing a manual that defines a business programming language. There are numerous benefits to taking a functional approach to your ERP project management architecture.
They include the following:
● With functional architecture, processes, outcomes, and actions are available for everyone to see and understand. Thus, encouraging transparency.
● This structure works efficiently in a stable environment that has continuous operations.
● Implementing functional architecture in a business ensures consistency, especially if you have an existing infrastructure and want to implement new technology in your system.
● It gives ERP project managers a better view of how different component of their business connects and function. With this, you can better understand ERP systems affect overall business operations.
● You ultimately save time by examining the different modules and the end-to-end processes. You can easily identify where the process will be impacted or improved within your system.
● Technology trends like mobile, cloud computing, and the Internet of Things (IoT) continue to evolve. Functional architecture benefits businesses, especially manufacturing companies, that want to remain abreast with new technologies. With this, your investment can be targeted and value driven.
● It helps to coordinate IT processes, resources, data, and information for organizational strategies and objectives.
Are There Disadvantages of Functional Architecture?
Yes, there are downsides to focusing on the functional architecture of ERP systems. For instance, workers who are organized based on functional architecture may only focus on the specific functions that relate to them. This can result in a lack of teamwork with other departments and no coordination.
Also, it is a rigid structure where innovations, changes, and flexibility can be difficult to implement. Furthermore, a department in a business unit can become autocratic and put its goals above that of the organization as a whole.
Who Is Best Suited to Focus on the Functional Architecture of ERP?
Large companies are better suited to focus on the functional architecture of enterprise resource planning. Smaller companies may need to consider it or may find it too constraining. However, functional architecture helps organizations run their business operations efficiently and maximize profit.
If you are considering the functional architecture of ERP for your business, this article helps provide some clarity. If you need help learning more about what functional architecture means and how it fits into your implementation, then leave questions/comments below. Also, check out our LinkedIn page.