Developing and Customizing Federated ERP Systems

Developing and Customizing Federated ERP Systems

Daniel Lübke (Leibniz Universität Hannover, Germany) and Jorge Marx Gómez (University Oldenburg, Germany)
DOI: 10.4018/978-1-60566-892-5.ch016
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Abstract

Small and Medium Enterprises (SMEs) are the most important drivers in many economies. Due to their flexibility and willingness to innovate they can stand up to larger industry players. However, SMEs – as every other company – need to further reduce costs and optimize their business in order to stay competitive. Larger enterprises utilize ERP systems and other IT support for reducing costs and time in their business processes. SMEs lack behind because the introduction and maintenance of ERP systems are too expensive, the return on investment is achieved too late and the associated financial risks are too high. However, SMEs would like to have IT support for their business. The research behind the Federated ERP System (FERP) addresses the problems SMEs face with conventional ERP systems and offers reasonable and scalable IT support. This is done by decomposing the whole business logic of the ERP system into Web services, which are linked at run-time. The service composition is realized by a workflow system that is also responsible for creating and managing the user interfaces and the data-flow. By integrating only the Web services that are needed (possibly from third parties) the cost is reduced and the functionality can be scaled to the actual needs. However, not only a technical solution is needed but also the development process must be tailored towards SMEs. Small companies cannot afford highlyskilled staff and often do not have defined business processes.
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Federated Erp Systems

Problem Addressed

An ERP system is a standard software system which provides functionality to integrate and automate the business practices associated with the operation or production aspects of a company. The integration is based on a common data model for all system components and extents to more than one enterprise sector (see Robey et al., 2002; Rautenstrauch et al., 2003).

However, there are some disadvantages associated with conventional ERP systems. The main ones are:

  • In most cases not all of the installed components are needed,

  • high-end computer hardware is required to run the system, and

  • customization of ERP systems is very expensive because product specific know-how of experts is necessary.

Due to the expensive process of installation and maintenance only large enterprises can afford complex ERP systems, which provide business logic for all sectors of the functional enterprise organization. Contrary to these aspects, FERP systems allow the separation of local and remote functions whereby no local resources are wasted for unnecessary components. Furthermore, single components are executable on small computers and due to decreasing complexity of the local system installation and maintenance costs subside, too.

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