1.-Sap Erp

Thursday, April 9, 2020
Page 1 of 14
SAP A Revolutionized ERP

By Mr Behram
Introduction
SAP is the world leader in enterprise applications in terms of software and
software-related service revenue. Based on market capitalization, it is the
world’s third largest independent software manufacturer supporting all sizes of
industries helping them to operate profitability, grow sustainably and stay ahead
of the competition in the market.
SAP at a Glance
SAP is known worldwide for its unique innovations that help the customers run
their business with high efficiency. Some of its facts and figures stand as follows:
➢ More than 263,000 customers in 188 countries.
➢ More than 68,800 employees in more than 130 countries.
➢ Annual revenue (IFRS) of €1682 billion.
➢ Listed under the symbol "SAP" on stock exchanges, including the

Frankfurt Exchange and NYSE.
SAP As A Leading ERP

SAP is a market leader in providing ERP (Enterprise Resource and Planning)
solutions and services. In this chapter, we will try to understand more on ERP and
where it should be used. In addition, we will learn the implementation techniques
of ERP along with the ERP packages available in the market.
Page 2 of 14
What is ERP?
Enterprise Resource Planning (ERP) is a software that is built to organizations
belonging to different industrial sectors, regardless of their size and strength.
The ERP package is designed to support and integrate almost every functional
area of a business process such as procurement of goods and services, sale and
distribution, finance, accountings, human resource, manufacturing, production
planning, logistics & warehouse management.
Page 3 of 14
Business Process Integration

Every business, regardless of the industry they belong to, require connected
systems with efficient information flow from one business process to another.
Business Process Integration (BPI) plays an important role in overcoming
integrating challenges that allows organizations to connect systems internally
and external Business Process Integration (BPI) allows:
• automation of business processes,

• integration of systems and services,
• secure sharing of data across numerous applications, and
• automation of management, operational, and supporting process.
The following illustration shows an overview of various business processes

running in an enterprise and how they are integrated.
Page 4 of 14
Evolution of ERP
During early phases of development, integrated solutions were designed for
particular process areas such as:
▪ Material Management: the integrated system was known as Material

Requirement Planning (MRP)
▪ Manufacturing: the integrated system was known as Manufacturing

Resource Planning
However none of the integrated systems came with a complete solution for an
organization covering major business process areas. In early 1990’s, the Gartner
Group first used the acronym ERP. By mid–1990’s, ERP systems addressed all the
core enterprise functions.
In the early stages, most of the ERP solutions were focused on automating back
office functions that were not directly affecting customers or general public.
Later, front office functions such as customer relationship management and e–
business systems were integrated.
Functions of ERP
An ERP system typically performs the following functions:
✓ Supports the integrated business process inside the organization.
✓ Improves capital planning and helps in executing organizational plans

and strategies.
✓ Helps speed up the decision-making process over the analysis of

accurate data.
✓ Helps extend the business network to wider domains, expanding the

products and services to reach more customers, suppliers, and
partners.
✓ Identifies operational risks to improve governance.
✓ Provides protection against organizational data breaches and

security threats to leakage of information.
✓ Makes the organization adaptable to the rapid changes in the

business process according to the needs.
Page 5 of 14
✓ Gives long-term profit by providing means to increase the customer base.
Functional Areas
ERP is a business management software is usually a suite of integrated
applications that a company can use to collect, store, manage, and interpret
data from many functional areas including:
➢ Financial Accounting – Deals with financial transactions and data.
➢ CO – Deals with budgeting.
➢ Human Resource Management – Deals with information related to
employee of an organization.
➢ Customer Relationship Management – Deals with capturing and
managing customer’s relationship, facilitating the use of customer
experience to evaluate the knowledge database.
➢ Sales and Distribution – Deals with order placement, delivery, shipment

and invoicing.
➢ Plant Maintenance - Deals with maintenance of technical equipment.
➢ Material Management – Deals with procurement of materials &
equipment.
Advantages of ERP
By integrating the business processes, the ERP offers the following advantages:
• Saves time and expenses.
• Allows faster decision-making by the management, utilizing the data

and reporting tools designed in the systems.
• Single data source and sharing of data among all the units of
an organization.
• Helps in tracking every transaction that takes place in an

organization, from starting till end.
• Supplies real-time information whenever required.
• Provides synchronized information transfer in between different

functional areas such as sales, marketing, finance, manufacturing,
human resource, logistics, etc.
Page 6 of 14
Disadvantages of ERP
It is not always easy to incorporate ERP in an organization. ERP suffers from
the following drawbacks:
• Sometimes business processes critical to an organization are to be
re-engineered to align them with an ERP solution.
• Cost of complex integration can be very high.

• Switching from one ERP solution to another increases the
implementation cost even further.
• End-users are to be trained for their daily operations.
• Customization is not preferred.
Page 7 of 14
SAP Modules.
SAP solutions include a number of functional modules, which support
transactions to execute key business processes, such as:
➢ Financial Accounting (FI)
➢ Controlling (CO)
➢ Sales and Distribution (SD)
➢ Materials Management (MM))
➢ Plant Maintenance (PM)
➢ Human Capital Management (HCM

Page 8 of 14
Finance and Controlling (FICO)

SAP FICO is a combination of two ERP modules, i.e., Finance Accounting (FI) and
Controlling (CO). Under Finance in SAP and at an enterprise level, the following
modules take part:
➢ FI – Finance
➢ CO – Controlling
➢ IM – Investment Management
➢ TR – Treasury
➢ EC – Enterprise Controlling
SAP FI (Financial Accounting) is accountable for tracking the flow of financial

data across the organization in a controlled manner and integrating all the
information for effective strategic decision-making.
Sales & Distribution Management (SD)

SAP SD is one of the most important modules in SAP. It has a high level of
integration complexity. SAP SD is used by organizations to support sales and
distribution activities of products and services, starting from enquiry to order and
then ending with delivery.
SAP SD can monitor a plethora of activities that take place in an organization
such as products enquires, quotation (pre-sales activities), placing order, pricing,
scheduling deliveries (sales activity), picking, packing, goods issue, shipment of
products to customers, delivery of products and billings.
In all these processes, multiple modules are involved such as FI (Finance
Accounting), CO (Controlling), MM (Material Management), PP (Production
Planning), LE (Logistics Execution), etc., which shows the complexity of the
integration involved.
Material Management (MM)

Material Management deals with movement of materials via other modules like
logistics, supply chain management, sales and delivery, warehouse
management, production and planning.
Plant Maintenance
Deals with maintenance of technical equipment. Have primarily four types of
maintenance processes:
➢ Breakdown Maintenance
Page 9 of 14
➢ Corrective Maintenance
➢ Preventive Maintenance
➢ General Maintenance
Human Capital Management (HCM)

The most important objective of master data administration in Human Resources
is to enter employee-related data for administrative, time-recording, and payroll
purposes.
A new employee can be hired without using Recruitment. Instead you can hire
someone by running a personnel action in Personnel Administration, thereby
creating the necessary data for the employee to be hired.
Employee data must be kept current. After an employee is hired, circumstances
can always arise which necessitate either the entry of new data or the correction
of current data. For instance:
➢ An employee moves to his or her new address must be stored in the
system.
➢ An employee gets a pay hike at the start of the year. The new salary
must be stored for the relevant date.
➢ An employee changes jobs within the organization. His or her

organizational assignment, working time, and salary also change.
➢ Data can be stored for the past, present, or future.
HCM module has got further seven sub modules:-
➢ Travel management
➢ Recruitment
➢ Payroll
➢ Personal development
➢ Organizational Management
➢ Time Management
➢ Training and event management
Page 10 of 14
Stages of SAP Impelmentation

A typical SAP project undergoes the following five stages during
implementation:-
Project Preparation
Since a SAP implementation intends to map the organization processes to the
ones defined by SAP, the implementation needs to have on-board people with
complete knowledge of the organization business processes. The project
preparation phase, amongst other things, aims to identify this team.
Business Blueprint
A business blueprint includes what modules of a SAP product would be used and
the mapping of the existing business processes to the processes provided by SAP.
Realization
The actual work of customizing the SAP software to be in sync with the
organizations business processes is done in this phase. It includes customization
of existing SAP package and solution along with the development of new objects
based on requirement.
Final Preparation
The production system is prepared using the changes from the realization and
testing phases. Certain activities need to be done directly in the production
system as well. These activities take place during the final preparation phase.
Page 11 of 14
Go-live
In this stage, the final product is released to the end-users. The go-live may be
done in a Big Bang (all modules at one go) or in a phase-by-phase manner.
Concluding Remarks
Although there are many ERPs in close competition with SAP like MS Dynamics
& Oracle in business software. But SAP S- 4 / HANA is considered to be the best
business suite considering its best integration methodology. Both of its versions
Cloud based & On Premise are available which have their obvious
advantages/disadvantages.
X
Behram
SM SAP PM
Page 12 of 14
Page 13 of 14
Page 14 of 14

1.-Sap Erp

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

1.-Sap Erp

Uploaded by

Copyright:

Available Formats

Thursday, April 9, 2020

SAP A Revolutionized ERP

➢ More than 68,800 employees in more than 130 countries.

➢ Annual revenue (IFRS) of €1682 billion.

➢ Listed under the symbol "SAP" on stock exchanges, including the

SAP As A Leading ERP

Business Process Integration

• automation of business processes,

The following illustration shows an overview of various business processes

▪ Material Management: the integrated system was known as Material

▪ Manufacturing: the integrated system was known as Manufacturing

✓ Supports the integrated business process inside the organization.

✓ Improves capital planning and helps in executing organizational plans

✓ Helps speed up the decision-making process over the analysis of

✓ Helps extend the business network to wider domains, expanding the

✓ Identifies operational risks to improve governance.

✓ Provides protection against organizational data breaches and

✓ Makes the organization adaptable to the rapid changes in the

✓ Gives long-term profit by providing means to increase the customer base.

➢ Sales and Distribution – Deals with order placement, delivery, shipment

• Allows faster decision-making by the management, utilizing the data

• Helps in tracking every transaction that takes place in an

• Supplies real-time information whenever required.

• Provides synchronized information transfer in between different

• Cost of complex integration can be very high.

➢ Sales and Distribution (SD)

➢ Materials Management (MM))

➢ Plant Maintenance (PM)

➢ Human Capital Management (HCM

Finance and Controlling (FICO)

SAP FI (Financial Accounting) is accountable for tracking the flow of financial

Sales & Distribution Management (SD)

Material Management (MM)

Human Capital Management (HCM)

➢ An employee changes jobs within the organization. His or her

➢ Data can be stored for the past, present, or future.

HCM module has got further seven sub modules:-

Stages of SAP Impelmentation

You might also like