SAP

What is SAP
SAP stands for System Application and Products. SAP is a way to integrate the data and
processes of an organization into one single system. Usually SAP systems will have many
components including hardware and software, in order to achieve integration, most SAP systems
use a unified database to store data for various functions found throughout the organization.

The term SAP originally referred to how a large organization planned to use organizational wide
resources. In the past, SAP systems were used in larger more industrial types of companies.
However, the use of SAP has changed and is extremely comprehensive, today the term can refer
to any type of company, no matter what industry it falls in. In fact, SAP systems are used in
almost any type of organization - large or small.

In order for a software system to be considered SAP, it must provide an organization with
functionality for two or more systems. While some SAP packages exist that only cover two
functions for an organization (QuickBooks: Payroll & Accounting), most SAP systems cover
several functions.

Today's SAP systems can cover a wide range of functions and integrate them into one unified
database. For instance, functions such as Human Resources, Supply Chain Management,
Customer Relations Management, Financials, Manufacturing functions and Warehouse
Management functions were all once stand alone software applications, usually housed with their
own database and network, today, they can all fit under one umbrella - the SAP system.

Integration is Key to SAP

Integration is an extremely important part to SAP's. SAP's main goal is to integrate data and
processes from all areas of an organization and unify it for easy access and work flow. SAP's
usually accomplish integration by creating one single database that employs multiple software
modules providing different areas of an organization with various business functions.

Although the ideal configuration would be one SAP system for an entire organization, many
larger organizations usually create and SAP system and then build upon the system and external
interface for other stand alone systems which might be more powerful and perform better in
fulfilling an organizations needs. Usually this type of configuration can be time consuming and
does require lots of labor hours.

The Ideal SAP System

An ideal SAP system is when a single database is utilized and contains all data for various
software modules. These software modules can include:

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Manufacturing: Some of the functions include; engineering, capacity, workflow management,
quality control, bills of material, manufacturing process, etc.

Financials: Accounts payable, accounts receivable, fixed assets, general ledger and cash
management, etc.

Human Resources: Benefits, training, payroll, time and attendance, etc

Supply Chain Management: Inventory, supply chain planning, supplier scheduling, claim
processing, order entry, purchasing, etc.

Projects: Costing, billing, activity management, time and expense, etc.

Customer Relationship Management: sales and marketing, service, commissions, customer

contact, calls center support, etc.

Data Warehouse: Usually this is a module that can be accessed by an organizations customers,
suppliers and employees.

SAP Improves Productivity

Before SAP systems, each department in an organization would most likely have their own
computer system, data and database. Unfortunately, many of these systems would not be able to
communicate with one another or need to store or rewrite data to make it possible for cross
computer system communication. For instance, the financials of a company were on a separate
computer system than the HR system, making it more intensive and complicated to process
certain functions.

Once an SAP system is in place, usually all aspects of an organization can work in harmony
instead of every single system needing to be compatible with each other. For large organizations,
increased productivity and less types of software are a result.

Implementation of an SAP System

Implementing an SAP system is not an easy task to achieve, in fact it takes lots of planning,
consulting and in most cases 3 months to 1 year +. SAP systems are extraordinary wide in scope
and for many larger organizations can be extremely complex. Implementing an SAP system will
ultimately require significant changes on staff and work practices. While it may seem reasonable
for an in house IT staff to head the project, it is widely advised that SAP implementation
consultants be used, due to the fact that consultants are usually more cost effective and are
specifically trained in implementing these types of systems.

One of the most important traits that an organization should have when implementing an SAP
system is ownership of the project. Because so many changes take place and its broad effect on
almost every individual in the organization, it is important to make sure that everyone is on board
and will help make the project and using the new SAP system a success.

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Usually organizations use SAP vendors or consulting companies to implement their customized
SAP system. There are three types of professional services that are provided when implementing
an SAP system, they are Consulting, Customization and Support.

Consulting Services - usually consulting services are responsible for the initial stages of SAP
implementation, they help an organization go live with their new system, with product training,
workflow, improve SAP's use in the specific organization, etc.

Customization Services - Customization services work by extending the use of the new SAP
system or changing its use by creating customized interfaces and/or underlying application code.
While SAP systems are made for many core routines, there are still some needs that need to be
built or customized for an organization.

Support Services- Support services include both support and maintenance of SAP systems. For
instance, trouble shooting and assistance with SAP issues.

Advantages of SAP Systems

There are many advantages of implementing an SAP system; here are a few of them:

 A totally integrated system

 The ability to streamline different processes and workflows
 The ability to easily share data across various departments in an organization
 Improved efficiency and productivity levels
 Better tracking and forecasting
 Lower costs
 Improved customer service

Functional Modules of SAP Software

SAP software is made up of many software modules. Each SAP software module mimics a major
functional area of an organization. Common SAP modules include modules for product planning, parts and
material purchasing, inventory control, product distribution, order tracking, finance, accounting, marketing,
and HR. Organizations often selectively implement the SAP modules that are both economically and
technically feasible.

SAP Financial Module

Both for-profit organizations and non-profit organizations benefit from the implementation of SAP
financial module. The financial module is the core of many SAP software systems. It can gather financial
data from various functional departments, and generates valuable financial reports such balance sheet,
general ledger, trail balance, and quarterly financial statements.

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SAP Production Planning Module

In the process of evolution of manufacturing requirements planning (MRP) II into SAP, while vendors have
developed more robust software for production planning, consulting firms have accumulated vast
knowledge of implementing production planning module. Production planning optimizes the utilization of
manufacturing capacity, parts, components and material resources using historical production data and
sales forecasting.

SAP Purchasing Module

Purchase module streamline procurement of required raw materials. It automates the processes of
identifying potential suppliers, negotiating price, awarding purchase order to the supplier, and billing
processes. Purchase module is tightly integrated with the inventory control and production planning
modules. Purchasing module is often integrated with supply chain management software.

SAP Inventory Control Module

Inventory module facilitates processes of maintaining the appropriate level of stock in a warehouse. The
activities of inventory control involves in identifying inventory requirements, setting targets, providing
replenishment techniques and options, monitoring item usages, reconciling the inventory balances, and
reporting inventory status. Integration of inventory control module with sales, purchase, finance modules
allows SAP systems to generate vigilant executive level reports.

SAP Sales Module

Revenues from sales are live blood for commercial organizations. Sales module implements functions of
order placement, order scheduling, shipping and invoicing. Sales module is closely integrated with
organizations' ecommerce websites. Many SAP vendors offer online storefront as part of the sales module.

SAP Market in Module

SAP marketing module supports lead generation, direct mailing campaign and more.

SAP HR Module

HR (Human Resources) is another widely implemented SAP module. HR module streamlines the
management of human resources and human capitals. HR modules routinely maintain a complete employee
database including contact information, salary details, attendance, performance evaluation and promotion
of all employees. Advanced HR module is integrated with knowledge management systems to optimally
utilize the expertise of all employees.

SAP MODULES

SAP now are moving away from describing their system as a set of modules, and now are using the
term ‘solutions’, which is much better, as follows:

 Financials
 Human Resources

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SAP  Customer Relationship Management

 Supplier Relationship Management

 Product Lifecycle Management

 Supply Chain Management

 Business Intelligence

FI Financial Accounting (Online Training, Tutorial, SAP Access) – essentially your regulatory ‘books of
record’, including

 General ledger
 Book close

 Tax

 Accounts receivable

 Accounts payable

 Consolidation

 Special ledgers

CO Controlling (Online Training, Tutorial, SAP Access) – basically your internal cost/management
accounting, including

 Cost elements
 Cost centres

 Profit centres

 Internal orders

 Activity based costing

 Product costing

AM Asset Management (Online Training, SAP Access) – track, value and depreciate your assets, including

 Purchase
 Sale

 Depreciation

 Tracking

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PS Project Systems (Online Training, SAP Access) – manage your projects, large and small, including

 Make to order
 Plant shut downs (as a project)

 Third party billing (on the back of a project)

HR Human Resources (Online Training, SAP Access) – ah yes, people, including

 Employment history
 Payroll

 Training

 Career management

 Succession planning

PM Plant Maintenance (Online Training, SAP Access) – maintain your equipment (e.g. a machine, an oil
rig, an aircraft etc), including

 Labour
 Material

 Down time and outages

MM Materials Management (Online Training, SAP Access) – undSAPins the supply chain, including

 Requisitions
 Purchase orders

 Goods receipts

 Accounts payable

 Inventory management

 BOM’s

 Master raw materials, finished goods etc

QM Quality Management (Online Training, SAP Access) – improve the quality of your goods, including

 Planning
 Execution

 Inspections

 Certificates

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PP Production Planning (Online Training, SAP Access) – manages your production process, including

 Capacity planning
 Master production scheduling

 Material requirements planning

 Shop floor

SD Sales and Distribution (Online Training, SAP Access) – from order to delivery, including

 RFQ
 Sales orders

 Pricing

 Picking (and other warehouse processes)

 Packing

 Shipping

CA Cross Application (Online Training, SAP Access) – these lie on top of the individual modules, and
include

 WF – workflow
 BW – business information warehouse

 Office – for email

 Workplace

 Industry solutions

New Dimension products such as CRM, PLM, SRM, APO etc