WHAT IS SAP?

WHAT IS SAP?

SAP stands for Systems Applications and Products in Data Processing. SAP, by definition, is also the name of the ERP (Enterprise Resource Planning) software as well as the name of the company. SAP Software is a European multinational, founded in 1972 by Wellenreuther, Hopp, Hector, Plattner, and Tschira. They develop software solutions for managing business operations and customer relationships.

SAP system consists of a number of fully integrated modules, which covers virtually every aspect of business management.

SAP is #1 in the ERP market. As of 2010, SAP has more  than 140,000 installations worldwide, over 25 industry-specific business solutions and more than 75,000 customers in 120 countries

Other Competitive products of SAP Software in the market are  Oracle, Microsoft Dynamics, etc.

Here is the whole process that is followed by any business unit.

  1. Client contacts the sales team to check the availability of the product
  2. Sales team approaches the Inventory department to check for the availability of the product
  3. In case the product is out of stock, the sales team approaches the Production Planning Department to manufacture the product
  4. The production planning team checks with inventory department for availability of raw material
  5. If the raw material is not available with inventory, the Production Planning team buys the raw material from the Vendors
  6. Then Production Planning forwards the raw materials to the Shop Floor Execution for actual production
  7. Once ready, the Shop Floor Team sends the goods to the Sales Team
  8. Sales Team who in turn deliver it to the client
  9. The sales team updates the finance with revenue generated by the sale of the product. Production planning team update the finance with payments to be made to different vendors for raw materials.
  10. All departments approach the HR for any Human Resource related issue.

That is a typical business process for any manufacturing company. Some key inferences one could derive from the scenario would be.

  • It has many departments or business units
  • These departments or business units continuously communicate and exchange data with each other
  • The success of any organization lies in effective communication, and data exchange, within these departments, as well as associated third party such as vendors, outsourcers, and customers.

Based on the manner in which communication and data exchanged is managed. Enterprise systems can be broadly classified as

1) Decentralized System

2) Centralized System which is also called as ERP.

Let's look at Decentralized system first, in a company with Decentralized System of Data Management. There are two major problems –

  • Data is maintained locally at the individual departments
  • Departments do not have access to information or data from other departments

To identify issues arising due to decentralized Enterprise management system lets look at the same business process again. The customer approaches the sales team for a product, but this time around, he needs the product, on an urgent basis