SAP ERP AN Introduction

What is ERP?
Enterprise resource planning software, or ERP, doesnt live up to its acronym. Forget about planningit doesnt do much of thatand forget about resource, a throwaway term. But remember the enterprise part. This is ERPs true ambition. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments particular needs That is a tall order, building a single software program that serves the needs of people in finance as well as it does the people in human resources and in the warehouse. Each of those departments typically has its own computer system optimized for the particular ways that the department does its work. But ERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other That integrated approach can have a tremendous payback if companies install the software correctly Take a customer order, for example. Typically, when a customer places an order, that order begins a mostly paper-based journey from in-basket to in-basket around the company, often being keyed and rekeyed into different departments computer systems along the way. All that lounging around in in-baskets causes delays and lost orders, and all the keying into different computer systems invites errors. Meanwhile, no one in the company truly knows what the status of the order is at any given point because there is no way for the finance department, for example, to get into the warehouses computer system to see whether the item has been shipped. "Youll have to call the warehouse" is the familiar refrain heard by frustrated customers ERP vanquishes the old standalone computer systems in finance, HR, manufacturing and the warehouse, and replaces them with a single unified software program divided into software modules that roughly approximate the old standalone systems. Finance, manufacturing and the warehouse all still get their own software, except now the software is linked together so that someone in finance can look into the warehouse software to see if an order has been shipped. Most vendors ERP software is flexible enough that yo u can install some modules without buying the whole package. Many companies, for example, will just install an ERP finance or HR module and leave the rest of the functions for another day

There are five major reasons why companies undertake ERP

Integrate financial informationAs the CEO tries to understand the companys overall performance, he may find many different versions of the truth. Finance has its own set of revenue numbers, sales has another version, and the different business units may each have their own version of how much they contributed to revenues. ERP creates a single version of the truth that cannot be questioned because everyone is using the same system Integrate customer order informationERP systems can become the place where the customer order lives from the time a customer service representative receives it until the loading dock ships the merchandise and finance sends an invoice. By having this information in one software system, rather than scattered among many different systems that cant communicate with one another, companies can keep track of orders more easily, and coordinate manufacturing, inventory and shipping among many different locations at the same time Standardize and speed up manufacturing processesmanufacturing companies especially those with an appetite for mergers and acquisitionsoften find that multiple business units across the company make the same widget using different methods and computer systems. ERP systems come with standard methods for automating some of the steps of a manufacturing process. Standardizing those processes and using a single, integrated computer system can save time, increase productivity and reduce head count Reduce inventoryERP helps the manufacturing process flow more smoothly, and it improves visibility of the order fulfillment process inside the company. That can lead to reduced inventories of the stuff used to make products (work-in-progress inventory), and it can help users better plan deliveries to customers, reducing the finished good inventory at the warehouses and shipping docks. To really improve the flow of your supply chain, you need supply chain software, but ERP helps too Standardize HR informationespecially in companies with multiple business units, HR may not have a unified, simple method for tracking employees time and communicating with them about benefits and services. ERP can fix that Lets go back to those inboxes for a minute. That process may not have been efficient, but it was simple. Finance did its job, the warehouse did its job, and if anything went wrong outside of the departments walls, it was somebody elses problem. Not anymore. With ERP, the customer service representatives are no longer just typists entering someones name into a computer and hitting the ret urn key. The ERP screen makes them businesspeople. It flickers with the customers credit rating from the finance department and the product inventory levels from the warehouse. Will the customer pay on time? Will we be able to ship the order on time? These are

decisions that customer service representatives have never had to make before, and the answers affect the customer and every other department in the company. But its not just the customer service representatives who have to wake up. People in the warehouse who used to keep inventory in their heads or on scraps of paper now need to put that information online. If they dont, customer service reps will see low inventory levels on their screens and tell customers that their requested item is not in stock. Accountability, responsibility and communication have never been tested like this before People dont like to change, and ERP asks them to change how they do their jobs. That is why the value of ERP is so hard to pin down. The software is less important than the changes companies make in the ways they do business. If you use ERP to improve the ways your people take orders, manufacture goods, ship them and bill for them, you will see value from the software. If you simply install the software without changing the ways people do their jobs, you may not see any value at allindeed, the new software could slow you down by simply replacing the old software that everyone knew with new software that no one does

SAP stands for Systems Applications and Products in Data Processing. Designed and developed by 5 IBM engineers during the 1970s as standards based software alternative to custom built ERP software, SAP has come a long way. SAP has been in the forefront of ERP software ever since SAP develops ERP products to be used by companies to manage their enterprise. This includes managing their day to day operations, logistics, finances, month end, quarter end and yearly activities, reporting, HR etc. Although there are a couple of other ERP vendors who do the same, the key differentiator for SAP is the way in which SAP integrates all these operations and makes for a seamless system that is both easy to use and at the same time sophisticated enough to include all kinds of complex activities that are needed for any kind of enterprise. Examples of some of these activities could, be running Material resource planning, recruiting and managing an employees lifecycle, disbursing payrolls, recording all financial transactions and drawing balance sheets and P/L statements of the company etc. Now imagine a single system that takes care of all these diverse activities and still keep them well integrated SAP was initially designed to be run on the mainframe and was called that release was called R/2 (Release 2). SAP quickly caught on to the client server model with a later release called R/3 and this was the most popular version of SAP. After R/3, later versions of their core software were launched called Enterprise Central Component (ECC) The automation needs of an enterprise are endless. SAP soon realized that corporations needed business intelligence to mine data from their daily operational data and extract meaningful trends that could enable further business opportunities. SAP BW was born and morphed into BI after buying out Business Objects (BO) After the hugely successful R/3, SAP created more and more niche software like Customer Relationship Management (CRM), SRM, XI (now called Process Integration or PI) and once again living up to the standards of SAP by maintaining tight integration with their core ECC software -

Through the process of developing these software components, SAP has slowly moved from standard client server architecture to a completely web-based architecture where every transaction can be run from just a browser. These new dimension products developed on the web standards based framework (Net Weaver) are all under new umbrella called mySAP Whats in it for me? SAP is all-powerful software and everything, but you might ask How does it help me? Roughly more than 70% of all Fortune 100 and more than 50% of all Fortune 500 companies use SAP as their core ERP software What this gives you is tremendous job opportunities with these companies. These companies have enormous appetite for qualified IT consultants in the field of SAP. These jobs are not just for computer engineers or the likes of them. There are multiple tiers of consultants working in SAP for these companies. SAP is one of the very few softwares where there is a clear distinction between functional and technical areas of expertise. For companies, this means that there is a clear and logical division of the type of work performed and hence leads to increased productivity and efficient implementation and maintenance lifecycles. For individuals like you, this means more jobs and more specialization required for the same We can classify them as 1. Functional Consultants: These are folks who have tremendous industry experience in their respective area (Like HR, Finance, Logistics modules like Sales, Procurement etc). An example would be a hard-core sales manager with extensive Sales domain experience, working as an SAP SD functional consultant. Another example would be a CPA working to configure an SAP FICO system in a company. The strength of these consultants would like in their deep understanding of the core business processes that are key to the enterprise. A CPA would understand the General Ledger, Balance Sheet or a reconciliation account more than somebody with just pure technical knowledge 2. Technical Consultants: These are folks who have very good engineering or other academic backgrounds and have a very strong understanding of programming languages. SAPs own 4th General Programming language is called ABAP. (Advanced Business Application Programming). In the mySAP suite of products, programming can be done in Java as well. Also there are specialized skills like configuring and customizing SAPs own middleware XI (Exchange Infrastructure), MDM (Master Data Management) etc -

3. System Administration: This is managing the SAP software itself (The Net weaver Core). These folks are called SAP Basis consultants and they come from some kind of System Administration background (*NIX, Windows or Database Administrators). The job includes, installation, upgrades, patching and general maintenance of the SAP system. They also take care of maintaining the entire system landscape Modules, Suites and More... 1990s saw a tremendous change in SAP. Early 1990 are when SAPs R/3 captured the ERP market. The core ERP product comprised of the following modules FICO Finance & Controlling SD Sales & Distribution MM Materials Management PP Production Planning SM Service Management QM Quality Management WM Warehouse Management TM Transportation Management HR Human Resources PS Project Systems

In the later part of 1990s, SAP diversified into many niche products expanding beyond just its core ERP product space and venturing into new dimension products. Some of these products are mentioned here. They were grouped under the term SAP Business Suite CRM Customer Relationship Management SRM Supplier Relationship Management APO Advanced Planner and Optimizer PLM Product Lifecycle Management SCM Supply Chain Management e-Procurement FSCM Financial Supply Chain Management EHS Environment Health and Safety SEM Strategic Enterprise Management BI Business Intelligence PI Process Integration EWM Extended Warehouse Management

And counting.