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What is ERP? ERP stands for Enterprise Resource planning, it is integrated all functions in one system.

Organization will have no of departments in organization. ERP integrate all the functions into one system. It will facilitate free flow of data among the departments.

Main ERP Softwares are SAP Oracle Applications aan !Infor "lo#al Solutions$ %icrosoft &ynamic '& Edwards (awson Software Sage "roup
SAP stands for System Application and Products in data Processing )ive former I % employees start a company they call SAP Systemanalyse *nd Programmentwic+lung !,System Analysis and Program &evelopment,$ SAP was released in -./0 1 2ead 3uarters is in "ermany #y 4ellenreuther, 2opp, 2ector, Plattner and 5schira Renamed in -.// History of SAP -./0 6 SAP R7- 1 Real time data processing -.89 6SAP 1 R70 Included no. of countries and no. of currencies -..9 1 SAP R7:6 R7: stands for &ata Structure -.Application Server 0.&ata #ased server :.Presentation

-... 1 %y 1 4e# #ased %y SAP ERP is the comprehensive enterprise resource planning

!ERP$ solution from SAP. It has #een designed to meet today;s changing demands on ERP.
099< 1 =et weaver 1 Integrates information, people and process.

SAP =et 4eaver offers a full suite of ena#ling software technologies including functionality for portal infrastructure, #usiness warehousing, e>change integration, 4e# application server, mo#ile technologies and more.

Advantages and Disadvantages of ERP: Advantages Allows easier glo#al integration !#arriers of currency e>change rates, language, and culture can #e #ridged automatically$ *pdates only need to #e done once to #e implemented company6wide Provides real6time information, reducing the possi#ility of redundancy errors %ay create a more efficient wor+ environment for employees ?endors have past +nowledge and e>pertise on how to #est #uild and implement a system Disadvantages (oc+ed into relationship #y contract and managea#ility with vendor 6 a contract can hold a company to the vendor until it e>pires and it can #e unprofita#le to switch vendors if switching costs are too high Infle>i#ility 6 vendor pac+ages may not fit a company@s #usiness model well and customization can #e e>pensive Return on Investment may ta+e too long to #e profita#le Implementations have a ris+ of proAect failure


Components of the

inan!ia" # $% Mod&"e

"eneral (edger Accounting Accounts Paya#le Accounts Receiva#le 5reasury Asset Accounting Bonsolidations

'rgani(ationa" )nits in

*he C"ient 5he client is the highest hierarchical level in the SAP System. Specifications that you ma+e or data that you enter at this level are valid for all company codes and for all other organizational structures. Each client is a self6 contained unit with separate master records and a complete set of ta#les. *he Company A company is the smallest organizational unit for which legal individual financial statements such as #alance sheets and profit and loss statements can #e created according to the respective commercial legislation. A company can include one or more company codes. 5he financial statements of a company are also the #asis of a consolidated financial statement. *he Company Code A company code is the smallest organizational unit for which complete, independent accounting can #e carried out. A legally independent company is generally represented #y one company code in the SAP System. In accounting, you enter, save and process #usiness transactions, and manage accounts fundamentally at company code level. A further su#division is possi#le via internal organizational *nits !E>C usiness Areas$

*he Chart of A!!o&nts 5he chart of accounts is the second highest hierarchical level in the SAP System. It is assigned to the company code. It is a list of all natural accounts availa#le to all company codes.

*ermino"ogy in


Company Code Smallest organizational unit of e>ternal accounting for which a complete, self6contained set of accounts !BOA$ can #e created. Similar to what is now considered a legal entity. Do!&ment Representation of an accounting document or entry in the SAP system Chart of A!!o&nts A framewor+ of "( accounts for the recording of values to ensure an orderly rendering of accounting data. 5he operational chart of accounts is used #y

financial accounting and cost accounting. 5he items in a chart of accounts can #e e>pense or revenue accounts in )I and cost or revenue elements in cost accounting. Each company code is assigned to a chart of accounts. Profit Center An organizational unit in Accounting used for Bontrolling purposes. Similar to what is now considered an origin. Cost Center An organizational unit that represents a defined location of cost incurrence. Similar to what is now considered a department. C&stomer Master Bustomer data that includes addresses, account #alances, and credit limits that are maintained centrally to prevent duplication. +endor Master ?endor data that includes addresses, payment details, and account #alances of all vendors with which AOI conducts #usiness. ?endor master records are centrally maintained to prevent duplication. Posting ,ey A two6digit numerical +ey that determines the way line items are posted. 5his +ey determines several factors including the account type, type of posting !de#it or credit$ and layout of entry screens. A!!o&nt -ro&p *sed to categorize accounts that have similar master data re3uirements. It determines the re3uired master data needed for creating "7( accounts. It also determines the num#er range in which the customer account should #e placed, and whether that num#er is to #e assigned #y the user or #y the system. .edger In "7( Accounting, you can use several ledgers in parallel. 5his allows you to produce financial statements according to different accounting principles, for e>ample. is!a" /ear +ariant A period as defined #y the financial calendar. 5he fiscal year variant contains the num#er of posting periods in the fiscal year and the num#er of special periods. Dou can define a ma>imum of -E posting periods for each fiscal year in the Bontrolling component !BO$. Posting Period +ariant

Dou can specify which company codes are open for posting in a posting period variant. Posting period variants are cross6company code and you have to assign them to your company codes. 5he posting periods are then opened and closed simultaneously for all company codes via the posting period variants. Re!on!i"iation Account Summary account for su# ledgers such as Accounts Receiva#le, Accounts Paya#le, and Asset Accounting. =o direct postings to reconciliation accounts are allowed. Cost E"ement A cost element classifies the organization@s valuated consumption of production factors within a controlling area. A cost element corresponds to a cost6relevant item in the chart of accounts. Primary Cost E"ement A cost element whose costs originate outside of BO and accrual costs that are used only for controlling purposes. 'pen $tem Management A stipulation that the items in an account must #e used to clear other line items in the same account. Items must #alance out to zero #efore they can #e cleared. 5he account #alance is therefore always e3ual to the sum of the open items.

A "eneral ledger summarizes all of a company@s financial transactions including sales and income, asset management, retained earnings, inventory supplies and e>penditures, payroll, including ta>es and #enefits and vendor e>penses.

"eneral (edger is fully integrated with the other SAP %odules. It is within the "eneral (edger that all accounting postings are recorded. 5hese postings are displayed in real6time providing up6to6date visi#ility of the financial accounts -0. A!!o&nts are 1"o!2ed at two "eve"s

F Bhart of Accounts level F Bompany Bode level -enera" .edger 'verview "eneral (edger !)I6"($ is defined as the su#6module in which all of the financial accounting data for the legal entity is recorded either manually or automatically through integrated processes.

Integrated with other application modules and )I su#6modules )inancial &ata Entry *ser6defined alance Sheet 7 Profit and (oss Statement versions

%ultiple Burrencies E>ternal Reporting Includes "eneral (edger and Profit Benter Accounting

-enera" .edger &n!tiona"ity $3-. -enera" .edger Master re!ords management: "( accounts

Do!&ment entry: direct posting, recurring posting, reverse posting, automatic posting, drill6down capa#ility Periodi! pro!essing: closing, interest calculation, automatic clearing, foreign currency valuation, 5a> management, archiving Reporting

4enefits of SAP -enera" .edger A!!o&nting Provides a comprehensive picture for e>ternal accounting and accounts Automatic and simultaneous posting of all su#6ledger items in the appropriate general ledger accounts !reconciliation accounts$

Simultaneous updating of general ledger and cost accounting areas Real6time evaluation of and reporting on current accounting data Integrated with all the other operational areas of a company and ensures that the accounting data is always complete and accurate Actual individual transactions can #e chec+ed at any time in real6time processing #y displaying the original documents, line items, and transaction figures at various levels li+e Account Information, 'ournals, 5otals75ransactional figures and alance Sheet Evaluations, etc.

New G/L

=ew "( has now an added dimension of Profit center and segment accounting in it. =ew "( functionality is very useful for companies which have multiple parallel reporting such as local reporting, Parent reporting

and ta> reporting. Earlier all this was only possi#le #y creating separate "( codes and different retained earning accounts. 5his had reconciliation issues #etween the various reporting. 4ith =ew "( structure now, no separate "( codes are re3uired. 5he data for one accounting principle is stored in the general ledger that is +nown as the (eading ledger. +ario&s f&n!tions in 5ew -.: =ew 5a#les (edger concept &ocument Splitting Improved Integration Segment Reporting Parallel (edgers %igration to the =ew (edger )ast close 5ew *a1"e 5hree new ta#les in the new general ledger handle totals, store general6 ledger and specific line items, and calculate valuations for year6end closings in parallel ledgers A 5ew *ota"s *a1"e In addition to using the new totals ta#le in the standard software, we can define our own ta#le, using a new ta#le !)A"()(EG5$ as a template. 4e might need to define our own ta#le if we have a very large volume of data or very different characteristic values. !)or more information, see SAP =ote 809<.H.$ efore creating new totals ta#les, we recommend that you chec+ to see if using the standard ta#le would #e sufficient. 5his step is important #ecause the report writer software or drill6down tools do not recognize new totals ta#les that you create. 5he new totals ta#le contains additional standard fields for storing totals. 4ith the standard ta#le, you can easily activate support for many scenarios #y customizing the software. 5he ta#le thus supports such activities asC Segment reporting Profit6center updating Bost6of6sales accounting Bost6center updating Preparation for consolidation usiness6area updating

Comparison C"assi! 0 5ew -. *ota"s *a1"e: