SAP ERP

Enterprise Systems

Prof.Parijat Upadhyay 1
 SAP ERP Discussion Points
• What is an Enterprise System ( or ERP)?
• How it is different from Information Systems?
• At what level of IS the ERP works?
• Why an organization should implement ERP system?
• Why an Organization should implement and ERP if they
already have functional systems?
• What are some of the benefits that organizations derive by
implementing ERP?
• What do you understand by legacy systems?
• What do you understand by Best Practice Methodology?
• What do you mean by a business process?
• IS BPR necessary for ERP implementation?
Prof.Parijat Upadhyay 2
 SAP ERP Why ERP?

• What are the Problems of Legacy Applications?

• What are some of the problems of Businesses that
are not on ERP?

Prof.Parijat Upadhyay 3
 SAP ERP Problems of Legacy Systems
• Automates existing processes
• Normally not driven by organization strategy and business vision.
• Develop one application at a time.
• No integration between applications – just transaction passing.
• Decentralized applications.
• Are relatively inflexible to accommodate changes in the business
environment.
• Up gradation to latest technology is difficult
• Usually not well documented.
• Maintenance is a problem – largely because of poor
documentation and staff attrition.

Prof.Parijat Upadhyay
4
SAP ERP Business Process

• What is a Business Process?

• Why Integrated Systems needs to
understand the concept of a Business
Process?

Prof.Parijat Upadhyay 5
 SAP ERP Business Processes
• A business process is a collection of activities that
takes one or more inputs and creates an output that
is of value to the customer
• The customer may be the traditional external
customer who buys the product or service, or an
internal customer (a colleague in another
department)
• The business process view is the customer’s
perspective.

Prof.Parijat Upadhyay 6
SAP ERP Process View of Business
Customer Order Process

Accounting

Purchasing

Production

Logistics
Function
Function

Function

Function

Function
Sales

Material Order Process

A process view of business

Prof.Parijat Upadhyay 7
SAP ERP Integration of Business Functions

• Sharing data efficiently and effectively

within and between functional areas leads
to more efficient business processes
• Information systems that share data
between functional areas are called
Integrated Information Systems

Prof.Parijat Upadhyay
8
SAP ERP

• Why ERP?

Prof.Parijat Upadhyay 9
 SAP ERP Why ERP?
• Increasing the efficiency of information systems can
result in more efficient business processes, making
a company more competitive
• Lack of integration can lead to costly inefficiencies
– Errors from keying in the same data more than
once
– Lack of timely data due to periodic updating
between systems
– Problems with data being defined differently in
different systems

Prof.Parijat Upadhyay 10
SAP ERP Why ERP?

• ERP systems can integrate a company’s operations by

providing a company-wide computing environment that:
– Includes a single database shared by all functions
– Can deliver consistent data to all business functions in
real-time
• ERP systems can dramatically reduce costs and increase
operational efficiency

Prof.Parijat Upadhyay 11
SAP ERP

• What is ERP?
• How you define ERP?

Prof.Parijat Upadhyay 12
SAP ERP What is an Enterprise Resource Planning System?

• An ERP System can be defined as a

“modularised, integrated, real time
information system with broad functional
scope responsible for the processing and
management of business transactions”

Prof.Parijat Upadhyay 13
SAP ERP What is ERP?

• Software tools
• Manages business systems
– Supply chain, receiving, inventory, customer orders,
production planning, shipping, accounting, HR
• Allows automation and integration of business
processes
• Enables data and information sharing
• Enterprise-wide system
• Introduces “best practices”

Prof.Parijat Upadhyay 14
SAP ERP Integrated Systems Approach

• Common set of applications

• Usually requires re-engineering business
processes
– Better alignment
• Limited customization
– Easier upgrades
• Overcomes inefficiencies of independent
systems
• Integrated data supports multiple business
functions
Prof.Parijat Upadhyay 15
SAP ERP ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales
Prof.Parijat Upadhyay Human 16
Finance Distribution Production
Resources
SAP ERP ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales
Prof.Parijat Upadhyay Human 17
Finance Distribution Production
Resources
SAP ERP ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales Human
Prof.Parijat Upadhyay
Production 18
Finance & Resources
Distribution
SAP ERP ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales
Prof.Parijat Upadhyay Human 19
Finance Distribution Production Resources
 SAP ERP ERP Drivers
Systems Not Y2K Compliant 42%

Disparate Systems 37%

Poor/Uncompetitive Performance 27%

Poor Quality/Visibility of Info 26%

Cost Structure Too High 24%

Program Motivation

Not Responsive Enough to Customers 21%

Complex, Ineffective Business Processes 20%

Business Processes or Systems Not Integrated 19%

Unable to Implement New Business Strategies 15%

Business Becoming Global 15%

Difficult to Integrate Acquisitions 12%

Obsolete Systems 11%

Inconsistent Processes 10%

Unable to Support Growth 6%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

% Respondents
Note: Based on multiple answers per respondent

Prof.Parijat Upadhyay 20
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system)
SAP ERP Enterprise Resource Planning Systems (ERP)

• ERP systems are the result of business process

engineering.
• They are information systems that facilitate the
flow of information between all functions within a
business.
• They organise and execute the millions of
transactions that are fundamental to many large
businesses.
• One huge database for storing transaction data.
• Eliminate many of the existing legacy systems.

Prof.Parijat Upadhyay 21
SAP ERP ERP Characteristics

• Links all business processes automatically

• Reduce inter-processing time (transactions
occur one time at the source)
• Maintain an audit trail of all transactions
• Utilises a common database
• Perform internal conversions automatically (tax,
foreign currency, legal rules for payroll)
• Improve customer service by putting data at the
fingertips of employees
• Involve employees in the entire functional cycle
Prof.Parijat Upadhyay 22
SAP ERP ERP Evolution

EDI e-Commerce
SFA
e-business
CRM
Planning
Scheduling SCM
Distribution
MRP MRP11
Payroll HR
GL ERP
AP FMIS ERP
AR Prof.Parijat Upadhyay 23
1970s 1980s 1990s 2000s
SAP ERP Evolution of ERP
• 1960s: software packages with inventory
control
• 1970s: MRP systems
– Production schedule with materials management
• 1980s: MRPII systems
– Adds financial accounting system
• 1990s: MRPII
– Integrated systems for manufacturing execution
• Late 1990s: ERP
– Integrated manufacturing with supply chain
• 2000s: ERP II
Prof.Parijat Upadhyay 24
SAP ERP ERP System

Executive
Enterprise Management
Resource
Human
Finance Planning Resources Middle
System Management

Operational
Management

Sales
& Production
Distribution Operations
Prof.Parijat Upadhyay 25
 SAP ERP
Why clients buy ERP?
• Corporate Initiatives
– Strategic initiatives
• A requisite capability in a competitive global business
– Operational initiative
• A foundation for performance and cost improvement
via integration
– Organizational initiative
• To initiate a major organizational change within the company
• Technology
– IT is making the transition from a supporting operational
entity to becoming a strategic competitive tool.
• Because others are buying it !!!
Prof.Parijat Upadhyay
26
 SAP ERP Business process benefits clients expect from an ERP
project

• Global process/ Product management

• Integrated Supply Chain Management
• Leverage purchasing and vendor management
• Order cycle time/ customer service improvement
• Inventory reductions
• Reduced information systems costs on an ongoing basis
• Improved business management through worldwide
integration and information
Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer
Logistics

Logistics and Distribution Sales & Customer Service

Prof.Parijat Upadhyay
27 11/26/2019
SAP ERP Overall Business Benefits

• Information
– Maximizes information throughput
– Provides timely information
– Integrates information throughout supply chain
• Minimizes response time
• Pushes decision making down to lowest levels
• Reduces costs
• Cuts inventory
• Improves operating performance

Prof.Parijat Upadhyay 28
SAP ERP Department Benefits

• Sales
– Increased efficiency
• Lower quotes, reduced lead time, improved
responsiveness
• Manufacturing
– Concurrent engineering
– Faster design and production
• Data Service
– Accurate customer service history and warranty
information
• Accounts Payable
– Suppliers paid accurately
Prof.Parijat Upadhyay 29
SAP ERP Systems Benefits

• Eliminating legacy systems

– Reduces incompatible data
– Can cause fragmentation
• Allows sharing and monitoring of information across
organization
• Foundation of eBusiness
– Back-office functions
• Standardization
• Helps obtain and maintain competitive advantage
• Improved interactions with customers and suppliers

Prof.Parijat Upadhyay 30
 SAP ERP ERP Benefits
Inventory
Personnel Reductions
Productivity Improvements
IT Cost Reduction
Cash Management
Tangible Benefits

Revenue/Profit
Procurement
Order Management/Cycle Time Time-based
benefits have
Financial Close Cycle exceeded original
expectations
Maintenance
Transportation/Logistics
Supplier Managment Anticipated
Actual
On-Time Delivery
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
% Respondents With Measurable Results
Source: Deloitte Consulting and Benchmarking Partners
Prof.Parijat
(Based on a study of 62 companies that have gone live with Upadhyay
an ERP system) 31
 SAP ERP ERP Implementation Budget

Design and
implementation
Software
35%
10%

Hardware
10%
Training
Data
and
cleansing
change management
10%
35%

Hammer 2000

Prof.Parijat Upadhyay 32
SAP ERP

• SAP – AN ERP….

Prof.Parijat Upadhyay 33
 SAP ERP SAP
“Systeme, Anwendungen und Produkte in der Datenverarbeitung”
(English: “Systems, Applications, and Products in Data Processing”)
• Global concern with many companies
– SAP AG
– SAP America
– SAP UK etc.
• SAP Business Suite
– SAP Enterprise Resource Planning (SAP ERP)
– SAP Supplier Relationship Management (SAP SRM)
– SAP Customer Relationship Planning (SAP CRM)
– SAP Supply Chain Management (SAP SCM)
– SAP Product Lifecycle Management (SAP PLM) etc.
• SAP Business ByDesign
• SAP NetWeaver
Prof.Parijat Upadhyay 34
 SAP ERP Who is SAP?
• SAP AG
– Founded in Walldorf, Germany in 1972
– World’s Largest Business Software Company
– World’s Third-largest Independent Software Provider
• Company Statistics
– Over 45,000 employees in more then 50 countries
– 1,500+ Business Partners
– 95,000+ customers in more then 120 countries
– 12 million users
– 100,000+ installations
Source: SAP AG website

Prof.Parijat Upadhyay 35
 SAP ERP Integrated Business Solution Vendors
• SAP
– SAP Business Suite, SAP All-in-One, SAP
Business ByDesign, SAP Business One
• Oracle Applications
– Oracle, JD Edwards, PeopleSoft, Siebel, Retek
• Microsoft Business Solutions
– Dynamics: Great Plains, Navision, Axapta,
Soloman
• The Sage Group
– Sage Software – Accpac ERP, PeachTree
• SSA Global Technologies - BAAN
Prof.Parijat Upadhyay 36
 SAP ERP SAP Portfolio Strength
• World-wide usage
• Designed to satisfy the information needs for all business
sizes (small local to large all international)
– Multi-lingual
– Multi-currency
– Multi-balance (parallel G/L Accounting)
• Designed to satisfy the information needs for all industries,
e.g.
– Automotive
– Banking
– Retail
– Public Sector
– Higher Education andProf.Parijat
Research etc.
Upadhyay 37
 SAP ERP SAP Architecture
• Client/Server Environment
– Client – hardware/software environment that can make a
request for services for a central repository of resources
– Server – hardware/software combination that can provide
services to a group of clients in a controlled environment
• Three – Tier Structure
– GUI
• Graphical User Interface or Web Interface
– Application Server
• One or more, help distribute work load
– Database Server
• One single data repository
Prof.Parijat Upadhyay 38
SAP ERP History

SD FI
MM SAP PLM
CO
PP AM
SAP R/3 SAP SAP
SRM SAP ERP CRM
Client/Server
QM ABAP PS
PM Basis
WF
SAP SCM
HR IS

SAP NetWeaver

Prof.Parijat Upadhyay 39
SAP ERP SAP Business Suite

SAP PLM

SAP SAP ERP SAP

SRM CRM

SAP SCM

SAP NetWeaver

Prof.Parijat Upadhyay 40
SAP ERP SAP Software Applications

 Small & Medium Size Solutions

• Solutions - SAP All-in-One
– SAP ERP - Business ByDesign
- Business One
– SAP CRM
– SAP PLM
– SAP SCM  Platforms
– SAP SRM - SAP NetWeaver
- SAP Enterprise Services
– SAP Business Architecture

Objects

Prof.Parijat Upadhyay 41
 SAP ERP SAP ERP Business Modules
• Collections of logically related transactions
within identifiable business functions
– MM (“Buy”)
– PP (“Make”)
– SD (“Sell”)
– FI and CO (“Track”)
– HCM (“People”)
– WM (“Store”)
– EAM (“Maintain”)
– CS (“Service”)
Prof.Parijat Upadhyay 42
SAP ERP SAP ERP Core Applications
• Logistics  Human Capital Management
– Sales & Distribution - Personnel Management
– Materials - Benefits
Management - Payroll
– Production Planning
– Plant Maintenance
– Quality Management
• Finance
– Financial Accounting
– Managerial
Accounting
– Asset Management
– Treasury

Prof.Parijat Upadhyay 43
SAP ERP SAP Industry Solutions
• Aerospace & Defense
• Automotive  Media
• Banking  Mill Products
• Chemicals
 Mining
• Consumer Products
• Defense & Security  Oil & Gas
• Engineering, Const.  Pharmaceuticals
• Healthcare  Postal Services
• High Tech
• Higher Education  Professional Services
• Industrial Machinery  Public Sector
• Insurance  Railways
• Life Sciences
• Logistics Service Prod.  Retail
 Telecommunications
 Utilities
 Wholesale Distribution

Prof.Parijat Upadhyay 44
SAP ERP SAP ERP
Then
• Works with relational databases
• 8,900 relational tables
• 15,000 reports
• 12,000 screens
• most users only interact with 10 screens

Now
• 37,000 tables Prof.Parijat Upadhyay 45
SAP ERP Example of How SAP Work

• Step 1 : Brazilian retailer orders, via the

Internet, 1,000 shoes from International Shoe
Co. A sales rep takes the order, routes it to
SAP’s ordering module, SAP checks the
retailer credit, price, etc. The order is
approved.
• Step 2 : Simultaneously SAP’s inventory
module checks the stocks and notifies the rep
that half the order can be filled immediately
from stock. The other half will be
manufactured and delivered in 5 days directly
from the factory Prof.Parijat
in Taiwan. Upadhyay 46
SAP ERP Example of How SAP Work
• Step 3 : SAP’s manufacturing module schedules
the production in Taiwan and instructs the
warehouse (in China) to ship the shoes to Brazil
and print up an invoice (in Portuguese).
• Step 4 : SAP’s human resources module
calculates labor requirements. Due to a
shortage, the personnel manager in Taiwan is
instructed to get temporary workers.
• Step 5 : SAP’s material planning module notifies
the purchasing manager about a shortage of
purple dye. A purchase order is automatically
issued. Prof.Parijat Upadhyay 47
SAP ERP Example of How SAP Work
• Step 6 : The customer logs on via the
extranet to the company’s sneakers
division. He can see that 500 shoes were
shipped from the regional warehouse. This
is done with SAP tracing capabilities.
• Step 7 : Based on data from SAP’s
forecasting and financial modules, the CEO
can determine both demand and profitability
per product. The financial module also
converts all foreign money to $U.S.,
whenever needed
Prof.Parijat Upadhyay 48