IBM Global Services

ERP / SAP Overview

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

Objectives
 The participants will be able to:
 Recognize the evolution of ERP solutions.  Appraise the concept, benefit and use of ERP solution.  Define the SAP R/3 Overview.  Identify the different SAP R/3 Functional modules/areas.  Distinguish the components of SAP R/3.  Judge the use of ABAP programming language.

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

ERP Overview

Enterprise Resource Planning

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

Enterprise Resource Planning

... synchronization of Company functions...

Purchase

Manufacturing

Finance

Sales

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

Enterprise Resource Planning

and extended to the complete value chain...

Tier I Component Manufacturer

Vehicle OEM

Tier II Component Supplier

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

Enterprise Resource Planning

... delivering administrative and decision support with...

Decision support and analysis

Processes monitoring & feedback

Administrative registration

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

What is an ERP solution...?

Integrated across the primary and support processes
Distribution Manufacturing

Marketing

Materials

Planning and Execution

Finance

Engineering

Sales Human Resources

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

The ERP application

 An integrated suite of business applications, which..
 Closely links, monitors, and controls primary enterprise resources like manpower, machine, material, methods, market and money.  Enables corporates to readily change their processes to adapt to the ever changing business scenario.  Provides expertise in industry specific business processes.

 Entails
 Parameterization / Configuration  Designing & Customization  Testing and Implementation  Training

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

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 !!!

ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

Recent business trends favoring ERP growth

 Business Process Reengineering ( BPR )
 Most large companies are attempting to cut in-house development costs, improve customer service, and speed products to market by reorganizing their existing business processes.

 Software Pricing
 Licensing and pricing of mainframe based packaged applications are tied to the size of mainframe system on which the applications run, but now customers are now demanding user-based licensing options and major corporate applications like SAP provide this instead of the conventional platform-based pricing technique.

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2005 IBM Corporation

IBM Global Services

Recent business trends favoring ERP growth

 Globalization
 As businesses are becoming more global in scope, people are demanding packaged corporate applications that are available in a variety of languages with support for multiple currencies.

 Integration
 As more and more companies are going for BPR, there is increase in demand for integrated solution e.g.. different applications sharing a common database and thus enabling data definitions and business rules to be applied across an entire organization with the facility of doing modifications at one location only.

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ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

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 Logistics

Manufacturing

Transportation Distribution

Delivery

Customer Consumer

Logistics and Distribution

Sales & Customer Service

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ERP / SAP Overview | 1.01

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2005 IBM Corporation

IBM Global Services

Major ERP vendors

 SAP R/3  Oracle ( Peoplesoft and JD Edwards were independent ERP venders earlier,
but are subsets of Oracle now )  Peoplesoft  JD Edwards

 Baan

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2005 IBM Corporation

IBM Global Services

What results can be expected from an ERP culture?

         Reduced working capital requirements Improved customer service Improved direct labor productivity Reduced purchase costs Reduced obsolescence Reduced overtime Having the figures to make decisions Having accountability throughout the organization Improved quality of life

ERP

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ERP / SAP Overview | 1.01

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IBM Global Services

SAP R/3 Overview  Systems Applications and Products in Data Processing

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ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

SAP AG At a Glance
 Founded in Germany in 1972  Market Leader in Industrial Enterprise Application (IEA)
 About 56% market share in the ERP market.

 Employs more than 38,400 people in more than 50 countries.  As the world's third-largest independent software provider, SAP delivers business solutions to more than 36,200 customers in more than 120 countries around the world.  Strength lies in its high degree of integration, mainly for large, global corporate enterprises  Significant presence in Global Fortune 500 companies

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ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

SAP R/1 , R/2

 The R/1 system
    Developed for ICI Chemical Released 1972 Focused on Sales & Distribution and Materials Management Discontinued after release of R/2

 The R/2 system

R/2 Basis System

 Reorganized as leading mainframe software for large multinational corporations  No sales effort planned reactive only  4,300 copies worldwide in 1993  Mainframe-based to replace user legacy software; co-existence and migration strategy underway for R/2 and R/3  Keeping in mind its multinational customers, SAP designs SAP R/2 to handle different languages and currencies.

Note: "R" stands for real-time data processing.

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SAP R/3 : 3 Tier Architecture

The Presentation Layer Those SAP R/3 software components that specialize in interacting with end-users form the Presentation Layer.

The Application Layer Those SAP R/3 software components that specialize in processing business applications form the Application Layer.

The Database Layer Those SAP R/3 software components that specialize in the management , storage and retrieval of data form the Database Layer
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SAP R/3 : 3 Tier Architecture

Presentation Layer components reside in:

Application Layer components reside in:

Database Layer components reside in:

Presentation servers: Systems capable of providing a graphical interface.

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Application servers: Specialized systems multiple CPUs and vast amounts of RAM.
March-2005

Database servers: Specialized systems with fast and large hard drives.
2005 IBM Corporation

IBM Global Services

SAP R/3 : 3 Tier Architecture

Presentation Layer components are installed across many PCs

The Application Layer components are installed across one or more highend servers. The Database Layer components are installed on high-end database server.
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IBM Global Services

SAP R/3 Overview

FI Financial Accounting CO Controlling

SD Sales & Distribution MM PP Materials Mgmt.

Product Planning

R/3
Client/Server ABAP/4

TR Treasury

QM Quality Mgmt. PM Plant Maintenance HR

PS Project System WF Workflow IS

Human Resources

Industry Solutions

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ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

Integration
MRP Requirement on component level Purchase Order Goods Receipt Invoice Verification

Planned Requirement

PP
Customer Order

SD

MM

Planned Order Production Order

Shipping

Invoicing

Production completed

Account Receivable

FI
Accounts Payable
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CO
Order Settlement

FI

Which modules are involved?

March-2005 2005 IBM Corporation

IBM Global Services

Integration
All business processes throughout the supply chain are executed in one system sharing all information

SAP R/3
S U P P L I E R
FI Procurement MM

Workflow

C U S

Production PP Finance and Accounting

Distribution SD

T O M E

CO

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mySAP Technology

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ERP / SAP Overview | 1.01

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2005 IBM Corporation

IBM Global Services

SAP NetWeaver

Existing Systems
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SAP R/3 : Components

Master Data Transaction Data

Application

ABAP Programs

Organization Structure Configuration Key Data Elements Functionality Configurations

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What is Customization ?
 Customization
 The adaptation of application software to customer-specific needs is accomplished in two ways :

 Coding
 Programming customer-specific code that replaces or complements components of the application

 Configuration
 Rendering the application appropriate to a specific customer by specifying data on which the application operates

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2005 IBM Corporation

IBM Global Services

ABAP Programming
 SAP R/3 applications are written in the ABAP (Advanced Business Application Programming) programming language, and run within the application layer of the R/3 System.  ABAP programs communicate with the database management system of the central relational database (RDBMS), and with the graphical user interface (SAP GUI) at presentation level.

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2005 IBM Corporation

IBM Global Services

Why do we need ABAP Development ?

SAP R/3 scope

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ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

SAP Solution

SAP R/3 scope

Specific company requirements

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March-2005

2005 IBM Corporation

IBM Global Services

SAP Solution

SAP R/3 scope

Specific company requirements

New Functionality Development

Non SAP applications

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ERP / SAP Overview | 1.01

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2005 IBM Corporation

IBM Global Services

Summary
 Materials Requirement Planning (MRP-I) began as a technique for developing enterprisewide business solutions by providing automated tools for forecasting demands and planning according to the forecast.  ERP is an integrated suite of Applications to meet corporate needs.  Some major ERP vendors are : SAP R/3, Oracle, Baan  SAP AG was founded in Germany in 1972 and it is a Market Leader in Industrial Enterprise Application (IEA).  SAP NetWeaver is a vision, or paradigm, of total integration of :
    People Information Business Processes Applications

 SAP has a 3 tier architecture comprising of the Presentation layer, Application layer and the Database layer.  The SAP solution is divided in different areas or Functional Modules like SD, MM, PP, QM, PM, FI, CO etc. which are reorganized under services in mySAP Business Suite.  R/3 applications are written in the ABAP programming language, and run within the application layer of the R/3 System.

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ERP / SAP Overview | 1.01

March-2005

2005 IBM Corporation

IBM Global Services

Questions
 What is MRP ?  What is ERP ?  When was SAP AG founded ?  What are the 3 layers of the SAP R/3 ?  What is SAP Netweaver ?  What are the different functional modules of SAP ?  What programming language is used for SAP applications ?  Why do we need ABAP developments ?

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2005 IBM Corporation