What is SAP ?

What is SAP ?

SAP stands for  Systems Applications and Products in Data Processing.

SAP by definition is also named of the ERP (Enterprise Resource Planning) software as well the name of the company.

SAP Software was Founded in 1972 by Wellenreuther, Hopp, Hector, Plattner and Tschira.

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

The very basic question to any beginners is why Enterprise Resource Planning also called ERP is required? To answer this, let’s examine this typical business scenario.

What is SAP? Definition of SAP ERP Software

Suppose a client approaches sales team asking for a particular product. The sales team contacts to inventory department to check the availability of the product. To their surprise, sales team found out that the product is out of stock. So next time this don’t happen, they have to introduce a SAP ERP tool.

Before we actually see in detail, what ERP is and how ERP can help in your business process, we will understand how different departments are involved in the whole business process, right from the ordering of the raw material – to manufacturing goods – to delivering final goods to the customer.

What is SAP? Definition of SAP ERP Software

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 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 forwards 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 are also called as ERP.


Decentralized System

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 of other departments

To identify problems 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.

What is SAP? Definition of SAP ERP Software

Since it is a decentralized process, the Sales Team do not have any real-time information access to the products availability. So they approach the Inventory department to check the availability of the product. This process takes time and customer chooses another vendor leading to loss of revenue and customer dissatisfaction.

What is SAP? Definition of SAP ERP Software

Now, suppose the product is out of stock and the Sales Team approaches the Production Planning team to manufacture the product for future use. Production Planning Team checks the availability of the raw materials required.

In a decentralized system, raw material information is separately stored by Production Planning as well as Inventory Department. Thus, data maintenance cost (in this case Raw Material) goes up.

What is SAP? Definition of SAP ERP Software

The raw material information is available in two different departments Inventory as well as Production Planning. When sales team check a particular raw material required to manufacture the product, it shows the raw material is available as per the inventory, but as per the database of the production planning team, the raw material is out of stock.

So, they go ahead and buy the raw material. Thus, material as well inventory cost goes up.

Once the raw material is available, the shop floor department suddenly realizes they are short of workers they approach the HR, who in turn hire temporary employees at higher than market rates. Thus LABOR Cost Increases.

The production planning department fails to update the finance department on the materials they have purchased. The finance department defaults the payment deadline set by the vendor causing the company loss of its reputation and even inviting a possible legal action.

What is SAP? Definition of SAP ERP Software

These are just a few of many problems with decentralized systems.

Some Major problems with the decentralized system are –

  • Numerous disparate information system generates individually over time which are difficult to maintain
  • Integrating the data is time and money consuming
  • Inconsistencies and duplication of data
  • Lack of timely information leads to customer dissatisfaction , loss of revenue and reputation
  • High Inventory, material, and human resource cost.

These are some major drawbacks for which we need a solution. Well the Solution lies in Centralized Systems i.e. ERP.

Centralized System

In a company, with Centralized System of Information and Data Management.

1) Data is maintained at a central location and is shared with various Departments

2) Departments have access to information or data of other Departments

Let’s look at the same business process again to understand how a Centralized Enterprise System helps to overcome problems posed by a Decentralized Enterprise System.

What is SAP? Definition of SAP ERP Software

In this Case, all departments update a Central Information System.

  • When Customer approaches the sales team to buy a product on an urgent basis. The Sales Team has real-time information access to the products in inventory which is updated by the Inventory Department in the Centralized System
  • Sales Team respond to customer request on time leading to Increased Revenue and Customer Delight.
  • In case, manufacturing is required the Sales Team update the Centralized Database, so that all the department remain informed about the product status.
  • Production Planning Department is auto updated by the Centralized Database for requirements. Production Planning Team checks the availability of the raw materials required via Central Database, which is updated by the Inventory Department.
  • Thus, Data Duplication is avoided, and accurate data is made available. The Shop Floor Team update their Man Power Status regularly in the Central Database, which can be accessed by the HR department.
  • In case of shortage of workforce, HR team starts recruitment process with considerable lead time to hire a suitable candidate at market price.Thus labor cost goes down.
  • While vendors can directly submit their invoices to the Central Enterprise System, which can be accessed by the finance department. Thus, payments are made on time, and possible legal actions are avoided
  • SAP software is a type of Centralized System. SAP System is most popularly used ERP software.

Key benefits of the centralized system are:

  • It Eliminates the duplication, discontinuity and redundancy in data
  • Provides information across departments in real time.
  • SAP System is Provides control over various business processes
  • Increases productivity, better inventory management , promotes quality , reduced material cost, effective human resources management, reduced overheads boosts profits
  • Better customer interaction and increased throughput. It also improves customer service
  • Hence, a centralized enterprise management system is required.
  • SAP Software is a centralized enterprise management system also known as Enterprise Resource Planning.


Share this post

97 thoughts on “What is SAP ?

  1. My turn, my turn.? Larгy sazid eagerly
    wiggling to get an opportunity to talk. ?I believe the very bеst factor about God is that he can beat up
    the satan as a result of tһhe devil is frightening
    and mean and ufly and bad and Godd can beat him up so the satann can?t hurt us like һe did these demon stuffed indіviduals in Jesus day.

  2. I think this is among the most significant information for me. And i am glad reading your article. But want to remark on few general things, The website style is ideal, the articles is really nice

  3. Oh my goodness! an amazing write-up guy. Thanks Nonetheless I am experiencing problem with ur rss. Don?t know why Incapable to register for it. Exists anyone obtaining the same rss issue? Anyone who understands kindly respond. Thnkx Marlee Terrance Vivienne

  4. Donec venenatis feugiat congue. Integer ipsum tellus, accumsan ut purus vitae, congue rhoncus ipsum. Praesent finibus suscipit fringilla. Curabitur faucibus libero non est viverra lacinia. Jami Ferdinand Bainbrudge

  5. Hey there. I found your website via Google even as searching for a comparable topic, your web site came up. It seems good. I have bookmarked it in my google bookmarks to come back then. Cinderella Alfons Accalia

  6. semoga setelah menerapkan cara yang di bahas ini, saya selaku BeHangat. Com bisa semakin baik untuk meningkatkan pengunjung dan lain-lain. TrimS kak. Bernita Myca Magas

  7. Its such as you read my mind! You appear to understand so much approximately this, such as you wrote the book in it or something. I feel that you simply can do with some percent to power the message house a bit, but other than that, this is excellent blog. An excellent read. I will certainly be back. Van Merrick Lamphere

  8. Hi my family member! I wish to say that this article is awesome, nice written and include approximately all important infos. I would like to peer more posts like this. Edita Borden Decamp

  9. Awesome post. I am a normal visitor of your site and appreciate you taking the time to maintain the excellent site. I will be a regular visitor for a long time. Donella Matthias Avigdor

  10. Oh Beth, sitting on Election eve, biting my nails like so many. All we can do is pray. The fate of our nation hangs in the balance, no joke. Shelba Ker Che

  11. I was more than happy to discover this site. I wanted to thank you for your time for this particularly wonderful read!! I definitely liked every little bit of it and i also have you book marked to look at new stuff in your blog. Renata Willdon Apicella

  12. Massa suspendisse lorem turpis ac. Pellentesque volutpat faucibus pellentesque velit in, leo odio molestie, magnis vitae condimentum. Auroora Giff Weidar

  13. I have learn a few just right stuff here. Certainly price bookmarking for revisiting. I surprise how so much effort you put to create any such magnificent informative website. Enrichetta Richard Karly

  14. Hi there, after reading this amazing paragraph i am as well delighted to share my knowledge here with friends. Henryetta Sawyere Neal

  15. I am very much thankful for your efforts put on this article. This guide is transparent, updated and very informative. Can I expect you will post this type of another article in the near future? Casie Bronson Grayce

  16. Every weekend i used to visit this website, because i want enjoyment, as this this web page conations truly pleasant funny data too. Nerita Clint Panter Waly Arron Lhary

  17. Howdy, I think your website could possibly be having browser compatibility problems. When I take a look at your site in Safari, it looks fine however, when opening in IE, it has some overlapping issues. I just wanted to provide you with a quick heads up! Other than that, excellent blog! Stesha Hamnet Edroi

  18. That is a very good tip especially to those new to the blogosphere. Simple but very precise info?Thank you for sharing this one. A must read post! Jennette Cecilio Bettzel

  19. I blog frequently and I truly appreciate your content. The article has really peaked my interest. I am going to take a note of your site and keep checking for new details about once a week. I opted in for your RSS feed too. Cynde Alistair Vern

  20. Very good point which I had quickly initiate efficient initiatives without wireless web services. Interactively underwhelm turnkey initiatives before high-payoff relationships. Holisticly restore superior interfaces before flexible technology. Completely scale extensible relationships through empowered web-readiness. Colline Augusto Langer

  21. I felt like that was such a fake device used to tie up an impossible mystery. Unfair to the reader- even though I was totally sucked into the story Ottilie Cosme Pasho

  22. Its like you read my mind! You appear to know a lot about this, like you wrote the book in it or something. I think that you can do with a few pics to drive the message home a bit, but instead of that, this is great blog. A great read. I will certainly be back. Klarika Thorn Stedt

  23. Look out for 1 which employs one additional orientation an extremely precious metal hue perhaps tulle top to restore current day! You rule pertaining to using another joint dress would be keep goodies clear-cut. Emmeline Hodge Dabbs

  24. A wonderful serenity has taken possession of my entire soul, like these sweet mornings of spring which I enjoy with my whole heart. I am alone, and feel the charm of existence in this spot Hannis Jessie Allan

  25. i hope makapasa ako sa exam dis october..malaking tulong po itong reviewer nyo.. nagkaroon po akong mga idea about a exam.. Tarrah Jakob Napoleon

  26. I am really enjoying the theme/design of your site. Do you ever run into any browser compatibility issues? A few of my blog visitors have complained about my site not working correctly in Explorer but looks great in Safari. Do you have any recommendations to help fix this issue? Marleah Pail Simeon

  27. Very good point which I had quickly initiate efficient initiatives without wireless web services. Interactively underwhelm turnkey initiatives before high-payoff relationships. Holisticly restore superior interfaces before flexible technology. Completely scale extensible relationships through empowered web-readiness. Felicle Benedick Enriqueta

  28. It is actually a great and helpful piece of info. I am happy that you shared this helpful information with us. Please stay us informed like this. Thanks for sharing. Dacia Clemente Marva

  29. Ex dolor vivendo salutatus eos, ea pro tritani feugiat salutandi. Per id dicta lobortis elaboraret, ut mel munere consequat elaboraret, solum atomorum rationibus nec no. Vanny Haskel Amabelle

  30. One change since you went through, they no longer wear the blue’s during the coin/ceremony retreat, at least they haven’t since i started attending in January. Everything else is as you described. Even the speech’s given are the same every week. Celene Morry Claudelle

  31. Excellent website. Lots of helpful info here. I am sending it to a few pals ans also sharing in delicious. And naturally, thank you to your effort!| Margarette Salem Garneau

  32. Greetings! Very useful advice within this post! It is the little changes that make the most significant changes. Thanks a lot for sharing! Doloritas Arnold Jean

  33. I and my buddies have been reading through the nice secrets located on your site while instantly I got an awful suspicion I never thanked the blog owner for them. These young boys are already for this reason joyful to see them and have now unquestionably been tapping into those things. Many thanks for indeed being indeed accommodating and also for picking varieties of marvelous topics most people are really eager to be informed on. My very own honest regret for not saying thanks to you sooner. Gennifer Urson Hendren

  34. I was recommended this website by my cousin. I am not sure whether this post is written by him as nobody else know such detailed about my difficulty. You are incredible! Thanks! Cleopatra Claudio Favian

  35. Excellent blog here! Also your web site loads up very fast! What web host are you using? Can I get your affiliate link to your host? I wish my site loaded up as fast as yours lol Aurelia Cecilius Belloir

  36. Heya i am for the first time here. I came across this board and I find It really useful & it helped me out a lot. I hope to give something back and aid others like you aided me. Hyacinthia Rodolph Blanc

  37. Efficiently unleash cross-media information without cross-media value. Quickly maximize timely deliverables for real-time schemas. Dramatically maintain clicks-and-mortar solutions without functional solutions. Trenna Maximilianus Falzetta

  38. Simply wish to say your article is as amazing. The clearness in your post is simply excellent and i could assume you are an expert on this subject. Fine with your permission allow me to grab your feed to keep updated with forthcoming post. Thanks a million and please continue the enjoyable work. Pansie Obie Siegel

  39. So stunning! I love the dried florals and those cute white branches tucked in the napkin rings. Always such a treat to see your creations. xo Pammi Salvidor Oballa

  40. Aw, this was a really good post. Spending some time and actual effort to create a top notch article?but what can I say?I procrastinate a whole lot and never seem to get anything done. Eugenia Horace Prober

  41. Hello there. I discovered your website by way of Google whilst looking for a comparable matter, your web site came up. It appears to be great. I have bookmarked it in my google bookmarks to come back then. Modesta Farlie Vezza

  42. I have observed that costs for online degree authorities tend to be a terrific value. For example a full College Degree in Communication in the University of Phoenix Online consists of Sixty credits from $515/credit or $30,900. Also American Intercontinental University Online provides a Bachelors of Business Administration with a whole program element of 180 units and a tariff of $30,560. Online learning has made getting your college degree been so cool because you could earn your current degree from the comfort of your house and when you finish from work. Thanks for all tips I have really learned through your site. Aurilia Rickard Naples

  43. Pretty section of content. I just stumbled upon your weblog and in accession capital to assert that I acquire actually enjoyed account your blog posts. Anyway I will be subscribing to your feeds and even I achievement you access consistently rapidly. Petunia Ulrick Mendoza

  44. When I originally left a comment I seem to have clicked the -Notify me when new comments are added- checkbox and from now on each time a comment is added I recieve 4 emails with the same comment. Is there an easy method you are able to remove me from that service? Thanks. Mae Walsh Publus

Leave a Reply

Your email address will not be published. Required fields are marked *