SAP ERP System

SAP ERP System

SAP is one of the most demanded ERP technology in the world.It is (ERP)enterprise resource planning software is used to integrate the All SAP modules into SAP to develop ERP applications which are created by the SAP ABAP language to reach the customer needs.Here we will learn the SAP modules and Advantages and Disadvantages of SAP ERP system.

SAP ERP is enterprise resource planning software developed by the German company SAP SE. SAP ERP includes the key business functions of an organization.

The most recent Enhancement Package for SAP ERP 6.0 was released in 2016.
SAP R/3, which was officially launched on 6 July 1992, consisted of various applications on top of SAP Basis, SAP's set of middle ware programs and tools.

There are many SAP ERP vendors with a wide variety of functions and on-premises or cloud deployment options.ERP .Supporting ERP vendors have a variety of support models for ERP systems, depending on licensing contracts with customers.We will learn the implementation techniques of ERP along with the ERP packages available in the market.All applications were built on top of the SAP Web Application Server.

The Web Application Server contained all the capabilities of SAP Basis.Types of ERP software: On premises and cloud Legacy ERP systems tend to be architected as large, complex, homogeneous systems which do not lend themselves easily to a software as a service ERP delivery model.


Enterprise systems can be broadly classified as

A.Decentralized System
B. Centralized System which are also called as ERP.
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.


SAP ERP 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, outsources, and customers.

The SAP Business Warehouse, SAP Strategic Enterprise Management and Internet Transaction Server were also merged into SAP ECC, allowing users to run them under one instance.The latest version, SAP ERP 6.0, was released in 2006.SAP ERP 6.0 has since then been updated through SAP enhancement packs, the most recent: SAP enhancement package 8 for SAP ERP 6.0 in 2016.

SAP ERP collects and combines data from the separate modules to provide the company or organization with enterprise resource planning.

SAP ERP System Modules

SAP FICO module

MM Module

SD module

HR module

PP module

PS module

Basis module

security module

ABAP module

Sales & Distribution: The SAP ERP sales and distribution is part of the logistics module that support your customers, starting from quotations, sales order and all the way towards billing the customer.

SAP ERP System

It is tightly integrated with the MM and PP functional modules.

Material Management: Is the materials management module of the SAP. This module is used for Procurement Handling and Inventory Management.

Materials management is integrated with other modules such as SD, PP and QM. Materials management is used for procurement and inventory management.

The Production Planning module of SAP takes care of Master data needed like Bill Of Materials, Routing and Work Centers and stores it in one separate component.

This module enables customers to effectively manage information about the people in their organization, and to integrate that information with "Other SAP modules" and external systems.
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 SAP (ERP)Enterprise System.

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.

The Shop Floor Team update their Man Power Status regularly in the Central Database, which can be accessed by the HR department.

While vendors can directly submit their invoices to the Central Enterprise System, which can be accessed by the finance department.

Key benefits of the centralized system are: It Eliminates the duplication, discontinuity and redundancy in data Provides information across departments in real time.

Implementation Phases in SAP ERP System

Typical implementation phases: 

Phase 1 - Project Preparation
Phase 2 - Business Blueprint
Phase 3 - Realization
Phase 4 - Final Preparation
Phase 5 - Golive

Support Companies planning to implement or upgrade an SAP ERP system should pay strict attention to system integration to save their SAP ERP implementation from failure.
Integration of erp system
With system integration in place, data flows completely and correctly among various SAP ERP components, thereby not only streamlining business processes but also eliminating or minimizing redundant data entry efforts.

SAP ERP Advantages

SAP ERP Allows easier global integration .
Updates only need to be done once to be implemented company-wide
Provides real-time information, reducing the possibility of redundancy errors
May create a more efficient work environment for employees
Vendors have past knowledge and expertise on how to best build and implement a system
User interface is completely customize able allowing end users to dictate the operational structure of the product.

Effectively implemented SAP ERP systems have cost benefits: Reduced level of inventory through improved planning and control.

Reduced materials cost through improved procurement and payment protocols.

Reduced labor cost through better allocation of staff and reduced overtime.

SAP ERP Disadvantages

SAP ERP bind into relationship by contract and manageability with vendor - a contract can hold a company to the vendor until it expires and it can be unprofitable to switch vendors if switching costs are too high
Inflexibility - vendor packages may not fit a company's business model well and customization can be expensive
Return on Investment may take too long to be profitable
Implementations have a risk of project failure

Finally ,we have learnt the what is the SAP ERP System and its definition and SAP modules and advantages and disadvantages.

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