SAP R/3. Enterprise Resource Planning (ERP) System. Reasons for Implementing ERP SAP. ERP Systems. Intro to

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1 Intro to SAP R/3 Enterprise Resource Planning (ERP) System Computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm Enterprise-wide resources needed to make, ship, and account for customer orders Integration accomplished through a database shared by all the application programs Allows firm to achieve end- to- end connectivity [internal] Reasons for Implementing ERP Desire to standardize and improve processes Improve the level of systems integration Improve information quality ERP Systems Case studies show that firms that have implemented ERP systems have made improvements in inter-functional coordination and business performance at various levels (reduced cycle times, reduced inventory, information sharing). However, ERP systems are extremely complex pieces of software requiring huge investments of financial resources, time and expertise. Improper implementation could lead to huge problems Hershey s FoxMeyer Drug SAP Systems, Applications, and Products in Data Processing (SAP) Name of the company SAP AG SAP America Name of the software SAP R/2 Mainframe version SAP R/3 Client/Server version SAP AG Founded in Germany (1972) World s fourth largest software provider World s largest provider of Integrated Business Solutions software Company stock trades on the Frankfurt and New York exchanges 1

2 SAP R/3 World-wide usage Designed to satisfy the information needs for all business sizes (small local to large international) Multi-lingual lingual Multi-currency Designed to satisfy the information needs for various industries (industry solutions) SAP R/3 Enables a company to link its business processes Ties together disparate business functions (integrated business solution) Helps the organization run smoothly Real-time environment Integrated Business Solutions Software Vendors SAP Oracle PeopleSoft,, J.D. Edwards Microsoft Great Plains, Axapta, Solomon IBM Baan IFS Architecture Central relational database (e.g., Oracle, Informix, Microsoft SQL, and many others) Client/Server three- tiered ERP Component Oriented towards common identifiable business modules (FI, MM, SD, CO, PP, HR) Add- ons: Customer Relationship Mgmt (CRM) Supply Chain Mgmt (SCM) Product Lifecycle Mgmt (PLM) Relational Database Defines and links thousands of tables of information (25,000+) Advantages Advantages Consistent and accurate data Common definitions for terms Shared, but restricted usage (e.g., profiles) Eliminates data redundancy Client Client/Server Environment Software/hardware combination that can make a request for services from a central repository of resources Server Software/hardware combination that can provide services to a group of clients in a controlled environment 2

3 SAP Enterprise System Three-Tier Tier SAP Structure GUI Graphical User Interface Or Web Interface Application server (one or many) Database server (one single location) PCs, Laptops, etc. Presentation Network Internet Transaction Server Browser Client Web Server Application Application Servers Database Database SAP Enterprise System Business Modules SD FI Sales and Financial Distribution Accounting MM CO Materials Mgmt. Controlling PP AM Production R/3 Fixed Assets SM Planning Mgmt. EC Service Client / Server Enterprise Mgmt. QM Controlling Integrated Business PS Quality Project Mgmt. PM Solution WF System Plant Maintenance Workflow HR IS Human Industry Resources Solutions Collections of logically related transactions within identifiable business functions MM ( Buy ) PP ( Make ) SD ( Sell ) FI and CO ( Track ) HR SAP R/3 Advanced Basics Instance each install of the SAP R/3 software on an individual application server Configurable each instance can be distinctively configured to fit the needs and desires of the customer (within limits) Most of the infrastructure decisions, including configuration decisions, occur during project implementation Configuration The process of tailoring SAP software by selecting specific functionality from a list of those supported by the software, very much like setting defaults (e.g., Word, Access) DOES NOT involve changes to the underlying software code 3

4 Programming Code Modifications Changes to the delivered code ABAP/4 Advanced Business Application Programming (ABAP) This should be done sparingly and carefully as it can make migration to new versions of the software much more difficult SAP R/3 Document Principle Each business transaction that writes data to the database creates a uniquely numbered electronic document Each document contains information such as Responsible person Date and time of the transaction Commercial content Once created, a document can not be deleted from the database Features Internet Demonstration and Evaluation System Fully developed model company Based on a standard R/3 system Master data and transaction data Complete Customizing Comprehensive data and process descriptions for cross-component component business processes Online documentation with self-learning learning units on the business processes in the consolidated group IDES - Overview of Divisions IDES Group IDES Retail IDES Banking IDES Services IDES Subgroups - Overview IDES Europe 4000 IDES Company Codes - Overview IDES Europe Frankfurt / De IDES N. America 3000 IDES N. America London / GB Paris / Fra New York / USA Toronto / Canada Lisbon / Por Barcelona / Esp 5000 IDES Asia 6000 IDES Mexico Mexico City IDES Asia Tokyo / Japan 4

5 Industry Engineer-toorder IDES - Production Make-to-order Production by lot size Process manufacturing JIT assembly Repetitive manufacturing Mass SAP for Engineering, Construction & Operations Elevator and turbine Power plant construction SAP for Automotive Manufacturer processes Supplier industry SAP for Consumer Products Production of foodstuffs and 'non-foodstuffs' SAP for High Tech SAP for PC assembly and Aerospace/Defense SAP for Pharmaceuticals service Production and maintenance of a power plant Tablet SAP for Chemicals Paint and solvent Organizational Structure of 'Accounting' Organizational Structure of 'Distribution' Cross- section of the Sales Organization Generally, only individual organizational units are ever involved in a concrete business process. E.g.: Company code Germany Sales organization Frankfurt Sales office Frankfurt Division 'Pumps' Consumer sales The credit limit of debtors is monitored in credit control area Organizational Structure of 'Logistics' Shipping point [VST] Storage location (SL) Purchasing Organization 1000 Einkäufergruppe 000 Chef H. EKG 001 Dienstleistungen 2000 EKO 3000 EKG 003 Komponenten & Motorräder Werk HH [WRK] 1000 B 1100 DD 1200 F 1300 S 1400 Heathrow 2000 NY CH A LA SE DA WI OL DE BUK BUK BUK