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As technology grows and changes, software has to upgrade accordingly.

However, SAP believes in an environment where you do not have to scrap your
existing software setup. Instead, it would provide upgrades and extend the
functionality of the existing software, thereby reducing costs.
In this image, you can see that to begin with SAPs technology was based on
Mainframe architecture based on ABAP and R2. Keeping pace with business
requirements and integrated business processes, technology changes were made
from R2 to three tier R/3 and moved from Mainframes to Client-Server Architecture.
SAP R/3 has always been an integrated system where business processes were
integrated within an enterprises operations. Capable of e-commerce since 1996, SAP
products incorporated business technology for the future, thus paving the way for
incorporating future developments. This eliminated the need for customers to change
existing systems and allowed for integration of business processes between
enterprises.
Finally, with Technology advances and the internet revolution, you now have services
catering to adaptive businesses like Web services. SAPs Enterprise service
architecture platform features Netweaver, business suites and xApps offerings,
keeping pace with the business requirements of today and the future.

After the SAP R/1 and SAP R/2 products, SAP introduced SAP R/3. Later, in March of
2003, SAP released SAP ERP, where many other SAP components were included along
with SAP R/3. Inside SAP ERP, SAP R/3 enterprise was just a component.
As you can see here, from this point on SAP ERP was more than just SAP R/3
Enterprise with SAP NetWeaver, since it offers many functional enhancements like
Self Services, self service procurement, internet sales, and SAP SEM. SAP Net Weaver
also contains the SAP Web Application Server. With SAP ERP, a new SAP solution was
born.
The SAP ERP Central Component or SAP ECC, is the evolutionary successor of the
previously offered SAP R/3 Enterprise, and is the central core of SAP ERP.
Compared to the SAP R/3 Enterprise, in SAP ECC there are architectural changes with
respect to Enterprise Services Architecture, enhanced usability and new developed
functionality, like the new general ledger.
SAP Business Warehouse, SAP Strategic Enterprise Management, and Internet
Transaction Server integrated into SAP ECC. Customers now have the option to run
these components on the same instance that runs SAP ECC to reduce the system
landscape and save costs. Running the components on separate instances is also
possible. SAP Web Application Server contains all capabilities of SAP basis as well as
additional web capabilities.

SAP ERP is the result of an ERP offering to SAP R/3. SAP ERP includes all the
functionality of SAP R/3 Enterprise with the large number of additional business
processes like self service, strategic management, and others. SAP ERP is an
integrated and personalized functionality. SAP ERP is built on the NetWeaver
technology. SAP NetWeaver is used as a technology platform for integration and as an
application infrastructure with open connections to Microsoft .NET and IBM
WebSphere.

SAP Business Suite comprises SAP ERP, SAP PLM, SAP CRM, SAP SCM, and SAP SRM.
SAP Business Suite is built on SAP NetWeaver. As you can see from this image, the
core component of the Business Suite is ERP. SAP ERP consists of:
Life Cycle Data Management
Quality and Asset Management
Sales Order Management
Internet Sales
Inventory Warehouse Management
Manufacturing and Transportation
Purchase Order Processing.
SAP ERP also supports mobile technologies featuring GPS and GSM-supported service
options for collaborative businesses.

The slide here shows the solution map. As is the case with other SAP solutions, a
solution map shows you the processes enabled by a specific solution. In the image
shown here, you can see various highlighted areas in different colors. These areas
indicate additional capabilities offered by SAP ERP as against those already available
to SAP R/3. For example, you have New General Ledger in Financial Accounting, ELearning, and E-Recruitment in Work Force Process Management, and Self-Service
Procurement in Procurement.

An Organizational Unit is a unit used to map an Organizational Structure of an

enterprise to the SAP Application. Familiar terminology like Storage Location, Sales
Office, Profit Center, and Legal Entity are all represented by the team Organizational
Unit inside the SAP Application.
In the image here, the Organizational Unit CLIENT is the highest on the order and is
used to represent the complete Enterprise.
Next would be the company code followed by Plant, Sales Organization, Division and
Storage Location. The purpose of this hierarchy or Organizational Unit is to avoid reentering data more than is required. For example, specifications or data that is valid
for all organizational units in all R/3 applications can be entered at the CLIENT level,
eliminating the need to enter this information more than once. A client usually
represents a company in an SAP system.
A company code is an independent legal accounting entity. An example would be a
company within a corporate group. Here company and subsidiary in SAP can be called
as company code. This is required for Financial Accounting.
Similarly, Plant is the central organizational unit for Production Planning and in the
context of Sales and Distribution, the Sales Organization is the central organizational
element that controls the terms of sales to the customer. Division is usually used to
represent a product line.

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In this image, you can see how Organizational Units are used to represent the
Enterprise Structure. At the highest level is the Client. This has two derivative
Company Codes, 1000 and 3000. Company Code 1000 has two derivation Plants
under it, and similarly Company Code 3000 has one plant and one Controlling area
under it.
When you define the organizational units for your enterprise, please bear in mind
how you would like the data to be entered, tracked, and extracted from the system,
as this is a representation of the existing business processes.

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Sales and distribution is organized according to the sales organization, distribution

channel and division. A combination of these three organizational units forms the
sales area. The sales organization is an organizational unit within logistics that
structures the company according to its sales requirements.
A sales organization is responsible for the sale and distribution of goods and services.
The distribution channel represents the channel through which saleable materials or
services reach customers. Typical distribution channels include wholesale, retail and
direct sales. In the SAP ECC System, you can define a division-specific sales
organization. Product groups, or divisions, can be defined for a wide-ranging
spectrum of products. In this image, you can see that in sales organization 1000,
products of divisions 02, 03 and 05 are only sold through distribution channel 10.

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Let us now look at what a Plant is in the Organizational Structure. A Plant is an

organizational unit defined in Material Management which represents a location
where stock of material is kept or manufactured. The assignment of plants to
company code can be n to 1.
This means any number of Plants can be assigned to one Company Code. Here you
can see plants 1000, 1100, 1200, 1300, and 1400 are all assigned to the company
code 1000. Any relevant company-code transaction from one of these five plants is
posted to company code 1000 in Accounting.

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Let us now look at a Purchasing Organization. A purchasing organization is an

organizational unit within logistics, subdividing an enterprise according to the
requirements of Purchasing. This Unit procures materials and services, negotiates
conditions of purchase with vendors, and bears responsibility for such transactions.
Each country in which plants operate has one purchasing organization.
Hence, you will notice that Purchasing organization 1000 purchases for plants 1000,
1100, 1200, 1300, and 1400, which are located in one country and posts all the
entries into the countrys company code in 1000.

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Let us now understand what we mean by Master Data. Any data that has to be used
across several business processes and is consistent for longer periods of time can be
termed as Master Data in the SAP System. Master data is usually created centrally
and is then available across applications and users. For this slide, you will look at the
Customer Master as an example.
A customer master contains information that defines the business relationship
between a company and its customer. The master contains data that is required to
execute key business processes between the customer and the company. Example of
such activities would include customer requests, deliveries, invoices, and payments.
The customer master is organized into three views which are located at different
organizational levels.
General Data: which does not depend on the company code. This data is entered at
the client level.
Financial Accounting Data: is relevant to Financial Accounting and applies to one
company code.
Sales Data: wherein data for one customer can differ for each sales area. As you have
seen earlier, the sales area is a combination of sales organization, distribution
channel and division. This data is only relevant to Sales and Distribution.

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While Master Data refers to data that remains unchanged for longer periods of time,
transactions are application programs which execute repeating business processes,
referencing the master data, such as creating a customer order, posting an incoming
payment, or approving a leave request.
Any transaction that has been executed in the system creates a document. When
these documents are created, they will automatically copy the referenced predefined
data from the master eliminating the need to enter it again.

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Let us understand the business process flow from purchasing goods to paying for the same.
This is typically termed as the Purchase to Pay process flow. We will be referring to two
courses, the MM or Material Management Course and FI or Finance Course.
Order Requirement: The first step in the purchase to pay process is the Order
Requirement. Order Requirement can be done manually by registering a requirement using
Order Requirement. In the SAP ECC system, the Order Requirement can also be automatically
created. Note that at this stage no postings are created in the FI course.
Order a Material: Next, in Purchase order process you order a material by using a basic
form of the purchase order document. While creating a purchase order, data such as
supplier, material, plant and any other data relevant to the purchasing of an organization
must be provided. In the SAP ECC system, the purchaser can control or supervise the
processing status of the purchase order. You can post the goods receipt or invoice receipt for
the concerned purchase order. This purchase order creation is handled only in the MM
course. In the SAP ECC system, no document is created in the FI course during purchase order
creation.
Good Receipt: Once goods are received after the purchase order is processed, the system
compares the goods receipt with purchase order quantity. A goods receipt entry is passed in
the MM course. Two documents are created in real time in the system, one for the material
document and the other for the FI document. The material document is created to update
the inventory. In the FI course, values are posted by debiting the Material stock account or
the consumption account and crediting goods receipt or the invoice receipt account.
Invoice Verification: The vendor invoice receipt is then verified during invoice verification. All
these purchasing processes are settled in the SAP ECC system via Logistics. The vendor
invoice is posted in MM and, in real time, an FI document is created, by debiting the goods
receipt or invoice receipt account, and crediting the vendor account.
Payment: The final step is the payment process which is finally updated in Financial
accounting, with details like the payment methods and bank settlement.

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Next, you will understand the Order to Cash process flow. A sales order is the basis
of the sales process. Let us understand with the help of two examples: product sale
ex-stock and sale of service.
Product sale ex-stock: In this process, a sales order is created for material which is
kept in inventory. Costs and revenues are derived automatically from the material
production costs or from the SD Course.
From the incoming order, you create the transport order, where in required goods are
removed from the stock and prepared for delivery. Then outbound delivery document
is created. The goods to be delivered are posted as goods issue. At the time of goods
issue two documents are created. One in MM as a goods issue document and
another in FI as an accounting document. Billing is done only after the goods issue is
posted. During billing an invoice document is created. Finally you come to payment
and dunning. When payment is received from the customer an entry of receipt is
posted in FI. If you have not received payments from your customers by the net due
date, the customers will be dunned.
Our second example is for Sale of service: - Here you sell a service. A direct service
generation process can also be displayed via a sales order item. The sales order item
is a cost bearer; in this case, you need to define Goods lnward accounts in order to
post the entries in to FI. All the other steps like incoming orders, billing, payment are
almost identical to the steps in sales ex-stock.

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OLAP or Online Analytical Processing is an approach to quickly provide the answer to

analytical queries that are dimensional in nature. It is part of the broader category of
business intelligence. Typical applications of OLAP are in business reporting for sales,
marketing, management reporting, business process management or BPM, budgeting
and forecasting, financial reporting, and other similar areas.
OLTP or Online Transaction Processing is a class of programs that facilitate and
manage transaction-oriented applications, typically for data entry and retrieval
transaction processing. If you are using the transactions in the Logistics applications,
the Logistics Information System (LIS) updates relevant information. You can also
update information from other systems in the LIS. The LIS aggregates and stores this
information in the data warehouse

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This slide discusses some of the most important demands placed on a modern data
warehouse. Decision criteria for the efficiency of a data warehouse solution are
highlighted here.
SAP BW enables the analysis of data from operative SAP applications, as well as, all
other business applications and external data sources such as databases, online
services, and the Internet. The transaction-oriented Online Transactional Processing,
or OLTP and the analysis-oriented Online Analytical Processing or OLAP environment
must be seen as an integrated entity.
Master data, and the business processes that result from it, produce a multitude of
information that cannot easily be used for target-oriented analysis. Therefore, data is
cleansed first and, because of the variety of its sources, it is prepared both technically
and in terms of content. Knowledge can then be generated from the analysis that
follows. This knowledge helps the organization to define its business strategy and
supports the business processes derived from it.

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