IBM Global Services

ERP / SAP Overview

© Copyright IBM Corporation 2003

IBM Global Services

ERP Overview

Enterprise Resource Planning
Slide 2 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003

IBM Global Services

... synchronization of Company functions...

Enterprise Resource Planning

Purchase

Manufacturi ng

Financ e

Sales
Slide 3 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003

Tier I Component Manufacturer Vehicle OEM Tier II Component Supplier Slide 4 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .IBM Global Services Enterprise Resource Planning … and extended to the complete value chain...

..IBM Global Services Enterprise Resource Planning ... Decision support and analysis Processes monitoring & feedback Administrativ e registration Slide 5 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . delivering administrative and decision support with.

? …..IBM Global Services What is an ERP solution.. Integrated across the primary and support processes Distributio n Manufacturi Marketing ng Materials Planning and Executio n Financ e Engineering Human Resources Slide 6 ERP / SAP Overview | September 2003 Sales © Copyright IBM Corporation 2003 .

IBM Global Services The ERP application  An integrated suite of business applications. 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 Slide 7 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . machine. - - - Closely links. material. which. and controls primary enterprise resources like manpower.. monitors.

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!!! Slide 8 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

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.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. 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 Slide 9 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

. 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.g. there is increase in demand for integrated solution e.IBM Global Services Recent business trends favoring ERP growth  Globalization  As businesses are becoming more global in scope. 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 Slide 10 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

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 Slide 11 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Major ERP vendors      SAP R/3 Peoplesoft Oracle Baan JD Edwards Slide 12 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services What results can be expected from an “ERP culture”? Slide 13 u Reduced working capital requirements u Improved customer service u Improved direct labour productivity u Reduced purchase costs ERP u Reduced obsolescence u Reduced overtime u Having the figures to make decisions u Having accountability throughout the organization u Improved quality of life ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services SAP R/3 Overview Systems Applications & Products in Data Processing Slide 14 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

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 Worldwide presence in over 50 countries 18. global corporate enterprises – Significant presence in Global Fortune 500 companies Slide 15 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .500 installations of SAP Strength lies in its high degree of integration.000+ employees Trained consultants doubled since 1996 (40.000) About 20. mainly for large.000 companies in 120 countries Around 64.

300 copies worldwide in 1993 – Mainframe-based to replace user legacy software. co-existence and migration strategy underway for R/2 and R/3 R/2 Basis System Slide 16 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . 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 – Reorganized as leading mainframe software for large multinational corporations – No sales effort planned – reactive only – 4.IBM Global Services SAP R/1 .

Financial Accounting Controlling Treasury MM Product Planning PP R/3 HR CO TR QM Quality Mgmt.IBM Global Services SAP R/3 : A comprehensive business solution SD FI Sales & Distribution Materials Mgmt. Plant Maintenance Client/Server PS PM ABAP/4 WF Workflow Human Resources Industry Solutions Project System IS Slide 17 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

storage and retrieval of data form the Database Layer Slide 18 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .IBM Global Services 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 .

Database servers: Specialized systems with fast and large hard drives.IBM Global Services 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. © Copyright IBM Corporation 2003 ERP / SAP Overview | September 2003 . Slide 19 Application servers: Specialized systems multiple CPUs and vast amounts of RAM.

The Application Layer components are installed across one or more highend servers. The Database Layer components are installed on high-end database server. Slide 20 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .IBM Global Services SAP R/3 : 3 Tier Architecture Presentation Layer components are installed across many PCs.

Plant Maintenance Client/Server PS PM ABAP/4 WF Workflow Human Resources Industry Solutions Project System IS Slide 21 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .IBM Global Services SAP R/3 Overview SD FI Sales & Distribution Materials Mgmt. Financial Accounting Controlling Treasury MM Product Planning PP R/3 HR CO TR  QM Quality Mgmt.

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 Procurement MM Workflow C U S Production PP Finance and Accounting Distribution SD T O M E FI CO R Slide 22 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

. . . Slide 23 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . .IBM Global Services SD: Sales and Distribution SAP R/3 SD Sales & Distribution . . . .

IBM Global Services SD Overview Inquiry Quotation Materials Planning Sales Order Pricing Delivery to Customer Picking Packing Goods Issue Invoicing Transportation SD Purchasing Production Goods Receipt Customer Stock Slide 24 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Process Chain: Sales Distribution Sales/Distribution Chain Inbound Logistics from Materials Management Sales Order & Distribution Process Outbound Logistics to Customer Receive Payment FI Create Invoice FI/CO/PA .Optional - (Documents) .Optional - (Activities) Slide 25 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .Determine pricing .Optional - Check product availability .Estimate delivery schedule .Create transportation work list .Determine conditions of sale - Create Sales Order FI/CO/PA MM PP Support Customer Agreements .Check credit Provide Customer Quotations .Create loading work list Support Customer Sales (Customer Info Analysis) .Optional - Issue Goods (Ship Product) FI MM Create Delivery Note Process Customer Inquires .Create pick list .

IBM Global Services Order Entry FI Credit Management Dynamic Availability Check Cash Forecast PP MM FI OK ? Slide 26 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

. MM Credit Management Static Availability Check Picking List Delivery Note MM WM Picking Packing Transportation Slide 27 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . . .IBM Global Services Delivery/Shipment Processing FI Ship to party: C100 Item Material Qty 10 6301 10 20 6412 10 30 1507 25 .

IBM Global Services Picking/Packing Sales Order Delivery Picking without Picking Confirmation Print Picking List Picking with Picking Confirmation Picking Request Confirm Picking Request Picking Confirmation Goods Issue Slide 28 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Invoicing CO PA CO Profit Center Accounting/Profitability Analysis PCA FI FI Accounts Receivable/General Ledger Cash Forecast Single Invoices Collective Invoices Invoice Lists Credit/Debit Notes EDI Slide 29 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services MM Overview SAP R/3 MM Materials Management . Slide 30 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . .

IBM Global Services MM Overview Material requirement planning MM External procurement Internal procurement Purchasing Invoice verification Production Master data Material Batch Vendor Customer G/L Storage bins ... Goods receipt Warehouse management Inventory management Goods issue Transfer posting Internal and external accounting Slide 31 ERP / SAP Overview | September 2003 Sales and distribution © Copyright IBM Corporation 2003 .

123 Slide 32 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .456 Product .IBM Global Services Material .Central Master “Record” for Logistic 456 Inventory Purchasing Desc:--------------------- 123 Inventory Quality Sales Information Production Information Desc:--------------------- Raw Material .

IBM Global Services Data in the Vendor Master Client Maintenance Level Purchase Organization • Mandatory maintenance at the Purchasing Organization Level • Optional Maintenance at the Plant Level. the Vendor Sub-Range Level or a combination of the two Company Code General Data Address Phone and Fax Number Control Data Purchasing Data Terms of Payment Contact Person Minimum Order Value Account Data Payment Terms Payment Method Accounting Clerk Slide 33 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services External Procurement Environment Requirement Determination Source List Quota Arrangement Purchase Requisition RFQ Quotation Outline Agreement Source Determination Vendor Selection Price History Purchasing Data Info Record Invoice Receipt Goods Receipt Purchase Order Slide 34 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Goods Movement Ad hoc. Goods Receipt Delivery Inventory Production Inventory Transfer Posting Goods Issue Consumption Slide 35 Goods Issue Sales Order © Copyright IBM Corporation 2003 Samples ERP / SAP Overview | September 2003 .

g. Release of Blocked Invoice Delivery Invoice Preliminary Posting Automatic Price Update Slide 36 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 ..IBM Global Services Invoice Verification CO FI Vendor Vendor invoice invoice Vendor 3 Vendor Orders / Projects /Cost centers G/L accounts / Accounts payable Payment OK ! Tolerance Check? Blocked Invoice Invoice Verification e..

Slide 37 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .IBM Global Services PP Overview SAP R/3 PP Production Planning . .

IBM Global Services PP Production Planning Cycle Sales and Operations Planning Master Production Scheduling Master Data Material Master Bill of Materials Work Centers Routings PRT Sales & Distribution Demand Management Materials Management MRP Capacity Planning Plant Maintenance MRP List Costing Production Order Cycle or Purchase Order Cycle Slide 38 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Production : Process Chain Production Chain Inbound Logistics from Procurement or Production Chain Manufacturing Process Outbound Logistics to Materials Management or Sales Chain Archive/Delete Order Settle Production Order FI CO Transfer Produced Goods to Inventory FI Confirm production of goods is completed Produce Goods Determine Production Requirements via MRP Output or Manually) Create production order (via conversion of planned order to production order or manually) Check material availability (Automatic) Release Production Order Print shop floor papers (actual workorders) Withdraw materials from inventory (automatic/manual) MM Slide 39 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Production Planning Production Planning Functionality Master Data Sales and Operations Planning & Demand Management MRP Production Order & Capacity Plannin Slide 40 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

Qrt 4.000 Stochastic Deterministic Planning Demands 3. Qrt Bill of Material Explosion Capacity Planning Lot Sizing Procedures Net Change Slide 41 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .IBM Global Services Material Requirements Planning Demands Quantity: 12.

Planning Procedures Planning Procedures Deterministic MRP Consumption-Based Planning Forecast-Based Planning Reorder Point Planning Automatic Reorder Point Slide 42 ERP / SAP Overview | September 2003 Manual Reorder Point © Copyright IBM Corporation 2003 .IBM Global Services MRP .

IBM Global Services Production Control MM FI CO Goods Issue Costs Open Production Order Release Production Order Planned Orders Slide 43 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

Slide 44 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . .IBM Global Services QM Overview SAP R/3 QM Quality Management .

inspection. Plant Maintenance QM PM Workflow Industry Solutions WF Project System PS Human Resources HR IS Slide 45 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . and control PP AM Product Fixed Assets for manufacturing and Planning Mgmt.IBM Global Services QM Overview QM  The QM application module is a FI SD Financial Sales & quality control and information Accounting Distribution system supporting quality CO MM Materials Controlling Mgmt. procurement R/3 Quality Mgmt. planning.

IBM Global Services QM in Logistics QM Goods receipt  History-dependent intensity of quality inspections Production • Inspection during production • Defects recording in QM • Control charts Goods issue • Quality management in SD (certifies quality) Slide 46 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services PM Overview SAP R/3 PM Plant Maintenance . Slide 47 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . .

WO’s Slide 48 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .Overview Master Data Pre-defined work steps Notifications Create Work Orders Emergencies Labor Special Tools Planned Work Orders Schedule WO’s External Services PM Parts/Supplies Material Requisitions Reporting Close and Settle WO Shop Papers Preventive/Predictive Maint.IBM Global Services Plant Maintenance .

Slide 49 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 . .IBM Global Services FI Overview SAP R/3 Fi Finance .

IBM Global Services Components of FI General Ledger FI FI-GL FI-AR FI-AP FI-SL Accounts Receivable Special Ledger FI-LC Accounts Payable Legal Consolidation FI-AA Asset Accounting Slide 50 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

Group Level Company Code (Company) Legal Entity Controlling Area Controlling Area Controlling Area Controlling Area Controlling Level Plant Cost Centers Management Units Work Place/Job Slide 51 ERP / SAP Overview | September 2003 Material Product © Copyright IBM Corporation 2003 .IBM Global Services Corporate Structure Financial Management Area Financial Management Area Financial Management Area Corp.

IBM Global Services The Elements of Financial Accounting Foreign Exchange Management Business Analysis Finance Information System Executive Information System G/L Information System Cash Management and Forecast Multiledger Accounts Payable Invoice Verification Bank Accounts Receivables Payables General Ledger Accounts Receivable Credit Management Extended General Ledger Consolidation Slide 52 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services The Components of FI Configuration • Organizational Structures – Company Codes – Business Area • Organization of Accounting – Ledger/Sub-ledger • Chart of Accounts • Credit Control – Setting Credit Limits • Master Records – G/L Accounts – Customers – Vendors – Banks • Chart of Depreciation – Depreciation Areas – Assets • Extended General Ledger • Group Company • Number Ranges Slide 53 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 Functionality Documents/Transactions Posting Payment Terms Foreign Currency Taxes Special G/L Transactions Planning Payment Program Fiscal Year Adjustments Balance Sheets/Income Statements Closings On-Line Display Interest Calculation Correspondence Fixed Assets Reporting Analysis Legal Consolidations Modules General Ledger Accounts Payable Accounts Receivable Asset Accounting Special Ledger Legal Consolidations Credit Management Cash Management and Forecast Treasury FI .

IBM Global Services

CO Overview

SAP R/3

CO

Controlling. .

Slide 54

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Components of CO

CO

CO Configuration Organization Structures Master Data Planning Setup Criteria and Values Valuation
• Cost Center Accounting • Order and Project Acctg. • Transaction-Based Postings • Periodic Allocations

CO Modules
• Profit Center Acctg. • Product Costing • Activity-Based Costing • Product Costing • Budgeting • Profitability Analysis • Business Planning & Control

Functionality
• Settlement • Internal Orders • Open Item Management • Profitability Analysis • Overhead Management • Planning • Transaction-Based Posting • Periodic Allocations • Monitoring Actual Activities vs. Planned

CO
Slide 55 ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

The Elements of Managerial Accounting
Overhead Cost Controlling
Cost Centers

Overhead Cost Controlling

Profitability Analysis
PA

Cost of Sales PCA

Report Structure: Market Segment Region Division

Cost of Period Report Structure: Profit Center GL Accounts
© Copyright IBM Corporation 2003

Controlling

Slide 56

ERP / SAP Overview | September 2003

Batch Production Make to Order Prod.IBM Global Services Integration Within FI/CO FI Financial Accounting Asset Accounting Asset Accounting Investment Controlling Plant Maintenance Asset Accounting Gen. Ledger Accounting Accounts Receivable Accounts Payable Cash Management Chart of Accounts Management Accounting Overhead Cost Controlling Cost Center Controlling Actual Costing Static Standard Costing Flexible Standard Costing Order Controlling Product & Production Controlling Mass Production Continuous Flow Prod. CO Sales & Profitability Controlling Cost of Sales Accounting Period Accounting Account Revenue Central Line Items Central Totals Central Documents Slide 57 ERP / SAP Overview | September 2003 Project Controlling © Copyright IBM Corporation 2003 .

IBM Global Services Integration Planned Requirement MM MRP Requirement on component level Purchase Order PP Customer Order SD Planned Order Shipping Production Order Invoicing Goods Receipt Production completed Invoice Verification Account Receivable FI Order Settlement FI Accounts Payable Slide 58 ERP / SAP Overview | September 2003 CO © Copyright IBM Corporation 2003 Which modules are involved? .

IBM Global Services SAP R/3 : Components Application Master Data Transaction Data ABAP Programs Organization Structure Configuration Key Data Elements Functionality Configurations Slide 59 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services What is Customization ? Customization • the adaptation of application software to customerspecific 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 Slide 60 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Organizational Structures in R/3 Organizational Units Cost Accounting External Logistics Accounting Client Controlling Areas Company Codes Sales Organizations Internal Logistics (MRP/Production) Purchasing Organizations Valuation Areas Plants Inventory Management Slide 61 ERP / SAP Overview | September 2003 Storage Locations/Batches/Special Stocks © Copyright IBM Corporation 2003 .

IBM Global Services Organizational Structure in SAP R/3 Production Planning Financial Accounting Company Code Plant Controlling Controlling Area Client Human Resources Personnel Area Sales and Distribution Sales Area Slide 62 ERP / SAP Overview | September 2003 Materials Management Purchasing Organization © Copyright IBM Corporation 2003 .

and with the graphical user interface (SAPgui) at presentation level.IBM Global Services ABAP Programming SAP R/3 applications are written in the ABAP programming language. ABAP programs communicate with the database management system of the central relational database (RDBMS). and run within the application layer of the R/3 System. Slide 63 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Why we need ABAP Developments? SAP Solution SAP R/3 scope Slide 64 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services SAP Solution SAP R/3 scope Specific company requirements Slide 65 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services SAP Solution SAP R/3 scope Specific company requirements New Functionality Development Slide 66 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services SAP Solution SAP R/3 scope Specific company requirements New Functionality Development Non SAP applications Slide 67 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

IBM Global Services Types of ABAP Developments • Reports • Interfaces • Conversions • Enhancements Slide 68 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003 .

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