TERP01 SAP ERP Introduction

About This Module Organizational Levels and Master Data is the basic framework that supports business processes. As part of this module, you will be introduced to the transition from R/3 to SAP ERP, and therefore understand how to create the Organizational Levels and Master Data for the business processes inside SAP ERP. Module Objectives • Understand the positioning of R/3 to SAP ERP, identify its various components, describe the Organization Levels and Master Data, which are needed to support business processes in SAP ERP, explain reporting and analysis solutions available in SAP ERP to support internal and external reporting needs of an organization. • Appreciate the transition from R/3 to SAP ERP. • Identify the various components of SAP ERP. • Describe the various Organization Levels and Master Data which are needed to support various Business Processes in SAP ERP. • Explain Reporting and Analysis solutions available in SAP ERP, to support various internal and external reporting needs of an organization. Module Content • • • • SAP ERP Positioning Organizational Levels Master Data Reporting Solutions

Target Audience Solution architect, project managers, team members, and solution consultants who want to gain a broad fundamental understanding of the core processes, business interrelations, and integration of the individual business applications within the SAP ERP solution.

SAP ERP Positioning
About This Topic This topic explains the transition from R/3 to SAP ERP. It also aims to introduce participants to the various components of SAP ERP. Estimated time to complete this topic: 30 minutes What's in it for me? • To understand the positioning of R/3 enterprise towards SAP ERP A New Wave of Information Technology

Audio Transcript 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 SAP’s 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 enterprise’s 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. SAP’s Enterprise service architecture platform features Netweaver, business suites and xApps offerings, keeping pace with the business requirements of today and the future.

Architecture of SAP ERP (Image) Audio Transcript 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 and SAP NetWeaver

Audio Transcript 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 ERP is a Solution within SAP Business Suite (image) Audio Transcript 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. SAP ERP Solution Map (Image) Audio Transcript 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, E-Learning, and E-Recruitment in Work Force Process Management, and SelfService Procurement in Procurement. Summary We now come to the end of the topic on SAP ERP Positioning.

Organizational Levels
About This Topic This topic describes the Organizational Levels which provide a framework to support Business

Processes in SAP ERP. What's in it for me? • Describe the SAP enterprise organizational levels Organizational Levels – Terminology (image) Audio Transcript 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 re-entering 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. Organizational Levels (image) Audio Transcript 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.

Sales Areas image
Audio Transcript 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. Plants image Audio Transcript 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 companycode transaction from one of these five plants is posted to company code 1000 in Accounting.

Purchasing Organizations image Audio Transcript 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 country’s company code in 1000. Summary We now come to the end of the topic on Organizational Levels for ERP Basics.

Master Data
About This Topic This topic describes the Master Data that are needed to support Business Processes in SAP ERP. Estimated time to complete this topic: 20 minutes What's in it for me? • Describe the functions of master data Master Data: Customer Master image

Audio Transcript 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. Transactions Image Audio Transcript 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.

Process Overview: Purchase to Pay Image Audio Transcript 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. Process Overview: Order to Cash image Audio Transcript 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. Summary We now come to the end of the topic on Master Data for ERP Basics.

Reporting Standards

About This Topic This topic explains the Reporting and Analytical Solutions available in SAP ERP, to support the internal and external reporting needs of an organization. What's in it for me? • Explain ERP analytical and reporting solutions Data Warehouse Concepts imafge Audio Transcript 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 transactionoriented 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.

Distinction: Operative/Informative Environments image Audio Transcript 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. Summary We now come to the end of the topic on Reporting and Analytical Solutions for ERP Basics.

Module Summary
The participant should now be able to appreciate the transition from R/3 to SAP ERP, identify the various components of SAP ERP and describe the various Organization Levels and Master Data which are needed to support various Business Processes in SAP ERP. The participant should also be able to describe the Reporting and Analysis solutions available in SAP ERP to support various internal and external reporting needs of an organization.

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