What is SAP?

SAP is the leading Enterprise Information and Management Package worldwide.

Use of this package makes it possible to track and manage, in real-time, sales, production,
finance accounting and human resources in an enterprise.

History of SAP

In 1972, five systems analysts began working nights and weekends to create
standard software with real time data processing. Twenty-five years later their vision is a reality:
SAP is the world’s market and technology leader in business application software.

On April 1, 1972 five former IBM employees founded SAP as Systemanalyse und
Programmentwicklung (“Systems Analysis and Program Development”) in Mannheim, Germany.
Their vision was to develop and market standard enterprise software which would integrate all
business processes. The idea came to them through their work as systems consultants for IBM
when they noticed that client after client was developing the same, or very similar, computer
programs. The second part of their vision was that data should be processed interactively in real
time, and the computer screen should become the focal point of data processing.

From a start-up software vendor to global market leader

Over the course of twenty-five years, their vision has transformed SAP from a
small regional enterprise into a world-class international company. Today, the SAP Group is the
global market leader in enterprise resource planning software, and has subsidiaries, affiliates and
branch offices in nearly every industrial nation in the world. Important milestones in the
company's corporate history include its conversion to a GmbH (a closely-held corporation) in
1977, the opening of the company's headquarters in Walldorf, and its conversion into a publicly-
held corporation whose shares are listed on several stock markets.

By changing its structure to a publicly-held corporation, SAP significantly strengthened its capital
base and laid the foundations for its employees to enjoy more of a share in the company's
success. In the end, it is SAP’s employees – currently more than 9,000 of them - whose know-
how, motivation and performance have nurtured the company’s progress. And it is their
commitment and innovative drive which will pace the company’s future success and keep it ahead
of the competition.

Over one million R/3 users

Products have played the central role in SAP's success story. In this area, two
milestones stand out: first, the development and 1979 market release of the R/2 software system
for mainframes, and, second, the R/3 client/server software system introduced in 1992. Since its
debut, the R/3 System use has grown explosively and now accounts for the lion's share of SAP
product sales. At present, more than one million end users around the world work with the R/3
System.

The development of SAP products has continually benefited from major

advances in the hardware sector. Back in 1972, the limited storage capacity of computers posed
one of the biggest challenges. In those days, mainframes only had 500 kilobytes of storage
capacity. Slow data input and output meant that only partial applications with a limited data
volume were feasible. It was against this technological background that SAP signed its first
customer, the German ICI subsidiary in Östringen.

With the successful implementation of its initial project, SAP had nine employees
and, at the end of its first fiscal year, posted a profit on revenues of DM 620,000. In the second
year of operation, two local businesses – the tobacco and cigarette manufacturer Roth-Händle
and the pharmaceutical company Knoll - selected the newly developed SAP Financial Accounting
(RF) System. This system quickly earned a reputation as an excellent standard package and
installations expanded to 40 customers. But product development did not slow on this success,
and a second standard product, the Materials Management (RM) System, with modules for
purchasing, inventory management and invoice verification,
soon followed. The benefits of SAP's integration philosophy showed through, with data from
Materials
Management flowing straight into Financial Accounting.

SAP moves to Walldorf

In its fifth year of operations, SAP became a GmbH (a closely-held corporation)

and took on a new name: Systeme, Anwendungen, Produkte in der Datenverarbeitung ("Systems,
Applications, Products in Data Processing"). Revenues were now close to DM 4 million, and the
number of employees had grown to 25. In 1977, SAP moved its offices and headquarters to
Walldorf. In the same year, it signed its first two foreign customers, two companies from Austria.
Just one year later, the customer base had grown to 100 and the number of employees stood at
50. SAP had also introduced another central module of the SAP System – Asset Accounting (RA).
At the same time, through the development of a French version of the accounting module, SAP
made additional steps toward the international markets.

By the end of the 1970s, new generations of powerful computers provided the
framework for a comprehensive software system, and a major step in the development of SAP
software - the R/2 System – was taken in 1978. In the same year, as sales headed toward the DM
10 million milestones, SAP began operation of its own computer center in Walldorf which, when
completed in 1980, united development teams under one roof. That year SAP’s software became
even more attractive with the addition of order history to the product range. At the end of 1980, 50
of the 100 largest industrial companies in Germany were SAP customers.

R/2 System goes international

SAP’s close relationships with customers led to continuous enhancements in the

existing program modules, while important new additions were made, such as the Cost
Accounting (RK) System. The R/2 System was now ready for the international market. New
computers with drastically improved price/performance ratios helped expand the customer base,
and SAP raised its profile still further by appearing at the Systems trade fair in Munich - the
company's first-ever presence at an industry trade show.

In 1982, SAP celebrated its tenth anniversary, with sales soaring 48% to over DM 24 million. By
the end of the year, 236 companies in Germany, Austria and Switzerland were working with the
SAP standard programs. Sales continued to climb in the following year, increasing by 45%.

In 1984 SAP took additional steps into the international arena with the founding of SAP
(International) AG in Switzerland, whose focus was to increase sales of the R/2 System in
international markets. Development teams began work on two new applications, Personnel
Management and Plant Maintenance, while the Production Planning and Control System was
installed at its first pilot customers.
1985 was characterized by further expansion. The Walldorf headquarters had grown to 10,000
square meters of space, while at the Swiss subsidiary a new headquarters was occupied. SAP
systems were now in use in most European countries, and SAP began to penetrate markets
outside Europe - with customers in South Africa, Kuwait, Trinidad, Canada and the US.

The DM 100 million sales mark exceeded

SAP continued to pursue international growth with the founding in 1986 of SAP’s
Austrian subsidiary SAP Österreich Ges.m.b.H. in Vienna. At the parent company, SAP GmbH,
the capital stock was increased from DM 500,000 to DM 5 million. The largest single hardware
investment to date was made in Walldorf with the installation of an IBM mainframe costing DM 7
million. The year's sales topped DM 100 million, and SAP exhibited at CeBIT, the world's largest
IT trade fair, for the first time.

The 15th year of the company's history was again characterized by powerful growth. Branch
offices were opened in Munich and Hamburg, and subsidiaries established in four European
countries - the Netherlands, France, Spain and the UK. Staff grew to 750, and sales more than
doubled to DM 245 million, with 850 companies now using SAP's software systems. In 1987, SAP
announced its strategy for a new generation of software, and the R/3 System was born.

SAP goes public

SAP continued to grow in 1988 with the international sales network strengthened
by the establishment of subsidiaries in Denmark, Sweden, Italy and the US. Other events
included: the founding of SAP Consulting GmbH as a joint project between SAP and the
consulting firm Arthur Andersen; the opening of an International Training Center in Walldorf; and
the welcoming of Dow Chemical as SAP’s 1,000th customer. However, the most significant
events of the year were the increase of SAP’s capital stock from DM 5 million to DM 60 million,
the subsequent conversion of SAP GmbH into a stock corporation, SAP AG, and the flotation of
SAP shares on the stock market. SAP shares were quoted on the securities
exchanges in Frankfurt and Stuttgart.

During the next year, 1989, SAP shares began trading on the Zurich stock
exchange. SAP expanded its alliance and strategic cooperation approaches by taking a majority
investment in TOS GmbH in Freiberg. Through the "International User Conference" in Lausanne,
Switzerland, and the first "SAPPHIRE" user conference in North America, SAP demonstrated its
solid commitment to direct international customer contact. This crucial commitment was to
become more and more important to SAP’s success in the coming years.

Over 1,000 employees

SAP (International) soon grew to twelve subsidiaries, including Canada,
Singapore and Australia. SAP's growing profile in 1989 was evidenced by a number of events: the
large number of participants attending the first Annual Stockholders' Meeting, the strong
employee growth to more than 1,000, and the expansion of the customer base. Recognizing this
success manager magazin named SAP "Company of the Year" – a distinction SAP would receive
twice more in the next few years.

In 1990, SAP's capital stock was expanded to DM 85 million with the issue of preference shares.
SAP strengthened its commitment to small- and medium-sized businesses by an investment in
the software company Steeb and the acquisition of software vendor CAS. In the same year, SAP
and Siemens Nixdorf founded SRS GmbH in Dresden, gaining a firm foothold in the East German
market. Sales grew strongly to over DM 500 million, and the number of staff grew to 1,700.
SAP develops Russian R/2 version
Strong growth continued unabated in 1991. The acquisition of Steeb GmbH was
completed and its activities were merged with CAS to form STEEB-CAS GmbH, creating a high-
caliber software company with an attractive product offering for the small- and medium-sized
company market. With SAP’s Eastern European business developing quickly, SAP collaborated
with a local Russian software company to develop an R/2 version in Russian. The first Japanese
installation of SAP software was successfully completed. At the end of the fiscal year, the SAP
Group boasted 2,225 customers in 31 countries and sales of more than DM 700 million – an
increase of over 40 percent. The company had more than 2,500 employees.

In its twentieth year, SAP opened a new Development and Sales Center in
Walldorf. The two-year project cost roughly DM 140 million and represented the company's
largest single investment to date. In preparation for additional development, SAP’s share capital
was expanded by DM 15 million to DM 100 million through the issue of 300,000 preference
shares. SAP was now firmly established as a global company, with South Africa, Malaysia and
Japan the newest additions to its 15 subsidiary companies. By 1992, almost half of the DM 831
million in product revenues were being generated outside Germany, and the availability of the
software in 14 different languages was adding significantly to its attractiveness.

Shipment of the client/server system R/3

With the R/3 System release in mid-1992, SAP began to penetrate the mid-size
market, and into branches and subsidiaries of large companies. The release of the R/3
client/server system was the most significant event in SAP’s history and started a record of
growth that even SAP’s most optimistic planners had not predicted.

SAP took top position among German software vendors in 1993. On an

international scale, the company moved to 7th place among software companies, establishing a
clear lead in the global business applications software market. Sales surpassed the important DM
1 billion mark for the first time in 1993, and the global customer base stood at 3,500 companies.
SAP made an investment in iXOS Software GmbH with the aim of developing and marketing
graphical user interfaces and optical archiving of documents.

New development center in Foster City, California

Releases 2.0 and 2.1 provided R/3 users with even more functionality. With the
R/3 System already running on six hardware platforms, SAP and Microsoft signed an agreement
to port R/3 to Windows NT. Other events included: the founding of SAP’s 18th subsidiary in the
Czech Republic, the establishment by SAP America of a development center in Foster City in
Silicon Valley, California, and the introduction by SAP Japan of a Kanji version of R/3.

1994 was yet another record-breaking year with sales jumping 66% to over DM
1.8 billion. By the end of the year, SAP employed more than 5,000 staff worldwide, and 200 of the
more than 4,000 customers were using the R/3 System in production operation. A Swiss
customer was the first customer to go live with R/3 on Microsoft’s Windows NT – a mere four
months after the platform became available. Since its rollout in 1992, R/3 had now been installed
more than 1,000 times. SAP development received ISO 9000 certification, and R/3 Release 2.2
was completed on schedule and included a wide range of enhancements in Logistics. SAP
continued to expand its sales organization and strategic alliances. In Germany, SAP acquired a
52% stake in DACOS Software GmbH with the aim of developing an integrated software solution
for the retail industry. The 19th subsidiary opened in Mexico City.
 The Annual Stockholders' Meeting agreed to a DM 400 million capital increase
out of retained earnings, bringing total capital to DM 500 million. The resulting 1:4 stock split was
positively received by the market and led to a significant increase in stock price levels.

Microsoft chooses R/3

More than 6,000 companies of all sizes were among SAP customers in 1995,
some two-thirds of which solved their IT tasks using the R/3 System. During the year Microsoft
joined IBM as an R/3 customer from the high-tech sector.

In 1995, R/3 became the largest source of overall revenues, with a DM 1.7 billion
share of total sales of DM 2.7 billion. Growth prospects were strengthened still further with the
new R/3 Release 3.0, a functional and technical milestone in R/3 development. With this version
the important areas of production planning and control were now comprehensively covered.
Another technical addition was the availability of R/3 on the widely used IBM AS/400 platform.

The indirect sales channel concept was introduced in Germany, with SAP forming
partnerships with value-added resellers so as to better support small- and medium-sized
businesses. A new Service and Support Center opened in Walldorf with room for some 750
employees. SAP now employed more than 7,000 staff.

Global profile: SAP represented in 40 countries

In 1995, SAP further increased its international activities with new subsidiaries
formed in China, Argentina, Brazil, Korea, Poland, Russia and Thailand. SAP was now
represented in over 40 countries by subsidiaries, branch offices or partner companies. An industry
solution for the process industry (eg., chemicals, pharmaceuticals, food and beverage industry,
and semiconductors) was announced in the US.

With 1,400 stockholders and guests, the number of attendees to the 1995 Annual
Stockholders' Meeting was more than triple the 1994 figure, and the ASM approved changing the
par value of SAP shares from DM 50 to DM 5. Shortly thereafter SAP entered the German stock
index (DAX). Both events had a positive effect on share prices.

Sales reach DM 3.7 billion in SAP's anniversary year

SAP's success continued into its 25th year of operations, with sales exceeding
DM 3.7 billion. Over the course of its 25-year history, SAP showed that business processes can
be modeled in a standard way across and within industry sectors. When the IT industry
developed flexible and cost-effective client/server architecture, SAP provided its customers with
the right product at the right time - the R/3 client/server system.

R/3 becomes Internet-enabled

The success of R/3 has propelled SAP to the top of the global software market.
IT is undergoing yet another revolution with the advent of the Internet, and SAP is again there
with a solution: the latest version of R/3 provides the first comprehensive, Internet-enabled
business application package. Release 4.0, which is already in development, further increases
the attractiveness of the R/3 System by making it more user-friendly. Small and mid-sized
businesses should especially welcome this development. The R/3 System is here to stay, and
users can look forward to its continuing enhancement

SAP Systems
 SAP markets two main products: R/2 and R/3. The two products share many
features and provide similar functionality such as:

• Provide an integrated suite of software application modules. The modules cover the
requirements of most companies who can purchase those components which they
require.
• Provide real-time database update for integrated applications. Thus when a business
transaction such as the receipt of inventory occurs, the entry into the system will
immediately be affected in the Inventory Reports and in the Financial Ledger.
• Support organizations with multiple companies in different locations.
• Support any number of currencies within the organization. If item is posted to the system
in foreign currency, it is also entered into the system in the company’s local currency.
• Support multiple languages. The user specifies their native language when signing on to
the system and subsequent screens appear the chosen language.
• Suitable to wide range of industries and organizations. The software can be tuned to
practically any company’s' requirements through configuration and customization.

The applications' programs are driven by table entries which are configurable by
the client. Extensive customization is also possible with the provision of the SAP programming
language ABAP. A large part of the software is written in ABAP and is available for modification.
ABAP is most widely used for reports; however it is also used for interface programs, database
updates, and for new online transactions. If the standard software does not provide the required
functionality, it is possible to write a whole new application with ABAP.

SAP's major criticism has been the cost of it's software and implementation. SAP and various
consulting companies have addressed the issue of implementation costs by creating industry-
specific templates.

R/2 System

R/2 is the SAP mainframe solution and has been around for many years. The
current version is 6.0. The hardware required limits it's suitability to large and very large
companies.

It consists of the following modules:

• RS Basis System (includes ABAP/4 programming language)

• RF Financial Accounting
• RA Asset Accounting
• RK Cost Accounting
• RK-P Project Costing
• RM-INST Plant Maintenance
• RM-MAT Materials Management
• RM-PPS Production Planning and Control
• RM-QSS Quality Assurance
• RP Human Resources
• RV Sales and Distribution

The architecture is such that the applications and database reside on one
mainframe computer. Users who are remote from the mainframe may establish a dial-in
connection or be permanently connected through a leased line.
 Having a centralized mainframe computer system can have distinct advantages
to a large company.

• Consolidation for Groups is made easy due to all relevant data residing on the one
system. Particularly attractive to such companies is the fact that all transactions of
regional offices can be reflected in the Group's Consolidation Reports immediately.
• Reports from regional offices can follow a standard format. i e. The same reporting
programs can be used with all users conforming to the same Chart of Accounts. They are
not subject to manipulation and can offer a true comparison of performance.
• New corporate policy can be implemented throughout all offices by changing the
configurations of the centralized SAP system. For example, a new transaction may install
that requires purchases over $1000 to attain Head Office approval before an Order can
be placed in the system.
• Mainframe systems currently retain greater processing power over client-server machine
although the gap is closing.

Centralized mainframe systems have the following disadvantages:

• High setup costs. Typically costs associated with components are higher with
mainframes. Mainframe system tends to proprietary-based which reduces competition
and inevitably raises prices.
• High maintenance costs. Mainframe systems will typically require an operations team to
perform ongoing technical tasks (such as initiating batch jobs, restarting printers and fine
tuning performance)
• Communications problems are more likely for a mainframe if regional offices are far away
from the mainframe. The cost of these connections can also be high.
• Less user-friendly interface possible with Mainframe terminals. R/2 is also available with
a front-end interface called "CUA". This is installed on PC Workstation which can connect
as a mainframe terminal. CUA provides a Windows-type interface based on the interface
provided by SAP R/3.

R/3 System

R/3 is the SAP client-server solution and has been around for approximately five
years. The current version is 3.1. It has proved hugely popular in many countries. Demand in the
United States is particularly high at present. The solution is available to many more companies
than R/2 as a mainframe is not required.

It consists of the following modules:

• BC Basis (includes ABAP/4 Programming Language)

• AM Asset Management
• CO Controlling
• FI Financial Accounting
• HR Human Resources
• IS Industry Specific Solutions
• PM Plant Maintenance
• PP Production Planning
• PS Project System
• QM Quality Management
• SD Sales and Distribution
 • MM Materials Management
• WF Business Work Flow

The architecture consists of application servers and database servers with PC

users established as clients of these servers on the network. The applications servers provide the
application software while the database servers handle the update of document and master file
databases. The system can support any number of servers in many different hardware
configurations. There is no restriction on numbers of users as it is always possible to link more
servers to the network. This makes R/3 scalable and suitable to many different types and sizes of
organization.

A decentralized client server solution can provide the following advantages:

• Possible to achieve near instant response times.

• Greater available time to users. The mainframe solution requires regular batch jobs to be
run without users logged on to the system making. R/3 still requires batch jobs but is
possible to achieve a greater window of available time.
• A friendlier user interface is possible with PC workstations as opposed to dumb
mainframe terminals.
• The architecture promotes open systems, where components and peripherals can be
used from multiple vendors thus promoting competition and reducing hardware costs.

Eight Reasons to Use SAP R/3

• Global Basis
• Faster Speed
• Flexibility for Changes (Business & IT)
• Agility
• Extended Supply Chain Management
• Reach New Opportunity
• Knowledge Sharing
• Creativity Focus

Facts about SAP

• Founded by five former IBM employees in 1972 Walldorf, Germany.

• Leading global provider of client/server business software solutions.
• Number one vendor of standard business application software, with a
worldwide market share of 31%.
• Fourth-largest independent software supplier in the world.
• Available in 14 languages.
• 34% of SAP's customers worldwide are under $200 million.
• 10 out of the top 10 US companies with the highest market value use SAP
software.
• 8 of the top 10 largest US corporations use SAP software.
• 8 of the top 10 highest profit US companies use SAP software.
• More than 7500 customers in over 90 countries have chosen SAP.
• Reported revenues of DM 6 billion in the most recent fiscal year, a 62-percent
increase over 1996 revenues.
 • SAP is not any longer a one-product-company

What Makes SAP different?

Traditional computer information systems used by many businesses today have

been developed to accomplish some specific tasks and provide reports and analysis of events
that have already taken place. Examples are accounting general ledger systems. Occasionally,
some systems operate in a "real-time" mode that is, have up to date information in them and can
be used to actually control events. A typical company has many separate systems to manage
different processes like production, sales and accounting. Each of these systems has its own
databases and seldom passes information to other systems in a timely manner.

SAP takes a different approach. There is only one information system in an

enterprise, SAP. All applications access common data. Real events in the business initiate
transactions. Accounting is done automatically by events in sales and production. Sales can see
when products can be delivered. Production schedules are driven by sales. The whole system is
designed to be real-time and not historical.SAP structure embodies what are considered the "best
business practices". A company implementing SAP adapts it operations to it to achieve its
efficiencies and power. The process of adapting procedures to the SAP model involves "Business
Process Re-engineering" which is a logical analysis of the events and relationships that exist in
an enterprise's operations.

SAP Application Modules

SAP has several layers. The Basis System is the heart of the data operations
and should be not evident to higher level or managerial users. Other customizing and
implementation tools exist also. The heart of the system from a manager's viewpoint are the
application modules. These modules may not all be implemented in a typical company but they
are all related and are listed below:

• FI Financial Accounting--designed for automated management and external reporting of

general ledger, accounts receivable, accounts payable and other sub-ledger accounts
with a user defined chart of accounts. As entries are made relating to sales production
and payments journal entries are automatically posted. This connection means that the
"books" are designed to reflect the real situation.
• CO Controlling--represents the company's flow of cost and revenue . It is a management
instrument for organizational decisions. It too is automatically updated as events occur.
• AM Asset Management--designed to manage and supervise individual aspects of fixed
assets including purchase and sale of assets, depreciation and investment management.
• PS Project System--is designed to support the planning, control and monitoring of long-
term, highly complex projects with defined goals.
• WF Workflow--links the integrated SAP application modules with cross-application
technologies, tools and services
• IS Industry Solutions--combine the SAP application modules and additional industry-
specific functionality. Special techniques have been developed for industries such as
banking, oil and gas, pharmaceuticals, etc.
• HR Human Resources--is a complete integrated system for supporting the planning and
control of personnel activities.
• PM Plant Maintenance--In complex manufacturing process maintenance means more
than sweeping the floors. Equipment must be services and rebuilt. These tasks affect the
production plans.
 • MM Materials Management--supports the procurement and inventory functions occurring
in day-to-day business operations such as purchasing, inventory management, reorder
point processing, etc.
• QM Quality Management--is a quality control and information system supporting quality
planning, inspection, and control for manufacturing and procurement.
• PP Production Planning--is used to plan and control the manufacturing activities of a
company. This module includes; bills of material, routings, work centers, sales and
operations planning, master production scheduling, material requirements planning, shop
floor control, production orders, product costing, etc.
• SD Sales and Distribution--helps to optimize all the tasks and activities carried out in
sales, delivery and billing. Key elements are; pre-sales support, inquiry processing,
quotation processing, sales order processing, delivery processing, billing and sales
information system.

Each of these Modules may have sub-modules designed for specific tasks as
detailed below.

System-Wide Features

SAP uses certain system wide features that should be understood at the outset.
These are used to logically, safely and flexibly organize the data in a business enterprise.
 • Customizing-- is the configuring of the system to represent your organization's legal
structure, reporting requirements and business processes. Internal reporting is a
managerial tool in the daily operations. External reporting is required by governmental
units controlling the legal structure of the corporation, such as, the IRS state taxing
authorities, SEC etc.
• Organizational Elements
o Financial--
 client is a legal and organizationally independent unit at the highest level
in SAP
 company is an independent legal entity within a client
 business areas are used to produce profit and loss statements and
balanced sheets across marketing lines
o Materials Management
 Purchasing units
 Plants
o Sales and Distribution
 Sales Organization
 Distribution channel
 Division
• Master Data is records that remain in the database over an extended period of time.
Examples:
o Customer Master
o Vendor Master
o Material master
o Account Master

This structure eliminates redundant data and is shared by all SAP Modules. It is a critical
aspect of the robustness of the system.

• Employee Self Service--your employees have access to the own HR records over the
Internet.
• Classification is the assignment of object s to a class. Each class has standard
characteristics.
• Match codes are query tools used to find specific information using search methods.
• Security is administered for objects, profiles and authorizations. Users are only
authorized to see or change the parts of the system required by their job responsibilities.

Business Processes and SAP Functionality

In order to understand a system like SAP a thorough understanding of the events

and relationships that take place in a business is required. It is not enough to just realize the
Sales, Production, Finance and Accounting have jobs to do in a business. The exact details of
each action, the timing of that action and its interrelationships with every other process must be
understood. In many large operations there may be no person that has a complete grasp of the
situation. Before an operation can be automated or computerized a thorough study of the
business must be undertaken. This task is called Business Process Engineering.
Sequential Walk Through

• Sales
o Pre-sales activity--planning and availability support for the sales personnel
o Sales Order--The actual entry of the sales order into the system done by the
salesperson at the point of sales perhaps using a PC and Internet connections.
o Determining where the most efficient source of the ordered product is in inventory
and shipping it.
o Delivery
o Customer Billing
o Customer Payment
• Production
o Sales and Operations Planning SOP where the sales forecasts are used in a
production planning model to check feasibility.
o Master Production Scheduling MPS--The actual plan for the whole production
process
o Material Requirements Planning MRP--Where the production plan is actually
converted into raw materials input requirements.
o Planned Order--When materials are available and capacity exists this plan is
created and then converted into a
o Production Order.
o Shop Floor Control where the actual production takes place and is registered into
the system as finished goods.
o Purchasing
  Requisition--Once the Production manager plans to manufacture
something a requisition for the raw materials required but not on hand
must be prepared.
 Vendor Selection--made by the purchasing department
 Purchase order sent
 goods receipt increasing inventory
 Invoice verification as it is received from vendor
 Payment to vendor.

Finance and Accounting

 Sales events must be captured at the proper time into the ledger system
 Inventory must be adjusted to match goods shipped
 Inventory must be adjusted to match raw materials received
 Inventory must be adjusted to move value from raw materials to work in
process
 Inventory must be adjusted to increase finished goods when they are
produced
 Accounts Payable must be set up for purchases
 Accounts Receivable must reflect goods billed but not yet paid for

Business Process Engineering must not only identify all these steps but must also find
the most efficient way to minimize redundant actions. For example, when sales are made,
inventory and manufacturing plans should be automatically updated. When
manufacturing plans are updated raw materials should be automatically ordered from
vendors. When finished goods are shipped customers should be automatically billed at
the same instant. Real situations are far more complex than the simple explanation
above.
Quick Tour of the SAP User Interface

The SAP R/3 system presents a Windows interface with several of the
familiar Windows functions for screen manipulation. The apparent simplicity of the
interface hides the power of the menus residing within the menu bar at the top of the
screen. The initial screen shows a menu bar with the following selections. The first level
sub menus are listed below to give you an idea of where to start:

o Office
 Workplace
 Telephone Integration
 Appointment Calendar
 Room Reservations
 Start Workflow
 Business Documents
o Logistics
 Materials Management
 Sales/distribution
 Logistics Execution
 Production
 Production-process
 Plant Maintenance
 Customer Service
 Quality Management
 Project Management
 Environment Health & Safety
 Central Functions
o Accounting
 Financial Accounting
 Treasury
 Controlling
 Enterprise Control
 Investment Mgt.
 Project management
 Real Estate
o Human Resources
 Managers Desktop
 Personnel admin.
 Time management
 Payroll
 Training and Event Management
 Organizational Management
 Travel
 Information system
o Information Systems
 Executive Information Systems
 Logistics
 Accounting
 Human Resources
 Project System
 Ad Hoc Reports
 General Report System
o Tools
 ABAP/4 Workbench
 Accelerated SAP
 Administration
 ALE
 Business Communication
 Business Documents
 Business Framework
 Business Workflow
 CCMS
 Web Development
 SAP Script
 Hypertext
 Find
R/3 System Overview

INTEGRATION

• Integrated Processes
o Operational. financial, and managerial principles are satisfied simultaneously
o Common Database
• Application Integration
o One point of data entry
o Consistency across all user applications
• Technical Integration
o On-line interactive edit and update
o Elimination of redundant data\
o Data Integrity
Designed for all Types of Business

• Provides a complete business solution across all business functions.

• System addresses critical business processes and provides an enterprise-wide solution:
o One system supports global business and accounting practices.
o Standardized business processes across the organization, yet tailoring by
individual business units is allowed.
o Supports multiple business structures per business process to accommodate
differences between business units

Worldwide Usage

• Comprehensive multi-currency translation

• Multiple language support
• Customized reporting and document generation for individual countries
• Multi-company support
• Local support in most major industrialized countries
• Country specific functionality

REAL-TIME PROCESSING

• Transactions within system update the underlying databases immediately

Open System

• R/3 allows the interplay and portability of applications, data and user interfaces
• Based on international standards for interfaces, services and data formats
• Architecture is aligned with recognized open systems standards

FLEXIBILITY

• Customers can customize business modules to realize best business practices

• System provides necessary interfaces to incorporate external software.
• Scalability, accommodates acquisitions and growth
• System can be configured the way you want to do business in the future
• Allows customized screens processing and reports
• System runs on multiple hardware platforms

STRUCTURE
Application Models

• System consists of application models that support all of a company's business

transactions and are integrated in real time
• A change in one application module results in an automatic update of the data in
the other application modules
• All applications have the same "look and feel"

Modules Grouping

• Financials:
o FI Financial Accounting
o CO Controlling
o AM Asset Management
o PS Project Systems
• Common Systems
o WF Workflow
o IS Industry Solutions
• Logistics
o PM Plant Maintenance
o QM Quality Management
o PP Production Planning
o MM Materials Management
o SD Sales and Distribution
o HR Human Resources
o The Basis System

SYSTEM WIDE PROCESSING CAPABILITIES

• Workflow
• Archiving
• Reporting
• Conditions
• Batch Input
• Output
SYSTEM INTEGRATION
SUMMARY