Enterprise System - CS556

Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768

(Week 4) Lecture 8-9

Learning objectives:
 Understanding SAP (System Applications and Products)
 Modules of SAP
 SAP consultancy opportunities
 System integration
 Organization Silos
 Information Systems in Organization

Resources: Beside these lecture handouts, this lesson will draw from the following
Text Book: Enterprise Systems for Management by J. Thompson and Luvai
F. Motiwalla (2nd Edition)
Reference book: Concepts in Enterprise Resource Planning by Bret Wagner
and Ellen Monk (4th Edition)

What is SAP Business Suite?

SAP Business Suite is collection of fully integrated applications such as SAP customer
relationship management (CRM), SAP Enterprise Resource Planning (ERP), SAP product
lifecycle management (PLM), SAP supplier relationship management (SRM), and SAP supply
chain management (SCM) modules.

Most people relate SAP with its ERP offering. But SAP now offers variety of products to address
varied needs of an organization. Lets have a look at them -

• SAP HANA: High Performance Analytic Appliance uses in-memory computing (a

type of middleware software that allows one to store data in RAM, across a cluster of
computers, and process it in parallel), a breakthrough technology that enables analysis

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
of very large, non-aggregated data at unprecedented speed in local memory (vs. disk-
based database) enabling complex analyses, plans and simulations on real-time data.

• SAP Convergent Charging : SAP Convergent Charging provides a rating and

charging solution for high-volume processing in service industries. It delivers pricing
design capabilities, high performance rating and convergent balance management.

• Customer Relationship Management:- Unlike other CRM software, the SAP

Customer Relationship Management (SAP CRM) application, part of the SAP
Business Suite, not only helps you address your short-term imperatives – to reduce
cost and increase your decision-making ability – but can also help your company
achieve differentiated capabilities in order to compete effectively over the long term.

• Enterprise Resource Planning: A sound foundation is necessary to compete and win

in the global marketplace. The SAP ERP application supports the essential functions
of your business processes and operations efficiently and is tailored to specific needs
of your industry like SAP ERP Financials, SAP ERP Human capital management,
SAP ERP Operations, SAP ERP corporate services.

• SAP Environment, Health, and Safety Management: It supports environmental,

occupational and product safety processes, regulatory compliance, and corporate
responsibility. This is accomplished by embedding corporate policies, compliance,
and environmental, health and safety capabilities with global business processes for
human resources, logistics, production and finance.

• SAP Product Life Cycle Management: To survive in an ever-changing global

environment, creating and delivering innovative and market differentiating products
and services is what distinguishes your company from the competition. The SAP
Product Lifecycle Management (SAP PLM) application provides you with a 360-
degree-support for all product-related processes – from the first product idea, through
manufacturing to product service.

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768

• SAP Supplier Life Cycle Management: SAP Supplier Lifecycle Management is a

holistic approach to managing supplier relationships. It deals with the supply base as
a whole to constantly determine the right mix of suppliers. It covers the lifecycle of
individual suppliers from onboarding to a continuous development.

• Supply Chain Management: You face enormous pressure to reduce costs while
increasing innovation and improving customer service and responsiveness. SAP
Supply Chain Management (SAP SCM) enables collaboration, planning, execution,
and coordination of the entire supply network, empowering you to adapt your supply
chain processes to an ever-changing competitive environment.

• Supplier Relationship Management:- With SAP SRM you can examine and forecast
purchasing behavior, shorten procurement cycles, and work with your partners in real
time. This allows you to develop long-term relationships with all those suppliers that
have proven themselves to be reliable partners

SAP Modules
These modules can be categorized into
 Functional Modules
 Technical Modules

SAP functional is responsible for the functionalities or processes in a SAP system whereas,
technical deals with technical aspects (build) like coding.

These functional and technical modules are tightly coupled. Below is a list of key SAP Modules

 SAP FI Module - FI stands for Financial Accounting

SAP FI module is very robust and covers almost all financial business process
encountered in various industries. It is one of the widely implemented modules in SAP.
 SAP CO Module - CO stands for Controlling

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
Cost Accounting (CO) module of SAP provides information to managers decision makers
to understand where the company's money is being spent. CO helps them to optimize
business costs.

 SAP HCM Module - HR stands for Human Resources

SAP Human Capital Management (HCM) is also called SAP-HR. SAP HCM consists of
sub-modules like Personnel Administration (PA), Organizational Management (OM),
Time, and Payroll that help in employee management.
 SAP BW Module - where BW stands for Business (Data) Warehouse
SAP BI (Business Intelligence) or SAP BW is a leading data warehousing and reporting
tool. It helps convert raw data into information and insights that help improve business
margins.
 SAP Basis
SAP Basis is a set of programs and tools that act as an interface with Database, Operating
system, communication protocols and other SAP modules like FI,HCM, SD etc
 SAP ABAP
ABAP (Advanced Business Application Programming) is the default programming
language for SAP applications. You can also use Java to code in SAP.
 SAP CRM - where CRM stands for Customer Relationship Management
SAP CRM is the Market Leader in Customer Relationship Management Software. SAP
CRM plays a pivotal role in strengthening customer relationships.

What is a SAP Consultant?

SAP Consultant is a Subject Matter Expert (SME) either domains of SAP

 Business/ sales
 Functional
 Development
 Basis

The consultant provides advisory, recommendations, guidance, and implementation help in their
respective SAP domains.

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
Types of SAP Consultant
 Business/Sales Consultant - They try to win projects at customer end without knowing
much about SAP.
 SAP Functional Consultant - They are responsible for customizing SAP as per customer
demand. They talk with developers to code custom ABAP programs as per client
requirements.
 Developer Consultant - They are responsible for coding ABAP/Java Programs
 SAP Basis Consultant - They help in installing, maintenance and performance tuning of
SAP servers and databases

Above are the major consulting roles found in almost all SAP projects. Depending on the nature
and size of the project there may be other consulting roles as well such as SAP security
consultant, SAP Techno-functional consultants.

Why SAP?
SAP (Systems Applications and Products) is the world's leading provider of business software
which specializes in industry specific Enterprise Resource Planning (ERP) solutions.

SAP is implemented in 9 out of every 10 Fortune 500 company.

SAP consultants enjoy a premium remuneration over their IT counterparts working in other
technologies like Java, .net etc.

Skills required in becoming a SAP Functional Consultant

The skills expected of a SAP Functional consultant vary with experience. But a fresher SAP
consultant must have following skills that almost all employers look for -

 Extensive SAP (module specific) knowledge.

 Good Domain (Banking, Telecommunication, etc. ) knowledge
 Good Communication and presentation skills. SAP consultants are often required to
interface with the client and understand client's requirements. A SAP consultant should
be good in explaining technical information to non-technical people
 Ability to work in Teams and good interpersonal skills.

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
System Integration

FUNCTIONAL SILOS
Functional silos in a business are teams of employees, grouped by function, that all operate
separately from each other, without cross-collaboration. The name comes from the way of
storing grains that ensures separation of different grains and often uses top-down distribution.

Horizontal Silos
In the early 1900s, a management philosopher named Henry Fayol was the first person to divide
functionalized organization into five basic areas: planning, organizing, coordinating,
commanding, and controlling. Fayol’s classification was extended and conceptualized in the
1930s by Luther Gulick into the functional model of POSDCORB (planning, organizing,
staffing, directing, coordinating, reporting, and budgeting). The POSDCORB categorization
(Figure 1-1) became very popular and led to a set of formal organization functions such as
control, management, supervision, and administration.

FIGURE 1-1 Functional Model of Organization (POSDCORB)

The current classification of organizations into divisions or departments like Accounting, Human
Resources, Marketing, Management, and others reflects this evolution in organizations of
breaking complex tasks into smaller manageable tasks that could be assigned to a group of
people who could then be held responsible.

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
Vertical Silos
In addition to the functional or horizontal division, organizations have also seen a vertical or
hierarchical layering of management functions.

FIGURE 1-2 Hierarchical Model of Organization

For example, most organizations have their top-level management like CEOs and presidents to
plan the long-term strategy of organizations, whereas midlevel management (e.g., vice presidents
or general managers) focuses on tactical issues and the execution of organizational policy to
ensure that the company is accomplishing its strategic objectives. The lower-level management
(e.g., supervisors) task is to focus on the day-to-day operations of the company. This vertical
categorization, even though not discrete organizational functions, does involve a distinctive set
of activities. The functional silos typically follow the scientific model for business and usually
have hierarchical or multilayered reporting structures, formal leadership, management positions,
or both with final authority on decision making. In this traditional functional (or silo)
organization, maintaining command and control is usually critical for the overall functioning of
the business organization.

ERP and organization silos

Over time, as business changes and expands, systems need to change to keep pace. The result is
sometimes a wide variety of information systems and computer architecture configurations

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
creating heterogeneous or independent nonintegrated systems. These systems ultimately create
bottlenecks and interfere with productivity. These systems lack control and coordination.

The information systems that work independently and are grouped by the various functions and
departments, or both, are known as silos. These systems cannot share data and therefore require
users to access multiple systems to integrate the data manually. As a result, the chance increases
for data errors and inconsistencies. Silo systems focus on individual tasks or functions, or both,
rather than on a process and team. In addition, these systems make it very difficult for
organizations to be customer-centric because data cannot be assimilated from different functional
areas to address customer needs. For example, if a customer support process requires information
to be pulled from the accounting and the shipping departments, the task requires access to two
separate systems and then visually matching the shipping information with the billing
information. This can be time consuming and prone to errors, resulting in poor customer support.

The essential problem with functional silos is that organizations design, manage, and reward
their employees and managers by functional performance, yet they deliver value to customers via
cross-functional processes. Today, many organizations reward employees on their performance
on multiple areas that includes personal performance, business unit performance, and corporate-
level performance.

Getting the right balance between functional management and process delivery is at the heart of
organizational performance. Organizations have been designed around functions for a very long
time and for good reason. The functions of an organization (e.g., sales, manufacturing, claims
assessment, HR, and warehouse) are important. They provide a structure by which an
organization functions smoothly. For example, the warehouse department and the warehouse
manager are essential for maintaining control over the product inventory.

A silo environment is inefficient, inaccurate, and expensive. Information is captured and re-
entered several times and is not available in real time. Silo environments hamper enterprise
decision making and overall effectiveness because key information never makes it out of the
different pockets of the organization in time for the decision maker. In a silo system environment
only selective employees from that department have access to information; customers, partners,
and suppliers are dependent on these employees to provide them with answers.

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
Information and Organization
It is important to understand the importance of Information System (IS) and Enterprise System in
fulfilling of Organization needs.

Information System (IS) / Management Information System (MIS) is responsible for information
management. It organizes and stores data collected from various sources in a single database and
draws reports based on this data. ERP is used for planning and automizing different processes.
These systems analyze data and allow managers to forecast development decisions.

In other words Information systems are a combination of hardware, software, data, procedures,
people, and feedback. Enterprise resource planning (ERP) is business management software that
an organization can use to collect, store, manage and interpret data from a variety of business
activities.

Both MIS and ERP system manage business data and help executives make data-driven
decisions. However, these two systems are a little bit different. Therefore, it is important that you
learn certain similarities and differences between MIS and ERP.

What Is MIS?
MIS, a management information system, is a centralized database that stores information about
the company’s departments and allows managers to use this information for managing workflow,
making data-driven decisions, and generating reports. The basic concept of MIS is to process
data from an organization and present it in the form of a report at regular intervals.

The main objective of information systems implementation is to raise the business’s income and
enhance its profitability. The decisions of MIS implementation are usually taken by chief
technology/information officers.

Below are the main functions of MIS:

 Data capturing is the process of gathering data from various resources. This includes the
following: customer touch points lives, e-commerce sites, global shopping, self-check-
out, etc., an output of one or more systems like sales, finance, market analysis,
operations, etc. and from social media sites.

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 Enterprise System - CS556
Mr. Farhan Sabir Ujager email id: farhan@biit.edu.pk, WhatsApp# 0300-5733768
 Data storage. All data is collected in a database or in data files. This data is also stored in
various storage media (DVD, hard drives, etc.). Cloud-based applications store data on
virtual servers.
 Data processing. Converting all data into meaningful information is what is called data
processing. This is an important function of MIS.
 Information and data distribution. As information is the core necessity, for achieving a
competitive advantage, distribution of the right information to the right person in the right
time is information distribution. The information could be in the form of report, image,
message, file, video or audio. To facilitate comparison, information is presented in the
form of charts or tables or graphs.
 Prediction and forecasting. With the help of modern statistics, MIS can predict business
using historical data as a base.
 Planning. Reports are generated based on the enterprise’s needs. These reports help
management to plan in advance.
 Control. MIS helps in monitoring and tracking operations against organizational plans.
The deviation between the operations and the organization plans is analyzed for
exercising control.

Questions you should answer after the end of this lecture

 What is SAP offering to the organization?

 What is a SAP consultant?
 What kind of skills required in SAP consultancy?
 What are organization Silos?
 What is information system’s effect on organizational silos?

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