WELCOME TO THE

WORLD OF
SAP

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 What is an ERP ?

Enterprise Resource Planning

Single software that runs Company-wide
– may need complementary software in a few areas which are
too specific or which it does not address
Addresses all major functional areas / processes of the company
– Continuously evolving to address newer areas and processes
Ready-to-use package from day one
Leading vendors
2 – SAP, Oracle (Applications), Peoplesoft, BaaN
 What is ERP?

- multi-module application software that helps organization

manage its core business
- product planning, inventory maintenance, supplier
interaction, order tracking, financial and HR management
- relational database system, client/server distributed
architecture
- business process analysis and retraining
- rich functionality across all areas

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 Evolution of ERP

- 1960s: Inventory Management Control (IMC)

- 1970s: Material Requirement Planning (MRP)
- 1980s: Manufacturing Resources Planning (MRP-II)
- 1990s: Enterprise Resource Planning (ERP)

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 ERP Definition

A Future proof software solution that addresses the

enterprise needs taking the process view of an
organization to meet the organizational goals tightly
integrating all functions of an enterprise

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 Characteristics of ERP

Real time decision support

 Fully integrated
 Open system
 Distributed yet integrated applications
 Ease of use - personalization, browser based
 Flexible / best business processes
 comprehensive - all functionalities
 Adaptability to latest technologies
 Internet / web applications
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 Why ERP? - A Typical IT Story
Manufac
HR/Payroll turing

Financial Accounting

Sales & Customer

Distribution Care
Procurement/Stores

1,000 island solution

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 A Typical IT Story

HR/Payroll Projects

Financial Accounting

Billing &
Maintenance
Customer
Care and Services
Procurement/Stores

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 Need for ERP
 Integration of Business Processes
 Online information at the corporate office
 Standardization of systems across Locations
 Reduce cash to cash cycle times
 Faster Consolidation at Head office for statutory reporting

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 ERP Position in
Process chain
MGMT.

Accounts Costing
S C
U U
P S
P T
L O
Purchasing Production Sales
I M
E E
R R

Maintenance Quality

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 Information and Goods Flow
long-term short-term

Capital resources
Logistic process
procurement production sales
purchase orders ware- processes ware- sales orders
 materials house house  products
 services  services

vendor client

Material resources

Capacity resources

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 Why ERP?

Centralized Purchasing, Sales, Accounting for

Multi-country, Multi-divisional, Multi-product
Better Production Resources planning
Better Services Resources planning
Integration with all functionalities
Optimize the business processes
Have Real-time processing
Get up-to-date information on business
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 ERP VS Custom Built
Applications

Incorporation of best business practices and

process orientation
Legacy systems are typically built around a fixed
business scenario.

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 SAP - The Company and its
Product R/3

Founded in 1972 by ex-IBM employees

HQ in Walldorf
64000 + installations
– 10 users to 10000 users
$ 3mn per day R&D expenditure
Indian operations from 1996
200+ Indian companies have implemented it
Market Share and Revenues are bigger than the next
14 three competitors combined!
 SAP R/ 3 ?
S-A-P (not SAP!): Systems Applications and
Products in Data Processing

R/3 : 3 tier architecture

Ready to Run Software
Most complex package
– 70,000+ tables, 120,000+ programs (Cryptic
German), 400+ authorization objects
Robust Design: wide compatibility for h/w, o/s, d/b
Designed using inputs from best of class companies
Extremely strong integration

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 What SAP is not

A temporary solution
– It will be the main back bone around which all
future systems will be built

A planning and optimizing tool

– SAP’s strengths are in execution
– It does not choose the best / most optimized solution

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 What SAP is not

A ‘do-it-your way’ software

– Large no. of options in configuration tables
– Limitations to going beyond these options
– Source Code cannot be touched - contractual implications
– ABAP Development possible in a few cases - technical restrictions in
trying ABAP in other cases
– System Performance issues
– Upgrades to newer versions may not support developments
Overall it is the best but not
– the best for ‘every’ feature
– better than existing systems for ‘every’ feature
A single burst effort
17 – sets the foundation for other Technology initiatives
 SAP R/3 Architecture
 SAP R/3 works on Three Tier Architecture

User Terminal Application Server Database Server

Data Creation Managing

Modification User Data Storage
Retrieval Requests

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 3-Tier Client/Server Architecture

Communication

The Presentation Layer

collects user input and
creates process requests.

The Application Layer

uses the application logic of
SAP programs to collect and
process the process requests.

The Database Layer

stores and retrieves all data.

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 The SAP World
SD FI
Sales & Financial
Distribution Accounting
MM CO
Materials
Mgmt. Controlling
PP AM

R/3
Production Fixed Assets
Planning Mgmt.

QM PS
Quality
Manage-
Client / Server Project
System
ment PM
WF
Plant Main- Workflow
tenance
HR IS
Human Industry
Resources Solutions

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 SAP - characteristics

 Highly Integrated solution covering entire business processes

 Technically capable of utilizing the network infrastructure
 Open system to ensure freedom to choose
 Provides multiple ways of configuring business processes
 Solutions in areas where currently no systems
 Workflow enabled business processes
 Enables to exploit the power of Intranet and Internet

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 Common SAP objectives

 Cost Control & increased profitability

 Increased productivity of all resources – man, material & money
 Process Standardization
 Transparency in operations, resulting in better communication
 Shift from post-mortem scenario to predictive scenario

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 Results of Integration
 Focus on Business Processes
 Elimination of Redundant Data (Common Constant Data)
 Easier Corporate Consolidation
 Better Managerial Control
 Elimination of Interfaces
 Faster reaction to changing structures

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 Success factors for SAP
implementation

 Top Management Commitment & communication down-the-

line
 Empowerment
 Change management
 Training
 Compliance to methodology

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 How It works

Multiple Users

Multiple Sessions

Multiple Locations
&
Live

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 Modules

 SAP are categorized into 3 core functional

areas:
– Logistics
– Financial
– Human Resources
 Technical
– Programming (ABAP)
– Basis

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 Logistics

 Sales and Distribution (SD)

 Material Management (MM)
 Production Planning (PP)
 General Logistics (LO)
 Quality Management (QM)
 Plant Maintenance (PM)

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 Financial

 Financial Accounting (FI)

 Controlling (CO)
 Enterprise Controlling (EC)
 Investment Management (IM)
 Treasury (TR)

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 Human Resource

 Personnel Administration (PA)

 Personnel Development (PD)

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 Plant Maintenance (PM)

 The PM application module supports planning, processing and completion

of the plant maintenance tasks.
– Helps keep track of maintenance cost and resources
– Provides information to facilitate decision-making about plant maintenance
concerns
 Key elements of the PM application include :
– Processing of unplanned tasks
– Service management
– Maintenance notification by date or counters
– Maintenance planning
– Maintenance Bill of materials
– Plant maintenance Information system

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 Quality Management (QM)

 The QM application module is a quality control and information

system supporting quality planning, inspection, and control for
manufacturing, costing, and procurement

 Key elements of the QM application module are :

– Quality inspection
– Quality planning
– Quality Management Information System (QMIS)
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 Production Planning (PP)

 The PP application module is used to plan and control the

manufacturing activities of a company
 PP application module include :
– Bill of Material (BOM)
– Routings
– Work Centers
– Materials Requirement Planning (MRP)
– Shop Floor Control (SFC)
– Product costing, activity-based costing
– Discrete and Repetitive manufacturing / Process
32 Manufacturing
 Materials Management (MM)

 The MM application module supports the procurement and inventory functions occurring in
day-to-day business operations.

 Key elements of the MM application include :

 Materials procurement (purchasing)
 Inventory management
 Reorder point processing
 Invoice verification
 Material valuation
 Vendor evaluation
 External Services management
 Purchasing Information System (PurchIS) and Inventory Controlling Information
system

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 Financial Accounting (FI)

 The Financial accounting module is 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

 FI application module include :

– General ledger
– Accounts payable
– Accounts receivable
– Special Purpose Ledger (FI-SL)
– Legal consolidation
– Accounting Information System
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 Controlling (CO)

 The CO application module represents the company’s flow of cost and revenue
 CO is a management instrument for organizational decisions
 CO application module include :

– Cost center accounting

– Product cost analysis
– Profit center accounting
– Activity based costing
– Enterprise controlling

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 Sales & Distribution (SD)

The SD application module helps to optimize all the tasks and activities
carried out in sales, delivery and billing

SD application module include :

–Contracts
–Sales order processing
–Delivery processing
–Billing
–Sales Information system
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 Information Analysis
 Standard Reports
 Flexible Analysis
 Standard Analysis
– Logistics Information System ( LIS )
– Sales Information System ( SIS )
– Project Information System ( PIS )
 ABAP/4 Query
 Report Writer
 Report Painter
 ABAP/4 Development Workbench for programming requirements

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 SAP IMPLEMENTATION -
PHASES
 Project Planning
 Business Process Study & Analysis
 Installation
 Training
 Business Requirement mapping
 Configuration
 Modifications / Interfaces
 Data Conversion
 Documentation
 Testing
 Go-Live
 Post production support

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 Implementation Methodology

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 Organizational Elements
The SAP business process uses the following organizational
elements:

– Client
– Company Code
– Group Company
– Controlling Area
– Purchase Organization
– Plants
– Sales Organization
– Distribution Channel
– Division
– Sales Area
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 Client - Characteristics

 A Highest Hierarchical Level in SAP(e.g. a

corporation)
 Used to Differentiate between a Development,
Quality Assurance, and Production System
within R/3
 Common Set of Rules
 Common Tables
 Common Master Files

41  Common Data Bases

 Client - Characteristics

Standardized data across the client

A vendor number and name is common
across the client
A customer is common across the client
A general ledger number and description is
common across the client
A material number and description is
common across the client
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 Company Code

 A company code represents an independent balancing/legal

accounting entity, for example, a company within a corporate
group.
 Balance sheets and profit & loss statements, required by law, can
be created at the company code level.
Company Code ****
BALANCING / (LEGAL)
ENTITY Assets Liabilities Revenues

= - Expenses

Profit/Loss

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 Controlling Area
The controlling area identifies a self-contained, organizational
element for which the management of costs and profits can be
performed.

Controlling Area
****
*********
Cost Centers

Company ****

Assets Liabilities Revenues

- Expenses

Profit/Loss

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 Purchase Organization

•Responsible for procurement for one or more plants

•Responsible for negotiating pricing and delivery terms
with vendors
•Purchasing organization is assigned to A company
where inventory is legally tracked or costs are legally
incurred.

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 Plant

•Usually a manufacturing facility, warehouse, or a location that

stocks , manages, and valuates inventory
•May be a physical site with multiple manufacturing/production lines
•May be multiple manufacturing/production lines at one physical site
•Can be a physical location(cost centers may or may not be associated
to a plant i.e. Administrative vs. Manufacturing cost centers)
•Links to production (PP), materials management (MM), and sales and
distribution (SD)
•A plant is assigned to a company
•Purchasing organization are assigned to plants.
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 Organization Structure

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 Logon to SAP System

SAPlogon.lnk

•Click on the SAP icon on the desk top

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 Using SAP GUI

Menu Bar

Tool Bar

Title Bar

Application Bar

Input
Fields

Screen Body

Status Bar

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 Getting into SAP System
• Enter the Client number

• Enter your user name

• Enter Your password

• And Press Enter Button

• Initial Screen will pop up

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 Client :
User ID :
Password :
Language : EN

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 Getting Around The Screen

Navigation Area

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 Creating Your Own Favorites

Add it to your Favourite

List 2

Select Your Favourite

Transaction 1

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 Your Own
Favourites
are Here

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