- SAP ERP
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ERP Developer(s) SAP AG Written in ABAP/4 Type ERP Website SAP ERP The SAP ERP application is an integrated enterprise resource planning (ERP) software manufactured by SAP AG that targets business software requirements of midsize and large organizations in all industries and sectors. It allows for open communication within and between all company functions.
Contents
Overview
SAP AG was founded by five former IBM employees in 1972 who wanted to create a real-time business data system. The first name chosen for the company was not Systeme, Anwendungen und Produkte in der Datenverarbeitung (German for "Systems, Applications and Products" or the acronym SAP) but originally Systemanalyse und Programmentwicklung (in English, "Systems analysis and programming").[1] It uses the concept of modules (individual programs that can be purchased, installed, and run separately, but that all extract data from the common database).[2] SAP AG, the company that provides the enterprise resource planning solution has upgraded the package and launched it as SAP ERP Central Component (ECC) 6.0 in 2005. The purpose of positioning it as ECC is to enable SAP to build and develop an environment of other products that can function upon the foundation of the central component.
SAP's ERP solution includes several modules that support key functional areas, including:
- SAP ERP Financials
- SAP ERP Operations
- SAP ERP Human Capital Management
Development
SAP R/3 through version 4.6c consisted of various applications on top of SAP Basis, SAP's set of middleware programs and tools. When SAP R/3 Enterprise was launched in 2002, all applications were built on top of the SAP Web Application Server. Extension sets were used to deliver new features and keep the core as stable as possible. The Web Application Server contained all the capabilities of SAP Basis.
As a result of marketing changes and changes in the industry, other versions of SAP have been released that address these changes. The first edition of mySAP ERP was launched in 2003 and bundled previously separate products, including SAP R/3 Enterprise, SAP Strategic Enterprise Management (SEM) and extension sets. The SAP Web Application Server was wrapped into NetWeaver, which was also introduced in 2003.
A complete architecture change took place with the introduction of mySAP ERP edition 2004. R/3 Enterprise was replaced with the introduction of ERP Central Component (SAP ECC). The SAP Business Warehouse, SAP Strategic Enterprise Management and Internet Transaction Server were also merged into SAP ECC, allowing users to run them under one instance. Architectural changes were also made to support an enterprise services architecture to transition customers to a services-oriented architecture. SAP HANA which is a combination if inmemory software and hardware can improve data processing at extremely high speeds.
Implementation
SAP ERP consists of several modules including: utilities for marketing and sales, field service, product design and development, production and inventory control, human resources, finance and accounting. SAP ERP collects and combines data from the separate modules to provide the company or organization with enterprise resource planning.
Although there can be major benefits for customers of SAP ERP, the implementation and training costs are expensive. Many companies experience problems when implementing SAP ERP software, such as: failing to specify their operation objectives, absence of a strong commitment or positive approach to change, failing to deal with organizational differences, failing to plan the change to SAP ERP properly, inadequate testing. All these factors can mean the difference between having a successful implementation of SAP ERP or an unsuccessful one.
If SAP ERP is implemented correctly an enterprise can go from its old calculations system to a fully integrated software package. Potential benefits include: efficient business process, inventory reduction, and lead time reduction.
IEEE scholar journal reports an industrial case in which the senior management successfully dealt with a troubled SAP R/3 implementation in an international fast moving consumer goods (FMCG) company during 2001 and 2002. [3]
Deployment and maintenance costs
SAP ERP systems effectively implemented can have cost benefits. Integration is the key in this process. "Generally, a company's level of data integration is highest when the company uses one vendor to supply all of its modules." An out-of-box software package has some level of integration but it depends on the expertise of the company to install the system and how the package allows the users to integrate the different modules.[2]
It is estimated that "for a Fortune 500 company, software, hardware, and consulting costs can easily exceed $100 million (around $50 million to $500 million). Large companies can also spend $50 million to $100 million on upgrades. Full implementation of all modules can take years," which also adds to the end price. Midsized companies (fewer than 1,000 employees) are more likely to spend around $10 million to $20 million at most, and small companies are not likely to have the need for a fully integrated SAP ERP system unless they have the likelihood of becoming midsized and then the same data applies as would a midsized company.[2] Independent studies have shown that deployment and maintenance costs of a SAP solution can greatly vary depending on the organization. For example, some point out that because of the rigid model imposed by SAP tools, a lot of customization code to adapt to the business process may have to be developed and maintained.[4] Some others pointed out that a return on investment could only be obtained when there was both a sufficient number of users and sufficient frequency of use.[5][6] Deploying SAP itself can also involve a lot of time and resources.[7]
Security
Communications
SAP systems - including client systems - communicate with each other using SAP-specific protocols (e.g., RFC and DIAG) and the http and https protocols. These systems do not have encrypted communications out of the box; however, SAP does provide a free toolkit for server-to-server communications[8]. With the recent acquisition of relevant parts of SECUDE[9], SAP can now provide cryptography libraries with SAP ERP for Secure Network Communications and Secure Socket Layer.
ERP advantages and disadvantages
- Advantages
- Allows easier global integration (barriers of currency exchange rates, language, and culture can be bridged automatically)
- Updates only need to be done once to be implemented company-wide
- Provides real-time information, reducing the possibility of redundancy errors
- May create a more efficient work environment for employees[2]
- Vendors have past knowledge and expertise on how to best build and implement a system
- Disadvantages
- Locked into relationship by contract and manageability with vendor - a contract can hold a company to the vendor until it expires and it can be unprofitable to switch vendors if switching costs are too high
- Inflexibility - vendor packages may not fit a company's business model well and customization can be expensive
- Return on Investment may take too long to be profitable
- Implementations have a risk of project failure[2]
See also
- SAP R/3
- SAP NetWeaver
- SOA
- List of ERP software packages
- SAPgui
- Secure Network Communications
- Secure Socket Layer
- Profitability Analysis
References
- ^ Burleson, Donald K (November 1999). Oracle SAP Administration. O'Reilly. ISBN 1-56592-696-X.
- ^ a b c d e Monk, Ellen F.; Wagner, Brej J. (2009). Concepts in enterprise resource planning (3rd ed.). Boston: Thomson Course Technology. pp. 23–34. ISBN 978-1-4239-0179-2.
- ^ Lui, Kim Man (January 2008). "Rescuing Troubled Software Projects by Team Transformation: A Case Study With an ERP Project". IEEE Transaction on Engineering Management 55 (1): 171 - 184. doi:10.1109/TEM.2007.912933. http://ieeexplore.ieee.org/Xplore/login.jsp?url=http%3A%2F%2Fieeexplore.ieee.org%2Fiel5%2F17%2F4439877%2F04439890.pdf%3Farnumber%3D4439890&authDecision=-203.
- ^ Everett, Cath (2008-02-13). "Companies warned over custom SAP costs". UK: zdnet. http://news.zdnet.co.uk/software/0,1000000121,39292842,00.htm. Retrieved 2009-03-08. "Around 90 percent of European SAP customers could save six- or seven-figure sums each year by avoiding the creation of bespoke code on top of the ERP platform, an IT consultant has claimed"
- ^ Vance, Ashlee (2003-03-31). "SAP costs too much – customers ROI challenged". UK: The Register. http://www.theregister.co.uk/2003/03/31/sap_costs_too_much_customers/. Retrieved 2009-03-08.
- ^ "Nucleus Research finds 57 percent of SAP Reference Customers have not Achieved a Positive ROI". Nucleus Research. 2003-03-31. http://nucleusresearch.com/news/press-releases/nucleus-research-finds-57-percent-of-sap-reference-customers-have-not-achieved-a-positive-roi/. Retrieved 2009-03-08. "Customers will see benefits after lengthy implementations, but many deployments anchored down by excessive consulting costs"
- ^ "How much does SAP costs me?". UK: web-geeks. http://www.web-geeks.co.uk/SAP-Intro/sap-cost.aspx. Retrieved 2009-03-08.
- ^ SAP Cryptographic Library
- ^ SAP to Acquire Software Security Products and Assets from SECUDE
- Gargeya, VB 2005, ‘Success and failure factors of adopting SAP in ERP system implementation’, Business Process Management Journal, Vol.11, No.5, pp501–516, Retrieved 21/04/2010. - In White Paper Review, Industry Week OCT 2009, ‘ERP Best Practices: The SaaS Difference, Plex Systems, Retrieved 21/04/2010. - Malhorta, A & Temponi, C 2010, ‘Critical decisions for ERP integration: Small business issues’, International Journal of Information Management, Vol. 30, Issue No.1, Pages 28–37, 21/04/2010, Science Direct.
External links
Categories:- SAP (company)
- ERP software
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