Enterprise Resource Planning and SAP System Software – A Summary
Contents
1. What is ERP
2. SAP R/3 Functionality
2.1 Logistics
2.2 Accounting
2.3 Human Resources (HR)
2.4 Cross-Application Functions
3. New Dimension Products
4. SAP R/3 Architecture
5. mySAP.com and the Internet
6. SAP R/3 Custom Configuration & Implementation
7. Sources
1. What is ERP
Many key business applications are now implemented using comprehensive and complex Enterprise Resource Planning (ERP) software. ERP software facilitates the flow of information among all the processes of an organization’s supply chain, from purchases to sales, including accounting and human resources. Process thinking is a key element in this business restructuring, differing from previous approaches with traditional application "silos", where departments within a company operated with poor interaction with other departments. ERP software eliminates the common problem of multiple incompatible software systems and databases in use in the departments or functional areas of many corporations. With one integrated comprehensive system (which could be distributed internationally) with one database, processes run more smoothly with up to date information availability throughout the corporation.
It is important for students to gain an understanding of the impact of ERP solutions in business today. Every business area is affected; implementing ERP systems in a corporation is a complex undertaking and has been likened to the effort required in merging two companies together.
ERP products are available from several vendors, including SAP AG, PeopleSoft, J.D. Edwards and Oracle. The ERP software market leader is SAP AG with the SAP R/3 System.
There is great demand in industry for people that are knowledgeable about ERP and specifically about SAP R/3 System. The following sections present an introduction to SAP R/3 and other SAP products that work together with R/3 or may be separate products.
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2. SAP R/3 Functionality
R/3 software allows the integration of all of a company’s business operations in an overall system for planning, controlling and monitoring. Over 1000 ready-made business processes are available, that include best business practices that reflect the experiences, suggestions and requirements of leading companies in a host of industries. New features are continuously being added to releases of R/3.
SAP R/3 System provides an integrated suite of business applications that covers a full range of processes used in almost any business. The main application groupings are:
- Logistics
- Financial/Management Accounting and Reporting
- Human Resources
- Cross-Application Functions
The following sub-sections list the main applications and some of their components.
2.1 Logistics
Logistics General integrates the manufacturing and distribution functions for Sales and Distribution, Production Planning, Materials Management, Plant Maintenance and Quality Management. The following components are included: - Logistics Information System (LO-LIS)
- Master Data (LO-MD)
- Forecast (LO-PR)
- Variant Configuration (LO-VD)
- Engineering Change Management (LO-ECH)
- Materials Management (MM)
A material can also be a person or a service. The MM application supports manufacturing, distribution and service industries: - Material Requirements Planning (MM-MRP)
- Purchasing (MM-PUR)
- Inventory Management (MM-IM)
- Warehouse Management (MM-WM)
- Invoice Verification (MM-IV)
- Information System (MM-IS)
- Electronic Data Interchange (MM-EDI)
- Sales & Distribution (SD)
This includes sales, shipping, and billing. It actively supports sales and distribution activities with functions for pricing, prompt order processing, and on-time delivery, interactive multilevel variant configuration, and a direct interface to Profitability Analysis and Production. - Master Data (SD-MD)
- Basic Functions (SD-GF)
- Sales (SD-SLS)
- Shipping (SD-SHP)
- Billing (SD-BIL)
- Sales Support (SD-CAS)
- Information System (SD-IS)
- Electronic Data Interchange (SD-EDI)
This involves the planning and control of manufacturing activities, including make-to-order or repetitive manufacturing. - Basic Data (PP-BD)
- Sales and Operations Planning (PP-SOP)
- Master Planning (PP-MP)
- Capacity Requirements Planning (PP-CRP)
- Material Requirements Planning (PP-MRP)
- Production Orders (PP-SFC)
- Product Costing (PP-PC) (which is also CO-PC Product Costing)
- Kanban/Just-in-Time Production (PP-KAB)
- Repetitive Manufacturing (PP-REM)
- Assembly Orders (PP-ATO)
- Production Planning for Process Industries (PP-PI)
- Plant Data Collection (PP-PDC)
- Information System (PP-IS)
This module provides quality planning, inspections, certificates, notification. It monitors, captures, and manages all processes relevant to quality assurance along the entire supply chain, coordinates inspection processing, initiates corrective measures, and integrates laboratory information systems. - Planing Tools (QM-PT)
- Inspection Processing (QM-IM)
- Quality Control (QM-QC)
- Quality Certificates (QM-CA
- Quality Notifications (QM-QN)
The Plant Maintenance module provides planning, control, and processing of scheduled maintenance, inspection, damage-related maintenance, and service management to ensure availability of operational systems, including plants and equipment delivered to customers. - Equipment and Technical Objects (PM-EQM)
- Preventive Maintenance (PM-PRM)
- Maintenance Order Management (PM-WOC)
- Maintenance Projects (PM-PRO)
- Service Management (PM-SMA)
- Plant Maintenance Information System (PM-IS)
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2.2 Accounting
- Financial Accounting (FI)
This application enables the company to publish legally required financial documents, and includes the following modules: - General Ledger (FI-GL)
- Accounts Receivable (FI-AR)
- Accounts Payable (FI-AP)
- Legal Consolidation (FI-LC)
- Special Purpose Ledger (FI-SL)
The following modules are integrated with FI and are used to better control a business: - Overhead Cost Control (CO-OM)
- Product Costing (CO-PC)
- Activity-Based Costing (CO-ABC)
- Sales and Profitability Analysis (CO-PA)
- Project Control (CO-PRO)
- Enterprise Controlling (EC)
- Executive Information System (EC-EIS)
- Business Planning (EC-BP)
- Management Consolidation (EC-MC)
- Profit Center Accounting (EC-PCA)
The Financial Accounting module provides treasury functions, but the following are more specialized: - Treasury Management (TR-TM)
- Funds Management (TR-FM)
- Cash Management (TR-CM)
- Market Risk Analyzer (TR-MRM)
- Capital Investment Management (IM)
- Tangible Fixed Assets (IM-FA)
- Financial Investments (IM-FI)
This module accommodates all types of research and development projects. It coordinates and controls all phases of a project, in direct cooperation with Purchasing and Controlling, from quotation to design and approval, to resource management and cost settlement. - Basic Data (PS-BD)
- Operational Structures (PS-OS)
- Project Planing (PS-PLN)
- Approval (PS-APP)
- Project Execution/Integration (PS-EXE)
- Information System (PS-IS)
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2.3 Human Resources (HR)
The Human Resources module includes administration, payroll accounting, shift management, employee attendance, trip costs, training, and recruitment. It provides solutions for planning and managing the company’s human resources, using integrated applications that cover all personnel management tasks and help simplify and speed the processes.
- Personal Planning and Development (HR-PD)
- Organizational Management (PD-OM)
- Seminar and Convention Management (PD-SCM)
- Personnel Development (PD-PD)
- Workforce Planning (PD-WFP)
- Room Reservations Planning (PD-RPL)
- Personnel Administration (HR-PA)
- Employee Management (PA-EMP)
- Benefits (PA-BEN)
- Compensation Administration (PA-COM)
- Applicant Management (PA-APP)
- Time Management (PA-TIM)
- Incentive Wages (PA-INW)
- Travel Expenses (PA-TRV)
- Payroll (PA-PAY)
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2.4 Cross-Application Functions
The Business Workflow module contains functions that can be used in all application components, linking the integrated application modules with cross-application technologies, tools and services. A typical example of a business process that can be actively controlled using SAP Business Workflow is the complete processing of a customer order from its receipt through delivery of the goods and issuing the invoice. You can automate all the steps in this business process and define all the roles of the appropriate employees. You can check a customer’s credit line and creditworthiness, query the stock on hand, and automatically place an order. Clerical staff can process the individual work items in a working environment familiar to them, request information on the current status of specific workflows at any time, and trace the history of the work process. All these functions can also be accessed through the Internet.
This provides electronic mail messaging for users and also by SAP applications.
The Business Warehouse provides management reporting, including non-SAP data sources into reports. This independent data warehouse solution summarizes data from R/3 applications and external sources to provide executive information for supporting decision making and planning. Reports cover a wide range of information requirements, automated data staging, and standard R/3 business process models.
Industry Solutions combine the R/3 application modules and additional Industry specific functionality. The following are some of the industries for which modules have been developed: - Aerospace & Defense
- Automotive
- Banking
- Chemicals
- Consumer Products
- Engineering & Construction
- Healthcare
- High Tech & Electronics
- Higher Education & Research
- Insurance
- Media
- Mill Products
- ining
- Oil & Gas
- Pharmaceuticals
- Project Oriented Manufacturing
- Public Sector
- Retail
- Service Provider
- Telecommunications
- Utilities
- International Development (INT)
Users in different countries have different needs regarding currency, legal requirements, and commercial practice. The components for different regions are: - Asian and Pacific Area (IN-APA)
- Europe (IN-EUR)
- North America (IN-NAM)
- Africa/Middle East (IN-AFM)
- South America (IN-SAM)
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3. New Dimension Products
New Dimension Products can stand alone or be integrated with R/3. Some components are included in the above R/3 list; the following are components of New Dimension Products:
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- Supply Chain Management (SCM)
SAP Advanced Planner and Optimizer (APO) is a tool for planning, optimizing, and scheduling software applications that enable the integration and synchronization of the supply chain on a global scale, from suppliers, agents, and production planners, to purchasers, customers and consumers.
- Business Information Warehouse
This has been mentioned above.
- Business-to-Business Procurement
This enables inter-enterprise procurement, including the creation and maintenance of requisitions, purchase orders and reservations with or without electronic catalogs, approval and rejection, desktop receiving and service entry, status and tracking, invoicing, and performance reporting functions. All end users are able to purchase goods and services straight from their workplace.
- Corporate Finance Management (CFM)
This is a comprehensive package for managing financial resources, and analyzing and optimizing business processes in the finance area of a company.
- Customer Relationship Management (CRM)
CRM provides a solution that enables companies to effectively manage customer relationships throughout the entire lifecycle, understanding as well as anticipating the needs of customers and prospects.
This is the cornerstone of SAP’s Knowledge Management solution for continuous knowledge transfer and life-long learning. It contains a repository for storing content and includes the tools to create, modify, distribute, and administer that content. The SAP HR components Personnel Development (PD) and Training and Event Management (TEM) provide functionality together with the Knowledge Warehouse. The Knowledge Warehouse provides unstructured information; the Business Information Warehouse provides structured data.
- Strategic Enterprise Management ( SEM)
SEM includes the following components:
- Business Consolidation (BCS) provides functionality for financial consolidation and value-based accounting.
- Business Planning and Simulation (BPS) provides functionality to support integrated strategic and operational business planning. These functions include the creation of dynamic and linear business models, simulation of various scenarios, evaluation of these scenarios taking account of the business risks, resource allocation as part of business planning, and rolling forecasting.
- Corporate Performance Monitor (CPM) provides support for the definition, analysis, visualization, and interpretation of key performance indicators.
- Business Information Collection (BIC) provides functionality for automated and semi-automated collection of structured and – especially – unstructured business information from internal and external sources. This includes an automatic search for relevant business information in the Internet, and the structuring of any information found.
- Stakeholder Relationship Management (SRM) provides functionality to support the stakeholder communication process: the stakeholders are informed regularly and systematically about the business strategy and its effects on their stakeholder value. In addition, the component helps to collect feedback from stakeholders in a structured manner, and then to pass this on to the other components (SEM-CPM and SEM-BPS).
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4. SAP R/3 Architecture
The SAP Business Framework is a family of SAP and non-SAP products. It is an open, integrated, component-based enterprise business application solution for companies of any size in any industry. Business Framework provides flexibility in setting up enterprise-critical distributed IT systems using independent components. The R/3 System is an evolving family of application components, that can be combined into an integrated, continuously maintainable network solution regardless of the release of the components. Business Framework is an open design, allowing integration of components from third-party vendors.
The SAP R/2 System was developed to run on mainframe computers; SAP R/3 System has been developed to run with a distributed multi tier client/server architecture. SAP R/3 can be configured to run on a single computer, or it can be distributed among many different machines at different locations. There is a clear distinction between the presentation, application, database, and Internet-enabling layers.
The presentation layer is the user interface, and a number of different graphical user interfaces (GUIs) can be used. SAPGUI is SAP’s own user interface software (in over 20 different languages), but Microsoft Windows or Internet browser interfaces can be used in its place. Other examples of interfaces are kiosk systems, and telephone answering systems.
Application servers contain the complete business process logic of R/3 applications. These application servers can run on Windows NT systems, major UNIX operating systems, and AS/400 systems. A number of different application servers can be connected in a network, distributed geographically.
The database layer manages both the R/3 System application components and the enterprise’s working data. This task is performed using relational database management systems. Supported are IBM DB2, Informix Online, Microsoft SQL Server, and Oracle. Database servers can be on different servers from the application servers, and can include mainframes, Windows NT, UNIX or AS/400. The industry standard SQL (Structured Query Language) is used for defining and manipulating all data. Applications are fetched from the database as required, loaded into the application layer, and then run from there.
SAP also has an Internet layer (with access through a Web server) that works with System R/3 that enables a corporation to couple its systems with customers and vendors. Employees can access the system over the Internet or intranet, customers can place orders, and vendors can access their customers’ warehouse data to schedule deliveries just in time. See mySAP.com below, which is central to SAP’s internet strategy.
SAP Application Link Enabling (ALE) is used to manage widely distributed, loosely coupled systems, based on an exchange of messages controlled by business processes. Individual companies in a corporation can distribute their transaction workloads where data are distributed, while a common service is offered throughout the network. Individual tasks can be distributed across locations. The systems involved can be different R/3 systems or non R/3 systems. With ALE, applications are integrated using asynchronous communications mechanisms.
The R/3 System offers standard interfaces to enable integration of R/3 with the processes and data of business applications from other vendors. These object-oriented interfaces are called business application programming interfaces (BAPIs). BAPIs are compatible with Microsoft’s Distributed Component Object Model (COM/DCOM) specifications and the Object Management Group’s Common Object Request Broker (CORBA) specifications.
R/3 applications are modules that can be used alone or combined with other solutions. R/3 is scalable and can be used with from 30 to several thousand users.
Popular desktop programs such as MS Word, MS Excel, and MS Project can be linked to R/3 applications. Electronic Data Interchange (EDI) between companies is also part if R/3.
The BASIS System is the fundamental software within R/3. Application modules listed above in SAP R/3 Functionality are added as needed.
ABAP is the SAP programming language that is used in the application modules. Custom programming with ABAP is possible for add on modules (but the standard SAP modules should not be modified).
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5. mySAP.com and the Internet
mySAP.com is SAP’s term for its Internet offering and strategy. The mySAP.com portals are ways of accessing all of the services and benefits afforded by this strategy. mySAP.com is an open collaborative business environment of personalized solutions. According to SAP, it is a comprehensive basket of offerings that includes Internet-enabled applications, such as the Web-enabled core components of SAP R/3.
mySAP.com will be the interface to all SAP products: collaborative, front office, and back office. SAP’s vision is to continue to provide complete, integrated solutions. Users of all the software solutions will access their applications via the easy-to-use Workplace on their desktop. All of the applications will continue to work in an integrated fashion.
mySAP.com integrates seamlessly with existing R/3 functions, users of mySAP.com need not have R/3 installed, and R/3 can be used without mySAP.com. If R/3 is installed, then mySAP.com would sit on top of the R/3 applications.
mySAP.com is intended to incorporate all current SAP products in the form of components. From Release 4.6 on, R/3 will be a mySAP.com component. mySAP.com can interoperate with R/3 from Release 3.1 on. Earlier R/3 releases can be connected on a project basis.
R/3 Release 4.6 is also called the EnjoySAP Release with a new interface that has made SAP software easier to learn, tailor and use.
The mySAP.com Workplace provides personal access to the business environment. It is a customizable, Web-enabled doorway into R/3, offering additional functions and services beyond the core R/3 functions. In addition, it provides integration with other ERP solutions and non-ERP information sources including financial market data, news tickers, and industry-specific content.
The mySAP.com Workplace is tailored to individuals, companies, and industries. It makes the business solutions, knowledge, and services they need in their daily business activities readily available. The users, through their browsers, can access functionality that is most relevant to their roles, and then configure their personal desktops to suit their individual work styles. The following are provided, or being developed:
- Access to business solution applications
- Access to internal corporate information, reports, press releases
- Access to services available on the Internet
- Access to any user applications
- Access to the mySAP.com Marketplace
The mySAP.com Marketplace is actually two things. It is the infrastructure that supports many SAP collaborative Business Scenarios, allowing many buyers and sellers to come together to exchange goods, services, and information. It is also the name currently used to describe the Web portal that SAP hosts at http://marketplace.mySAP.com. Anyone can access and use the Marketplace via www.mySAP.com. Buyers as well as sellers can leverage the Marketplace without the need for any SAP software.
The personalized Workplace is the employee enterprise portal, the Marketplace is the global e-business hub.
A Business Scenario offers the specific knowledge, functions, and services that one or more users may need to succeed in a business task. mySAP.com provides a host of e-business solutions, including purchasing, collaborative planning, employee self service, direct customer servicing, and inter-business knowledge management. Business Scenarios will provide access to all R/3 and SAP New Dimension functionality.
SAP has introduced the Internet Business Framework, which uncouples the integration technology from the development language and runtime. This means that the software module that calls a certain service need not be written in the same language as the software module that provides the service. Rather, the software providing the service can be implemented in virtually any language.
SAP also provides mySAP.com Application Hosting, where the IT services are outsourced to a hosting partner, with access to SAP products.
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6. SAP R/3 Custom Configuration & Implementation
Implementing R/3 requires a team of IT specialists and business users. For the enterprise, this can result in business process re-engineering: less supervisory levels, better flow of information between business units, and a new business organizational structure. The process can be ongoing – change can be continuous. Applications from R/3 are usually implemented gradually in a progressive implementation, rather than everything implemented at once.
The R/3 System is highly configurable to suit the operations of the enterprise. SAP has provided tools to model business processes, configure the system, and manage the process.
The R/3 Procedure Model provides guidance through the different project phases step by step (from project generation to going live). A wide range of tried-and-true, graphically portrayed business scenarios and processes are stored in the R/3 Reference Model, from which the best possible processes can be chosen. The R/3 Procedure Model uses the following tools:
- IMG (Implementation Management Guide) of R/3 – acts as a project management system, providing a plan of activities. It recommends a sequence for configuring and customizing the system, and supports documenting the project.
- SAPoffice – stores, edits text and graphical information. It also links to standard PC office products such as word processing and spreadsheets.
- Business Navigator - provides a graphical view of business processes and functions.
The R/3 Analyzer is a set of tools for selecting from the R/3 system the standard business programs that are needed for a particular enterprise. The results can be displayed in a graphical or list form. R/3 Analyzer prompts users to perform steps in the proper order.
The R/3 Reference Model is a tool that is provided to support configuration activities. It contains over 1,000 business processes that describe the functions of the R/3 System, and provides over 100 basic business scenarios. Five views are provided by the Reference Model:
- Process view – a network of event-driven process chains
- Function view – a summary display of the business functions required of R/3
- Information flow-view – for information flow between event-driven process chains
- Data view – clusters of data structures required for the business processes
- Organization view – the relationships between the organizational units of the enterprise
The configuration that is chosen by the users is represented by parameters in tables; the R/3 tools create the tables as the users specify their requirements, without the need to modify any software. Requirements that are not available in the standard R/3 Reference Model are documented by the tools, but must be programmed with the ABAP/4 language (with the ABAP/4 Development Workbench). Thus the enterprise can extend, and have their own version, of the R/3 Reference Model.
With Release 4.0, a business component can be implemented independently of the release of R/3. Thus the entire system does not need to be implemented or upgraded simultaneously.
SAP has also provided AcceleratedSAP (ASAP) as a methodology and tools for more rapid implementation of R/3. With Release 4.0, the Business Engineer draws upon the Reference Model to provide guidance through the implementation, in analyzing, designing and configuring the business processes. The Business Engineer can be used in a graphical or tabular form and is the recommended method of implementing or maintaining R/3.
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7. Sources
Downloadable pdf files through SAPs Internet emedia site: http://emedia.sap.com/usa/default.asp
- R/3 Technology Infrastructure 4.0
- R/3 System SAP Technology Infrastructure
- mySAP.com Frequently Asked Questions
- mySAP.com Application Hosting - Zero to E-Commerce in Nothing Flat
- The SAP Internet Strategy - Turning Internet Promises into Profit
Other downloadable SAP pdf files: from http://wwwext03.sap.com/usa/aboutsap/ selecting SAP R/3:
- SAP R/3
- R/3 System Release Strategy
August 1999 News Release: http://wwwext03.sap.com/usa/press/1999/Aug99.asp
- EnjoySAP enhances user efficiency and enjoyment
Books:
- Using SAP R/3 Third Edition , ASAP World Consultancy, 1999 Que
- Getting Started with SAP R/3, Denis L. Prince, 1998 Prima Publishing
For questions or comments about this file contact Peter Pille ppille@acs.ryerson.ca
February 10, 2000
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