IBM Global Services

ERP / SAP Overview

ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Objectives

 The participants will be able to:

 Recognize the evolution of ERP solutions.
 Appraise the concept, benefit and use of ERP solution.
 Define the SAP R/3 Overview.
 Identify the different SAP R/3 Functional modules/areas.
 Distinguish the components of SAP R/3.
 Judge the use of ABAP programming language.

2 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

ERP Overview

Enterprise Resource Planning

3 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Enterprise Resource Planning

... synchronization of Company functions...

Purchase

Manufacturing Finance

Sales

4 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Enterprise Resource Planning

… and extended to the complete value chain...

Tier I Component
Manufacturer

Vehicle OEM

Tier II Component
Supplier

5 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Enterprise Resource Planning

... delivering administrative and decision support with...

Decision support and

analysis

Processes monitoring &

feedback

Administrative
registration

6 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

What is an ERP solution...?

…Integrated across the primary and support processes
Distribution

Manufacturing Marketing

Planning
Materials and Finance
Execution

Engineering Sales

Human Resources

7 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

The ERP application

 An integrated suite of business applications, which..
 Closely links, monitors, and controls primary enterprise resources like manpower,
machine, material, methods, market and money.
 Enables corporates to readily change their processes to adapt to the ever changing
business scenario.
 Provides expertise in industry specific business processes.

 Entails
 Parameterization / Configuration
 Designing & Customization
 Testing and Implementation
 Training

8 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Why clients buy ERP?

 Corporate Initiatives
 Strategic initiatives
 A requisite capability in a competitive global business
 Operational initiative
 A foundation for performance and cost improvement
via integration
 Organizational initiative
 To initiate a major organizational change within the company
 Technology
 IT is making the transition from a supporting operational entity to becoming a strategic
competitive tool.
 Because others are buying it !!!

9 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Recent business trends favoring ERP growth

 Business Process Reengineering ( BPR )

 Most large companies are attempting to cut in-house development costs, improve
customer service, and speed products to market by reorganizing their existing
business processes.

 Software Pricing
 Licensing and pricing of mainframe based packaged applications are tied to the size of
mainframe system on which the applications run, but now customers are now
demanding user-based licensing options and major corporate applications like SAP
provide this instead of the conventional platform-based pricing technique.

10 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Recent business trends favoring ERP growth

 Globalization
 As businesses are becoming more global in scope, people are demanding packaged
corporate applications that are available in a variety of languages with support for
multiple currencies.

 Integration
 As more and more companies are going for BPR, there is increase in demand for
integrated solution e.g.. different applications sharing a common database and thus
enabling data definitions and business rules to be applied across an entire
organization with the facility of doing modifications at one location only.

11 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Business process benefits clients expect from an ERP project

 Global process/ Product management

 Integrated Supply Chain Management
 Leverage purchasing and vendor management
 Order cycle time/ customer service improvement
 Inventory reductions
 Reduced information systems costs on an ongoing basis
 Improved business management through worldwide integration and information

Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer

Logistics

Logistics and Distribution Sales & Customer Service

12 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Major ERP vendors

 SAP R/3
 Oracle ( Peoplesoft and JD Edwards were independent ERP venders earlier,
but are subsets of Oracle now )
 Peoplesoft
 JD Edwards

 Baan

13 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

What results can be expected from an “ERP culture”?

 Reduced working capital requirements
 Improved customer service
 Improved direct labor productivity
 Reduced purchase costs
 Reduced obsolescence
 Reduced overtime
 Having the figures to make decisions
 Having accountability throughout the organization ERP
 Improved quality of life

14 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP R/3 Overview

 Systems Applications and Products in Data Processing

15 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP AG – At a Glance

 Founded in Germany in 1972

 Market Leader in Industrial Enterprise Application (IEA)

 About 56% market share in the ERP market.

 Employs more than 38,400 people in more than 50 countries.

 As the world's third-largest independent software provider, SAP delivers

business solutions to more than 36,200 customers in more than 120 countries
around the world.

 Strength lies in its high degree of integration, mainly for large, global corporate
enterprises

 Significant presence in Global Fortune 500 companies

16 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP R/1 , R/2

 The R/1 system

 Developed for ICI Chemical
 Released 1972
 Focused on Sales & Distribution and Materials Management
 Discontinued after release of R/2

 The R/2 system

 Reorganized as leading mainframe software for large multinational
R/2
corporations
Basis System
 No sales effort planned – reactive only
 4,300 copies worldwide in 1993
 Mainframe-based to replace user legacy software;
co-existence and migration strategy underway for R/2 and R/3
 Keeping in mind its multinational customers, SAP designs SAP
R/2 to handle different languages and currencies.
Note: "R" stands for real-time data processing.

17 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP R/3 : 3 Tier Architecture

The Presentation Layer

Those SAP R/3 software components that
specialize in interacting with end-users
form the Presentation Layer.

The Application Layer

Those SAP R/3 software components that
specialize in processing business
applications form the Application Layer.

The Database Layer

Those SAP R/3 software components that

specialize in the management , storage and
retrieval of data form the Database Layer

18 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP R/3 : 3 Tier Architecture

Presentation Layer Application Layer Database Layer

components components components

reside in: reside in: reside in:

Presentation servers: Application servers: Database servers:

Systems capable of Specialized systems Specialized systems
providing a graphical multiple CPUs and with fast and large
interface. vast amounts of RAM. hard drives.

19 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP R/3 : 3 Tier Architecture

Presentation Layer components are installed across many PCs

The Application Layer

components are installed
across one or more high-
end servers.

The Database Layer

components are installed on
high-end database server.

20 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP R/3 Overview

SD FI
Sales & Financial
Distribution Accounting
MM CO
Materials Controlling
Mgmt.
PP
R/3 TR
Product Treasury
Planning

Client/Server
QM ABAP/4 PS
Quality Project
Mgmt. System
PM WF
Plant Mainte- Workflow
nance
HR IS
Human Industry
Resources Solutions

21 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Integration Planned
Requirement PP SD

Customer
MRP Order
MM
Requirement on
component Planned Shipping
level Order

Purchase
Order Production Invoicing
Order

Goods
Receipt Account
Production Receivable
completed
Invoice FI
Verification CO
FI Order
Settlement
Accounts Which modules are
Payable involved?

22 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Integration

All business processes throughout the supply chain are executed in

one system sharing all information

SAP R/3 Workflow

S C
U U
P S
P Procurement Production Distribution T
L MM PP SD O
I M
E Finance and Accounting E
R FI CO R

23 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

mySAP Technology

24 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP NetWeaver

Existing Systems
25 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation
 IBM Global Services

SAP R/3 : Components

Master Data
Application
Transaction Data

ABAP
Programs

Organization Structure

Configuration Key Data Elements

Functionality Configurations

26 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

What is Customization ?

 Customization
 The adaptation of application software to customer-specific needs is
accomplished in two ways :
 Coding
 Programming customer-specific code that replaces or complements
components of the application
 Configuration
 Rendering the application appropriate to a specific customer by specifying
data on which the application operates

27 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

ABAP Programming
 SAP R/3 applications are written in the ABAP (Advanced Business
Application Programming) programming language, and run within the
application layer of the R/3 System.
 ABAP programs communicate with the database management system of the
central relational database (RDBMS), and with the graphical user interface
(SAP GUI) at presentation level.

28 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Why do we need ABAP Development ?

SAP R/3 scope

29 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP Solution

Specific company
requirements
SAP R/3 scope

30 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

SAP Solution

Specific company
requirements
SAP R/3 scope

New Functionality
Development

Non SAP
applications

31 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Summary
 Materials Requirement Planning (MRP-I) began as a technique for developing enterprise-
wide business solutions by providing automated tools for forecasting demands and
planning according to the forecast.
 ERP is an integrated suite of Applications to meet corporate needs.
 Some major ERP vendors are : SAP R/3, Oracle, Baan
 SAP AG was founded in Germany in 1972 and it is a Market Leader in Industrial Enterprise
Application (IEA).
 SAP NetWeaver is a vision, or paradigm, of total integration of :
 People
 Information
 Business Processes
 Applications
 SAP has a 3 tier architecture comprising of the Presentation layer, Application layer and the
Database layer.
 The SAP solution is divided in different areas or Functional Modules like SD, MM, PP, QM,
PM, FI, CO etc. which are reorganized under services in mySAP Business Suite.
 R/3 applications are written in the ABAP programming language, and run within the
application layer of the R/3 System.

32 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation

 IBM Global Services

Questions

 What is MRP ?
 What is ERP ?
 When was SAP AG founded ?
 What are the 3 layers of the SAP R/3 ?
 What is SAP Netweaver ?
 What are the different functional modules of SAP ?
 What programming language is used for SAP applications ?
 Why do we need ABAP developments ?

33 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation