01 SAP Overview

IBM Global Services
ERP / SAP Overview
© Copyright IBM Corporation 2003

IBM Global Services
ERP Overview
Enterprise Resource Planning
Slide 2 ERP / SAP Overview | September 2003 © Copyright IBM Corporation 2003
IBM Global Services

... synchronization of Company functions...
Purchase
Manufacturi Financ
ng e
Sales
IBM Global Services

… and extended to the complete value chain...
Tier I Component
Manufacturer
Vehicle OEM
Tier II Component
Supplier
IBM Global Services

... delivering administrative and decision support with...
Decision support
and analysis
Processes
monitoring &
feedback
Administrativ
e registration
IBM Global Services
What is an ERP solution...?

…. Integrated across the primary and support
processes
Distributio
n
Manufacturi Marketing
ng
Planning
Materials and Financ
Executio e
n
Engineering Sales
Human Resources
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
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!!!
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
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
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
IBM Global Services
Major ERP vendors
 SAP R/3
 Peoplesoft
 Oracle
 Baan
 JD Edwards
IBM Global Services
What results can be expected from an “ERP culture”?
❑ Reduced working capital requirements

❑ Improved customer service
❑ Improved direct labour productivity
❑ Reduced purchase costs ERP
❑ Reduced obsolescence
❑ Reduced overtime
❑ Having the figures to make decisions
❑ Having accountability throughout the
organization
❑ Improved quality of life
IBM Global Services
SAP R/3 Overview
Systems Applications & Products in Data Processing
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
Worldwide presence in over 50 countries

18,000+ employees
Trained consultants doubled since 1996 (40,000)
About 20,000 companies in 120 countries

Around 64,500 installations of SAP
Strength lies in its high degree of integration, mainly for large,

global corporate enterprises
– Significant presence in Global Fortune 500 companies
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
corporations
– No sales effort planned – reactive only
R/2
Basis System
– 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
IBM Global Services
SAP R/3 : A comprehensive business solution
SD FI
Sales & Financial
Distribution Accounting
MM CO
R/3
Materials Controlling
Mgmt.
PP TR
Product Treasury
Planning
QM
Quality
Client/Server PS
Project
PM ABAP/4 WF
Mgmt. System
Plant Mainte- Workflow

nance
HR IS
Human Industry
Resources Solutions
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

specialize in processing business
applications form the Application Layer.
The Database Layer

specialize in the management , storage and
retrieval of data form the Database Layer
IBM Global Services
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.
IBM Global Services
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.
IBM Global Services
SAP R/3 Overview
SD FI
Sales & Financial
MM CO
R/3
Mgmt.
PP TR
Product Treasury
Planning
 QM
Quality
Client/Server PS
Project
PM ABAP/4 WF
Mgmt. System

nance
HR IS
Human Industry
Resources Solutions
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
IBM Global Services
SD: Sales and Distribution
SAP
R/3
SD Sales & Distribution . . . . . . . .
IBM Global Services
SD Overview SD
Inquiry
Quotation Purchasing
Materials Planning
Sales Order Production
Pricing
Delivery to Customer Picking

Goods Receipt
Packing
Goods Issue Customer Stock
Invoicing Transportation
IBM Global Services
Process Chain: Sales Distribution

Sales/Distribution
Chain
Inbound Logistics
Outbound Logistics
from Materials Sales Order & Distribution
to Customer
Management Process
Receive Payment
FI
Support Customer Sales
(Customer Info Analysis)
Create Invoice - Optional -
FI/CO/PA
- Create pick list
- Create trans- Issue Goods Process Customer
portation
work list
(Ship Product) Inquires
- Create loading FI - Optional -
work list MM
Provide Customer
(Documents) Create Delivery Note Quotations
- Optional -
- Check credit
-Check product availability Create Sales Order
- Determine pricing FI/CO/PA Support Customer
- Estimate delivery schedule MM Agreements
- Determine conditions of - Optional -
sale PP
(Activities)
IBM Global Services
Order Entry
PP
FI MM FI
Credit Management
Dynamic Availability Check
Cash Forecast
?
OK
IBM Global Services
Delivery/Shipment Processing
FI MM
WM
MM
Ship to party: C100
Item Material Qty
10
20
30
6301
6412
1507
10
10
25
Credit Management
.
.
. Delivery
Static Availability Check
.
Note
Picking
List
Picking
Packing
Transportation
IBM Global Services
Picking/Packing
Sales Order
Delivery
Picking without Picking Picking with Picking

Confirmation Confirmation
Picking
Print Picking List
Request
Confirm Picking Picking

Request Confirmation
Goods Issue
IBM Global Services
Invoicing
CO
PA
CO
Profit Center Accounting/Profitability Analysis PCA FI
Accounts Receivable/General Ledger FI
Cash Forecast
Single Invoices
EDI
Collective Invoices
Invoice Lists
Credit/Debit Notes
IBM Global Services
MM Overview
SAP
R/3
MM Materials Management . .
IBM Global Services
MM Overview MM
Material requirement
planning
External procurement Internal procurement

Purchasing Production
Invoice Goods Master data

verification Warehouse
receipt management Material
Batch
Inventory Vendor
management Customer
Goods Transfer G/L
issue posting Storage bins
...
Internal and external accounting Sales and distribution
IBM Global Services
Material - Central Master “Record” for Logistic
456
Inventory
Purchasing
Desc:---------------------
123
Inventory Raw Material - 456
Quality
Sales Information
Production Information
Desc:---------------------
Product - 123
IBM Global Services
Data in the Vendor Master

Maintenance Level
Client Purchase Organization Company Code
• Mandatory maintenance at the
Purchasing Organization Level
• Optional Maintenance at the
Plant Level, the Vendor
Sub-Range Level or a
combination of the two
General Data Purchasing Data Account Data

Address Terms of Payment Payment Terms
Phone and Fax Contact Person Payment Method
Number Minimum Order Value Accounting Clerk
Control Data
IBM Global Services
External Procurement Environment

Requirement RFQ
Determination
Source List
Purchase Quotation
Quota Requisition
Arrangement
Source
Outline Determination Price History
Agreement Vendor Purchasing Data
Selection
Info Record
Purchase Invoice
Order Receipt
Goods Receipt
IBM Global Services
Goods Movement
Ad hoc.
Goods
Receipt
Delivery Production
Inventory Inventory
Transfer
Posting
Goods Goods
Issue Issue
Consumption Samples Sales Order
IBM Global Services
Invoice Verification
CO FI
Orders / Projects /Cost centers
G/L accounts / Accounts payable Payment
Vendor
Vendor
Vendor
Vendor 3 invoiceinvoice Tolerance Check?
OK !
Blocked Invoice
e.g...
Invoice Release of
Verification Blocked Invoice
Delivery Invoice
Preliminary Posting
Automatic Price Update
IBM Global Services
PP Overview
SAP
R/3
PP Production Planning . .
IBM Global Services
PP
Production Planning Cycle
Sales and Operations Planning Master Data
Material Master
Master Production Scheduling Bill of Materials
Work Centers
Routings
PRT
Sales & Distribution Demand Management
Materials Management MRP Capacity Planning
MRP List Plant Maintenance
Production Order Cycle or

Costing Purchase Order Cycle
IBM Global Services
Production : Process Chain

Production Chain
Inbound Logistics from Outbound Logistics to Materials
Manufacturing
Procurement or Production Chain Management or Sales Chain
Process
Archive/Delete Order
Determine Production Requirements
via MRP Output or Manually)
Settle Production Order
FI
CO Create production order
(via conversion of planned order
to production order or manually)
Transfer Produced Goods to Inventory
FI Check material availability
(Automatic)
Confirm production of
goods is completed Release Production Order
Produce Goods Print shop floor papers

(actual workorders)
Withdraw materials from

inventory (automatic/manual)
MM
IBM Global Services
Production Planning
Production Planning Functionality

Master Data
Sales and Operations Planning &
Demand Management
MRP
Production Order & Capacity Plannin
IBM Global Services
Material Requirements Planning

Demands
Quantity:
12.000
Stochastic
Deterministic Planning
Bill of
Material
Demands Explosion
3. Qrt 4. Qrt
Capacity Planning
Lot Sizing Procedures
Net Change
IBM Global Services
MRP - Planning Procedures

Planning
Procedures
Deterministic Consumption-Based
MRP Planning
Forecast-Based Reorder Point

Planning Planning
Automatic Manual
Reorder Point Reorder Point
IBM Global Services
Production Control
MM
FI CO
Goods Issue
Costs
Open Production Order
Release Production Order
Planned Orders
IBM Global Services
QM Overview
SAP
R/3
QM Quality Management . .
IBM Global Services
QM
QM Overview
 The QM application module is a

SD FI
Sales & quality control
Financial and information
MM system supporting CO quality
R/3
PP
Mgmt. planning, inspection, AM
and control
Product
Planning for manufacturing Mgmt. and
Fixed Assets
procurement
QM PS
Quality Project
Mgmt. System
PM WF
nance
HR IS
Human Industry
Resources Solutions
IBM Global Services
QM in Logistics QM
Goods receipt
 History-dependent intensity of quality inspections
Production
• Inspection during production
• Defects recording in QM
• Control charts
Goods issue
• Quality management in SD (certifies quality)
IBM Global Services
PM Overview
SAP
R/3
PM Plant Maintenance . .
IBM Global Services
PM
Plant Maintenance - Overview
Master Data
Pre-defined External
work steps Services Material
Parts/Supplies Requisitions Reporting
Notifications
Create
Work Planned Schedule Close and
Orders Work Orders WO’s Settle WO
Emergencies
Labor Shop
Special
Tools Papers
Preventive/Predictive
Maint. WO’s
IBM Global Services
FI Overview
SAP
R/3
Fi Finance . .
IBM Global Services
Components of FI FI
General Ledger
FI-GL
Special Ledger
FI-SL
Accounts Receivable
FI-AR
Legal Consolidation
FI-LC
Accounts Payable
FI-AP Asset Accounting
FI-AA
IBM Global Services
Corporate Structure
Financial Financial Financial
Management Management Management
Area Area Area Corp. Group Level
Company Code (Company)

Legal Entity
Controlling Controlling Controlling Controlling

Area Area Area Area
Controlling Level
Plant Cost Centers

Management Units
Work Material
Place/Job Product
IBM Global Services
The Elements of Financial Accounting
Foreign Exchange Business

Management Analysis
Finance Information System

Executive Information System
G/L Information System Cash Management
and Forecast
Multiledger
Bank Accounts
Accounts Accounts
Payable Payables Receivables Receivable
General Ledger
Extended General Ledger
Invoice Credit
Verification Management
Consolidation
IBM Global Services
The Components of FI
Configuration Functionality
• Organizational Structures Documents/Transactions Fiscal Year
– Company Codes Posting Adjustments
– Business Area Payment Terms Balance Sheets/Income Statements
• Organization of Accounting Foreign Currency Closings
– Ledger/Sub-ledger Taxes On-Line Display
Special G/L Transactions Interest Calculation
• Chart of Accounts
Planning Correspondence
• Credit Control Payment Program Fixed Assets
– Setting Credit Limits Reporting Analysis
• Master Records Legal Consolidations
– G/L Accounts
– Customers Modules
– Vendors
– Banks General Ledger Special Ledger
Accounts Payable Legal Consolidations
• Chart of Depreciation
Accounts Receivable Credit Management
– Depreciation Areas
Asset Accounting Cash Management and Forecast
– Assets
Treasury
• Extended General Ledger
• Group Company
FI
• Number Ranges
IBM Global Services
CO Overview
SAP
R/3
CO Controlling. .
IBM Global Services
CO
Components of CO
CO Configuration CO Modules
Organization Structures • Cost Center Accounting • Profit Center Acctg.
• Order and Project Acctg. • Product Costing
Master Data
• Transaction-Based • Activity-Based Costing
Planning Setup Postings
• Product Costing
• Periodic Allocations
• Budgeting
Criteria and Values
• Profitability Analysis
Valuation • Business Planning
& Control
Functionality
• Settlement • Planning
• Internal Orders • Transaction-Based
Posting
• Open Item Management
• Periodic Allocations
• Profitability Analysis
CO • Overhead Management
• Monitoring Actual
Activities vs. Planned
IBM Global Services
The Elements of Managerial Accounting

Overhead Cost Overhead Cost Profitability Report
Controlling Controlling Analysis
Structure:
Cost PA Market
Centers Segment
Region
Division
Cost of Sales
PCA
Cost of Period
Report
Structure:
Controlling Profit
Center
GL
Accounts
IBM Global Services
Integration Within FI/CO
FI Chart of Accounts CO
Financial Accounting Management Accounting
Asset Asset Overhead Cost Product & Sales &

Accounting Accounting Controlling Production Profitability
Controlling Controlling
Asset Gen. Ledger Cost Center
Accounting Accounting Controlling Mass Cost of Sales
Production Accounting
Investment Accounts Actual
Controlling Receivable Costing Continuous Period
Flow Prod. Accounting
Static
Plant Accounts
Standard
Maintenance Payable Batch
Costing
Production
Cash Flexible
Account Management Standard Make to
Revenue Costing Order Prod.
Central
Order Line Items
Controlling
Central Project Central
Documents Controlling Totals
IBM Global Services
Integration
Planned
Requirement PP SD
MM Customer
MRP Order
Requirement
on component Planned
Shipping
level Order
Purchase
Production
Order Invoicing
Order
Goods
Receipt Account
Receivable
Production
completed
Invoice
Verification FI
FI Order
Settlement CO
Accounts
Payable
Slide 58 ERP / SAP Overview | September 2003
Which modules are involved?
© Copyright IBM Corporation 2003
IBM Global Services
SAP R/3 : Components

Master Data
Application
Transaction Data
ABAP
Programs
Organization Structure
Configuration Key Data Elements
Functionality Configurations
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
IBM Global Services
Organizational Structures in R/3

Organizational Units
Cost Accounting Client
External Logistics Controlling Areas
Accounting Company Codes
Sales Purchasing
Organizations Organizations
Internal Logistics Valuation Areas
(MRP/Production)
Plants
Inventory Management Storage Locations/Batches/Special Stocks
IBM Global Services
Organizational Structure in SAP R/3

Production Planning Financial Accounting
Company
Plant
Code
Controlling Human Resources

Client
Controlling Personnel
Area Area
Sales and Distribution Materials Management
Sales Purchasing
Area Organization
IBM Global Services
ABAP Programming
SAP R/3 applications are written in the ABAP 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 (SAPgui) at presentation level.
IBM Global Services
Why we need ABAP Developments?
SAP Solution
SAP R/3 scope
IBM Global Services
SAP Solution
Specific company
SAP R/3 scope
requirements
IBM Global Services
SAP Solution
SAP R/3 scope Specific company

requirements
New Functionality
Development
IBM Global Services
SAP Solution
SAP R/3 scope Specific company

requirements
New Functionality
Development
Non SAP
applications
IBM Global Services
Types of ABAP Developments
• Reports
• Interfaces
• Conversions
• Enhancements

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IBM Global Services

ERP / SAP Overview

© Copyright IBM Corporation 2003

Enterprise Resource Planning

Enterprise Resource Planning

Enterprise Resource Planning

Enterprise Resource Planning

What is an ERP solution...?

The ERP application

Why clients buy ERP?

Recent business trends favoring ERP growth

Recent business trends favoring ERP growth

Business process benefits clients expect from an ERP project

Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer

Logistics and Distribution Sales & Customer Service

Major ERP vendors

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

❑ Reduced working capital requirements

SAP R/3 Overview

Systems Applications & Products in Data Processing

Founded in Germany in 1972

Market Leader in Industrial Enterprise Application (IEA)

Worldwide presence in over 50 countries

About 20,000 companies in 120 countries

Strength lies in its high degree of integration, mainly for large,

SAP R/1 , R/2

• The R/2 system

SAP R/3 : A comprehensive business solution

Plant Mainte- Workflow

SAP R/3 : 3 Tier Architecture

The Application Layer

The Database Layer

SAP R/3 : 3 Tier Architecture

Presentation Layer Application Layer Database Layer

reside in: reside in: reside in:

Presentation servers: Application servers: Database servers:

SAP R/3 : 3 Tier Architecture

Presentation Layer components are installed across many PCs.

The Application Layer

The Database Layer

SAP R/3 Overview

Plant Mainte- Workflow

All business processes throughout the supply chain are

SAP R/3 Workflow

SD: Sales and Distribution

SD Sales & Distribution . . . . . . . .

Delivery to Customer Picking

Process Chain: Sales Distribution

Picking without Picking Picking with Picking

Confirm Picking Picking

External procurement Internal procurement

Invoice Goods Master data

Internal and external accounting Sales and distribution

Material - Central Master “Record” for Logistic

Data in the Vendor Master

General Data Purchasing Data Account Data

External Procurement Environment

Consumption Samples Sales Order

Materials Management MRP Capacity Planning

MRP List Plant Maintenance

Production Order Cycle or

Production : Process Chain

Produce Goods Print shop floor papers