SAP -An Introduction

The full form of SAP is Systems Applications and Products in

Data Processing. SAP is a German software program company
whose items permit businesses to track client and business
intelligence.
SAP, by definition, is additionally the title of the ERP (Enterprise
Resource Planning) software as well as the title of the company.
SAP was established in 1972 by Wellenreuther, Hector, Hopp,
Plattner, and Tschira. Earlier it was called Framework
Investigation and Program Development (German:
Systemanalyse und Programmentwickung) after that it was
renamed as SAP.
1972 – When the primary adaptation launched. SAP Company
has a 0.3-million-dollar income with fair nine representatives.

What is SAP Software?

SAP is a German global software company that was founded in
1972. Since then, it has grown into a global pioneer in large
company programming, with its ERP programming being one of
its flagship goods. SAP software is intended to combine many
business cycles and works into a unified framework, helping
organizations to deal with their jobs more successfully and
effectively.
SAP software is designed to combine disparate corporate
functions, such as finance, human resources, transportation, and
supply chain management, into a unified system. It serves as a
centralized data store, helping businesses to efficiently monitor,
analyze, and optimize their operations.
What are the uses of SAP Software in the
Workplace?
SAP software is used in a wide range of sectors and corporate
functions:
Finance Management
 Finance and Accounting: SAP enables firms to manage
financial transactions, budgeting, and financial reporting more
easily. It aids in regulatory compliance and provides financial
performance data.
 Financial Reporting: SAP gives tools to creating financial
reports and explanations. These reports can be customized to
 meet explicit regulatory and inward reporting necessities,
guaranteeing straightforwardness and compliance.
 Financial Transactions: SAP programming is broadly
utilized for overseeing financial transactions inside
associations. It works with the recording of financial exercises
like income, costs, speculations, and resource the board.
 Financial Performance Data: SAP’s reporting capacities
offer experiences into an association’s financial performance,
permitting partners to evaluate benefit, liquidity, and
generally financial health.
 Budgeting: SAP’s financial modules help with budgeting and
anticipating. Associations can make nitty gritty financial plans,
track spending against planned sums, and investigate
differences to settle on informed financial choices.
Human Capital Management
 Human Resources: SAP’s HR modules help with staff data
administration, payroll, talent recruiting, and performance
evaluation. It enhances human resource management and
workforce planning.
 Staff Data Administration: SAP’s Human Resources The
executives (HCM) modules empower associations to
effectively oversee worker data, including individual data,
work jobs, and pay subtleties. This concentrates HR data,
making it open and reliable across the association.
 Payroll: SAP’s payroll module robotizes payroll processing,
guaranteeing that workers are paid precisely and on time. It
computes pay rates, allowances, duties, and advantages in
view of predefined rules and regulatory prerequisites.
 Talent Recruiting: SAP supports talent securing by giving
tools to work posting, candidate following, and candidate
evaluation. It helps HR groups smooth out the enlistment
process and recognize the best candidates for open positions.
 Performance Evaluation: SAP aids performance the
executives by permitting associations to define performance
objectives, lead customary evaluations, and give criticism to
workers. It helps in distinguishing preparing and improvement
needs.
 Workforce Planning: SAP’s workforce analytics and planning
tools empower associations to gauge future workforce needs,
guaranteeing they have the right talent set up to meet
business goals.
Supply Chain Management:
 Supply Chain Management: SAP is used by businesses to
optimize their supply networks, assuring accurate inventory
management, demand forecasting, and order fulfillment.
 Supply Network Optimization: SAP’s Supply Chain
Management (SCM) modules assist associations with
improving their supply networks. This incorporates
investigating demand designs, distinguishing financially savvy
providers, and overseeing provider connections.
 Inventory Management: SAP empowers precise and
continuous following of inventory levels. It assists associations
with keeping away from stock outs and abundance inventory,
prompting further developed supply chain efficiency and
diminished conveying costs.
 Demand Forecasting: SAP utilizes authentic data and
prescient analytics to gauge future demand for items or
administrations. This data helps with acquisition planning and
creation booking.
 Order Fulfilment: SAP supports order management and
fulfillment processes. It guarantees that client orders are
processed productively, from order creation to conveyance,
while keeping up with high client support levels.
CRM and Customer Experience
 Sales and Customer Relationship Management: SAP
assists with customer relationship management, sales
procedures, and marketing campaigns. It gives a
comprehensive view of client interactions.
 Customer Relationship Management: SAP CRM modules
help associations assemble and oversee solid customer
relationships. It gives a 360-degree view of customer
interactions, including sales, administration demands, and
marketing campaigns.
 Sales Procedures: SAP aids sales automation, helping sales
groups oversee leads, valuable open doors, and the whole
sales cycle. It tracks sales exercises, conjectures incomes,
and recognizes sales patterns.
 Marketing Campaigns: SAP’s marketing tools empower
associations to design, execute, and examine marketing
campaigns. It helps in focusing on the right crowd, estimating
effort viability, and changing systems on a case by case basis.
 Comprehensive View of Client Interactions: SAP CRM
concentrates customer data, permitting sales and customer
 administration groups to get to a total history of interactions.
This improves customer administration and empowers a more
customized customer experience.
 Manufacturing and Production: SAP supports
manufacturers with production planning, quality control, and
maintenance. It ensures that everything goes as planned.
 Production Planning: SAP’s production planning modules
help makers in planning and booking production exercises. It
guarantees that production runs proficiently, considering asset
accessibility and demand estimates.
Key Functions of SAP Software
 Financial Management: SAP software enables businesses to
smooth out their financial cycles, which include bookkeeping,
financial reporting, budgeting, and forecasting. It enables
better financial management by gradually following financial
facts.
 Supply Chain Management: SAP’s supply chain
management (SCM) module supports organizations in
streamlining their supply chain tasks. It considers better
demand planning, stock management, procurement, and
operations coordination.
 Human Resources Management: SAP’s human capital
management (HCM) module aids in the administration of HR
functions such as finance, enrolment, worker execution, and
ability advancement. It supports organizations in attracting,
retaining, and developing their workforce.
 Customer Relationship Management (CRM): SAP CRM
enables firms to better manage their client relationships. It
aids with deal automation, marketing initiatives, and customer
administration, enhancing client satisfaction and
steadfastness.
 Production and Manufacturing: SAP’s production arranging
and manufacturing module assists businesses with dealing
with their production processes effectively. It helps with
streamlining production plans, overseeing resources, and
guaranteeing item quality.
 Business Analytics: SAP gives vigorous analytics and
revealing apparatuses that permit associations to acquire bits
of knowledge from their information. It upholds information-
driven direction by giving dashboards, information perception,
and prescient analytics.
 Business Intelligence: SAP’s production planning and
manufacturing module supports firms in effectively managing
their production operations. It aids in optimizing production
plans, managing resources, and ensuring item quality.
 Enterprise Mobility: SAP offers powerful analytics and
disclosing apparatuses that enable organizations to gain
knowledge from their data. It promotes information-driven
decision-making by providing dashboards, information
perception, and predictive analytics.

Advantages of SAP Software:

Efficiency:
SAP software smoothes out corporate operations, reduces
manual tasks, and eliminates obvious repetition. This
necessitates increased efficiency, efficiency, and cost investment
funds.
Benefits:
 Time Savings: Employees spend less time on routine tasks,
allowing them to focus on more strategic and value-added
activities.
 Reduced Errors: Automation minimizes human errors, which
can be common in manual processes. This leads to higher
accuracy in data and operations.
 Increased Productivity: With manual tasks reduced,
employees can be more productive, resulting in higher output
and faster task completion.
 Cost Savings: Efficiency gains can lead to cost savings in
terms of reduced labour hours and increased productivity.
Data Accuracy:
By unifying data and ensuring continual updates, SAP
programming improves data correctness and reduces errors,
resulting in better independent direction.
Benefits:
 Consistency: Data entered into SAP is consistent across the
organization, reducing discrepancies and inconsistencies.
 Error Reduction: SAP’s validation rules and data integrity
checks minimize data entry errors.
 Timeliness: Real-time data updates ensure that decision-
makers have access to the most current information.
 Better Decision-Making: Accurate data supports informed
decision-making, as decisions are based on reliable
information.
Scalability:
SAP setups are extremely adaptable and can adapt to the
changing needs of an organization, whether it is a private
business or a large worldwide enterprise.
Benefits:
 Flexibility: SAP setups can grow with an organization,
accommodating increased data volumes, users, and business
complexity.
 Cost-Effective Growth: Organizations don’t need to invest in
entirely new systems when they expand; instead, they can
scale up their existing SAP infrastructure.
 Global Reach: SAP is suitable for both local and global
operations, making it a versatile choice for organizations with
international reach.
Competitive Advantage:
Organizations that use SAP programming frequently obtain a
competitive advantage by improving their responsiveness,
agility, and ability to meet client needs.
Benefits:
 Responsiveness: SAP’s real-time data and streamlined
processes enable organizations to respond quickly to market
changes, customer demands, and emerging trends.
 Agility: SAP’s flexibility and automation allow organizations to
adapt to changing business conditions and seize new
opportunities swiftly.
 Customer Satisfaction: Improved efficiency and accuracy in
customer interactions can lead to higher customer satisfaction
and loyalty.
 Innovation: SAP’s data analytics and reporting capabilities
enable organizations to innovate by identifying trends,
opportunities, and areas for improvement.
Compliance:
SAP programming aids organizations in adhering to industry
guidelines and compliance requirements, lowering the risk of
legal and financial penalties.
Benefits:
 Regulatory Adherence: SAP provides tools and processes
that can be configured to comply with industry-specific
regulations and standards.
 Auditing Capabilities: SAP logs and tracks data changes,
making it easier to demonstrate compliance during audits.
 Risk Mitigation: By ensuring that financial and operational
data is accurate and transparent, SAP helps mitigate the risk
of non-compliance and associated penalties.

SAP MODULES
SAP solutions include a number of functional modules, which support
transactions to execute key business processes, such as −

 Financial Accounting (FI)

 Financial Supply Chain Management (FSCM)
 Controlling (CO)
 Materials Management (MM)
 Sales and Distribution (SD)
 Logistics Execution (LE)
 Production Planning (PP)
 Quality Management (QM)
 Plant Maintenance (PM)
 Project System (PS)
 Human Resources (HR)

Finance and Controlling (FICO)

SAP FICO is a combination of two ERP modules, i.e., Finance Accounting (FI)
and Controlling (CO). Under Finance in SAP and at an enterprise level, the
following modules take part −
  FI − Finance
 CO − Controlling
 IM − Investment Management
 TR − Treasury
 EC − Enterprise Controlling

SAP FI (Financial Accounting) is accountable for tracking the flow of financial

data across the organization in a controlled manner and integrating all the
information for effective strategic decision-making.

Activities Involved in SAP FI

 Creation of Organizational Structure (Defining Company, Company
Codes, business Areas, Functional Areas, Credit Control, Assignment of
Company Codes to Credit Controls)
 Financial Accounting Global Settings (Maintenance of Fiscal Year,
Posting Periods, defining Document types, posting keys, Number
ranges for documents)
 General Ledger Accounting (Creation of Chart of Accounts, Account
groups, defining data transfer rules, creation of General Ledger
Account)
 Tax Configuration & Creation and Maintenance of House of Banks
 Account Payables (Creation of Vendor Master data and vendor-related
finance attributes like account groups and payment terms)
 Account Receivables (Creation of Customer Master data and customer-
related finance attributes like account groups and payment terms
 Asset Accounting
 Integration with SD and MM

SAP CO (Controlling) module facilitates coordinating, monitoring, and

optimizing all the processes in an organization. It controls the business flow
in an organization. This module helps in analyzing the actual figures with the
planned data and in planning business strategies.

Two kinds of elements are managed in CO −

 Cost elements
 Revenue elements

These elements are stored in the FI module.

Activities Involved in SAP CO

 Cost Element Accounting (Overview of the costs and revenues that
occur in an organization)
 Cost Center Accounting
  Activity-Based-Accounting (Analyzes cross-departmental business
processes)
 Internal Orders
 Product Cost Controlling (Calculates the costs that occur during the
manufacture of a product or provision of a service)
 Profitability Analysis (Analyzes the profit or loss of an organization by
individual market segments)
 Profit Center Accounting (Evaluates the profit or loss of individual,
independent areas within an organization)

Sales & Distribution Management (SD)

SAP SD is one of the most important modules in SAP. It has a high level of
integration complexity. SAP SD is used by organizations to support sales and
distribution activities of products and services, starting from enquiry to order
and then ending with delivery.

SAP SD can monitor a plethora of activities that take place in an organization

such as products enquires, quotation (pre-sales activities), placing order,
pricing, scheduling deliveries (sales activity), picking, packing, goods issue,
shipment of products to customers, delivery of products and billings.

In all these processes, multiple modules are involved such as FI (Finance

Accounting), CO (Controlling), MM (Material Management), PP (Production
Planning), LE (Logistics Execution), etc., which shows the complexity of the
integration involved.

Activities Involved in SAP SD

 Setting up Organization Structure (creation of new company, company
codes, sales organization, distribution channels, divisions, business
area, plants, sales area, maintaining sales offices, storage location)
  Assigning Organizational Units (Assignment of individual components
created in the above activities with each other according to design like
company code to company, sales organization to company code,
distribution channel to sales organization, etc.)
 Defining Pricing Components (Defining condition tables, condition
types, condition sequences)
 Setting up sales document types, billing types, and tax-related
components
 Setting up Customer master data records and configuration

Material Management (MM)

Material Management deals with movement of materials via other modules
like logistics, supply chain management, sales and delivery, warehouse
management, production and planning.

Logistic Execution (LE)

Logistic Execution can be divided into two sub-modules, i.e., shipment of
goods (purchase to procurement process) and warehouse management
(storage of goods). These two modules are integrated with sale and
distribution, material management, and production and planning.
Supplier Relationship Management (SRM)
As the name SRM suggests, this module deals with the effective and efficient
transition of products and services between an organization and its suppliers.
The main process covered in this section is procurement of products like
direct materials, indirect materials, and services. This module can effectively
integrate with planning, accounting, and inventory system.

End-to-End Procurement Cycle

Procurement process with SAP Enterprise Buyer comprises of the following

major steps −

 Shopping Carts
 Approval of Shopping Cart
  Sourcing of Requirements
 Purchase Orders
 Purchase Order Approval
 Confirm Goods/Services
 Confirmation Approval
 Process Invoice
 Invoice Approval

Customer Relationship Management (CRM)

CRM deals with end-to-end customer related processes. CRM is designed to
centralize the data related to all the customers associated with an
organization. It helps an organization −

 Maintain its sales, services, and build marketing strategies according

the market demand and customer data analysis.
 Remain focused on its customers and via information analysis, help the
business to know more about its customers.
 Improve sales and services and building better relationships with
customers.

Human Resource (HR)

The most important objective of master data administration in Human
Resources is to enter employee-related data for administrative, time-
recording, and payroll purposes.

A new employee can be hired without using Recruitment. Instead you can
hire someone by running a personnel action in Personnel Administration,
thereby creating the necessary data for the employee to be hired.
Employee data must be kept current. After an employee is hired,
circumstances can always arise which necessitate either the entry of new
data or the correction of current data. For instance −

 An employee moves to his or her new address must be stored in the

system.
 An employee gets a pay hike at the start of the year. The new salary
must be stored for the relevant date.
 An employee changes jobs within the organization. His or her
organizational assignment, working time, and salary also change.
 Data can be stored for the past, present, or future.

Note − Entering payroll-relevant data in the past triggers retroactive

accounting.

The HR module is comprised of major areas of functionality known as sub-

modules. The HR module is a true demonstration of the strength of the SAP
product in Enterprise Resource Planning.

The HR system has very strong integration points (where data is passed back
and forth without human intervention) with just about all of the other SAP
modules. In addition, there is very tight integration amongst the HR sub-
modules.

The above illustration highlights some of the basic SAP HR terms as listed
below.

 Business trip management

 Recruitment
 Payroll
 Personal development
 Organizational Management
 Time Management
 Workforce Planning
 ESS
 MSS
 Training and event management
 CATS
 Benefits
 Compensation management
 Personal Administration