ERP (enterprise resource planning) is software used to streamline, or automate, a company’s data processing operation. This is accomplished by integrating the company’s data and processes into one system. SAP is Systems applications and products in data processing. Five former IBM employees founded SAP in 1972. SAP’s headquarters are in Waldorf, Germany, located approximately 65 miles south of Frankfurt. They have operations in more than 50 countries. Eighty percent of Fortune 1000 organizations use SAP software. It is the most widely used ERP software in the world.
Users connect to the SAP application server through a stand-alone or browser-based client. The application server connects to a database and other internal and external systems. Services provided by SAP ERP software include: end-user deployment, analytics, financial management, human capital management, procurement and logistics, product development and manufacturing, sales and service, corporate services, and more.
In 2002, ERP systems had an average cost of ownership of approximately $15 million. Costs to corporations ranged from $500,000 to more than $300 million. Costs may include new hardware and professional services such as customization, integration, data conversion, testing, and training. It all depends on what features / modules a firm will need.
Some general benefits of using ERP systems include: a totally integrated system, streamlined processes and workflows, simple data sharing across departments, increased efficiency and productivity, improved tracking and forecasting, lower costs, quality customer service, improved response to change, reduced risk of noncompliance, higher staff morale and job satisfaction, better customer satisfaction, and faster time-to-market for product development. Disadvantages can include: limits to customization, need to reengineer business processes, cost of installation and implementation, poor tech support, rigidity, and price hikes. Users have complained about support hikes and not actually seeing what they were promised. This is the result of SAP’s move away from standard support and requiring enterprise support. Said hike peaked at 29.4 percent.
A few related technologies are: human resources management (HRM), product lifecycle management (PLM), knowledge warehouse, customer relationship management (CRM), supply chain management (SCM), and supplier relationship management (SRP). HRM is used by ERP to aid in hiring and to ensure efficient use of corporate personnel. PLM is used for effective product development, production, and service. Knowledge warehouse develops and provides help with systems and/or applications. CRM allows businesses to stay in touch with customers in order to provide services like ordering and support. SCM provides a way for everyone in the supply chain to stay in the “loop.” This includes parts suppliers, retailers, and sometimes customers. SRM enables suppliers and organizations to work together on issues such as Kanban and JIT manufacturing. Other related technologies could include: NetWeaver, SOA, ecommerce, and SAP GUI. Middleware technologies operate as a middleman for other applications or components. SAP ERP provides mechanisms for online ordering, an example being online reservations for travel. Various forms of interfaces include browser-based, kiosk, and mobile interfaces. SAP can interact with Microsoft’s Office software through the Duet software.
Some entities involved with the use of SAP ERP include: the organization itself, third-party companies, supply chain partners, customers, and service providers. The company itself would more than likely host the application on its own server(s). SAP could also provide hosting of an organization’s ERP software (SAP Application Hosting). Other third-party companies could provide hosting of ERP services (Application Hosting). Supply chain partners, both up and downstream, might use a corporation’s ERP services. Customers would likely use the software. This could be indirectly, such as a salesperson filling an order via phone. Service providers, such as ISPs, would likely be required to communicate with outside entities.
SAP technology can be used just about anywhere in the world. Organizations of all sizes are able to use this software. Due to high costs, it is more likely to be utilized in major corporations.
Works Cited
SAP AG, Wikipedia, the Free Encyclopedia, Wikipedia Foundation, Inc. Mod 14 Jan. 2011
