SAP ERP is an enterprise resource planning software developed by the German company SAP SE. SAP ERP incorporates the key business functions of an organization. The latest version (SAP ERP 6.0) was made available in 2006. The most recent Enhancement Package (EHP8) for SAP ERP 6.0 was released in 2016.
Business Processes included in SAP ERP are Operations (Sales & Distribution, Materials Management, Production Planning, Logistics Execution, and Quality Management), Financials (Financial Accounting, Management Accounting, Financial Supply Chain Management), Human Capital Management (Training, Payroll, e-Recruiting) and Corporate Services (Travel Management, Environment, Health and Safety, and Real-Estate Management).
SAP ERP consists of several modules, including Financial Accounting (FI), Controlling (CO), Asset Accounting (AA), Sales & Distribution (SD), Material Management (MM), Production Planning (PP), Quality Management (QM), Project System (PS), Plant Maintenance (PM), Human Resources (HR). SAP ERP collects and combines data from the separate modules to provide the company or organization with enterprise resource planning.
Typical implementation phases:
Phase 1: Project Preparation
Phase 2: Business Blueprint
Phase 3: Realization
Phase 4: Final Preparation
Phase 5: Golive Support
Companies planning to implement or upgrade an SAP ERP system should pay strict attention to system integration to save their SAP ERP implementation from failure. With system integration in place, data flows move completely and correctly among various SAP ERP components, thereby not only streamlining business processes but also eliminating or minimizing redundant data entry efforts.
- Allows easier global integration (barriers of currency exchange rates, language, and culture can be bridged automatically)
- Updates only need to be done once to be implemented company-wide
- Provides real-time information, reducing the possibility of redundancy errors
- May create a more efficient work environment for employees
- Vendors have past knowledge and expertise on how to best build and implement a system
- User interface is completely customizable allowing end users to dictate the operational structure of the product
- Locked into relationship by contract and manageability with vendor – a contract can hold a company to the vendor until it expires and it can be unprofitable to switch vendors if switching costs are too high
- Inflexibility – vendor packages may not fit a company’s business model well and customization can be expensive and/or lead to version lock-in, since customized code may not fit future versions and would then need to be redeveloped at great expense
- Return on Investment may take too long to be profitable
- Implementations have a risk of project failure