IBM Global Services

ERP / SAP Overview

ERP / SAP Overview | Dec-2008 2005 IBM Corporation

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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.
Evolution of SAP Architecture to ERP6
Judge the use of ABAP programming language.

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ERP Overview

Enterprise Resource Planning

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Enterprise Resource Planning

... synchronization of Company functions...

Purchase

Manufacturing Finance

Sales

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Enterprise Resource Planning

and extended to the complete value chain...

Tier I Component
Manufacturer

Vehicle OEM

Tier II Component
Supplier

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Enterprise Resource Planning

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

Decision support and

analysis

Processes monitoring &

feedback

Administrative
registration

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What is an ERP solution...?

Integrated across the primary and support processes
Distribution

Manufacturing Marketing

Planning
Materials and Finance
Execution

Engineering Sales

Human Resources

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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

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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 !!!

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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.

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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.

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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

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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

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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

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SAP R/3 Overview

Systems Applications and Products in Data Processing

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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

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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.

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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

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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.

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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.

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SAP R/3 Overview

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

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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?

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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 O
MM PP SD
I M
E Finance and Accounting E
R FI CO R

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mySAP Technology

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SAP NetWeaver

Existing Systems

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Evolution of SAP Architecture

SAP ERP 6.0
Supplier Relationship Management
Self-Services
Internet Sales
Composite Applications
Strategic Enterprise Management
and more

EhP 1 EhP 2
Switch Framework
Enterprise Extensions Industry Extensions

SAP ECC Core (6.0)

SAP NetWeaver 7.0

PEOPLE INTEGRATION

Composite Application Framework

Multi Channel Access
Portal Collaboration

INFORMATION INTEGRATION

Life Cycle Mgmt

Bus. Intelligence Knowledge Mgmt
Master Data Mgmt

PROCESS INTEGRATION
Integration Business
Broker Process Mgmt

APPLICATION PLATFORM (7.00)

J2EE ABAP ITS

DB and OS Abstraction

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Enhancement Packages

Enhancement Packages

SAP ERP 6.0

SAP NetWeaver

What Are Enhancement Packages?

Optionally installed and activated software innovations for SAP ERP 6.0
Software innovations include; UI simplifications, functional enhancements, industry
specific capabilities and enterprise services
Cumulative in nature; current enhancement packages contain all contents of earlier
packages
Enhancement packages are not support packages

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Improved Software Lifecycle

Installation of new functionality separated from activation via Switch Framework

Content of enhancement packages

From a functional view each SAP enhancement package contains several
Business Functions.
From a technical view each SAP enhancement package contains new versions
of existing software components, grouped by a technical usage.

Selective Installation
Enhancement Install the parts that are required for the selected Business Function.
Packages If installed:
No UI or process change until a business function is activated via Switch Framework
Less Adjustment effort due to selective update of software components
No implications on the underlying NetWeaver platform, in addition enhancement
packages contain most current Support Package Stack

Selective Activation
Activate the business functions you need.
Support
Packages If activated:
End-user training is limited to the activated business function(s)
Testing is simplified with templates, provided for every business function

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SAP R/3 : Components

Master Data
Application
Transaction Data

ABAP
Programs

Organization Structure

Configuration Key Data Elements

Functionality Configurations

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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

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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.

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Why do we need ABAP Development ?

SAP R/3 scope

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SAP Solution

Specific company
requirements
SAP R/3 scope

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SAP Solution

Specific company
requirements
SAP R/3 scope

New Functionality
Development

Non SAP
applications

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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.

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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 ?

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