What is SAP?

What is SAP?
SAP stands for Systems, Applications and Products in Data Processing.
SAP is the fourth largest software company in the world. The SAP R/3 system is a business software package designed to integrate all areas of a business. It provides end-to-end solutions for financials, manufacturing, logistics, distribution etc.

All business processes are executed in one SAP system and share common information with everyone. SAP is used by companies to plan, organize, integrate and manage their various operations like accounting, finance, manufacturing and human resources. The main aim is to improve efficiency and accuracy.

SAP is an Enterprise Resource Planning (ERP) system by SAP AG, a company based out of Walldorf in Germany. AG is derived from the German word Aktiengesellschaft. According to German Language SAP Stands for Systeme, Anwendungen und Produkte in Der Datenverarbeitung. SAP software suite that is being implemented as part of re-engineering and Provides end-to-end solutions for financial, logistics, distribution, and inventories. Present scenario large number of companies are using sap software for their day-to-day business activities.

After the hugely successful R/3, SAP created more and more niche software like
  • Customer Relationship Management (CRM), SRM, XI (now called Process Integration or PI) and once again living up to the standards of SAP by maintaining tight integration with their core ECC software. The newest version of the suite is SAP ECC 6.0.

Products of SAP
  • SAP R/3 and R/3 Enterprise
  • mySAP Business Suite
  • SAP Industry Solutions
  • SAP xApps
  • SAP Solution Manager

SAP is based on server design and uses a relational database to track all information related to a company. It is made up of small programs called transactions.
Related transactions together into groups and call them modules. Thus a module is a set of transactions that deal with the same area of business functionality.
SAP ECC 5.0 computerizes the functions in the following departments:
  • Inventory
  • Procurement
  • Production Planning
  • Quality Management
  • Sales Order Management

SAP ECC 5.0 consists of a set of commercial software programs (called modules) that are licensed from SAP ECC 5.0. The table below identifies the standard SAP ECC 5.0 modules that have been installed for Medley’s facilities.

Module Name

General Function

QS Impact(s)


Material Management



Quality Management



Production Planning and Control



Sales & Distribution



Human Resource



Finance Management


What is ERP?
ERP stands for Enterprise Resource Planning, it is a business software system that support a business or enterprise throughout the project in organizing, planning, maintaining, tracking and utilization of resources (Man, Machine, Material and Money) effectively.

PEOPLE ALSO READ: SOP for Data Integrity

  • If you are new to ERP, the first question which arises in your mind is What is an ERP (Enterprise Resource Planning), ERP System, ERP software and why it is so important for business success.
  • ERP is gateway to integrating the data and processes of an organization into single system with all modules that support the core business areas. Its recommended to read about SAP modules list.
  • Enterprise Resource Planning systems cover all basic functions of an organization
  • Enterprise Resource Planning is developing into a Multi-Module Application Software Package that enables business processes across the supply chain management.
  • ERP Software allows to integrate all the operational units such as financing, human resources, manufacturing, sales, marketing, finance & accounting, procurement, inventory management and so on.
  • ERP software system allows the business to achieve real time business process, increase productivity, improve delivery, reduce cost and increase profits, increase product quality, and improve information and performance management.

If u get a query about what is ERP, simply we can explain ERP is a business suite with the number of applications that are integrated together and assist an organization in collecting, managing and reporting information throughout the business process.

Why do we Need ERP Software?
  • ERP is an integrated system of different business process for e.g. if a company has different departments like sales department, production department, material management, finance department,etc, so in ERP we have an integration of all the departments and they all use common database.
  • We can have standardization of systems across locations. For e.g. for MNC companies can have different plants in different locations with standard systems.
  • ERP systems help to have better control over the different process.
  • As ERP is an integrated system, it helps to provide better reporting.

Advantages of Implementation of an ERP system
  • Reduced redundancy in entering data
  • ERP system provides real-time information of all needs of the organization in a single system.
  • It allows everyone to access the same source and share the same source of information.
  • It allows to access, and update instantly and saves a lot of time.
  • Integration among different functional areas to ensure proper communication, productivity and efficiency.
  • The Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level.
  • Allow standardization of business processes and enterprise information.
  • It is a single source of systems that can be used throughout the organization.
  • ERP software enables real-time information availability, and reduction in inventory and cycle times.

Disadvantages of ERP Systems
  • Takes a lot of effort and time and requires a lot of training.
  • Customization of the ERP software is limited, you may not be allowed to design applications as per business requirements.
  • ERP systems can be very expensive to install.
  • ERP Systems centralize the data in one place and this can increase the risk of loss of sensitive information in the event of a security violation.
  • The usage of ERP systems can be difficult for users, so appropriate training is to required to use the ERP software.

What is ERP in Manufacturing?
A manufacturing company could use an ERP system to track and manage virtually every operation in the organization. Requests for Proposals (RFP) and corresponding quotes can be entered and assigned to any large database of customers. Quotes can be changed to Sales orders upon receipt of purchase orders, with line items and corresponding prices that represent goods to be delivered to a customer.

What is ERP SAP Software?
SAP is an Enterprise Resource Planning software that supports all the company's business processes. It integrates with all SAP modules and provides accurate business solutions of financial, sales, manufacturing etc.

Common ERP Software Modules
  1. Sales Order (SO)
  2. Purchase Order (PO)
  3. Finance and Accounting
  4. Manufacturing Resource Planning
  5. Customer relationship management (CRM)
  6. Human Resources
  7. Procurement
  8. Marketing

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