SAP R/3

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SAP R/3 is the former name of the main ERP software produced by SAP. Its new name is mySAP ERP.

1 History of SAP R/3
2 Reasons for success
3 Organization
4 Technology
5 See also
6 External links

History of SAP R/3

SAP R/2 was a mainframe based business application software suite that was very successful in the 1980s and early 1990s. It was particularly popular with large multinational European companies who required soft-real-time business applications, with multi-currency and multi-language capabilities built in. With the advent of distributed client-server computing SAP AG brought out a client-server version of the software called SAP R/3 that was manageable on multiple platforms and operating systems, such as Linux since 1999, which opened up SAP to a whole new customer base. SAP R/3 was officially launched on 6 July 1992. SAP came to dominate the large business applications market over the next 10 years.

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Reasons for success

From the late 1960s to the 1980s there was a concern that software development was too complex, and liable to go wrong. One of the solutions to this proposed by many people including Fred Brooks was the development of a modular approach in order to maximize software reuse and encapsulate common business processes within internal transactions. SAP introduced the object-oriented concept of "business objects"; for example, a customer in the system is actually an instantiation of a customer business object, and interacts with other objects in the system in a pre-defined, customizable way. In some ways, SAP can be almost thought of as an operating system for a business.

SAP software comes with customizable processes which a company uses in the modelling of its business. Traditionally, software purchases had provided tools for building applications, but these tools did not provide business processes. SAP provided standardized processes, which were termed best-practice solutions of processes. The implementation of SAP software commonly required the expertise of knowledgeable external consultants, who were familiar with these best-practices.

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Organization

SAP R/3 is arranged into distinct functional modules, covering the typical functions in place in an organization. The most widely used modules are Financials and Controlling (FICO), Human Resources (HR), Materials Management (MM), Sales & Distribution (SD), and Production Planning (PP). Those modules, as well as the additional components of SAP R/3, are detailed in the next section.

Each module handles specific business tasks on its own, but is linked to the others where applicable. For instance, an invoice from the Billing transaction of Sales & Distribution will pass through to accounting, where it will appear in accounts receivable and cost of goods sold.

SAP has typically focused on best practice methodologies for driving its software processes, but has more recently expanded into vertical markets. In these situations, SAP produces specialized modules (referred to as IS or Industry Specific) geared toward a particular market segment, such as utilities or retail.

Using SAP often requires the payment of hefty license fees, as the customers have effectively outsourced various business software development tasks to SAP. By specializing in software development, SAP hopes to provide a better value to corporations than they could if they attempted to develop and maintain their own applications.

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Technology

SAP R/3 is a client/server based application, utilizing a 3-tiered model. A presentation layer, or client, interfaces with the user. The application layer houses all the business-specific logic, and the database layer records and stores all the information about the system, including transactional and configuration data.

SAP R/3 functionality is structured using its own proprietary language called ABAP (Advanced Business Application Programming). ABAP, or ABAP/4 is a fourth generation language (4GL), geared toward the creation of simple, yet powerful programs. R/3 also offers a complete development environment where developers can either modify existing SAP code to modify existing functionality or develop their own functions, whether reports or complete transactional systems within the SAP framework.

ABAP's main interaction with the database system is via open SQL statements. These statements allow a developer to query, update, or delete information from the database. Advanced topics include GUI development and advanced integration with other systems.

The most difficult part of SAP R/3 is its implementation. Simply because SAP R/3 is never used the same way in any two places. For instance, Atlas Copco can have a different implementation of SAP R/3 from Procter & Gamble and so forth. Two primary issues are the root of the complexity and of the differences:

Customization configuration - Within R/3, there are tens of thousands of database tables that may be used to control how the application behaves. For instance, each company will have its own accounting "Chart of Accounts" which reflects how its transactions flow together to represent its activity. That will be specific to a given company. In general, the behavior (and appearance) of virtually every screen and transaction is controlled by configuration tables. This gives the implementor great power to make the application behave differently for different environments. With that power comes considerable complexity.
Extensions, Bolt-Ons - In any company, there will be a need to develop interface programs to communicate with other corporate information systems. This generally involves developing ABAP/4 code, and considerable "systems integration" effort to either determine what data is to be drawn out of R/3 or to interface into R/3 to load data into the system.

Due to the complexity of implementation, these companies recruit highly skilled SAP consultants to do the job. The implementation must consider the company's needs and resources. Some companies implement only a few modules of SAP while others may want numerous modules.

SAP has several layers. The Basis System (BC) includes the ABAP programming language, and is the heart of operations and should not be visible to higher level or managerial users. Other customizing and implementation tools exist also. The heart of the system (from a manager's viewpoint) are the application modules. These modules may not all be implemented in a typical company but they are all related and are listed below:

FI Financial Accounting

designed for automated management and external reporting of general ledger, accounts receivable, accounts payable and other sub-ledger accounts with a user defined chart of accounts. As entries are made relating to sales production and payments journal entries are automatically posted. This connection means that the "books" are designed to reflect the real situation.
The FI module has 8 sub modules:

FI-GL: General Ledger Accounting
FI-LC: Consolidation
FI-AP: Accounts Payable
FI-AR: Accounts Receivable
FI-BL: Bank Accounting
FI-AA: Asset Accounting
FI-SL: Special Purpose Ledger
FI-FM: Funds Management

CO Controlling

represents the company's flow of cost and revenue. It is a management instrument for organizational decisions. It too is automatically updated as events occur.
The CO module has following sub modules:

CO-OM: Overhead Costing (Cost Centers, Activity Based Costing, Internal Order Costing)
CO-PA: Profitability Analysis
CO-PC: Product Cost Controlling

AM Asset Management

designed to manage and supervise individual aspects of fixed assets including purchase and sale of assets, depreciation and investment management.

PS Project System

is designed to support the planning, control and monitoring of long-term, highly complex projects with defined goals.

WF Workflow

links the integrated SAP application modules with cross-application technologies, tools and services.

IS Industry Solutions

combine the SAP application modules and additional industry-specific functionality. Special techniques have been developed for industries such as banking, oil and gas, pharmaceuticals, etc.
As of Feb 2006, following Industry Specific Solutions are supported by SAP:

IS-A Automotive
IS-ADEC: Aerospace & Defense
IS-AFS: Apparel and Footwear
IS-B: Bank
IS-BEV: Beverage
IS-CWM: Catch Weight Mgmnt
IS-DFS: Defense & Security
IS-H: Hospital
IS-HER: Higher Education
IS-HSS: Hospitality Managm.
IS-HT: High Tech
IS-M: Media
IS-MIN: Mining
IS-MP: Mill Products
IS-OIL: Oil
IS-PS: Public Sector
IS-R: Retail
IS-REA: Recycling Admin
IS-SP: Service Provider
IS-T: Telecommunications
IS-U: Utilities

HR Human Resources

is a complete integrated system for supporting the planning and control of personnel activities.

PM Plant Maintenance

In a complex manufacturing process maintenance means more than sweeping the floors. Equipment must be serviced and rebuilt. These tasks affect the production plans.

MM Materials Management

supports the procurement and inventory functions occurring in day-to-day business operations such as purchasing, inventory management, reorder point processing, etc.

QM Quality Management

is a quality control and information system supporting quality planning, inspection, and control for manufacturing and procurement.

PP Production Planning

is used to plan and control the manufacturing activities of a company. This module includes; bills of material, routings, work centers, sales and operations planning, master production scheduling, material requirements planning, shop floor control, production orders, product costing, etc.

SD Sales and Distribution

helps to optimize all the tasks and activities carried out in sales, delivery and billing. Key elements are: pre-sales support, inquiry processing, quotation processing, sales order processing, delivery processing, billing and sales information system.

WM Warehouse Management

Control of stock to a physical level down to a warehouse bin. Placement and removal rules can be configured, stock counts can be done see SAP Business Information Warehouse (see Talk:SAP_R/3).