SAP and Enterprise Resource Planning

In the last two months I attended a couple international human-computer interaction and engineering design conferences in California and while travelling through this state’s many airports (Los Angeles, San Diego and San Francisco), I noticed quite a few posters advertising SAP, the largest software enterprise in Europe and the fourth largest software enterprise in the world (at least according to Wikipedia).

Quite impressed with the success of SAP and perplexed with the apparent complexity of the company’s best known product – SAP Enterprise Resource Planning (SAP ERP), I decided to investigate this company’s cutting-edge software.

So, SAP (Systems, Applications and Products in Data Processing) was founded 37 years ago in Germany by 5 former IBM engineers with a view of offering software applications and services that enable companies from many different sectors to better manage their data processing activities. When SAP first started it focused on improving management processes of large companies with SAP Business Suite, however, it is now also actively targeting small and medium sized enterprises (SMEs) with SAP Business ByDesign and SAP Business One. SAP’s Business Suite contains 5 enterprise applications including: (1) customer relationship management (CRM), (2) product lifecycle management (PLM), (3) supply chain management (SCM), (4) supplier relationship management (SRM) and the most famous of all (5) enterprise resource planning (ERP).

ERP is a computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores. An ERP system typically has modular hardware and software units that communicate on a local area network. The modular design allows a business to add or reconfigure modules (such as manufacturing, supply chain management, financials, project management, human resources, customer relationship management, etc.) while preserving data integrity in one shared database that may be centralised or distributed. The software provides both internal employees and external resources such as suppliers and customers with real-time access to the data stored within the system.The current version of SAP Enterprise Resource Planning (ERP) is 6.0 with the previous version being SAP R/3.

There are clearly many advantages (integration of different functional areas, improved communication, reduced risk of loss of sensitive data, top-down view of the enterprise, etc.) and also some disadvantages (limited customisation, high cost, too rigid and too difficult adaptation to the specific workflow and business process, etc.) of using SAP ERP, however, the success of the product is unquestionable as there are over 100,600 SAP installations serving more than 41,200 companies in more than 25 industries in more than 120 countries (see SAP website).