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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
1 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation
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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
2 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation
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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
6 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation
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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
7 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation
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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
corporations
R/2
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
12 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation
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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
R/3 TR
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 MM PP SD O
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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SAP R/3 : Components
Master Data
Application
Transaction Data
ABAP
Programs
Organization Structure
Configuration Key Data Elements
Functionality Configurations
20 ERP / SAP Overview | 1.01 March-2005 © 2005 IBM Corporation
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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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