What is SAP ERP?

What’s SAP?

SAP AG is a German software company which is known as the market leader in Enterprise Resources Planning (ERP) software products. Its global market share in ERP software products was estimated as 27.5 percent in 2007, far surpassing the second-ranked competitor (Oracle) at 13.9 percent. Approximately, SAP has 75,000 customers which are various companies that spread in 120 countries.

It’s the largest software company in Europe and the third largest software company in the world after Microsoft and Oracle. Microsoft and Oracle have various software products other than ERP application that SAP don’t.

SAP History

SAP was founded in 1972 in Mannheim, Baden-W’rttemberg by five former IBM engineers: Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther. Originally, SAP means Systemanalyse und Programmentwicklung (in english: Systems analysis and program development). Then they changed the acronym to Systeme, Anwendungen und Produkte in der Datenverarbeitung (in english: Systems, Applications and Products in Data Processing).

In 1976, the company became a GmbH (Gesellschaft mit beschr’nkter Haftung) company (in USA known as limited liability company, LLC). In 1977, its headquarter was moved to Walldorf. In August 1988, it became an AG (Aktiengesellschaft) company (in USA known as public company).

The first SAP software was known as R/1. It was launched in 1972. ‘R’ means ‘Real-time Data Processing’. R/1 was a financial accounting system. In 1979, it was replaced by R/2. SAP R/2 was a mainframe based business application software suite. On July 6, 1992, SAP launched R/3. It was a client-server version software that was manageable on multiple platforms and operating systems, such as Microsoft Windows or UNIX.

‘3’ in R/3 means ‘3-tiered’ as it is a client/server based application. It utilizes a 3-tiered model:

  • Presentation layer, or client, which interfaces with the user.
  • Application layer which houses all the business-specific logic.
  • Database layer which records and stores all the information about the system, including transactional and configuration data.

SAP R/3 is has some functional modules that can be applied in almost all departments in a company. The most widely used modules are Financials and Controlling (FICO), Human Resources (HR), Materials Management (MM), Sales & Distribution (SD), Production Planning (PP), Plant Maintenance (PM), etc. The overview of each module will be explained in the next article. Each module is used for specific business processes in a company and can be linked if applicable as they are stored in the same database.

SAP book on Amazon:
Using SAP: A Guide for Beginners and End Users

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