First of all, what does SAP means? Systems Applications and Products is the full form of SAP, it is used in the field of data processing.
If it is looked at by its definition then, it is also a name for ERP (Enterprise Resource Planning) software and also the name of the company. This was launched in the year 1972 by Hopp, Hector, Wellenreuther, Plattner, and Tschira.
In the ERP market, SAP is considered number one. SAP has been installed more than 140,000 times worldwide over 25 industry-specific business solutions and more than 75,000 customers in almost 120 countries, and these are the records till the year 2010.
There are some products in the market that are competitors of SAP Software. Those products are Oracle, Microsoft Dynamics, etc.
Why is SAP required?
Before looking at why is SAP required and how it can help in business processes, below there is a step by step guide that will make the businesses understand how different departments are involved in the overall business process.
The process followed by business units:
- The sales team is contacted by the clients to check product availability.
- The inventory department is approached by the sales team to check product availability.
- The sales team approaches the production department in the case when the product goes out of stock, this is done to get the product manufactured.
- For the availability of raw materials of the product the production planning team checks with the inventory department.
- The production planning team buys the raw material from the vendors in case the raw material is not available with the inventory department.
- For the purpose of actual production, the raw material is forwarded to the shop floor execution by the production planning department.
- The goods are sent to the sales team by the shop floor team once they are ready.
- The goods are delivered to the clients by the sales team.
- Updates about the revenue generated by the products sale are provided to the finance team by the sales team. Updates about the payments that are needed to be done to different various vendors for raw materials are provided to the finance team by the production planning team.
- For any kind of issue that is related to human resource, all the departments approach the HR.
Every business that is running all over the world needs some kind of technology. Technology has now become the backbone of all phases of business operations. Enterprises use many software programs and some cloud computing services for apps to handle different procedures. Are they interconnected and can seamlessly work together? Maybe not. There are many businesses that are struggling to create a unified ecosystem that meets all their current needs. If surveys are to be believed, an average enterprise uses:
- Approx 90 services from cloud for HCM Functions.
- Approx 60 tools for the purpose of finance and accounting.
- 43 CRM/sales tools.
- 41 software development services
The numbers depicted above may seem staggering but if it is looked at from a different perspective then all the departments in an enterprise have their own software solutions and operate independently from each other. And even within the departments, there may be separate software for specific functions, a software that might not be integrated with other rest of the software setup in the enterprise. Big data solutions and cloud computing services are also vital parts of the SAP implementation process. By including them with the modules, the businesses will get many additional benefits.
SAP software solutions are not what the enterprise knows about them they are much more.
Cloud software solution companies like Microsoft Azure are also providing SAP custom development solutions to enterprises.
Understanding why a business would want to implement SAP through an Example
We will now look at an example to understand why businesses around the world would want to implement SAP with the help of an example.
Let us consider one big challenge that is faced by a product business.
There are multiple functions in the area of the logistics, material management, sales and distribution, management of the warehouse, customer service, and management of the fleet are few examples of the functions in the area of logistics.
There are different and separate technologies used for operation in each of these departments. The main question that arises when there are different technologies used for all the departments is that how do these departments communicate with each other, and without communication, it is difficult to integrate and analyze, and with all that there will be a problem in making sound business decisions that are based on the analyzed and integrated data.
So this problem can be solved by using SAP software. An SAP software can integrate all the functions that provide data by giving the stakeholders access to that data. Once all the functions have integrated the process of making a decision (a sound business decision) will become easy and will result in:
- For the full support of business applications, single integrated platforms are implemented and TCO reduction is done.
- Sales are reduced (revenue is increased) because of fewer stock usage.
- There is a lot of savings on the cost and delays are also reduced because of more efficient and reliable purchasing of the materials.
- There are very few delays in the process of delivery and that improves the level of customer satisfaction.
- The freight and distribution costs are reduced.
A business may be in some other niche than manufacturing but for any business around the world, there is an SAP model for their business operation that will help them improve flexibility and full integration of all the operations and offering both efficient and cost-saving solution at each and every stage of the lifecycle of a product.
The SAP software is beautiful as only those modules can be secured that are needed by a business and those modules can also be implemented - providing customized solutions to them.
Solutions offered by SAP
All the major modules that are included in a full SAP system are shown in the below list, along with the logistics module above. Each module will be addressing challenges that are faced by the specific business operations, alongside them there are add-on solutions for customization:
- Enterprise Resource Planning
- For Sales and Marketing, CRM
- Sales and Distribution
- Financial Management
- Human Resources
- Asset Management
- Management of Product lifecycle
- Management of the supply chain
For almost all the niches, industry-specific solutions are provided by SAP, those niches are manufacturing, pharmaceuticals, healthcare, insurance, finance, etc. This with the ability to purchase only the modules that can “fit” can be clearly termed as two of the biggest advantages of using SAP for a business of any type and size.
Who uses SAP Solutions?
There are almost 2,00,000 businesses around the world that take the help of some or a full set of the SAP modules and that is done in more than 150 countries. There is a belief that has become common nowadays that only big enterprises need SAP software but about 80% of small-to-medium-sized enterprises are on board too and are using SAP software.
The bottom line of a company determines the success of the SAP software that is used by them. And the bottom line is the result of great efficiency, more streamlined operations and taking better decisions for the business.
Read the blog- Why Is SAP Better Than Other ERP Solutions?
A continuous yearly growth rate of 25% is enough for proof for a mid-sized company such as Schoolhouse Electric and supply, producer and retailer of lighting and other home goods.
According to the VP of operations and finance of an esteemed enterprise, “Without SAP the businesses simply wouldn’t have any competitive lead ties and because of that, they wouldn’t be able to fill orders as fast as they do by using SAP. SAP does much more than enabling growth for an enterprise. It makes the models of businesses that are small-medium sized possible, to exist in the global market.”
There is a large enterprise named Siemens and it provides technical solutions to a variety of industries such as construction, energy, healthcare, etc. The challenge faced by them were to consolidate and simplify processes that are complex and disjoint. Their executives wanted to speed up the processes and access to the information that would inform their decision-making.
They turned to an SAP solutions company and recently migrated to the SAP HANA platform, for additional benefits it can also be paired up with seamlessly with Microsoft Azure. The enterprises can now enjoy so much increased productivity through rapid processes and real-time data insights, this has also lowered the cost of the enterprises for both hardware and data-processing centers, and business integrations and continuity have been improved very much, all this is enabled in the enterprises by SAP.
If the enterprises are looked at the perspective of improved operations then a 24% reduction in the size of the database has been observed in Siemens and a 60% increase in productivity is observed. And, as much as 90 times faster performance has been reported. If someone wants to understand why do companies need and use SAP then these reported statistics should provide all the answers.
Implementation of SAP: Key to Success or Failure
Implementation of SAP for any enterprise cannot occur overnight, once the decision is made to incorporate any SAP software solution. The enterprises might face big failure in they try to implement and deploy the SAP solutions too quickly and without expertise.
Let’s consider two enterprises that are implementing SAP solutions, ent A and ent B. Both Ent A and Ent B have identified SAP software as their solution for various issues with operations and other areas, mainly warehouse and inventory issues, logistics, especially distribution to retailers and normally slow business processes.
Ent A launched one project for the integration of SAP ERP over a period of five years, this will result in a new warehouse management system and will help improve the structure to its distribution centers.
While the recommendation for Ent B was an implementation over 5 years, the enterprise insisted upon 2.5 years resulted in reducing the implementation time by half. To make this happen, they had to sacrifice system testing and cutover other activities. The cutover was planned during the enterprise busiest season - a big mistake. As a result of it, the distribution suffered, and ent B’s reputation declined, and as a result, it saw a drop in its stock value.
The process of implementation of the SAP is really important and critical any mistake made during it will result in huge losses for the enterprise. The SAP Development Company should let the experts do the job of implementation of SAP and they should not interfere in the time or other important constraints in the process of implementation. If the SAP is implemented accurately how it should be, then it will give the enterprises many benefits and will improve the process of production and also improve the operations. But if the implementation process is altered then the results like a drop in the stock value can be observed.
Phases of Implementation
The solution’s capabilities are investigated by active encouragement at this stage, this means the business values are established and also the business that can be generated to the business through it is determined. Common grounds are to be established and development of an adoption plan and roadmap is done by both, the C-level executives and managers, along with those responsible for implementation.
SAP allows the businesses to take advantage of SAP 5/4HANA free trail to explore the solution’s capabilities and also provides many excellent tools for making decisions, tools such as SAP 5/4HANA Journeymap, SAP 5/4 HANA Community Network.
The execution of the initial phase is done in this stage and the preparations of the implementation process are done. The businesses should allocate time for finalizing plans, assessment of responsibility to the teams and provisioning the starter system.
The businesses need to encourage their teams to go through a few iterations to fine-tune the plans of the project and to make sure that they are aligned with respective activities of the project that include:
- Project goal’s confirmation
- High-level scope
- Clearly defining project roles and responsibilities
- Strong governance of the whole process to steer the lifecycle of the project.
Planning in an effective manner is the backbone of implementation, it is the only way to get success in this phase. The businesses should make sure that their plans for the projects account for the possible risks that may affect the implementation of SAP software solutions.
A starter system should be requested at this stage for SAP 5/4 HANA cloud customers and a user-id should be created for all the members of the team. The businesses also need to make sure that all the employees complete the onboarding process.
- Explore: Fit-to-standard analysis should be performed at this stage to validate the solution functionality listed in the project scope and to confirm that all the requirements of the businesses are met.
- Realize: After the Explore stage, it is time to deploy a series of Agile spirits to configure, build and test the newly integrated environment for business and the systems. This should be done once all the scenarios and process requirements are identified.
- Deploy: In this stage, the teams assume the setup of the system of the production and confirmation of the enterprise’s readiness to take the business operations to a new environment. The in-charge of crossing out all the tasks within the list and offering risk and issue management is still the project manager. The learning of the end-user and onboarding preparation are the key deliverables of this stage. A clearly defined learning plan must be there. There should be a cutover plan that is in the place as well, it will be outlining the key tasks to be performed like the go/no-go decision point and migration/creation of data, and setup of the non-transportable object.
- Run: At the end of the implementation process, it is time to continue with the adoption and the implementation of the new solution throughout the enterprise. The businesses should start adding new users and encourage them to execute business transactions and activate the functionality of the software if it is needed. Regression testing should be run in the background by the development team for quarterly upgrades to ensure the latest version of the system.
All the SAP development companies try their best to provide enterprises with the best solutions. But the proper implementation of SAP does not only depend on the SAP development companies but also on the enterprises that want to avail the SAP.
SAP is integrated with big data cloud solutions, cloud software solutions, and cloud computing services to facilitate the smooth functioning of all the business operations of an enterprise. The enterprises can also go for SAP custom development to get specially made SAP software solutions for them. The main reason behind the failure or success of the implementation of SAP is planning and executing it accordingly. If there is any change in the plan that is formulated by the companies.