ERP and SAP ERP: A Beginner’s Guide

What It Is, How It Works, and Why SAP Leads the Market

Are you new to ERP systems? In this beginner's guide, we’ll explore what ERP is, how SAP ERP stands out, and why businesses worldwide rely on it to streamline their operations. Learn the basics of SAP’s powerful features and how it can transform your company’s efficiency and productivity.

1) SAP Introduction:
    1- What’s ERP.
    2- SAP Start.
    3- Terminology.
    4- History.
    5- Evolution.
    6- Products.
    7- HANA.
    8- Modules.

2) SAP Architecture:
    1- System Architecture:
        à Presentation Layer.
        à Application Layer.

        à Database Layer.

    2- System Landscape:
        à Development System.
        à Quality System.
        à Production System.

3) SAP Data Types (Function):
    1- SAP Organizational Data.
    2- SAP Configuration Data.
    3- SAP Master Data.
    4- SAP Transactions Data.
    5- SAP Reporting Data.

1) SAP Introduction:

    1- What’s ERP:

Enterprise Resource Planning (ERP) is a type of software that helps businesses manage and integrate their core processes in a centralized system.

It allows different departments—such as finance, supply chain, human resources, and sales—to share information seamlessly, improving efficiency and decision-making.

 

    2- SAP Start:

When Xerox exited the computer hardware manufacturing industry in 1971,
it asked IBM to migrate its business systems to IBM technology, as part of IBM's compensation for the migration, IBM was given the rights to the Scientific Data Systems (SDS)/SAPE software, reportedly for a contract credit of $80,000.
Five IBM engineers from the AI department
- Dietmar Hopp
- Klaus Tschira
- Hans-Werner Hector
- Hasso Plattner
- Claus Wellenreuther
All from Mannheim, Baden-Württemberg were working in an enterprise-wide system based on this software, only to be told that it would no longer be necessary.
Rather than abandoning the project, they decided to leave IBM Tech and start another company.
In June 1972, they founded the SAP Systemanalyse und Programmentwicklung
("System Analysis and Program Development" / "SAPD") company as a private partnership under the German Civil Code.
Their first client was the German branch of Imperial Chemical Industries in Östringen,
where they developed mainframe programs for payroll and accounting.
Instead of storing the data on punch cards mechanically, as IBM did, they stored it locally
in the electronic system while using common logical database for all activities of organization.
Therefore, they called their software a real-time system, since there was no need to process
the punch cards overnight (for this reason their flagship product carried an R in its name
until the late 1990s).
This first version was also a standalone software that could be offered to other interested parties.

 

    3- Terminology:

ERP	Enterprise Resource Planning
SAP	1972 à System Analysis and Program Development (SAPD) 1976 à Systems, Applications, and Products in Data Processing (SAP GmbH) 1988 à (SAP GmbH) To (SAP AG)
ECC	ERP Central Component
EHP	Enhancement Package for SAP
IDES	Internet Demonstration and Evaluation System - It’s an Empty System Used to Install (Development - Quality - Production) Systems And the users use it for (Training - Testing).
R1	Real Time or Release 1
S/4HANA	Simplify For HANA
KPI	Key Performance Indicators
OTC	Order to Cash
PTP	Procure to Payment
WBS	Work Breakdown structure
MRP	Material Requirement Planning

    4- History:

The Company History:

 

In 1972

SAPD à System Analyse und Programmentwicklung
("System Analysis and Program Development" / "SAPD") company is founded.

 

In 1973

The first financial accounting software is completed, what came to be known as the R/1 system.

New customers from the local region implement SAP software using IBM computer and DOS system.

 

In 1976

SAP GmbH à Systeme, Anwendungen und Produkte in der Datenverarbeitung
("Systems, Applications, and Products in Data Processing") company is founded.

 

In 1977

For the first time, SAP installs its system at customer sites outside Germany.

Two Austrian companies decide to implement SAP software.

 

In 1979

SAP/R2 is brought into the world.

 

In 1981

The private corporation established in 1972 (Systems Analysis and Program Development) dissolved, and its rights are transferred to SAP GmbH, giving the company its current name (Systems, Applications, and Products in Data Processing).

 

In 1987

The standardization of software production becomes an incentive for SAP to start developing a new generation of software: SAP R/3.

 

In 1988

SAP GmbH becomes SAP AG.

 

In 1992

SAP presents its R/3 system for the first time, the product meets with overwhelming approval due to its client/server concept, uniform appearance of graphical interfaces, consistent use of relational databases, and the ability to run on computers from different provider.

 

In 1999

SAP announces the mySAP.com strategy, mySAP.com connects e-commerce solutions with existing ERP applications using up-to-date Web technology.

 

In 2003

SAP announces the solution concept behind mySAPBusiness Suite.

SAP introduces a new ERP solution: mySAPERP.

With SAP Labs China in Shanghai, India, Japan, Israel, France, Bulgaria, Canada, and the United States.

 

In 2004

Enterprise services architecture delivers the first version of SAP NetWeaver.

 

In 2012

Since 2012, SAP has acquired several companies that sell cloud-based products.

 

In 2015

The company launched SAP S/4HANA.

    5- Evolution:

SAP Version	Year	Architecture
SAP R/1 System RF	1972	Financial Accounting system. Runs on IBM Servers and the DOS operating system.
SAP R/2 Mainframe System	1979	Mainframe based real time data processing across accounting, manufacturing processes, supply chain logistics and human resources.
SAP R/3 Enterprise Edition 1.0 A	Jul-1992	Three tire architecture ERP Solutions, enabling SAP to be used by enterprises.
SAP R/3 Enterprise Edition 2.0	1993
SAP R/3 Enterprise Edition 3.0	1995
SAP R/3 Enterprise Edition 4.0B	Jun-1998
SAP R/3 Enterprise Edition 4.3
SAP R/3 Enterprise Edition 4.5B	Mar-1999	Client Server / mySAP.
SAP R/3 Enterprise Edition 4.6C	April-2001
SAP R/3 Enterprise Edition 4.6F
SAP R/3 Enterprise Edition 4.7	2003
SAP ERP Central Component (ECC) 5.0	2004	SAP ERP constitutes the foundation of SAP's industry solutions and a spring board to enterprise SOA. It includes SAP ECC (successor of SAP R/3) and EhP.
SAP ERP Central Component (ECC) 6.0	Oct-2005
SAP Enhancement Package 1 for SAP ERP 6.0 Business All-in-One	Dec-2006	SAP started focusing on Mid-Sized enterprises and developed this product on the same code base of SAP R/3 on SAP Netweaver platform.
SAP Enhancement Package 2 for SAP ERP 6.0	Jul-2007	It is designed to help businesses optimize their performance and reduce IT costs. It compresses SRM, CRM, SCM, PLM and ERP on one platform.
SAP Enhancement Package 5 for SAP ERP 6.0 Business Suite 7	Jun-2010
SAP Enhancement Package 6 for SAP ERP 6.0	Jun-2012
SAP Enhancement Package 7  for SAP ERP 6.0	2013
SAP S/4 Simple Suite for HANA	Feb-2015	Imagined platform that combines data processing, database and in-memory processing, provides libraries for planning, text processing, predictive, spatial and business analytics.

Note:

1-  SAP ECC (ERP Central Component) is the core of existing SAP Business Suite.

2-  SAP Business Suite has SAP ECC + SAP CRM + SAP SRM + SAP SCM + SAP PLM.

3-  SAP ECC is not to be confused with SAP Business Suite.

4-  SAP ECC is part of the SAP Business Suite.

5-  SAP Business Suite can run on any DB (Oracle, MSSQL, IBM DB2) including HANA.

6-  SAP HANA is an RDBMS like Oracle, MSSQL, and DB2 etc.

7-  S/4 HANA stands for SAP Business Suite 4 SAP HANA.
à The backend application layer runs on only HANA DB.
à The front end will be developed with SAPUI5 (Fiori).
à In the 3 Tier Architecture of SAP System.
à HANA is the database layer, S/4 HANA is the application layer, Fiori is the presentation layer.
à S/4 HANA is called the SAP Next Gen Business Suite,
à Concept of SAP ECC is not here.
à Instead modules like Finance + Logistics + CRM + SRM + SCM + PLM.
à It is an ongoing project and different modules will be optimized to run exclusively on HANA.

    6- Products:

    7- HANA:

HANA it’s a Fast Database Based in:

1)  In Memory computing à The process working in RAM.

2)  Column based storing à Storage every column in separated file.

3)  Parallel processing à Split code and execute it parallel in the cores of CPU.

    8- Modules:

1- FI à   Financial.
2- CO à Controlling / Costing.
3- MM à Material Management.
4- SD à Sales and Distribution.
5- PP à Production Planning.
6- PM à plant maintenance.
7- PS à Project System.
8- QM à Quality Management.
9- CS à Customer Serves.
10- DBM à  Dealer business Management.
11- VMS à Vehicle Management System.
12- CX (Hybris) à (Marketing Cloud - Sales Cloud - Service Cloud).
13- Success Factors à Human Resources (HCM).

2) SAP Architecture:

    1- System Architecture:

        1. Presentation Layer:

- The presentation layer consists of the user interface, which runs on a client machine that uses a standard graphical user interface (GUI). The user interface can be a web browser or propriety software like SAP GUI. Because the presentation layer can be developed independently depending on the requirements and system configuration, it can support various devices (PCs, smartphones, etc.) and operating system environments.

 

- The GUI communicates with the application layer by taking user inputs, sending requests to the application server, and displaying the results received from the application server. For example, when you open a website in your web browser, you are requesting a resource from the web server. The web server responds to your request, and the browser presents the result in a user-friendly way.

 

- There are two options for the presentation layer: (SAP GUI - web browser).

        2. Application Layer:

- The application layer is where all the major work is done by ABAP programs.
- This is the software layer that hosts various modules of business functions and executes program code.
- It can consist of one or multiple application servers and a messaging server, which is responsible
for communication within the layer.
- When you run an application, the execution takes place in the application layer.
- The application layer can communicate with the database to process the data requested by the user.
- The application layer includes one or more application servers and a message server.
- The message server is responsible for communication between the application servers.

- The application server interprets ABAP programs by providing the runtime environment to execute ABAP code.

- Internet Communication Manager (ICM):

- The ICM enables the application server to communicate with the outside world using web protocols
like HTTP, HTTPS, or SMTP.

- The ICM web-enables the application server, this allows users to use a web browser to make requests
to the application server, as opposed to using SAP’s proprietary GUI.

- ICM runs as a separate process, started and monitored by the ABAP Dispatcher.

- With ICM, the application server can process requests from the Internet, such as Web Dynpro-based applications.

 

- ABAP Dispatcher:

- Each application server has a dispatcher.

- The role of the dispatcher is to assign requests to work processes.

- A user makes a request, the request is sent to the dispatcher, and the dispatcher assigns the request to a freely available work process, Once the request is assigned to the work process, the work process executes the request and sends back the result, The work process then becomes free, ready to take up another request.

- When a user logs in to an SAP system, the logon request goes to the message server, which performs
load balancing and connects the user to the dispatcher of an instance with the least.

- Work Processes (WP):

- User requests are processed through work processes.

- There may exists multiple work processes per application server instance.

- When a user makes a request, the request is sent to the ABAP Dispatcher, the ABAP Dispatcher, in turn, assigns the request to the available work process for processing, Once the work process completes the request, it sends back the result, and the work process becomes free again to take a new request.

        3. Database Layer:

- The database layer is where all the persistent data is stored.

- The database is typically managed by a relational database management system (RDBMS).

- The RDBMS provides a declarative method to maintain data and queries, and the system takes care of describing the structures for storing the data.

- SAP supports various database systems, like SAP HANA, Oracle, MSSQL, M0axDB, and IBM DB/2.

 

    2- System Landscape:

- When implementing an SAP system, organizations typically implement at least three separate systems:
one for development, one for quality assurance/testing, and one for a production environment.

- Each of these SAP systems have three layers, the presentation layer, application layer, and database layer.

3) SAP Data Types (Function):

Every ERP is Based on Data and some of this data define by the consultants & ABAP
and the others define by the end user like:

    1- SAP Organizational Data:

It’s the consultant’s responsibility.

Used to define the structure of the company in the system.

    2- SAP Configuration Data:

It’s the consultant’s responsibility.

Used to define the system setups that help the end user to create master data and transactions in order to meet the business needs.

    3- SAP Master Data:

It’s the end user’s responsibility.

Used to define the master data that needed to create the daily transactions like (Customers - Materials - Pricing - etc.)

    4- SAP Transactions Data:

There are many types of transaction data

Manual à It’s the end user’s responsibility.

Automatic à It’s the consultant responsibility.

Integration (Internal/ External) à It’s the consultant responsibility.

Used to define the daily transactions on the system like (Sales - Purchasing - etc.)

    5- SAP Reporting Data:

It’s the Consultant & ABAP responsibility.

Used to define the reports to show the result of transactions on the system.