Enterprise Resource Process: Erp and Sap Future

SAP Background

SAP is in the enterprise resource process analysis market. Enterprise resource process analysis is “an integrated information system that serves all departments within an enterprise. ERP evolved out of the manufacturing industry. It implies the use of packaged software rather than proprietary software written by or for one customer. 1 Systems Applications and Products (SAP) is well-respected and considered the industry leader in ERP.

SAP was developed in 1972 by five engineers in Mannheim, Germany. They had a distinct vision to develop standard application software for real-time business processing. The company started with developing a financial accounting system called the “R/1 system”. After about a decade, SAP came out with their second release SAP R/2 after in-depth examination of their IBM database.

The next major stage the company takes is the release of their third version of their enterprise software. The release of SAP R/3 brought several new capabilities to the marketplace. They updated the client/server concept, created a uniform GUI interface, used relational databases more consistently, and gave their system the ability to run on computers from different vendors. With their R/3 version, SAP capitalized on the client/server architecture that is still widely considered the standard in business software. Another milestone SAP accomplished in the 90’s is establishing 50% of sales outside of Germany. By 1996, SAP R/3 has established a client base of 1,089 customers and installed more than 9,000 systems worldwide. In 1997, they celebrated their 25th anniversary and were employing almost 13,000 employees located all over the world. The business model kept growing, strengthening their industry focus and developing more industry-specific solutions.

In the new millennium, SAP experienced great growth due to the development of the Internet and Ecommerce. Recently, more than 12 million users work each day with different SAP system offerings. 121,000 applications have been installed and implemented worldwide. SAP has developed over 1,500 partnerships, created more than 25 industry-specific business solutions, and has a client base of more than 41,000 in 120 countries. As of late, they are the third largest independent software vendor in the world.2

Current Products

SAP established early on that platform strategy and partnerships were vital to its business. The ecosystem that they have created drives the incorporation of enterprise service-oriented architecture. They stress co-innovation between the company, clients and partners and attempt to bring forth value for all parties involved. SAP focuses itself on collaboration. They achieve high levels of collaboration with leveraging their industry knowledge and with the help of their partners and the SAP NetWeaver platform. Through the years they have been able to take revolutionary ideas and turn them in to innovative solutions for customers.

This partnership network is made available by the SAP NetWeaver platform. SAP NetWeaver is the latest advancement in the MySAP Technology. NetWeaver is updated by a community that comprises of over 2,000 independent software vendors. This network continues to grow. The developers within these vendors build software for the NetWeaver platform. Net Weaver in simple words is an application and Integration platform in which Web Services play a major role and which is open for Non-SAP applications and platform. It is used by organizations to improve productivity and enhance efficiency by making all the resources that are available in an enterprise to work collectively. In addition, it enables customers to use the already existing systems without putting in much investment.3

NetWeaver Advantages

One of the key features of NetWeaver is flexibility. Enhanced flexibility actually refers to the flexibility of SAP NetWeaver focused on the existing business system in any company. It provides a diverse environment, bringing together the various applications and databases, making accessible open technologies readily available to the user. It saves money on unnecessary customization of the existing system. Another advantage of this software is the ability to lower the total cost of ownership (TOC). NetWeaver, instead of replacing the existing system, combines the different entities like databases, legacy systems, Internet based data and provides a diverse environment for the client to get the greatest value and benefit from the new combined system. It also prevents pointless customization of the whole system. It also reduces obscurity and makes the system more adaptable to the ever changing business processes. All of these features lead to reduce the total cost of ownership. NetWeaver also provides a better return on investment than other options.

With the use of this technology, IT strategies can be synchronized with SAP solutions. This synchronization makes the system more reliable leading to better assessment services, which in turn lead to financial benefits.

Current Successes

There have been many successes for the ERP leader SAP. One example of a successful implementation lies with the Dow Corning company. Dow Corning recently has felt it was losing its cost competitive advantage in the silicon industry. They decided to pursue and implement SAP’s mySAP ERP Human Capital Management system globally. With the implementation of this system what was once a disorganized and decentralized organization is now a fully integrated organization. SAP was presented with many challenges with providing a working solution for Dow Corning. SAP had to deal with a decentralized environment which had an insufficient technological structure. This structure put great strain on costs. Another problem was that the Dow employees laced coordination and insight. They didn’t have a general understanding of company best practices and processes relating to human resources. Another challenge they were faced with was pleasing executives with creating better visibility into existing resources and assets so they could make more informed decisions. Finally, SAP found that Dow wasn’t capable of fully leveraging global assets.

After the development and implementation of SAP’s system, Dow Corning was extremely happy with the results. They reported that they were able to achieve an astonishing 163% return on investment. It only took the company 3.8 years to earn back what they paid for the investment. A 10 year savings of $53.7 million was projected. MySAP was able to eliminate the organizational and technological redundancies. They were able to streamline the