SAP Full Form

SAP stands for Systems Applications and Products in Data Processing. SAP is an
ERP software that helps run the day to day operations of an enterprise. SAP
system offers real time visibility across the entire enterprise. SAP is also the name
of the ERP (Enterprise Resource Planning) software as well as the name of the
company. SAP Software is a European multinational, founded in 1972 by
Wellenreuther, Hopp, Hector, Plattner, and Tschira

SAP software suite maps financial, logistics, human resource and many other
business processes. SAP system offers real time visibility across the entire
enterprise. It can be used by every individual in the organization

History and Growth of SAP:

• SAP was founded in 1972 by Wellenreuther, Hector, Hopp, Plattner, and
Tschira.
• Earlier it was called System Analysis and Program Development (German:
Systemanalyse und Programmentwickung) after that it was renamed as
SAP.
• 1972 – when the first version launched. SAP company has 0.3-million-dollar
revenue with just nine employees.
• 1979- R/2 mainframe version launched. The revenue reached 5.1 million
with 60 employees and 50 clients in two countries.
• 1992- R/3 client/server version launched. The revenue figure reached 6,266
million. Employee strength reached around 3200 with around 2800
customers in 35 countries.
• 1999- mySAP.com with one step Business launched. The company revenue
went up to 7341 billions and employee strength reach to 25,000. The
customer base expands to 15,000 customers around in 120+ countries.
What is the Full Form and Meaning of ERP?
What is ERP Full Form?
SAP ERP Central Component (ECC) is the previous generation of SAP's enterprise. The Full
form of ERP is Enterprise Resource Planning. ERP is a business management
software. It is a suite of integrated application that helps users to store and
manage data of their business.

One of the most important activities associated with the implementation of an

ERP system is the opportunity to streamline and improve the business operations
of an organization through business process re-engineering and the by
implementing the best practices and standards.

In this tutorial, we will learn-

• What is the Full Form of ERP?

• Why implement an ERP System?
• What are Primary Goals for the ERP System?
• Steps To Implement On ERP System
• Benefits and Drawbacks of ERP system

Why implement an ERP System?

An ERP is the best option for demonstrating value by providing real-time
information to all employees of a corporation across departments.

1. Integrate Financial Information

Enterprise owners want to understand company's overall performance because in
numerous situation they may find various versions of the truth. Finance and sales
have another version and business units may have their version of the
contribution of revenues for the organization. By implementing ERP, they can get
a single version of the truth.

2. Standardize and Speed up Manufacturing Processes:

ERP systems come with methods for automating manufacturing process. This
helps organizations to speed up and standardize the manufacturing process.

3. Reduce Inventory:
It helps to increase the visibility of the order fulfilment process of any company. It
may lead to reduced inventories to make products.

4. Increases and Improves Interaction:

ERP system also helps to increase and improve interaction between customers
and suppliers. Moreover, the suppliers can also communicate more seamlessly
with sales, marketing, and finance team.

What are Primary Goals for the ERP System?

The goal of any ERP project is to track supply chain actions from inventory
purchase, processing, and final shipment.

1. Efficiency
The real-time information flow in ERP system eases the analysis, data, and
reporting. It also improves decision-making. It also helps to reduce the need for
maintaining multiple databases.

2. Cost Reduction
Cost reduction is vital reason why small and large enterprises invest huge time
and resources for implementing ERP systems. It will reduce waste and increase
productivity. It also reduces overall production's cost.
3. Quality
Quality improvement is the most important goal of ERP. The software technology
helps management to benchmark its quality performance against other
manufacturing companies in the same industry.

4. Decentralization
Enterprise resource planning systems can decentralize decision-making process at
all level. It also allows users to have real-time access to the same data, such as
production status and financial reports.

Steps To Implement On ERP System

Step 1) Strategic Planning
• Assign a team of employees from sales, accounting, purchasing, and
logistics department.
• Examine current business processes and information flow.
• Check the ERP software's capabilities to check how they perform day-to-
day tasks in the new system.
• Set objectives of the Project.
• Develop a project plan.

Step 2) Procedure Review

• Review software and check every aspect of the ERP software and identify
gaps.
• Evaluate which processes are manual and should be Automated
• Develop standard operating procedures.

Step 3) Data Collection and Clean-Up

• Determine which information need to be converted through an analysis of
current data.
• Define the new data that needs to be collected. Create spreadsheets to
collect and segment the data into logical tables
• ERP database needs to be reviewed for accuracy and completeness
• Review and clean-up unwanted information

Step 4) Training and Testing

 • Mock ERP runs to test the data accuracy.
• Make sure that the actual test mirrors the Standard Operating Procedures.
• The project team needs to perform a final test on the data and processes.

Step 5) Deployment
• Once ERP software has been configured correctly and financial data is
sorted it's time to go live.
• In the final evaluation, you need to create structured evaluation plan by
keeping in mind all the goals and objectives which is set in the planning
stage.

Benefits and Drawbacks of ERP system

Benefits of ERP system

• An ERP system is easily scalable so adding new functionality according to

the business plan is very easy.
• By offering accurate and real-time information ERP software reduces
administrative and operations costs.
• ERP system improves data quality by improving the underlying processes
which help organizations to make better business decisions.
• ERP system helps to improve data access with the use of advanced user
management and access control.
• ERP provides transparency to the organization
• Helps to eliminate redundancy in the data management system
• Offers a higher level of security by allowing restricting employee's accounts
only to the processes.
• It helps to helps make reporting easier and more customizable.

Drawbacks of ERP system

• The up-front cost of the entire implementation can be very high for any
small-to-medium-sized businesses.
• ERP deployments take a relatively longer amount of time. Sometime it may
take 1-3 years to be implemented and be fully functional.
• Migration of existing data is very difficult to achieve. That' why Integrating
ERP systems with other standalone software systems is equally difficult.
• ERP implementations are very difficult in decentralized organizations with
different kind of business processes and systems.
Conclusion
• Enterprise resource planning known as ERP is a business management
software
• ERP system gives the opportunity to streamline and improve the business
operations.
• By implementing ERP, enterprise owner gets a single version of the truth.
• The main aim of ERP project is to track supply chain actions.
• Quality improvement is the most important goal of ERP.
• The real-time information flow in these systems eases the data collection,
analysis, and reporting.

There are three architecture models which existed in SAP ERP

SAP is a client-server-based software which is also called R/3. (Where "R" stand
for real time data process & 3 stand for 3-tier.

1. Database.
2. Application servers
3. Client

There are three architecture models which existed in SAP ERP.

1. R/1 : 1 - Tier Architecture

2. R/2 : 2 - Tier Architecture
3. R/3 : 3 - Tier Architecture

Here, "R" stands for Real Time Data Processing.

R/1 : 1 - Tier Architecture
SAP R/1 is a Single Layer Architecture application in which all three
components Presentation, Application and Database are merged and installed
in one system/Server.
R/2 : 2 - Tier Architecture
SAP R/2 is a Two Layer Architecture application in which all three components
Presentation, Application and Database are merged and installed in two
systems/Servers.
In R/2, Presentation component is installed in one System/Server and
Application component and Database component is installed in other
system/server.

R/3 : 3 - Tier Architecture

SAP R/3 is a Three Layer Architecture application in which all three
components Presentation, Application and Database are installed in three
systems/Servers.
In R/3, Presentation component is installed in one System/Server and
Application component is installed in other system/server
Database component is installed in other system/server.

What is SAP FICO?

SAP FICO is a module used for financial reporting both externally and internally.
The objective is to record all financial transactions that are posted by an entity
and produce financial statements that are accurate at the end of the trading
period. Full form or SAP FICO stands for FI (Financial Accounting) and CO
(Controlling). This tutorial is going to explain the major functionalities with SAP FI
module.

SAP FI is made up of sub modules. The sub-modules that are often used are
accounts receivables, accounts payables, asset accounting, general
ledger Accounting and bank accounting.

All the sub modules are interlinked and integrate in real time. A trial balance can
be extracted at an time and it will always balance because all the sub modules are
connected. The diagram below shows the the integration between SAP FI
modules.
General ledger accounting
All general ledger accounts that are used for reporting are managed through
general ledger accounting. In SAP a set of all general ledger accounts used by a
company or a group of companies is called a chart of accounts. These are the
accounts that will be used for the preparation of financial statements. Most of the
transactions are recorded in sub modules and they are reconciled with the
general ledgers in real time. Transactions that can be done in direct in general
ledger Accounting include journal vouchers which are posted to adjust or correct
transactions. Reversals can also be done from general ledger accounting. Balances
in general ledger accounts can be displayed and trial balances extracted from the
system.

Accounts receivables
Accounts receivables is a sub module that captures all transactions with
customers and manages customer accounts. Separate customer accounts will be
maintained and when transactions are posted in customer accounts,
reconciliation accounts in general ledger are updated with the figures in real time.
Transactions in accounts receivables include invoice posting, credit memo
posting, down payments, invoice payment, dunning and executing customer
reports.

Account’s payables
Account’s payables is a sub module that captures all transactions with vendors
and manages vendor accounts. Separate vendor accounts are maintained and
when transactions are posted in customer accounts, reconciliation accounts in
general ledger are updated with the figures in real time. Transactions in accounts
payables include invoice posting, credit memo posting, down payments, invoice
payment, automatic payment program and executing vendor reports.

Asset accounting
Asset accounting manages all transactions related to assets for an entity. When
transactions are posted in asset accounts, reconciliation accounts in general
ledger are updated in real time. Transactions in asset accounting include asset
acquisition, asset retirement, asset sale, asset transfer, asset revaluation and
asset depreciation.

Bank accounting
Bank accounting captures all transactions with the banks. Bank reconciliation is
done to reconcile all transactions recorded on bank statements comparing them
to transactions in the system.

All SAP FI sub-modules are integrated and transactions are updated in real time
which means accurate financial statements can be extracted from the system at
any time.
SAP FI/CO

General Ledger Accounting: Basic Settings

Sl.No. Particulars Transaction Code

I Enterprise Structure
1 Creation of Company ----------------- OX15

2 Creation of Company Code -------------- OX02

3 Assign Company Code to Company -------- OX16

4 Creation of Business Areas ------------ OX03

II Fiscal Year

1 Creation of Fiscal Year Variant ------- OB29

2 Assign Company Code to Fiscal Year Variant -- OB37

III Chart of Accounts

1 Creation of Chart of Accounts --------- OB13

2 Assign Company Code to Chart of Accounts --- OB62

3 Define Account Groups ----------------- OBD4

4 Define Retained Earnings Account ------ OB53

IV Posting Periods

1 Define Posting Period Variant --------- OBBO

2 Assign Company Code to Posting Period Variant- OBBP

3 Open and Close Posting Periods -------- OB52

V Document Types and Number Ranges

1 Define Document Types ----------------- OBA7

2 Define Number Ranges ------------------ FBN1

VI Tolerances
1 Define Tolerance Groups for G/L Accounts -- OBA0

2 Define Tolerance Groups for Employees --- OBA4

3 Assign Users to Tolerance Groups ------ OB57

VII Field Status

1 Define Field Status Variants ---------- OBC4

2 Assign Company Code to Field Status Variants - OBC5

IX Global Parameters

1 Enter Global Parameters ---------------- OBY6