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The original name for SAP was German: Systeme, Anwendungen, Produkte, German for

"Systems Applications and Products." The original SAP idea was to provide custo
mers with the ability to interact with a common corporate database for a compreh
ensive range of applications. Gradually, the applications have been assembled an
d today many corporations, including IBM and Microsoft, are using SAP products t
o run their own businesses.
SAP applications, built around their latest R/3 system, provide the capability t
o manage financial, asset, and cost accounting, production operations and materi
als, personnel, plants, and archived documents. The R/3 system runs on a number
of platforms including Windows 2000 and uses the client/server model. The latest
version of R/3 includes a comprehensive Internet-enabled package.
SAP has recently recast its product offerings under a comprehensive Web interfac
e, called, and added new e-business applications, including customer r
elationship management (CRM) and supply chain management (SCM).
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incorporates the key business functions of an organization. The latest version (
SAP ERP 6.0) was made available in 2006. The most recent Enhancement Package (EH
P8) for SAP ERP 6.0 was released in 2016.
Business Processes included in SAP ERP include Operations (Sales & Distribution,
Materials Management, Production Planning, Logistics Execution, and Quality Man
agement), Financials (Financial Accounting, Management Accounting, Financial Sup
ply Chain Management) and Human Capital Management (Payroll, e-Recruiting).[3]
SAP ERP was built based on the former SAP R/3 software. SAP R/3 through version
4.6c consisted of various applications on top of SAP Basis, SAP's set of middlew
are programs and tools. When SAP R/3 Enterprise was launched in 2002, all applic
ations were built on top of the SAP Web Application Server. Extension sets were
used to deliver new features and keep the core as stable as possible. The Web Ap
plication Server contained all the capabilities of SAP Basis.
As a result of marketing changes and changes in the industry, new versions of SA
P have been released. The first edition of mySAP ERP was launched in 2003 and bu
ndled previously separate products, including SAP R/3 Enterprise, SAP Strategic
Enterprise Management (SEM) and extension sets. The SAP Web Application Server w
as wrapped into NetWeaver, which was also introduced in 2003.
A complete architecture change took place with the introduction of mySAP ERP edi
tion in 2004. R/3 Enterprise was replaced with the introduction of ERP Central C
omponent (SAP ECC). The SAP Business Warehouse, SAP Strategic Enterprise Managem
ent and Internet Transaction Server were also merged into SAP ECC, allowing user
s to run them under one instance. Architectural changes were also made to suppor
t an enterprise service architecture to transition customers to a services-orien
ted architecture.
SAP ERP consists of several modules, including utilities for marketing and sales
, field service, product design and development, production and inventory contro
l, human resources, finance and accounting. SAP ERP collects and combines data f
rom the separate modules to provide the company or organization with enterprise
resource planning.
An article in the IEEE Transaction on Engineering Management journal reports an

industrial case in which senior management successfully dealt with a troubled SA

P R/3 implementation in an international fast-moving consumer goods (FMCG) compa
ny during 2001 and 2002.[4]
Deployment and maintenance costs[edit]
Effectively implemented SAP ERP systems can have cost benefits[citation needed].
Integration is the key in this process. "Generally, a company's level of data i
ntegration is highest when the company uses one vendor to supply all of its modu
les." An out-of-box software package has some level of integration but it depend
s on the expertise of the company to install the system and how the package allo
ws the users to integrate the different modules.[5]
It is estimated that "for a Fortune 500 company, software, hardware, and consult
ing costs can easily exceed $100 million (around $50 million to $500 million). L
arge companies can also spend $50 million to $100 million on upgrades. Full impl
ementation of all modules can take years," which also adds to the end price. Mid
sized companies (fewer than 1,000 employees) are more likely to spend around $10
million to $20 million at most, and small companies are not likely to have the
need for a fully integrated SAP ERP system unless they have the likelihood of be
coming midsized and then the same data applies as would a midsized company.[5] I
ndependent studies have shown that deployment and maintenance costs of a SAP sol
ution can greatly vary depending on the organization. For example, some point ou
t that because of the rigid model imposed by SAP tools, a lot of customization c
ode to adapt to the business process may have to be developed and maintained.[6]
Some others pointed out that a return on investment could only be obtained when
there was both a sufficient number of users and sufficient frequency of use.[7]
[8] Deploying SAP itself can also involve a lot of time and resources.[9]
ERP advantages and disadvantages[edit]
Allows easier global integration (barriers of currency exchange rates, language,
and culture can be bridged automatically)
Updates only need to be done once to be implemented company-wide
Provides real-time information, reducing the possibility of redundancy errors
May create a more efficient work environment for employees[5]
Vendors have past knowledge and expertise on how to best build and implement a s
User interface is completely customizable allowing end users to dictate the oper
ational structure of the product
Locked into relationship by contract and manageability with vendor - a contract
can hold a company to the vendor until it expires and it can be unprofitable to
switch vendors if switching costs are too high
Inflexibility - vendor packages may not fit a company's business model well and
customization can be expensive
Return on Investment may take too long to be profitable
Implementations have a risk of project failure[5]
See also[edit]