To understand what SAP software means and what it is used for , lets first understand what is an ERP system.
ERP stands for "Enterprise Resource Planning" Software. Any large organization has multiple business units which frequently need to exchange information and data amongst themselves . Not only that , they also need to exchange information with third party vendors. An ERP system spans multiple departments and integrates their software systems.
The key benefit of using an ERP system is that it provides for a centralized repository of information and avoids duplication of data. It helps map typical enterprise business process into your software system ensuring smooth business operation.Due to the information connect that ERP provides amonst business units of an enterprise , an employee from Sales can check order status currently in production department and update the client with the status.
SAP is a leading ERP system. SAP stands for Systems, Applications and Products in Data Processing. It was founded in 1972 by five former IBM employees. SAP is the market leader in ERP software and has the largest market share. SAP is name of the company as well the name of their leading ERP product
SAP has many modules like CO(Cost Accounting),PP(Production Planning),SD(Sales and Distribution) etc. corresponding to the typical departments in any corporation. SAP also offers industry specific solutions for retail, telecommunication , mining and other industries. SAP also has Product Lifecycle Management (PLM), Customer Relationship Management (CRM) offerings.
Impementing a SAP system is very expensive. Each SAP implementation is unique to the company its implemented for and takes into the consideration the unique business process of the implementing organization.
Implementation costs may be millions of dollars, while entire project may take years to deploy. Due to the large cost and project risks involved many companys prefer deploying SAP in an incremental fashion (one module at a time) rather than implementing all modules at once. But the TCO (Total Cost of Ownership) of SAP works out in the advantage of the buyer since it tinkers , modifies and streamlines long-standing workflows. Dues to the mass automation SAP provides , employee costs go down drastically