SAP stands for Systems, Applications, and Products in Data Processing.
Why is SAP ERP required?
Based on the manner in which the communication and data exchanged is managed, enterprise systems can be classified as:
- Decentralized System
- Centralized System also called as ERP system
1. Decentralized System
Since the data is managed locally at different departments, it is difficult for the departments to access the data available at the other departments in real time. It is one of the major drawbacks of a decentralized system.
Other drawbacks are:
- Numerous disparate information system are generated individually over time which are difficult to maintain
- Integrating the data from different departments is time and money consuming
- Inconsistencies and duplication of data may occur
- Lack of timely information leads to customer dissatisfaction , loss of revenue and reputation
- High inventory, material, and human resource cost
2. Centralized System/ERP System
To overcome these drawbacks, the centralized system was invented which had many advantages over the old decentralized system.
These advantages are:
- The data is maintained at a central location and shared with all the departments. The departments have access to the data of all the other departments on a real time basis.
- It eliminates the duplication, discontinuity and redundancy in data
- SAP system provides control over various business processes
- It increases productivity, better inventory management , promotes quality , reduced material cost, effective human resources management, reduced overheads boosts profits
- Better customer interaction and increased throughput. It also improves customer service.
Hence, a centralized enterprise management system is required. In additon, SAP software is a centralized enterprise management system also known as Enterprise Resource Planning.
HOW DOES SAP WORK?
SAP software products provide powerful instruments for helping companies to manage their financials, logistics, human resources, and other business areas. The backbone of SAP software offering is the SAP ERP system which is the most advanced Enterprise Resource Planning (ERP) system from currently available ones. SAP has evolved to offer application software for supporting complex business functionality and in this post, we are going to explain (on a high level) how does SAP works.
