What is SAP ERP?
SAP stands for Systems Applications and Products in Data Processing. It is an information technology company founded in Germany in 1972. Today, SAP has over 413,000 customers.
ERP stands for Enterprise Resource Planning. An ERP system or ERP suite is a set of integrated software applications that help organizations manage and automate core business functions. The global ERP market was valued at USD 33.6 billion in 2017, and is expected to reach a value of USD 47.85 billion by 2023.⁽¹⁾
SAP defines ERP by considering “…all the core processes needed to run a company: finance, HR, manufacturing, supply chain, services, procurement, and others. At its most basic level, ERP integrates these processes into a single system.”
An SAP ERP system is made up of applications or modules that correspond to functional areas. Modules can be combined or selected to meet different needs. They communicate with each other and share a database.
SAP ERP includes modules for:
- Asset Accounting
- Financial Accounting
- Human Resources
- Material Management
- Product Planning
- Project System Planned Maintenance
- Quality Management
- Sales and Distribution⁽²⁾
SAP ERP software also offers modules for company and industry-specific functions.
Another acronym to understand for SAP ERP is HANA and S/4 HANA. HANA is short for high-performance analytic appliance — SAP’s in-memory database technology. HANA can process massive amounts of data in very short periods of time by processing data stored in RAM, rather than reading it from a disk. HANA is the database foundation for S/4 HANA, SAP’s business suite that is similar to but not the same as SAP ERP software.
SAP ERP on the cloud
SAP ERP software began with a vision for “real-time” computing, which meant software that could process data as users needed it rather than waiting for batch reports. As its solutions began to deliver on the real-time vision, SAP brought packages to the mainframe and incorporated more enterprise business functions. Through the 1990s, SAP ERP reached the desktop with client-server versions. With the advent of the web, it could be used just about anywhere, including mobile devices and across cloud environments.
SAP blogger Paul Russel explains that “cloud ERP is the next logical step in business development. Essentially, Cloud ERPs are a kind of Software-as-a-Service (SaaS) which isn’t limited to a physical server but is instead hosted on the cloud. This allows for a lot of data integration between systems and allows businesses to extend their capabilities rapidly and for a very low cost.”
SAP launched the HANA Enterprise Cloud (HEC) solution in 2014. HEC enables SAP applications to run in the cloud. To improve the reach of HEC, SAP sought a partner with the skills and capabilities to help deliver a superior cloud experience.
After an intense selection process, SAP chose IBM as its first premium cloud partner. IBM brings 30 years of collective experience providing SAP services, hosting and applications management, and has more than 32,000 SAP specialists. IBM also has 50 cloud data centers across the globe.⁽³⁾
IBM is not the only managed service option for SAP ERP — either in the cloud or on-premises. Others include: Accenture, Atos, Capgemini, Deloitte, Syslink Xandria and more.⁽³⁾
Why is SAP ERP important?
SAP ERP is important because it delivers business benefits. Connecting and consolidating business processes into a single system helps organizations:
- Improve productivity through automation
- Gain new insights by eliminating information silos
- Lower risk and improve control with unified visibility
- Increase agility by responding to real-time data
Deploying SAP ERP in the cloud enhances these benefits with greater IT simplification, cost-reduction, scalability, resiliency and resource optimization.
Further, working with an IT managed services provider to facilitate cloud migration and management can help:
- Accelerate SAP module adoption and roll out
- Optimize the ERP environment for greater performance at lower cost
- Provide a reliable management function for the ERP suite
- Free resources to focus on core business innovation over ERP management
A few examples:
Rapidly achieving operational stability. LiquidPower makes additives that assist in the transportation of fuels. As part of Berkshire Hathaway, they were challenged with becoming their own operating business from a blank sheet of paper — without disrupting operations. Migrating to an SAP ERP solution on the cloud, they could pull together and manage business processes quickly, and leave the cloud migration and management to IBM.
Scalability and resiliency. Car maker and seller Mitsubishi in Australia worked with IBM on a cloud-based SAP ERP solution that helped it handle growth in its business without reconfiguring major parts of its infrastructure. The cloud implementation scales as Mitsubishi’s needs change. It also improves disaster preparedness by reducing a switch-over to back up systems in just a few hours, should an incident occur.
Improving customer service: G2 Technologica is working with IBM to quickly roll out its services and improve customer relationships. It’s an SAP ERP application provider for small and medium businesses in Brazil. To keep customers satisfied, G2 has to offer exceptional performance, responsiveness and price. The IBM SAP ERP managed cloud service helps G2 deliver application performance 30 percent faster than on-premises, roll out new functionality four times faster, and stay profitable by controlling costs.
Managing the move to SAP ERP in the cloud
“Many companies use SAP to run their mission-critical business processes and intend to move them to cloud. But a few are still delaying — not because they don’t want to make the move, but because concerns around information protection, resiliency and regulatory compliance are holding them back,” writes IBM director of enterprise applications solutions Madhuri Chawla at IT Biz Advisor.
She points out that among more than 270 U.S. businesses surveyed by Frost & Sullivan, 68 percent said they faced “insurmountable challenges in migrating their workloads or data” when moving from the enterprise data center to a cloud environment. Chawla adds that “58 percent of companies said they have inadequate cloud expertise in their organizations.”
Frost & Sullivan and IBM compiled a list of six concerns and lessons learned from users to highlight key considerations about ERP cloud deployment and how managed cloud services can help:
Security: Seventy-eight percent of businesses found security to be a top issue when considering deploying ERP in the cloud. Taking a managed cloud services approach can reverse this concern. When asked about the most valuable benefits of managed cloud services, 76 percent of users cited increased security for SAP and Oracle workloads.
ROI: The IT department may be sold on cloud, management may not. Presenting a strong business case can move projects forward. The IBM and Frost & Sullivan report found 70 percent of users cited faster delivery of services, 68 percent noted the ability to provide better customer service, and 66 percent pointed to optimized ERP workloads through managed cloud services.
Migration: The thought of transitioning vast workloads of business-critical applications and data from the data center to the cloud can be overwhelming. Managed cloud services can help by delivering a clear strategy and the experience to execute it. In addition, migration-tested automation tools and practices can accelerate the process while mitigating risk.
Line of business: According to the report, 69 percent of IT leaders said line of business (LoB) staff are concerned about allowing IT sole determination over how applications are deployed. At the same time, LoB control has resulted in unauthorized cloud applications or “shadow IT.” Managed cloud services can bridge this trust gap by improving responsiveness to LoB. According to the report, of current managed cloud services users in the U.S, “70 percent state that managed cloud services have given them the ability to deliver services and applications to line of business users faster.”
Compliance: For some organizations, particularly those in Germany, France and Russia, data sovereignty restrictions are an issue. Data created in those jurisdictions must physically remain there. Managed cloud services can actually aid compliance. Seventy-six percent say it improves their compliance reporting for SAP and Oracle workloads.
The right partner: Finding the right service provider is critical. Users in the study found the most sought-after attributes to be:
- Integration of ERP workloads with in-house applications
- Demonstration of a secure cloud platform
- Provision of security service level agreements
- Customization of cloud service parameters
- Existing and beneficial relationship with ERP vendors
1. Global $47+ Enterprise Resource Planning (ERP) Markets to 2023, AP Press Release, January 25, 2019
2. SAP ERP, Wikipedia
3. SAP Service Providers, IT Central Station