What are the different products available from SAP AG?

SAP's products focus on Enterprise Resource Planning (ERP), which it helped to pioneer. The company's main product is SAP ERP. The name of its predecessor, SAP R/3 gives a clue to its functionality: the "R" stands for realtime (even though it is not a realtime solution), the number 3 relates to a 3 tier client-server architecture (database layer, application layer and presentation layer) 3-tier architecture: database, application server and client ( usually a SAP GUI ). R/2, which ran on a Mainframe architecture, was the first SAP version.

SAP ERP is the one of five major enterprise applications that makes up SAP's Business Suite. The four other applications are:

• Customer Relationship Management (CRM) - helps companies acquire and retain customers, gain deep marketing and customer insight, and align organization on customer-focused strategies
• Product Lifecycle Management (PLM) - helps manufacturers with a single source of all product-related information necessary for collaborating with business partners and supporting product lines
• Supply Chain Management (SCM)- helps companies enhance operational flexibility across global enterprises and provide real-time visibility for customers and suppliers. Supplier Relationship Management (SRM) - customers can collaborate closely with suppliers and integrate sourcing processes with applications throughout the enterprise to enhance transparency and lower costs
  

Other major product offerings include: the NetWeaver platform, Governance, Risk and Compliance (GRC) solutions, Duet (joint offering with Microsoft), Performance Management solutions and RFID. SAP offers a systematic approach to enterprise SOA, which is the technical standard that enables various enterprise software applications to exchange data effectively. Through enterprise SOA, SAP is focusing on enabling more flexible business processes as well as creating technical connections between IT systems and building a common language for business.

While its original products were typically used by Fortune 500 companies, SAP is now also actively targeting small and medium sized enterprises (SME) with its SAP Business One and SAP Business All - in - One. On September 19th, 2007 SAP announced a new product named SAP Business ByDesign complementing its portfolio for SME. SAP Business ByDesign was known under the code name "A1S" before. SAP officials say there are over 100,600 SAP installations serving more than 41,200 companies in more than 25 industries in more than 120 countries.

How much does it cost? What will it take to implement it?

There is a defining moment in the journey of all companies on the road to SAP nirvana. This moment comes just after the company has concluded that it want’s SAP, it needs SAP, it’s gotta have SAP … then comes the question ‘so what does it take to implement it’?

This is the question which separates those who are ready from the wannabees. At the heart of every good business decision lies a cost benefit analysis. If this cannot be complete with a positive outcome, the initiative (whatever it is) should probably not be launched. Same goes for a SAP implementation.

Implementing SAP is an expensive business. No doubt about it. But the potential rewards can dwarf the costs and the list of organisations that have realised this is growing every day . One customer reportedly made enough savings on the procurement of a single raw material to pay for the entire enterprise-wide SAP implementation! Of course these are hard to substantiate, but visit SAP’s website and take a look at the customer testimonials.

SAP sells it’s R/3 product on a ‘price per user basis’. The actual price is negotiated between SAP and the customer and therefore depends on numerous factors which include number of users and modules (and other hundreds of factors which are present in any negotiation). You should check with SAP, but for an initial planning number you could do worse than starting with $4000 per user. There is also an annual support cost of about 10% which includes periodic upgrades. Again, check with SAP for further details.

Then there is the implementation cost. What? It is about now that you need to get the business case out again and remind yourself why you need to do this. The major drivers of the total implementation cost are the Timeframe, Resource Requirements and Hardware.

Timeframe - The absolute quickest implementation we have ever heard of is 45 days … but this was for a tiny company with very few users and no changes to the delivered SAP processes. At the other end of the scale you get the multi-nationals who are implementing SAP over 5 to 10 years. These are not necessarily failures … many of them are planned as successive global deployments (which seem to roll around the globe forever). Of course the really expensive ones are those we don’t hear about! For the most part, you should be able to get your (single instance) project completed in a 9 to 18 month period.

People – The smallest of SAP implementations can get done on a part-time basis without outside help. The largest swallow up hundreds of people (sometimes over a thousand) and include whole armies of consultants. This adds up fast. Again, get that business case out. The types of people you will need run the range from heavy duty techies to project managers.

Hardware – The smallest of SAP implementations probably use only three instances (boxes) … one for the production system, one for test, and one for development. The largest implementations have well over 100 instances, especially if they involve multiple parallel projects (otherwise known as a program).

Adding all this up, your SAP project can run anywhere from $400,000 to hundreds of millions of $$$’s. As you can see, SAP can be all things to all companies … so it’s best to talk to them (or your consulting firm) about your specific requirements.

Who is it made for? Why might I need it?

We have all heard about the large (and very large) companies who have implemented (or are still busy implementing) SAP R/3. But SAP is gaining acceptance by smaller companies too.

There are many reasons a company selects and implements SAP – some of which are good and some are really just sales pitch. The good ones include replacing an out-dated and inefficient IT Architecture (including the CIO’s nemesis … the burning platform, if someone remembers), enabling business process change, and to gain competitive advantage. But the SAP sales even have tried to convince few of the industries by asking them questions such as "why are you the only semiconductor company without SAP".

I think we better concentrate on the good reasons:

Replacing an out-dated and inefficient IT Architecture: In the beginning, computer systems were developed by individual departments to satisfy the requirements of that particular department. When someone finally realized that benefits could be had by linking these systems together, interface heaven was born. There are some companies today with literally thousands of interfaces, each of which needs to be maintained (assuming of course that there is someone around who understands how they work!). Sweeping them away and replacing them with an integrated system such as SAP can save much money in support. Of course, if you have a burning platform as well the question becomes even easier.

Enabling business process change: From the start, SAP was built on a foundation of process best practices. Although it sounds absurd, it is probably easier (and less expensive) to change your companies processes to adapt to SAP than the other way around. Many companies have reported good success from combining a SAP implementation with a BPR project.

Competitive advantage: The CFO types around have heard this old saying from the CIO types for many years now. The question still has to be asked … can you gain competitive advantage from implementing SAP? The answer, of course, depends on the company. It seems to us, however, that:

-being able to accurately provide delivery promise dates for manufactured products and meet them) doesn’t hurt ... and
-being able to consolidate purchase decisions from around the globe and use that leverage when negotiating with vendors has gotta help … and
-being able to place kiosks in stores where individual customers can enter their product specifications and then feed this data directly into it’s production planning process is pretty neat etc etc

Ok. So you want SAP, you need SAP, you gotta have SAP.

What made the company so successful

SAP AG started its operations in 1979, after they released SAP R/2, their first enterprise software which ran on mainframes; into the German market. SAP R/2 was the first integrated, enterprise wide package and was an immediate success. The reason for the success was the flexibility that was provided with which an organisation can implement the application, to its own set of specifications. For quite few years SAP stayed and prospered within the German borders until it was virtually present in every large German company. As with all major institutions, SAP looking for more growth, expanded its horizons into other European markets during the 80's. By the end of the 80's, the client-server architecture over-took, the thick client architecture, and SAP intuitively responded with the release of SAP R/3 in the year 1992. This was the single most popular application by SAP especially in the North America, where SAP started its operation in the year 1988.

The success of SAP R/3 was nothing short of stunning. Going with the statistics, the North American market went from virtually 0 to 44% of total SAP worldwide sales. At the present SAP America alone employs more than 3,000 people and has added the names of many of the Fortune 500 to it's customer list. Talking of examples, you can add 8 of the top 10 semiconductor companies, 7 of the top 10 pharmaceuical companies and the list goes on like this. SAP today is available in 46 country specific versions, incorporating 28 languages including Kanji and other double-byte character languages. SAP also comes in 21 industry specific versions. In short, no matter what business you are in, SAP has got something to sell to you!

So what is the fuss about SAP consultants and where do they come into the picture? Well SAP R/3 is delivered to a customer with selected industry and/or country specific processes turned on, and many other optional processes and features turned off, which at the local level needs to be configured. At the heart of the SAP R/3, there are about 10,000 tables which control the way these processes are executed. Configuration is the process of adjusting and manipulating the settings of these tables to get SAP to run the way the client inteds it to. Think of an Operating System, with 10,000 parameters to set, which if done in correct way, delivers the WOW effect, otherwise, crashes the system.

Some of the enterprise wide functionality that SAP offers includes Financial Accounting, Management Accounting, Sales, Distribution, Manufacturing, Production Planning, Purchasing, Human Resources, Payroll, etc and the lists goes on and on.

The factors that has helped SAP gain the edge over its competitors are:
- Embracing the internet with mySAP.com to head off i2 etc
- Extending their solutions with CRM to head off Siebel
- Adding functionality to their industry solutions

So to sum it all, if there is someone somewhere who provides a section of a particular industry, tools to make their jobs easier; SAP will have something to compare it to!