Posted by: ahmedashfaque | August 14, 2014

What is SAP – SAP structure

In my previous post, we have understood what is SAP. Now we will understand structure of SAP application.

Business applications which take care of many (if not all) business functions of any organization are called ERP (Enterprise Resource Planning) tools. What are typical business functions in any organization?

Any organization have customers. Marketing department of the organization is always focused on finding which of their products and services sell more, what are customer requirements, how customer requirements can be fulfilled better, which are target markets, how to penetrate target markets, how to beat competition etc. To get answers to these marketing related questions, they need to have customer data for analysis. They also need a tool which can crunch all this data and provide answers to their questions. The software applications which do these jobs are known as Customer Relationship Management (CRM) applications.

Next the organizations have a sales department which takes care of delivery of goods or services to customers. The sales department uses software applications which help them take orders from customers, track available products or services in the inventory to fulfill the orders, arrange shipping of the goods to the customer and finally get payment from customers against the billing they have done to the customer against the goods which were sold. This whole process is popularly known as sales to cash cycle.

If the organization manufactures goods which it sells then the production department needs information as to which goods to manufacture when and in what quantity, issue or procure raw material, arrange machines and men to get the manufacturing done and finally ship the manufactured goods to the inventory. The software which takes care of production operations is known as production planning & operations management software.

The organization needs to procure the raw materials which are needed for production. The procurement department needs to get information as to when and how much raw materials are needed, which vendor provides the required raw materials, what is the price of the raw materials, through what procurement arrangement the needed raw material can be purchased (long term contract, one time purchase, RFQ etc.) and finally arranging payment to the vendors for purchases made. This entire process is also known as procure to pay.

Apart from functional requirements, the organization also needs to have a finance department which manages all accounts payable and accounts receivables  for the organization. In fact the finance department is the controlling department which has controlling powers for all financial aspects about the organization. The finance department uses financial software to manage all of its activities.

Apart from these main functions in any organization, there are people management (human resource), payroll management, vendor management, IT management etc functions which need to be taken care of.

Any good ERP should have features which will take care of all these functions in any organization. SAP is the best ERP to take care of these functions for any organization.

To take care of these department specific functions, SAP application is divided into modules. Fro example, there is a Finance module in SAP application which is used by finance department, there is a sales & distribution module which is used by sales department, materials management module which is used by procurement department etc.

All of these modules are tightly integrated with each other in SAP application.

In my next post, i will discuss about how the integration of modules is handled in SAP.



  1. […] my last post I discussed about SAP structure. In this post i will discuss about integration of various modules […]

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