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SAP Overview.  (An Introductory Manual)

Objective: This idea of this manual is to give an overall picture of SAP as an ERP system so as to understand the working concepts and to have a brief overview on the same.

Introduction to SAP & ERP:

In simple, SAP is a three letter word that could in fact re-define your business. It’s an ERP software and stands for Systems Applications and Products in Data Processing. ERP stands for Enterprise Resource Planning. ERP refers to a packaged business software system that lets a company automate and integrate the majority of its business processes; share common data (ensuring data integrity) and practices across the enterprise and produce and access information in a real-time environment.

History & Evolution

            In 1972, five former IBM employees -- Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther -- launch a company called SAP Systems Analysis and Program Development in Mannheim, Germany. Their objective was to develop standard application software for real-time business processing.

One year later, the first financial accounting software is complete; forming the basis for the continuous development of other software components in what later came to be known as the "R/1 system." "R" stands for real-time data processing.

By the end of the decade, intensive examination of SAP's IBM database and dialog control system leads to the birth of SAP R/2.

The 1980s: Rapid Growth [R/2= Real time 2 tier]

The SAP R/2 (Mainframe) system attains the high level of stability of the previous generation of programs. Keeping in mind its multinational customers, SAP designs SAP R/2 to handle different languages and currencies. With this and other innovations in SAP R/2, SAP saw rapid growth.

The 1990s: A New Approach to Software and Solutions[R/3= Real time 3 tier]

SAP R/3 is unleashed on the market. The client-server concept, uniform appearance of graphical interfaces, consistent use of relational databases, and the ability to run on computers from different vendors meets with overwhelming approval. With SAP R/3, SAP points to a new generation of enterprise software -- from mainframe computing to the three-tier architecture of database, application, and presentation GUI). Even today, the client-server architecture is the standard in business software.   

The Millennium Innovations: [Netweaver Technology]

With the wide use of internet and other communications SAP came up with the idea of WebAs. The Netweaver platform was an innovation from SAP that enabled to integrate different systems with SAP.

SAP Architecture

SAP Business Suite

SAP Software Applications

SAP IS (Industry Solutions)

SAP Functional Modules (Main)





Finance & Controlling


Materials Management


Sales & Distribution



Production Planning

MRP most important sub-module, PP-PI for Process Industries


Plant Maintenance


Quality Management


Project System

More  suitable  for  Project  based  manufacturing /   Machine   tool manufacturers, Software companies


Human Resources

Payroll most important sub-module


Controlling-Profitability analysis


Customer Service


Environmental Health & Safety

Applicable to any Chemical Industries. Wide scope lies in Petroleum/Oil & Gas Industry.


Warehouse Management

(part of Logistics Execution)

SAP office  &

CA        (Cross


Work   flow,   SAP mail,


*Core Modules.

SAP Technical Modules



  System Administration of SAP R3


Advanced Business Application Programming (4th generation language, originated from COBOL)

ALE,   EDI, IDoc,


Application Link Enabling, Electronic Data

Interchange   ,  Intermediary Documents, Business         Application         Programming

Interface , Remote Functional Call

Features       /      technical       components available  in  SAP  to  communicate  and exchange  information with external SAP R3, R2 / non-SAP systems

SAP R/3 System Landscape

Live implementation/ support environment: System Landscape consists of DEV, QAS, PROD servers (Development, Quality, Production servers) to ensure that configuration settings/ changes are released / transported to Project Leaders/ Process owners (normally in support environment) and systematically and approved by them from DEV server to QAS server, tested in the QAS server to check the performance (unit and integration testing) before it is released to Production Server. SAP Licenses are maintained by Basis Administrator through OSS user Id (Online Support Service User ID which is given by SAP to its customers. Normally it is a 3-tier architecture viz., Central Instance (SAP R/3 instance) & Database instance (it can be oracle, MS-SQL) on  separate servers connected to Clients /user  PCs (which  are  installed with  SAP  GUI (Graphical  User  Interface).

Training Environment: System Landscape consists of DEV & PROD servers tied up in a logical loop (no physical DEV, PROD servers will be there) in a single server connected to the clients. It is also a 3-tier architecture.

In  both  the  above architecture /environment  any customizing  setting will lead  to  a  pop-up screen (Customizing request/ prompt) with a unique identity key (assigned to the consultant by system/ BASIS support team). These customizing settings are then to be released by individual consultant to the project leader/ process owner through Customizing & Transport Organizer.

(Transaction code SE10-Transport Organizer).

Client Concept in SAP

“CLIENT” in SAP is different from Client-Server concept in the sense that SAP Client is the highest level at which the data is retained. It holds the data of underlying companies, Controlling Area, Business Area, Chart of Accounts, Sales Organization, Plant, Warehouse etc., of the underlying companies.  But there are still some settings like calendar which are common across clients.

  1. E.g.: Client 800,810 etc… are IDES demo client.

Clients 000, 001, and 066 are part of the R/3 delivery system. Customers are not allowed to work in 000 &006. Although one may work in client 001, SAP recommends that you create a new client as a copy of client000 and work in this new client.

Each new client in the ASAP three-system landscape is created from client 000 with the client copy tool.  After post-installation activities are completed in the development system, the client copy tool is used to create clients CUST and TEST. At some point in the implementation process, the quality assurance system is installed and requires at least one client, the quality assurance test or QTST client. In addition, a training client or TRNG may be required. During the final stages of implementation, the production system is installed and the production client PROD is created.

Basis Administrator will copy the Client 000 (allowed namespace 002 to 999) to DEV, QAS, and PRD servers.

SAP Project Implementation Methodology

SAP recommended Methodology is ASAP (Accelerated SAP)

In  terms  of  implementation approach we  can  classify  it  into  Big-bang  Implementation & Phased Implementation approach.

Companies follow Big-bang approach (Implementation of All modules at all locations totally migrating from legacy system to SAP R/3) at one stroke. In Phased approach or they go for few core modules in Phase I at one location / multiple locations and additional modules at other locations at a later phase.


SAPNet - R/3 Frontend (formerly Online Service System (OSS)) provides the infrastructure for SAP's R/3Service & Support and is the primary medium for problem management. It is the technological link between customers, SAP partners and SAP.   Beyond this, SAPNet - R/3 Frontend provides access to valuable information about known problems and helps you resolve them on your own or with the help of the SAP support team. SAP customers have free access to SAPNet - R/3 Frontend wherever they are 24 hours a day. They can also access through web-browser at with the required User Id and password.

Customizing the SAP/IMG (Implementation guide)

Customizing of SAP R/3 refers to the tailoring of SAP to customer’s business processes. Customizing (IMG settings) can be broadly modularized  into

Reference IMG (Standard SAP settings), Enterprise  IMG  (settings  relevant  to  the customer/ organization), Project IMG (settings  relevant to only particular project).

Assignment of user roles and profiles: SAP has more than 500 standard user roles and profiles (like Purchasing Manager, Invoice Clerk etc.,) which are authorized to only certain transaction codes. Basis Administrator  assigns the user  roles  and profiles based  on  both  functional  and technical  consultant’s requirements.

The T-code for the customization is SPRO and it expands as SAP Project Reference Object.

Data in SAP can be broadly sub-divided into Input data, Transaction data & Output data:

Input Data: Inputted by users while performing their business functions like creating a master data, raising a Sales/ Purchase Order/ Invoice/ Credit Memo/ Debit Memo/ Stock Transport Order etc.,

Transaction Data: This  is  internally  generated  System data controlled  by  Customizing settings  and structural settings.

Output Data: Output Data is generated in SAP through Standard Reports, SAPScript, SMARTFORMS &Custom ABAP reports. IS(Information Systems) deals with standard reporting needs for all the modules.