What is SAP [An Introduction]

Are you interested to learn about SAP? Then go through this SAP tutorial, we will see the introduction to SAP, SAP history, R/3 architecture, modules, and clients. Also, this tutorial touched upon the advantages, and disadvantages as well.

Introduction to SAP

  • SAP is the world’s most superior producer of software management of business processing developing the solution that clears the way for effective data processing and information retrieving across organizations.
  • SAP formerly known as System Analysis Program Development later shortened as SAP.
  • It started from five people striving to a multinational enterprise headquartered in Walldorf, Germany, with more than 105,000 employees worldwide.
  • With the development of SAP R/2 software and SAP R/3 software, SAP establishes enterprise resource planning (ERP) software. Now, SAP HANA takes the ERP to a higher level by processing a vast amount of data using advanced technologies.
  • SAP has 230 million cloud users covering more than 100 solutions, including business functions and a large cloud solution provider.

Also, Read: What is Enterprise Resource Planning (ERP)

SAP History

  • IBM has played a major role in the formation of SAP. The former engineers of SAP decided to put together an enterprise-wide system based on the Scientific Data Systems (SDS) software.
  • However, the program soon lost power and the engineers were told the work was unavailable. Undoubtfully, they left IBM and became entrepreneurs and started up their own company, (System Analysis and Program Development in English), or SAP for short.
  • The first customer was Imperial Chemicals Company. When asked with creating accounting and payroll software, the team soon left the mechanical data storage method of punch cards in favor of storing the information locally on a shared database.
  • The original system was known as a “real-time” system since punch cards needed to be processed overnight but database storage was quick.
  • When the system was finished being created, SAP was prepared to introduce it as a business endeavor to additional clients under the name SAP RF, a complete financial accounting system.
  • Later, this system was referred to as SAP R/1, with the “R” standing for that real-time functionality, which served as the software’s main selling feature. Through the incorporation of new functional modules to expand the financial accounting suite, SAP R/1 continued to advance throughout the 1970s.
  • All the material management incorporated with sales and distribution united with radio frequency (RF).
  • This made SAP its turning point in the ERP market as a new era for the company in the R/2 version launched in 1980. R/2 became a well-liked software solution for the following ten years as a result of upgrading the supporting servers in SAP and tighter integration between an expanding number of functional areas.

Introduction of R/3

  • The Client-Server architecture and GUI for SAP R/3 were also launched in the 1990s. It is compatible with virtually all databases and operating systems.
  • By transitioning from “mainframe” to 3-tier architecture, or database, application, and user interface, the R/3 users are in a new age in ERP.
  • The business had more than 9000 installations worldwide by 1996. At the end of the 1990s, SAP released e-commerce, allowing my SAP products to make use of rapidly evolving web technologies.
  • SAP R/3 is a worldwide enterprise resource planning (ERP) software that helps businesses and companies to organize and automate their business progress. This SAP structure mainly designed to provide flexibility and capacity to businesses of all sizes from small scale to large is a major feature of SAP R/3. R/3 stands for real-time integration.
  • SAP R/3 architecture is based on a three-tier client-server model that includes a Presentation, Application, and Database layers.
  • SAP R/3 software interlinks all business transactions with real-time integrations. If any modifications are required in other applications, it would automatically change in those concerned applications.

Check out: What is Sales Return in SAP FICO?

SAP R/3 Architecture

SAP R/3 has 3 layers namely,

  • Presentation Layer
  • Application Layer
  • Database Layer
  1. Presentation Layer – The presentation layer is nothing but seeing things directly on the screen. This layer has the software components that make the graphical user interface (GUI). The presentation layer is responsible for the user’s input or details for the application server hence receiving the data and then displaying it.
  2. Application Layer – Application layers serve as an intermediate for both presentation and database layers. It has a large number of applications and message servers. Every application server has services to use the R/3 system. It sends data requests from one application server to another server within the system. It has information about application server groups as well. It uses this proper information to use an appropriate server when a user logs into the system.
  3. Database Layer – The name sounds like it’s a database for maintaining the data. It has a central database system containing an R/3 system. It has two systems database itself and a database management system (DBMS).

SAP has its database named HANA but it is highly effective compared to other databases such as Oracle. All R/3 data is stored in the database.

Modules of SAP

SAP modules are interconnected with other modules. It has divided into two types of modules such as technical modules and functional modules.

Technical Module Functional Module
SAP securitySAP MM
NetweaverSAP CRM
SAP WebdynproSAP PM
SAP CloudSAP Banking

All the modules have their demand and scope and play a major role in the current market.


SAP software helps every organization in managing nearly every aspect of the business, from finances to HR, procurement, and logistics as well.

Business includes a broad range of business applications as well as industry-specific functionality. Apart from ECC, it includes modules for CRM, PLM, SCM, and supplier relationship management (SRM)

Based on the industry-specific applications in S/4HANA are explained below.

  • Consumer Industries include Agribusiness, Consumer Products, fashion, Life Sciences, Retail, and Wholesale Distribution in the current market.
  • Aero Industries – including Aerospace and Defense, High-tech.
  • Natural Resources and Energy, including Building Products, Chemicals, Mill Products, Mining, Oil, Gas, and Energy.
  • Financial Services – Banking with Insurance.
  • Public Service – Defense and Security, National Federal Government, Future Cities, Healthcare, Higher Education and Research, and district, State, and Local Government.
  • Service Industries – It involves Transportation and Logistics, Building, Construction, and Operations, Media, Passenger Travel and Leisure, Professional Services, Sports and Entertainment, and Telecommunications as well.

Read: How to Create Append Structure in SAP ABAP

What does SAP Software Do?

  • SAP supports both small and big firm organizations and makes profit growth and develops solutions that provide effective data processing and information flow across the companies.
  • Every business process can be mapped and built using industry solutions, platforms, and technologies, as well as standard applications.
  • The software has been collected and processed in one platform from material purchasing to developing, testing, and production to customer satisfaction. SAP software is installed on the basis of the user’s location or we can use it from the cloud thus improving the company effectively.
  • SAP solution is also used to create alertness in the industry when the machine needs service or how gross profit will grow in the next few months to years.
  • Moreover, SAP assists clients in smoothly fusing operational data on business operations with experience data on emotional variables, including customer feedback and purchase experiences. As a result, businesses are better able to comprehend and serve their customers.

SAP Solution Manager

Tools, Methodologies, and Pre-configured material are all accessible from one location through the solution manager. Additionally, it provides support for all phases of a solution’s lifecycle, including business blueprint, configuration, and maintenance.

  • SAP Solution Implementation/Upgrading
  • Centralized project tool access (Administration for the project, Business configuration, Test Workbench, and also Group Templates for business needs)
  • Information for a project is managed centrally (Roadmap, System Landscape, and also Documentation part, etc.)
  • Allows for comparing and coordinating customization across many components
  • Solution Inspection
  • System Landscape Analysis for Centralized System Management at the System level Reporting
  • System-Level Monitoring
  • Organizational Process Monitoring
  • Service & Assistance
  • Access to tools and services for assessing, enhancing, and reducing risks in systems performance and availability.
  • Solution for the Service Desk Help for creating and managing process/problem messages through the workflow
  • Change Request Management allows us to track and audit system modifications and transfers.

Have a look: What is Retained Earnings in SAP FICO?

SAP Clients

  • A client is a required element in SAP and is identified by a 3-character alphanumeric identifier. All of the business codes can access the settings established at the client level, the data kept, etc. A client must have at least one established company code.
  • Clients 001 and 002 have all the default settings included with SAP when it is released. Typically, it adds new clients while copying from the default clients.

Types of Clients

In SAP, we have three different clients namely,

  1. Development client
  2. Test client
  3. Production client

Not only in SAP but in any kind of implementation in the company, the above three clients are important in deployment.

  1. Development Client

A development client on which we can test out new configurations and write new programs, etc. Before a scenario is finished, this is where all configurations can be made.

2. Test Client

If you are satisfied with the settings, you will move it to the Test Client and conduct all necessary tests there (both modular and integration).

The training client is used to give training to the end users. Sometimes a single instance could contain both the training client and the test client.

3. Production Client

After done with the testing is successful, the same will be moved to the production client. We are unable to make any changes manually in the production client.

Also, the authorization is restricted because in production client’s daily business transactions are occurred. So, any issues here will create problems for the whole business operation.

Advantages and Disadvantages

For every technology, there will be ups and downs. Let’s see what advantages and drawbacks SAP had below.

Advantages of SAP

Efficiency in Delivering Work

SAP allows all business data to be well maintained with different databases. For this exclusive reason, this system is able to well-organized business processes so thus delivering the work in a productive way by that companies can collect data more easily and efficiently.

Reduction of Cost

It reduces cost if the company put in more manual effort and also took reporting of the database seriously way before the implementation. Another scenario is if their consideration is not up to the mark, and not caring about the accounting things, then we can’t expect cost reduction in this case.

Increase in Productivity level

A business using an SAP application is much more effective. There is no need for data entry of the SAP, so the program will be integrated productively.

This automated process gives users or clients more time to work on emergency tasks and client projects. By considering this system is designed to make it easier for users, their work has also become more accessible.

Applicable to All Level Business Users

This is applicable to both small-scale and large-scale organizations as well. The SAP system provides a clear solution through a hands-on implementation process to ease the company’s transition from small growth to development. SAP provides flexibility in growth goals. Therefore, many small businesses benefit more from this system.

Security in Sharing the Data

Through this SAP system, we will have a centralized and effective database allowing the information across all departments/teams in our company.

It allows us to go with the need to frequently send the information to different departments separately. This also minimizes the chances of deformation of the information because all the person has access to real-time data.

Financial Management

This system makes us reduce the errors caused financially. We can track all the transactions in our company since it provides appropriate solutions. SAP Business One price is the second most costly ERP system after Oracle. Compared to other systems, SAP provides quick financial reimbursement.

Disadvantage of SAP

With the many benefits of SAP, it has also gone through some disadvantages as well. Let’s see what are they.

The SAP Software Installation Process Is Quite Difficult

The installation of SAP is quite complex which is supposed to suit the company’s needs. It will take more effort and time to install in the system. Before that, we need to install more software as well to get into the SAP software.

High Price Software

The main disadvantage of this software is the price. The company needs to buy both software and hardware and install the software in the system. The high costs also take into consideration includes the budget of the organization.

Once the installation is done, the employees of the particular companies will be trained in the respective modules.

Regular System Update

Another disadvantage of SAP is it required system updates regularly every few years. This includes a financial expense that some people may find challenging to bear. By doing system updates frequently, there will be modifications in the functions, and some functions or options will disappear or update, so it might be confusing.

What is SAP

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We have seen enough information in the introduction of SAP. I hope this tutorial helps you know more about SAP. Here I have given everything related to SAP. Go through the points and understand. Hope you liked this tutorial and below are the topics covered in this tutorial.

  • SAP History
  • Introduction of R/3
  • Modules in SAP
  • SAP Uses
  • What does SAP software do?
  • SAP Solution Manager
  • SAP Clients
  • Advantages and disadvantages