SAP the company was founded in Germany in 1972 by five ex-IBM engineers. In case you’re ever asked, SAP stands for Systeme, Andwendungen, Produkte in der Datenverarbeitung which - translated to English - means Systems, Applications, Products in Data Processing. So now you know! Being incorporated in Germany, the full name of the parent company is SAP AG. It is located in Walldorf, Germany which is close to the beautiful town of Heidelberg. SAP has subsidiaries in over 50 countries around the world from Argentina to Venezuela (and pretty much everything in between). SAP America (with responsibility for North America, South America and Australia - go figure!) is located just outside Philadelphia, PA.

The original five founders have been so successful that they have multiplied many times over such that SAP AG is now the third largest software maker in the world, with over 17,500 customers (including more than half of the world's 500 top companies). SAP employs over 27,000 people worldwide today, and had revenues of $7.34 billion and Net Income of $581 million in FY01. SAP is listed in Germany (where it is one of the 30 stocks which make up the DAX) and on the NYSE (ticker:SAP). 

There are now 44,500 installations of SAP, in 120 countries, with more then 10 million users!

So what made this company so successful? Back in 1979 SAP released SAP R/2 (which runs on mainframes) into the German market. SAP R/2 was the first integrated, enterprise wide package and was an immediate success. For years SAP stayed within the German borders until it had penetrated practically every large German company. Looking for more growth, SAP expanded into the remainder of Europe during the 80's. Towards the end of the 80's, client-server architecture became popular and SAP responded with the release of SAP R/3 (in 1992). This turned out to be a killer app for SAP, especially in the North American region into which SAP expanded  in 1988.

The success of SAP R/3 in North America has been nothing short of stunning. Within a 5 year period, the North American market went from virtually zero to 44% of total SAP worldwide sales. 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 (8 of the top 10 semiconductor companies, 7 of the top 10 pharmaceutical companies etc). 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.

SAP R/3 is delivered to a customer with selected standard process turned on, and many many other optional processes and features turned off. At the heart of SAP R/3 are about 10,000 tables which control the way the processes are executed. Configuration is the process of adjusting the settings of these tables to get SAP to run the way you want it to. Think of a radio with 10,000 dials to tune and you’ll get the picture. Functionality included is truly enterprise wide including: Financial Accounting (e.g. general ledger, accounts receivable etc), Management Accounting (e.g. cost centers, profitability analysis etc), Sales, Distribution, Manufacturing, Production Planning, Purchasing, Human Resources, Payroll etc etc etc. For a full description of the modules included in SAP, see the related articles. All of these modules are tightly integrated which – as you will find out – is a huge blessing ... but brings with it special challenges.

SAP are maintaining and increasing their dominance over their competitors through a combination of
- embracing the internet with mySAP.com (a confusing name we believe) to head off i2 etc
- extending their solutions with CRM to head off Siebel
- adding functionality to their industry solutions

Article 2
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 are good and some are bad. The good ones include replacing an out-dated and inefficient IT Architecture (including the CIO’s nemesis … the burning platform), enabling business process change, and to gain competitive advantage. The bad ones are too numerous to go into here but would include the "why are we the only semiconductor company without SAP" question. More on the good reasons follows:

1. 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.
2. 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.
3. 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.

Article 3
How much does it cost? What will it take to implement it? Wow!

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.

Before being accused of being too negative, let me remind you that 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 expensive. No doubt about it. But the potential rewards can dwarf the costs (and have for many existing customers already). 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 factors which are present in any negotiation). You should check with SAP, but for a ballpark 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.

Then there is the implementation cost. Yowser. 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.

1. 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.
2. 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.
3. 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.

Article 4
Is there any help out there? What should I do next?
Help From SAP AG

There is a ton of help available out there - depending on your companies budget and culture – to help you along your journey beginning with your strategy and ending up when you reach that hallowed (and sometimes distant) ground of post-implementation. This article concentrates on the help available from SAP AG.  Article 5discusses other sources of help.

As you read in article 1 of this series, SAP AG employs around 22,000 people. Although they re-organize as often as most other companies, you can think of them as being organized into the following four areas: Pre-Sales, Consulting, Training and Developers.

• Pre-Sales. These are people with heavy-duty functional knowledge of one or more SAP modules and one or more industries. They give really excellent system demonstrations on particular areas of the system which – while thick with pre-sales features – are an extremely valuable source of information about SAP. I’m sure they have many other responsibilities as well, but if you can, get a demo from them. For an even more useful demo, ask if you can provide them with business process scenarios that are pertinent to your business or industry prior to the demo.
  
• Consulting. While also knowledgeable in SAP (of course), these are mostly consulting types like those that can be found in the major consulting firms. Often a team will consist of consultants from SAP and a partner consulting firm and you will not know the difference. Expect them to have business process and/or industry knowledge in addition to detailed SAP knowledge. They are not readily available to non-customers as they are usually assigned to one or more customers.
  
• Training. In 1999 SAP opened up their training programs to non-customers and non-partners. This opens up a whole world of top-rate training programs at SAP’s facilities around the globe. These can be expensive, however, and up to three weeks are usually required to gain a sufficiently deep understanding of a particular module or subject. If you have lots of time and money, you could register for one of SAP’s ‘academies’ which are five-week crash courses (emphasis on crash … as in burn) in one of the following areas: FI/CO, MM/SD, and HR/ABAP. These end with an examination and 'certification' in your chosen area. More information on SAP training courses can be found on SAP’s website.
  
• Developers. These heavy-duty techies are off limits to non-customers. Customers can sometimes get a message to them via the OSS system – which is an automated trouble ticket type system. If you ever actually see one, or have one on the phone, ask all the questions you can think of, as you may never have the chance again!

Article 5
Is there any help out there? What should I do next?
Help From Other Sources

Article 4 i n this series covered the help that is available from SAP AG. Here we will cover the help that is available from other sources, including: Consulting Companies, SAPPHIRE and other SAP Events, ASUG, and this website.

1. Consulting Companies

One of SAP’s key strategies has been to develop partnerships with the Consulting Companies. This has contributed enormously to the widespread adoption of SAP due to the fact that there are literally thousands of consultants (SAP estimate 55,000) ready to help with all aspects of your SAP implementation … from strategy to completion. There are two types of consulting partners:
1. Global consulting partners (13 of these at last count) are the largest of the consulting firms who are able to provide global assistance to global companies, and
2. National consulting partners who are accredited by country
Your need of a consulting partner depends on your project scope and complexity, your project budget, company culture, and prior SAP implementation experience in your company. Suffice to say that without heavy prior SAP experience in your company, all but the simplest SAP implementations would benefit from the involvement of experienced individuals who have done it before. Rates depend on your negotiations with the consulting company, of course, but you could do worse than use an estimate of $200 per person per hour. Consulting styles differ from firm to firm, so make sure your company culture is compatible with the typical approach of your chosen consulting partner.
In addition, spend some time on their websites to get an idea of their approach, experience and capabilities.
 
2. SAPPHIRE and other SAP events

SAPPHIRE is the name given to SAP’s annual user conference. Multiple SAPPHIRE’s can be found around the globe each year, and are usually sold out in advance. North American SAPPHIRE's are typically held in hot cities (off season) and attract upwards of 14,000 prospects, customers and partners.  SAPPHIRE is a great place to go explore, but is quite expensive at around $2,200 for three days (food, lodging, travel etc is at your own expense). Even so, it is well worth the time and expense.
Note: SAP holds other events throughout the year (TechEd, for example, is aimed at the more technical users) See their website for additional details.
 
3. ASUG (America’s SAP User Group)
   As the name suggests, ASUG is a forum for users of SAP. Non-users (prospects and consultants) and not usually found lurking here. ASUG actually comprises of multiple sub-ASUG’s – each focusing on a particular area of SAP, for example there is an ASUG for High Tech companies, and an ASUG for companies using ALE etc. Leadership of these sub-ASUG’s (for lack of a better description) usually rotates between members of the user community. ASUG provides opportunities for networking, learning and influencing SAP (for example joining forces with other users to convince SAP to include a particular modification in their standard software). In addition to meetings within the sub-ASUG’s, there is an annual conference (which attracted nearly 6,000 users and vendors in 1999).
   

4. If you have read all five of the articles in this series, well done! If you have the time, we would really appreciate some feedback.

Article 6

SAP AG Corporate Overview

3rd - SAP is the 3rd largest software company in the world

30,000 - Total number of people employed by SAP
5,400 - Number of programmers employed by SAP

$7.024 billion - FY03 Revenue
$1.077 million - FY03 Net Income

12,000 - Number of companies using SAP
79,800 - Number of SAP installations
12,000,000 - Number of people using SAP
120,000,000 - Total number of people in the 12,000 companies who are using SAP

28 - Number of languages supported by SAP
46 - Number of country-specific versions of SAP
22 - Number of industry-specific versions of SAP

1,000 - Number of pre-defined best practices contained in the SAP system
10,000 - Number of tables requiring configuration in a full SAP implementation

55,000 - Number of SAP experienced consultants worldwide

28 - Number of years ago SAP was started

5 - Number of people who started SAP

Financial Summary

Article 7

SAP Modules and Solutions Overview

In the past when people were discussing SAP, the conversation very quickly boiled down to modules, for example:

• SAP’s courses were structured along module lines so that you would attend MM 101, 102 and 103. While at the course you would learn many things about MM, but not much about the rest of the SAP system and how MM fits into it.
   

• A conversation with a SAP recruiter might go something like this:

Recruiter … “which modules do you work with?”

Candidate … “well, I have a lot of purchasing process experience”

Recruiter … “yes, but which modules do you work with?”

Candidate … “well, it’s purchasing functionality … so that would be, umm, MM, FI and CO mainly”

Recruiter … “great I have just the job for you”

Candidate … “fantastic, is it purchasing?”

Recruiter … “well it says here that they want an MM, FI and CO person and that’s you, right?”

Not necessarily! A MM, FI, CO role might include Inventory Management (MM), Accounts Receivable (FI) and Profitability Analysis (CO) – none of which a purchasing person is guaranteed to have

• Many programme teams were organised along module lines, so that you would have a FI/CO, an MM and a HR team, for example. Training courses were (therefore) often prepared and delivered along module lines too. The result of this was that solutions were frequently optimised along module lines, and less often well integratred, and as for users, well, they were pretty much trained up in a module and left to get on with it post go-live. Fortunately those days are mostly passed, and more and more programmes (from design to build to training) are being organised along process lines such as:

Order to Cash (including parts of SD, FI-AR and probably TY as well)

Purchase to Pay (including MM-Purchasing and FI-AP)

Record to Report (FI-GL etc)

SAP now are moving away from describing their system as a set of modules, and now are using the term ‘solutions’, which is much better. If you visit SAP's website (as we urge you to do) you will find that they have structured their Solutions tab as follows:

• Financials

• Human Resources

• Customer Relationship Management

• Supplier Relationship Management

• Product Lifecycle Management

• Supply Chain Management

• Business Intelligence

If you’re still looking for that list of modules, here they are:

FI Financial Accounting – essentially your regulatory ‘books of record’, including

• General ledger

• Book close

• Tax

• Accounts receivable

• Accounts payable

• Consolidation

• Special ledgers

CO Controlling – basically your internal cost/management accounting, including

• Cost elements

• Cost centres

• Profit centres

• Internal orders

• Activity based costing

• Product costing

AM Asset Management – track, value and depreciate your assets, including

• Purchase

• Sale

• Depreciation

• Tracking

PS Project Systems – manage your projects, large and small, including

• Make to order

• Plant shut downs (as a project)

• Third party billing (on the back of a project)

HR Human Resources – ah yes, people, including

• Employment history

• Payroll

• Training

• Career management

• Succession planning

PM Plant Maintenance – maintain your equipment (e.g. a machine, an oil rig, an aircraft etc), including

• Labour

• Material

• Down time and outages

MM Materials Management – underpins the supply chain, including

• Requisitions

• Purchase orders

• Goods receipts

• Accounts payable

• Inventory management

• BOM’s

• Master raw materials, finished goods etc

QM Quality Management – improve the quality of your goods, including

• Planning

• Execution

• Inspections

• Certificates

PP Production Planning – manages your production process, including

• Capacity planning

• Master production scheduling

• Material requirements planning

• Shop floor

SD Sales and Distribution – from order to delivery, including

• RFQ

• Sales orders

• Pricing

• Picking (and other warehouse processes)

• Packing

• Shipping

CA Cross Application – these lie on top of the individual modules, and include

• WF – workflow

• BW – business information warehouse

• Office – for email

• Workplace

• Industry solutions

• New Dimension products such as CRM, PLM, SRM, APO etc

Article 8

15 Things You Need To Know About mySAP.com

1. What is mySAP.com?
   In SAP's words "mySAP.com is an open collaborative business environment of personalized solutions on demand"
    

2. Ok, really now. What is mySAP.com?
   In our words, mySAP.com is actually a collection of three things.
   a) The Marketplace is a website where buyers and sellers can register themselves, and then buy and sell from each other.
   b) The Workplace is a piece of software which sits on your desktop, and allows you (after ity is setup correctly) to gain access to all of the systems you use in your company. It is, naturally, tightly integrated with both SAP and the Marketplace.
   c) mySAP.com is also the umbrella name for all of SAP's internet-enabled applications.
    

3. What is SAP's competitive advantage over other e-Business vendors?
   In a word, integration - especially for SAP's 20,000 customers. SAP have termed it "three-dimensional integration"
    

4. What is "three-dimensional integration"?
   a) Integration of core business systems within an organization - front-end to back-end
   b) Seamless flow of data between two organizations who transact with each other
   c) Ability for participants in an industry to use any systems, and still communicate with other participants in that industry
    

5. Does the Marketplace exist now?
   Yes.
    

6. Is the Workplace available now?
   Yes. It was available 3rd quarter 1999.
    

7. Do you have to be a SAP customer to use the Marketplace?
   No. Anyone can register as a buyer or seller on the marketplace. But if you use SAP, it is much easier to transact with another party who also uses SAP - it's called a one-step transaction.
    

8. What's a one-step transaction?
   If both parties to a transaction use SAP, then all purchase orders, sales orders, etc etc are automatically entered into both parties' systems with one click (i.e. on approval of the purchase).
    

9. Does mySAP.com replace R/3?
   No. If you have SAP R/3 implemented, then mySAP.com sits "on top" of R/3.
    

10. Is this actually R/4?
    No. mySAP.com sits "on top" of R/3.
     

11. What is R/3's future?
    R/3, along with all other current SAP products, will become 'components' of mySAP.com.
     

12. Can mySAP.com run by itself?
    Yes. The Workplace, Marketplace and Internet-enabled applications can run without SAP R/3 as the back-office system.
     

13. How is mySAP.com priced?
    Not an easy question. Talk is of "pay per name", "pay per record" and "pay per transaction". Stay tuned.
     

14. Let's get technical. Does mySAP.com use XML?
    Yes. We understand it is in close co-operation with webMethods and Microsoft's BixTalk.
     

15. Which standards (W3C, OAG etc) are mySAP.com in compliance with?
    No clear answer yet. Their response is "mySAP.com will be compliant with all relevant content and protocol standards"

Article 9

Industry Solutions

Or, "Advantage SAP"

As mentioned in our Take a closer look ' article (first published July 2002), we believe that Industry Solutions are one of three major advantages that SAP have built up over their competition. Here we provide more information about SAP's industry solutions.

As you know, SAP started many years ago with a single, integrated, solution. For many years they continued along this 'one size fits all' until about 1994/5 when at SAPPHIRE they launched their industry solutions initiative promising that now they understood that industries were different (surely not!) and so they would release versions of their software which were customised for particular industries. SAP have been working on it for around 7 years now, and we think they have a fine job.

Here then are the 21 Industry Solutions together with an SAP written overview document you can download. If you want to know more about any of them, use the links to the SAP Industry Solution page. As you read through the list below take a look at some of the key features we extracted (not by any means a comprehensive list).
 

What an incredible competitive advantage. Can you imagine the integration meetings required to keep all these parallel developments in check and integrated with the core? The answer to the 'how do they keep all this integrated with the core' question we posed at the top of the article lies, we think, in keeping a tight grip on the data ... and there is a lesson in there for everyone working on enterprise systems.