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The SAP Enterprise Resource Planning system (ERP) is a German software package used extensively by the world’s largest organizations for treasury, cash management, accounting, management control, production control, human resources, material management planning, and many other facets of business’ operation. For those readers who do not know SAP stands for “Systems, Applications and Processes in data processing”. ECC stands for “Enterprise Central Component”. The predecessor of the Enterprise Central Component was R/3, and before that it was R/2. The origins of the SAP ERP system date back to 1972 when it was founded as a mainframe software system. In 1992 they developed their client server based ERP program and have dominated the marketplace since then. The hallmark of SAP is the tight integration of its core business suite. This core product is based on industry best practices.

When I use the term partner, implementation partner, consultant, consulting firm, advisor, integrator, or systems integrator all of these terms should be considered synonymous. All of these terms refer to a third party firm hired to assist an organization which has a license for SAP in making changes to it or using it. Lastly, when I use the term “the business”, I am referring to any organization (both private and public sector) that is implementing, modifying, or upgrading SAP. This term will never be used to denote the implementation partner that is advising and assisting “the business” with their implementation.

Furthermore the term “implementation” is used to denote any major SAP project (with an arbitrary budget of over $1 million). This encompasses re implementations, enhancement projects, module deployments, end-to-end deployment of an entire new business process, and upgrades. In all discussions, changes to the SAP ECC (SAP Enterprise Central Component), and in particular the Treasury and Risk Management module are central to the discussion.

SAP’s Success

The success of the world’s third largest software retailer, SAP AG, cannot be denied. As of 2012 there were 44,000 installations worldwide of its flagship software SAP Enterprise Central Component, in some of the biggest organizations: 3M, Kraft Foods, and Colgate Palmolive are but a few of the members of the Fortune 500 that run this brand of ERP. On the public sector side the Government of Canada, the US Army, and the State of California are a few examples of massive entities that run the SAP. Thumbing through the 1,887 success stories on SAP’s website you will encounter names such as Citrix, Proctor and Gamble, and the University of Kentucky. Time and time again the stories document gains in productivity, customer service, and a positive return on investment. SAP is the most common type of ERP system that you will find in the marketplace, as indicated in this graph:

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Worldwide ERP software market share 2019

In 2000 SAP had a market share of 11%; by 2012 it had climbed to 25%. it has a share in the ERP market that is equal to that of its three biggest competitors. There is no denying SAP’s success. Now in 2019 you can find the % by graph. The benefits of implementing it are well documented.

SAP Enterprise Central Component

The SAP Enterprise Central Component, often abbreviated to SAP ECC is the cornerstone of SAP`s software offerings. While SAP now offers many other products that can be bolted on to the Enterprise Central Component, this component is the core. It is also the software element that has helped it become the third largest software retailer in the world, and the undisputed champion of the enterprise resource planning (ERP) marketplace. The Enterprise Central Component is a collection of modules that are all contained on the initial compact disks that are loaded on to a client`s servers. Though they are referred to as separate and distinct modules the client in fact has them all loaded and they all exist in the SAP system whether they are active or not. The Treasury and Risk Management module is part of ECC.

Initially when the Enterprise Central Component software is loaded on to the customer`s server it does not work. None of the modules can in fact be used “out of the box”, despite SAP often being referred to as an “out of the box” solution. Any module desired for use has to first be activated and then configured. Only after it is activated (and configured) in the Implementation Guide can a user perform business functions. The beauty of the SAP Enterprise Central Component lies in its real-time integration.

The majority of modules pass information from one to another in real time without having to run any batch jobs (there are a few exceptions, for example the Contract Accounting module (FICA) and the Treasury and Risk Management module (TRM), require a batch job to be run to move summarized values to the General Ledger). The hallmark of SAP is its integration. You enter information once into the system, and that information is carried through to all other modules, usually in real-time. It is however, not heavily automated. As one SAP consultant once said “SAP is integrated, not automated. It requires staff to think about what is going on … not to watch the system do their job”. With the advent of automated programs like SAP Electronic Bank Statement that is changing.

I hope that you understand my post. if you like this post then share my post, and comment on my post if you have any suggestion or Queries related to ERP. Thank you!

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