What is SAP? Meaning & Definition of SAP ERP Software (2024)

What is SAP?

SAPstands for Systems Applications and Products in Data Processing. SAP, by definition, is also the name of the ERP (Enterprise Resource Planning) software as well as the name of the company. SAP Software is a European multinational, founded in 1972 by Wellenreuther, Hopp, Hector, Plattner, and Tschira. They develop software solutions for managing business operations and customer relationships.

SAP system consists of a number of fully integrated modules, which covers virtually every aspect of business management.

SAP is #1 in the ERP market. As of 2010, SAP has morethan 140,000 installations worldwide, over 25 industry-specific business solutions and more than 75,000 customers in 120 countries

Other Competitive products of SAP Software in the market areOracle, Microsoft Dynamics, etc.

Here is the whole process that is followed by any business unit.

1. Client contacts the sales team to check the availability of the product
2. Sales team approaches the Inventory department to check for the availability of the product
3. In case the product is out of stock, the sales team approaches the Production Planning Department to manufacture the product
4. The production planning team checks with inventory department for availability of raw material
5. If the raw material is not available with inventory, the Production Planning team buys the raw material from the Vendors
6. Then Production Planning forwards the raw materials to the Shop Floor Execution for actual production
7. Once ready, the Shop Floor Team sends the goods to the Sales Team
8. Sales Team who in turn deliver it to the client
9. The sales team updates the finance with revenue generated by the sale of the product. Production planning team update the finance with payments to be made to different vendors for raw materials.
10. All departments approach the HR for any Human Resource related issue.

Key benefits of the centralized system are:

• It eliminates the duplication, discontinuity, and redundancy in data
• Provides information across departments in real time.
• SAP Company provides control over various business processes
• Increases productivity, better inventory management, promotes quality, reduced material cost, effective human resources management, reduced overheads boosts profits
• Better customer interaction and increased throughput. It also improves customer service
• Hence, a centralized enterprise management system is required.
• SAP Software is a centralized enterprise management system, also known as Enterprise Resource Planning.
• The abbreviation of SAP is Systems Applications and Products in Data Processing.