What Is SAP Software Used For? SAP ERP Technology Systems Explained
Today, businesses are heavily reliant on technology to drive efficiency and production. In the past few decades, enterprise resource planning (ERP) systems have become integral to many businesses.
But why is that so? What is SAP software used for exactly?
SAP ERP software is one of the most widely used ERP systems today. The system provides a unified space for all business operations, covering every aspect of production, from raw materials management to finished goods and shipping.
Let's take a closer look at what SAP software can do and explain the inner workings of the SAP ERP technology systems.
What does SAP stand for in ERP?
SAP stands for “Systemanalyse Programmentwicklung,” which was later abbreviated to SAP. The English translation and the SAP full form in ERP is “System Analysis Program Development.” SAP is pronounced as individual letters (S-A-P) as it’s an initialism of the company's original German name and not an acronym.
SAP SE is a multinational software company and a market leader in ERP. The company has more than 230 million cloud users. Also, it has developed more than 100 solutions covering all business functions and serves customers in more than 180 countries around the world.
Although the company offers on-premises, cloud, and hybrid development models, its main focus is its cloud computing options. The "SE" in "SAP SE" stands for Societies Europea because the company is registered with the European Union according to corporate law.
So, what is SAP software? Our definition
Before we get into the details of the SAP computer software, let’s give a quick SAP software definition. In short, SAP is a widely-used enterprise resource planning software that gathers and processes data from all business functions on one platform.
SAP is a software used by many businesses, including small businesses, midsize companies, and large corporations. SAP is critical for a company's success as it allows departments to communicate and collaborate more efficiently.
In addition, it helps companies accelerate workflows, improve customer experience, and raise productivity. Ultimately, SAP computer software can help businesses obtain higher profits.
What is SAP used for in business?
SAP uses range from financial management and spend management to enterprise resource planning and supply chain management. Let’s see these uses in greater detail below.
Enterprise Resource Planning
The SAP S/4HANA is a complete modular cloud ERP powered by artificial intelligence and analytics. It's the latest version of SAP and the successor to SAP R/2, SAP R/3, and SAP ERP system.
The software supports and integrates every functional area of business processes, such as sourcing and procurement, manufacturing, asset management, R&D and engineering, and more.
We have a post that discusses the differences between ERP accounting software vs normal accounting software. Learn what is ERP, why it is superior to accounting tools, and why you should invest in such software when your business operations start to grow.
The Financial Management software helps finance departments grow revenue, control cost, and minimize risk.
The software comes with a comprehensive suite of financial accounting and management features that equip companies with all the tools they need to keep track of their finances.
Some of those features include financial planning and analysis, accounting and tax management, treasury and cash management, and accounts payable and receivable.
CRM and Customer Experience
The CRM and Customer Experience software provides end-to-end insights into your customer activity by connecting your commerce, marketing, sales, and service data. Some of the best functionalities include a Sales CRM platform, Marketing CRM platform, Customer service CRM system, and Commerce CRM system.
The Spend Management software helps businesses gain a more unified view of their spending to reduce costs, mitigate risks, improve collaboration, and ensure every spending decision aligns with the business strategy.
Supply Chain Management
The SAP Supply Chain Management (SAP SCM) software helps businesses get customer-centric products to market faster and at less cost. The supply management solution includes different modules, including supply chain planning, logistics, manufacturing, product lifecycle management, and enterprise asset management.
Human Capital Management
The SAP SuccessFactors HXM Suite helps businesses understand what employees need, how they work, and what motivates them. It comes packed with powerful capabilities, such as employee experience management, core HR and payroll, talent management, and HR analytics and workforce planning.
Which industries can use SAP systems?
SAP systems can be used by businesses in any industry, from automotive and healthcare to energy and telecommunications.
For example, SAP in IT companies is often used to help businesses deliver innovative products, optimize the supply chain, and exceed customer expectations. SAP systems in the automotive industry assist businesses with designing innovative vehicle products and services and getting them to market fast.
Businesses in the consumer industries, such as fashion, life sciences, retail, and wholesale distribution, use SAP solutions to gain a real-time view into inventory, optimize demand-supply matching, and drive consistent customer interactions across channels and regions on one platform.
In short, any business with more complex operations and processes has a lot to benefit from using SAP systems.
Pros and cons of the SAP application lineup
We’ve already established that SAP is a popular type of ERP software system for various business applications.
But what are SAP applications good for? And, are there any disadvantages of these applications?
Let’s get into the main advantages and disadvantages:
SAP technology advantages
One of the most important advantages of SAP technology is effective data processing and collaboration between departments. Data is maintained at a central location and shared with various departments. For example, the sales department will have access to information or data from the production planning department.
Let's imagine a customer contacts the sales team, asking about buying a product urgently. The sales department has real-time information access to the number of products in inventory, which the inventory department regularly updates. The sales team responds to customer requests promptly, leading to improved customer satisfaction and higher revenue.
Another advantage is the reduction of duplicate records and data entries. All data will be stored in a single database, and the system will automatically report the most recent system records. SAP systems also improve data quality and security using built-in security systems and firewalls.
Moreover, SAP software comes with various SAP modules for different departments, such as customer relationship management, finance management, and enterprise resource planning. This makes the software highly adaptable and flexible.
Additional benefits include increased productivity, improved quality, reduced material cost, effective human resources management, reduced overhead, and better analysis and forecasting.
Finally, as we previously mentioned, SAP systems are suitable for almost every industry and for businesses of all sizes, except for micro businesses.
SAP technology disadvantages
One of the biggest disadvantages of SAP technology is the high purchase and implementation costs.
In addition to buying the software, some other associated costs include hiring external consultants, training employees on how to use the software, periodic updates, software maintenance, etc.
Another downside is the system's complexity, which means you'll have to invest in learning resources to educate yourself and your employees on the ins and outs of the software.
How to use SAP software
Here are seven major steps of how to use SAP software:
Start by making a list of what you'll be needing from SAP software.
Make a list of software that meets your requirements and budget.
Take advantage of the free trial or request a free demo to see how the software works and whether it fits your business well.
Train your employees on how to use the software. Everyone should be properly onboarded. Clearly explain the plan and assign responsibilities.
Consider hiring SAP consultants who will provide training to your employees on how to operate the software best.
Once all employees have learned the system, migrate your business operations to the new environment.
Finally, make sure that you’re keeping your system up to date. SAP systems are designed to be constantly updated.
Where do I get the SAP software solution?
To get the SAP software solution, visit SAP’s website for more information about trials and pricing plans. The good news is that you can try out the latest versions of every module, including analytics, CRM, data management, and the ERP platform.
The free trial is a great chance to see for yourself if the platform is a perfect fit for your business. You can start in a production environment, try out services, and easily switch to the paid service plan.
If you find the SAP software solution unsuitable for your business, there are many alternatives on the market. Microsoft Dynamics, Oracle NetSuite, and Acumatica Cloud ERP are the best SAP alternatives.
Our conclusion on the SAP system application and products
SAP ERP technology systems have been around for decades and have proven to be a successful business management solution. The business processes that are managed through ERP solutions are extensive and complicated, so it makes sense that many businesses invest in platforms that can simplify their processes and drive better collaboration.
The SAP HANA is one of the best industry-known ERP tools powered by AI and analytics that offers many benefits to businesses. It was built to support complex business operations and is a complete business framework that manages everything from finance and accounting to manufacturing and marketing.
In a nutshell, SAP offers a robust set of features that help businesses function more effectively and at higher levels of efficiency. It's a multi-dimensional solution that's flexible, scalable, and easy to use if appropriately implemented.
It can also be used for many different types of businesses, including manufacturing, retail, wholesale distribution, healthcare, automotive, high-tech, and telecommunications.
But if SAP software is too heavyweight for your company and you need regular accountancy software for your small business, we have a post that reviews the 15 best online accounting SaaS on the market today.