Fire up your online shopping website of preference and it will helpfully recommend some items you might like. Apply for a job at a large company and a representative will reply to you individually. Ask for an out-of-stock item at a store and it will be ordered in for you the next day.
All of these things happen thanks to SAP.
SAP is one of the most-used technologies in the world, and yet even if you have heard of it, or know someone who works in the field, it is still more than likely that you are in the dark as to what is really is.
Lifting the lid on SAP – the complex technology behind everyday processes – it all starts in Weinheim, Germany, 1972.
SAP the company
Five engineers, Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira and Claus Wellenreuther, were working on an enterprise-wide resource planning system (ERP) at IBM, only for the company to purchase a completed ERP from Xerox. Instead of abandoning the project, the five engineers abandoned IBM and founded their own company, exclusively focusing on this new ERP.
They named the company ‘System Analysis and Program Development’ or SAP. They gave their software the same name. This decision led to decades of confusion, since other companies also went on to develop SAP software. But it might have been a wise one, since SAP the software now cannot be mentioned without invoking SAP the company. This was the ERP equivalent of Microsoft naming their company ‘Operating System’.
What is SAP?
SAP is a centralised Enterprise Resource Planning (ERP) system that provides business solutions for large companies.
It provides a method for which any department in a company can continuously update a centralised database. This streamlined system for internal communication yields faster services and enhanced efficiency. Instead of each department corresponding directly with each other, departments can simply check a database for real time information.
SAP can be applied to any department in a variety of ways and it should come as no surprise that there are whole career paths based around advising companies on how best to implement SAP.
How does SAP help with efficiency?
The typical process of a manufacturing company that does not use SAP involves several steps in which several departments relay information back and forth.
If a business implements a centralised ERP system like SAP, all the information every department needs is stored on a central database, meaning everything is quicker, cheaper, more efficient and more accurate.
SAP’s ability to boost efficiency can be exemplified in the following commonplace scenario: a customer asks a customer service assistant working at a retail store for a product they cannot find.
In an SAP-less world, the following events may ensue:
- Shop assistant communicates directly with the warehouse for a stock update
- If the warehouse is also out of stock, the warehouse staff will have to contact the manufacturers to order more and ask how long it will take
- The manufacturers may have to contact their suppliers if they need more materials to make more of the product before they can tell the warehouse workers how long this delivery will take
- Then, the message will have to be passed back down the communication chain before the customer can get the answers they need
With SAP, none of this would happen. All parties (the suppliers, the manufacturers, the warehouse and the store) update one database in real time. To answer the customer’s question, all the store assistant needs to do is check the database. If configured effectively, SAP can ensure next day delivery of stock.
You can see how a similar database could be invaluable for any type of company dealing with increasingly tech-reliant warehouses. SAP, combined with tech-driven, large-scale warehouse solutions can create an extremely efficient system that’s convenient for customers and companies.
The future of SAP
Despite their history of innovation since the 1970s, SAP have been reluctant to embrace change. They took a stance against cloud computing when it first rose to prominence, labelling it “unsecure”. Investors became skeptical, and new CEOs were appointed.
With this change in leadership came a change in practice, and SAP now offers a wide range of cloud computing products, including their HANA cloud platform, which is one of the biggest in the world.
SAP the company is still seeing increasing competition from startups that offer tailor-made resource planning solutions that are not enterprise-wide. Salesforce, for example, aims to provide the most comprehensive and user-friendly customer-service and sales planning solution on the market. Even simpler online productivity and task-management programs like Trello rival aspects of SAP’s enterprise-wide service.