SAP is an enterprise resource planning software that manages business processes like finance, supply chain, manufacturing, and more. It uses a 3-tier client-server architecture and ABAP as its proprietary programming language. SAP's modules are organized into functional areas like finance, sales, production, and more. Implementing SAP requires configuration of the software to meet a company's needs through customization, interfaces, and data conversion programs. SAP licenses are based on the number of users and their level of access. The enterprise structure in SAP defines how a company is organized in areas like finance, purchasing, and sales for reporting and transaction purposes.

1. SAP for Managers:
An Overview
Friday, February 27, 2015 1

2. SAP Fundamentals
Friday, February 27, 2015 2
• Full name of SAP translates into English from German as
“Systems, Applications and Products in Data Processing”
• The full name of SAP is rarely used now
• SAP is pronounced as “ES-AYE-PEE” and not “SAP”
• SAP’s architecture is based on “3-tier” client-server
technology (GUI layer, application layer and database layer)
• Hence the name “R/3”
• “R/3” does not stand for “Release 3”
• ABAP/4 (Advanced Business Application Programming
Language Version 4) is the proprietary programming
language in which the SAP product is programmed and
customisation done
• SAP has categorised basic business processes in an
organisation.
• These “building blocks” of processes are called “modules”
• SAP’s “honeycomb structure” depicts the “core R/3 modules”
• SAP upgrades to new features through version management
• The latest version of SAP is mySAP ECC (Enterprise Core Component) 6.0
• Previously SAP versions were named as 4.xa. The last version is this series
was SAP version 4.7. After this SAP discontinued this nomenclature and
moved to ECC nomenclature
• To cater to specific country needs, SAP has various “country
versions” to be bolt-on the base R/3. Now some country
version is built in ECC
• Country Version for India is called CIN (Country India Version)
• To cater to industry specific requirements, SAP has various
Industry Solutions (IS) e.g. IS-Oil for Oil and Gas, IS-Mills for
Mill Products, IS-Retail for Retail
• E-commerce based modules like CRM, SRM are added
components to R/3
Sales &Sales &
DistributionDistribution
SDSD
MMMM
PPPP
QMQM
PMPM
HRHR
FIFI
COCO
TRTR
PSPS
WFWF
ISIS
MaterialsMaterials
Mgmt.Mgmt.
ProductProduct
PlanningPlanning
QualityQuality
Mgmt.Mgmt.
Plant MaintePlant Mainte--
nancenance
HumanHuman
ResourcesResources
FinancialFinancial
AccountingAccounting
ControllingControlling
TreasuryTreasury
ProjectProject
SystemSystem
WorkflowWorkflow
IndustryIndustry
SolutionsSolutions
R/3R/3R/3
Client/Server
ABAP/4
Client/ServerClient/Server
ABAP/4ABAP/4
Sales &Sales &
DistributionDistribution
SDSD
MMMM
PPPP
QMQM
PMPM
HRHR
FIFI
COCO
TRTR
PSPS
WFWF
ISIS
MaterialsMaterials
Mgmt.Mgmt.
ProductProduct
PlanningPlanning
QualityQuality
Mgmt.Mgmt.
Plant MaintePlant Mainte--
nancenance
HumanHuman
ResourcesResources
FinancialFinancial
AccountingAccounting
ControllingControlling
TreasuryTreasury
ProjectProject
SystemSystem
WorkflowWorkflow
IndustryIndustry
SolutionsSolutions
R/3R/3R/3
Client/Server
ABAP/4
Client/ServerClient/Server
ABAP/4ABAP/4
SAP’s famous “honeycomb structure”
depicting the core R/3 modules

3. SAP Core Modules
Friday, February 27, 2015 3
Sales and Distribution (SD)
Customer Master, Enquiry, Quotation, Sales Order Processing, Pricing, Credit Management, Transportation, etc
Materials Management (MM)
Vendor Master, Enquiry, Quotation, Purchase Orders, Pricing, Inventory Management, Inventory Valuation, Stock Transfer, etc
Production Planning (PP)
Planning Strategy, MRP, BOM, Routing, Work Center, Production Orders, etc
Quality Management (QM)
Inspection Plan, Incoming Quality, In-process Quality, Finished Goods Quality, Quality Certificates, etc
Plant Maintenance (PM)
Maintenance Orders, Breakdown Maintenance, Preventive Maintenance, Maintenance Notifications, etc
Human Resources (HR)
Payroll, Training, Recruitment, Performance Management, etc
Financial Accounting (FI)
Chart of Accounts, Accounts Payable, Accounts Receivables, Invoice Verification, Asset Accounting, etc
Controlling (CO)
Cost Center Accounting, Profit Center Accounting, Internal Orders, Product Costing, etc
Treasury (TR)
Funds Management, Cash Management, etc
Project Systems (PS)
Work Breakdown Structure (WBS), Internal Projects, External Projects, Project Costing, etc
Workflow (WF)
Not a separate module actually but the feature is built into most modules

4. SAP “New Dimension” Product Portfolio
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Non R/3 modules – With the advent of e-business and various other specific business
requirements, SAP added new modules around 1998-99
CRM – Customer Relationship Management intended to capture sales transactions over the net and
also other features like call center activities. This product is a close competitor to Siebel.
SRM – Supplier Relationship Management intended to capture purchases over the net
PLM – Product Lifecycle Management
APO – Advanced Planner and Optimiser intended to provide features of rule based shop floor
scheduling and optimisation, global availability checks across multiple plants, transportation
optimisation, etc. This product is a close competitor to i2.
BW – Business Warehouse intended to provide management reporting and data mining
SEM – Strategic Enterprise Management intended to provide financial consolidation for group
companies, balance score card, etc
DMS – Document Management System
EHS – Environment, Health and Safety
SAP has now reorganised its module based components into process based components and
included e-business components into it. But module based terminology is still popularly
used in most cases.
SCM – includes erstwhile MM, PP, PM, APO and SRM modules
CRM – includes erstwhile SD and CRM modules
Financials – includes erstwhile FI, CO, SEM and BW modules
PLM – includes erstwhile QM and PLM modules
Industry Solutions (IS)
Various Industry specific solutions like IS-Oil, IS-Mills, IS-Auto, IS-Banking, IS-Retail, etc

5. SAP Technical Areas: ABAP and BASIS
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Technical areas of SAP consist of
ABAP
BASIS
BASIS involves
Server sizing
SAP system installation
Database administration
Performance tuning
Transports (i.e. transporting configuration and customisation
from one system to another)
User authorisations
“Patch” and “Hot Pack” applications
Patches or hot packs are pieces of “correction codes” released by
SAP from time to time or when there is a product problem
SAP version upgrade

6. SAP Technical Areas: ABAP and BASIS
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SAP’s Source Code
SAP identified
“user exit” at pre-
defined points in
source code
You can write your
own code here
and return to
source code
You will require a special
key from SAP to modify
“source code”. It is
strongly discouraged as
SAP may consider to
withdraw its warranty
support if source code is
modified
ABAP involves programming in ABAP
language for customisation popularly
called “RICEF”
Reports (customised reports)
Interfaces (with other systems)
Conversions (for migrating data from
legacy system to SAP)
Enhancements (to address unique
business conditions by writing a piece of
code through “user exits” or “module
pool”)
Forms (for document outputs like
Invoice, Purchase Orders, etc.
Minimum customisation is strongly
recommended for
Faster testing
Easier maintenance
Easier upgrade
SAP has introduced Netweaver
technology which is an SOA (Service
Oriented Architecture) in 2003

7. Friday, February 27, 2015 7
Printed MIS vs. SAP “Drilldown” Report:
A Change in Mindset for Managers
Country Region State Target Sale ($) Actual Sale ($)
India North Delhi 100,000 110,000
India North Punjab 120,000 125,000
India North UP 80,000 75,000
India West Maharashtra 200,000 230,000
India West Gujarat 150,000 180,000
India East West Bengal 50,000 20,000
India East Bihar 30,000 25,000
Traditional MIS is comes in two dimensional printed format. Many managers today
feel comfortable in this format as they do not have to learn to extract the report
directly from the system. This comes from DYFM (Do it for me) mindset as
opposed to DIY (Do it yourself) mindset. Such MIS formats can only provide static
and limited information and cannot adequately highlight exceptions.

8. Friday, February 27, 2015 8
Printed MIS vs. SAP “Drilldown” Report:
A Change in Mindset for Managers
Country Target Sale ($) Actual Sale ($)
India 1,000,000 850,000
USA 10,000,000 10,100,000
China 5,00,000 6,00,000
“Drill-down” MIS reports, which most standard SAP reports are, can present
information in a better way enabling management by exception.
But managers need to be conversant with using the system to view and analyse
MIS online and real-time, as opposed to reports printed and given to them by
their assistants.
Region Target Sale ($) Actual Sale ($)
North 30,000 35,000
West 40,000 50,000
East 10,000 5,000
State Target Sale ($) Actual Sale ($)
West Bengal 5,000 4,000
Bihar 3,000 3,500
Jharkhand 2,000 2,200
City Target Sale ($) Actual Sale ($)
Kolkata 3,000 500
Durgapur 1,000 1,500
Siliguri 2,000 2,000

9. Friday, February 27, 2015 9
Interfaces: A Key Element in Customisation
Complexity of Interfaces depend on factors like whether
they are one-way or two-way, real-time or batch, etc.
Core Processes
including HR is in SAP
3rd Party Payroll
Software
Employee Master Data
Consolidated Financial Entry

10. Friday, February 27, 2015 10
Conversion Programs: Key to
Successful Data Migration
Conversion Programs assist in large volume transfer of
data from legacy systems to SAP
Raw
Data
Cleaned
Data
Full
Data
Data
Upload
Data in
SAP

11. Friday, February 27, 2015 11
SAP Products in ERP Space
SAP ECC is the flagship product of SAP meant for core
business processes of large enterprises
SAP has various non-ERP (CRM, SRM, APO, BI, BO, etc.)
and Industry Solutions (IS). Mostly Companies use them
as add-ons to ECC, though some of them can be
interfaced with non-SAP ERPs
SAP Business One (SAP B1) is a product purchased by
SAP to cater to the requirements of small and medium
enterprises
SAP Business By Design is SAP’s attempt to provide a
cloud based ERP platform
SAP Business All in One (A1) is not a separate product. It
is a Brand promoted by SAP in an attempt to
“productise” SAP ECC for Medium Enterprises

12. Friday, February 27, 2015 12
All-in One: SAP’s Attempt to
Productise ERP
Manufacturing, Financial Services, Education
Discrete, Continuous
Automobile, Electronics
Passenger Vehicle,
Auto Ancillary
Steering
Manufacturing
Your
Company
Traditional SAP Deployment: SAP ECC
configured/ customised ab-initio to
support company’s business process
SAP ECC pre-
configured to
“productise”
for a micro-
vertical
Remnant configuration/
customisation done for a specific
Company in the micro-vertical.
Expected to reduce time, effort
and cost of SAP deployment

13. Popular Licensing Policy in ERPs
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• Based on named users. E.g. SAP, Oracle
• Based on Concurrent users. E.g. Microsoft
• There are other licensing policies based on
number of employees, no. of articles, etc.

14. Types of Licenses: Example SAP
Friday, February 27, 2015 14
• Developer License – Meant for developers
• Professional License – Meant for users expected to
transact in multiple modules
• Semi Professional License – Meant for users
expected to transact in one module
• Employee License – Meant for users expected to
only view information and reports

15. SAP Licensing – Facts and Caution
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• Price of Employee License < Semi Professional License < Professional
License < Developer License
• Hence, the total licensing cost not only depends on the number of
licenses and discount offered by the vendor, but also on the mix of
licenses
• There are means to reduce the number of named licenses like using
common user id based on role or designation, using a common user id yet
capturing user information through customised tables and enhancements,
using a portal to capture transactions and then programmatically
pumping the data in SAP . Most of these techniques are violation of SAP’s
licensing agreement and hence must be avoided unless a specific
clearance is obtained from SAP

16. Commercial Elements in ERP License
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• License Price
• Annual Maintenance Contract (AMC) as a percentage of
License. To be paid annually in advance. For product bug fixes,
minor upgrades, etc. Not for maintenance of configuration
and customisation
• Taxes and Duties
• Service Tax for AMC
• Both VAT/ CST and Service Tax for License

17. SAP Enterprise Structure: Financial
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• Company Code = Legal Entity
• Profit Centre = Division below legal entity where profit
and loss statement can be obtained
• Business Area = Division below legal entity where
balance sheet can be obtained
• Controlling Area = Area where management reporting
can be obtained. Can cut across multiple legal entities
• Segments = Used for segmental reporting
• Cost Centre = Element that captures cost and passes
on to Profit Centre (where ever applicable)

18. Financial Enterprise Structure Relationships
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• Company Code to Profit Centre = 1: n
• Company Code to Business Area = 1: n
• Company Code to Controlling Area = m : n
• Profit Centre to Cost Centre = m : n

19. Financial Enterprise Structure: Application
Friday, February 27, 2015 19
Company
FMCG Tobacco Hotel
Legal Entity,
hence Company
Code
Profit Centres, if
only P&L
required
Business Area,
Balance Sheet
required

20. Financial Enterprise Structure: Application
Friday, February 27, 2015 20
Plant 1 –
Product
1
Plant 2 –
Product
1
Plant 1 –
Product
2
Plant 2 –
Product
2
Plant 1 Plant 2
Product 1
Product 2
Segment

21. Financial Enterprise Structure: Application
Friday, February 27, 2015 21
Company 1 Company 2 Company 3Consolidated view
of same business
run across multiple
companies

22. Financial Enterprise Structure: Application
Friday, February 27, 2015 22
Profit
Centre 1
Profit
Centre 1
Revenue
Cost
Centre 1
Cost
Centre 2
Cost
Centre 3
Cost
Centre 4
100%
40%
60%
100%
Cost not allocated to any Profit Centre. Gets consolidated at
Balance Sheet for financial reporting
Less: Expenses
= Profit/ Loss Cost allocation
based on rules

23. Enterprise Structure for
Inventory Management
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Plant
Storage Location
(Raw Material)
Storage Location
(WIP)
Storage Location
(Finished Goods)
Storage Bin 1
Storage Bin 2
Valuation of Inventory
is at Plant level

24. Enterprise Structure for Inventory
Management: Example
Friday, February 27, 2015 24
Manufacturing
Plant
Warehouse
Inventory
valued at $100
Transportation
Cost $10
Inventory may be valued
differently from
manufacturing plant
Manufacturing Plant and Warehouse are defined as
separate Plants in SAP as inventory may be valued
differently in these two locations.

25. Enterprise Structure: Purchasing
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Purchasing Organisation – Administrative unit responsible for certain type of
purchases e.g. Central purchases for above certain value, local purchases, etc.
Purchasing Group – Groups under a Purchasing Organisation responsible for
certain category of purchases, e.g. Raw material group, Spares and consumables
group
Purchase Organisation to Purchasing Group = 1 : n
Purchase Organisation to Plant = 1 : n
Purchase Organisation to Company Code = n : 1

26. Purchasing Enterprise Structure: Example
Friday, February 27, 2015 26
Head Office
Central Purchasing
Organisation for high value
purchase
Manufacturing Plants
Plant Purchasing Organisation
for urgent lower value plant
specific purchase
Regional Offices
RO Purchasing Organisation for
office supplies

27. Enterprise Structure: Sales and Distribution
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Sales Organisation – Administrative unit responsible for sales, typically over a
particular region
Distribution Channel – Supply Chains through which products are distributed e.g.
Retail, wholesale, internet, etc
Division = Similar product groups
Sales Area = Combination of Sales Organisation, Distribution Channel and Division
Sales Office = Organisational units responsible for sale under a Sales Area
Sales Employee = Employees in a Sales Office

28. Sales and Distribution
Enterprise Structure: Example
Friday, February 27, 2015 28
Tobacco FMCG
North
West
East
South
Wholesale Retail
Sales
Organisation
Division
Distribution
Channel

29. What is Master Data?
Friday, February 27, 2015 29
• Master Data refers to data that is relatively “static” compared to
the other type of data i.e. Transaction data
• For example, Material Master is a Master Data, while Purchase
Order is a transaction data
• In SAP Master Data does not only carry information about the
data element (e.g. Material code, material description, etc. in case
of Material Master, but also data that defines certain business
processes, e.g. MRP type, Planning Strategy, Valuation Class, etc.
• Hence, maintaining master data with correct value is of utmost
importance in SAP

30. Example: Material Master
Friday, February 27, 2015 30
“Views” of the master for an
organisational element (e.g. Company
code, plant, etc.) define what the
master is and how the master should
drive the transaction for different types
of transactions e.g. Accounting
transaction, costing transaction, MRP
transaction, etc., for the particular
organisational entity

31. Example: Customer Master
Friday, February 27, 2015 31
Customer’s Head Office
From where PO was issued
Sold-to Party
Customer’s Plant
Where the goods have to be
shipped
Ship-to Party
Customer’s Regional Office
From where payment is made
Bill-to Party

32. Example: Bill of Material
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• Bill of Materials (BOM) refers to a structured
multilevel hierarchy depicting the components
that are required to manufacture the finished
products including the quantities of the
components required for one unit of the finished
product and then the components that are
required to manufacture the components.
• In the example here, 2 units of B and 1 unit of C
are required to manufacture 1 unit of A and then
3 units of X and 2 units of Y are, in turn, required
to manufacture 1 unit of B
• The final product which is not further processed
and sold to the customer (A, in this example) is
called “finished product”. The intermediate
products made out of raw materials and that go
as input to the finished product are called Semi-
finished product (B, in this example). The
materials which are procured from outside (X and
Y in this example) are called “raw materials”
A (1)
B (2) [1] C (1)
X [3] Y [2]

33. Example: Routing
Friday, February 27, 2015 33
• Routing is a set of manufacturing processes that are required to manufacture a product from its
components
• In the above diagram, an oval shaped sheet is to be manufactured from a square sheet. For this, the square
sheet needs to be “cut”, then the edges of the oval sheet needs to be smoothened through “chamfering”
process and finally the oval shaped sheet needs to be “packaged” before sending to the customer. These
manufacturing steps are called “Operations”
• These operations are executed in a machine or group of machines or by a group of people. These or they
are called “Work Centers”
• Each operation takes a certain number of hours to be completed, in general. This is called “Standard Time”
Operation No. Work Centre Operation Standard Time
(Hrs.)
10 Lathe Cutting 20
20 File Chamfering 10
30 Labour Packaging 5

34. Understanding Plant Operations with SAP:
Procurement
Purchase Requisition
Purchase Order
Goods Receipt
Invoice Receipt
Payment
Basic Purchase Cycle
User Dept
Purchase Dept
Stores Dept
Accounts
Dept
Stock
Accounting
3 Way Invoice
Verification
Accounts
Dept
Impact on Accounting
Material
document
Accounting
document

35. Understanding Plant Operations with SAP:
Sales Planning
• Towards the end of Month M0, you plan for M1, M2 and M3 with the requirement of Month M1 as
Firm (F) and requirements of Months M2 and M3 as Tentative (T).
• When you come to end of Month M1, you revise the requirement of Month M2 and make it Firm,
you also revise the requirement of Month M3, but still keep it Tentative and you forecast the
requirement of Month M4 also.
• Since the plan “rolls over” at the end of each month to new set of firm and tentative plan, this type
of planning is called “Rolling Plan”.
• In this particular case, it is a “3 month Rolling Plan”
M0 M1 M2 M3 M4 M5
100 (F) 120 (T) 130 (T)
110 (F) 120 (T) 150 (T)
125 (F) 140 (T) 160 (T)
Rolling Plan for Product A
At Month M0
At Month M1
At Month M2

36. Understanding Plant Operations with SAP:
Deterministic and Consumption Based Planning
• Deterministic Planning is a type of MRP applied to components or products whose demand is determined by the
demand of the final product and hence controlled by the Bill of Materials. Normally materials used for production
including raw materials, semi finished products and finished products are planned based on deterministic planning
• Consumption based planning is a type of MRP applied to materials which are consumed in the organisation but whose
demand is not directly determined by the demand of the products the company produces or sells. Spare parts,
consumables like stationary, etc. are planned using Consumption based planning. Important determining points in
Consumption based planning are
• Reorder quantity (based on Economic Order Quantity or EOQ)
• Reorder point
• Lead time of procurement
• Safety Stock
A (1)
B (2) [1] C (1)
X [3] Y [2]
Reorder
Qty (EOQ)
Reorder
Point
Lead Time
to Procure
Safety
Stock

37. Understanding Plant Operations with SAP:
Planning Strategies
• Planning Strategies are primarily 2 types
• Make to Order – When a company procures the components and manufactures the semi-finished and
finished products after receiving confirmed order from customer
• Make to Stock – When a company procures the components and manufactures the semi-finished and
finished products based on forecast before receiving confirmed orders from customers
• Make to Order and Make to Stock strategies optimise two counter-acting forces (a) speed of service or
delivery (b) inventory carrying cost
• Hence, most companies try to balance these two counter acting forces by adapting a hybrid of make to
order and make to stock strategies
A
B C
X Y
Make to
Stock
Make to
Order
If the company forecasts at the
level of finished product, it is called
“Planning without Final Assembly”
If the company forecasts at the
level of semi-finished product, it is
called “Planning at assembly level
Fixing this “bar” depends
on (a) value addition from
B to A (b) variability at
finished product level
At what level a company can
forecast depends on (a) if B
is also sold (b) variability of A

38. Understanding Plant Operations with SAP: MRP
• Demand Elements create demand e.g. PIR (Planned Independent Requirement), Dependent Requirement, Sales Order (if Sales Order is both a
Planning AND Execution Instrument, if Sales Order is ONLY an Execution Instrument, then it is not a Demand element)
• Supply Elements satisfy the demand created by Demand Elements, e.g. Stock, Planned Order, Purchase Requisition, etc.
• MRP Run ATTEMPTS to balance the Demand Elements and Supply Elements i.e. after an MRP Run Demand Element <= Supply Element
• Lot Size determines the quantity in which the products can be produced from an engineering perspective. In a fixed lot size scenario, products
can be made only in specific lots, neither more nor less. In that case, multiple planned orders can be created and Supply Element may become
greater than Demand Element after execution of MRP. In the example above, if the manufacturing process of A dictates to produce based on
fixed lot size of 50, then 2 planned orders each of 50 will be created. Thus Supply Element will be greater than Demand Element by 20 after MRP
Run. The Production Planner can then decide whether to produce 2 lots of total 100 (and hence have an excess inventory of 20) or 1 lot of 50
and risk loss of sale of 30 units
• If there is a Sales Order of 20 units, whether it will be considered as Demand Element or not depends on whether the Planner considers this
order a part of forecast (PIR) which has got converted (in which case the Sales Order is just an Execution Instrument) or this is an additional
Demand Element over and above the forecast of 100 (in which case the Sales Order is both a Planning and Execution Instrument). In the former
case there will be no change in the Planned Order of 80. But, in the latter case, a Planned Order of 100 will be created.
Demand (-)/ Supply (+)
Elements
Value
PIR 100-
Stock 20+
Planned Order 80+
A (1)
B (2) [1] C (1)
X [3] Y [2]
MRP Run Output for A
Demand (-)/ Supply (+)
Elements
Value
DReq 160-
Stock 40+
Planned Order 120+
MRP Run Output for B

39. Understanding Plant Operations with SAP:
Shop Floor Planning
• Material Availability Check
• Capacity Planning
• Scheduling
• SAP ECC supports planning assuming “infinite
capacity”. Overloaded capacity can be manually
(i.e. not algorithmically) levelled

40. Understanding Plant Operations with SAP:
Capacity Planning
Forging
Machine
Lathe
Machine
Packaging
Machine
Input
Material
Output
Material
P1
(1 unit)
10H 20H 5H
P2
(1 unit)
30H 10H
0 HR 10 HR 10 HR 30 HR 30 HR 35 HR
0 HR 30 HR 30 HR 40 HR
Infinite capacity planning scenario
• Throughput time for P1 is 35 hour and that for P2 is 40 hour
• No wait time
• No bottleneck capacity

41. Understanding Plant Operations with SAP:
Capacity Planning
Forging
Machine
Lathe
Machine
Packaging
Machine
Input
Material
Output
Material
P1
(1 unit)
10H 20H 5H
P2
(1 unit)
30H 10H
0 HR 10 HR 30 HR 50 HR 50 HR 55 HR
0 HR 30 HR 30 HR 40 HR
Finite capacity planning scenario
• Throughput time for P1 is 55 hour and that for P2 is 40 hour
• Wait time of 20 hour for P1
• Lathe machine is a bottleneck capacity
BOTTLENECK
Wait time = 20 HR

42. Understanding Plant Operations with SAP:
Production Execution (Discrete)
Planned Order
generated from MRP
Make
or Buy?
Purchase
Requisition
Buy
Procurement
Process
Production Order
Check Availability
of Materials
(Available to
Promise – ATP)
Capacity Planning
Scheduling
Goods Issue from
Stores to Shop
Floor (Material
Requisition Note
or MRN and
Goods Issue Slip)
Goods Issue of
input materials
(copied from
BOM) to
Production Order
Confirmation of
Operations in
Production Order
(copied from
Routing)
Good Receipt
from Production
Order to Finished
Goods Storage
Material in WIP
(Work in
Progress)
WIP gets
converted to FG
(Finished
Goods)

43. Understanding Plant Operations with SAP:
Costing
Fixed Variable
Indirect
Direct

44. Understanding Plant Operations with SAP:
Product Costing
A (1)
B (1)
C (1)MAP = $10
Standard Processing Cost = $ 20
Standard Cost = $30
Standard Processing Cost = $ 50
Standard Cost = $80
Actual units
issued = 2
Actual units
issued = 1
Actual Cost = $10 *2 + $ 30 = $ 50
Variance for process = $ 20
Inventory valuation at standard = $ 30
Inventory valuation at actual = $ 50
Actual Processing Cost = $ 30
Actual Processing Cost = $ 70
Actual Cost = $50 + $ 70 = $ 120
Variance for process = $20
Inventory valuation at standard = $ 80
Inventory valuation at actual = $ 120

45. Understanding Plant Operations with SAP:
Sales and Distribution
Sales Order
Availability Check
Credit Check
Picking and Packing
Post Goods Issue
Transportation

46. Types of ERP Projects
• Greenfield Implementation
• Roll-out
• Enhancement
• Upgrade (Functional and Technical)
• Maintenance

47. Delivery Models
In-house Outsourced
Onsite
Offshore
Near Shore
Greenfield Implementation Maintenance

48. Greenfield SAP Implementation Method: ASAP
Project
Preparation
Business
Blueprint
Realisation
Final
Preparation
Go Live and
Hyper Care
Support

49. Project Preparation: Key Activities
• Detailed Project Plan
• Detailed Project Scope
• Project Governance
• Hardware and Network Sizing
• Implementation Strategies
• Interface Strategy
• Data Migration Strategy
• Reports Strategy
• Authorisation Strategy
• Training Strategy
• Organisational Change Strategy

50. Business Blueprint: Key Activities
• To Be Process
• Key Data Structure Design
• Functional and Technical Specs for RICEF
• Authorisation Matrix Definition
• Organisational Impact Analysis
• Training Calendar
• Raw Data Collection and Cleaning

51. Realisation: Key Activities
• Configuration
• Customisation
• Unit Testing
• Integration Testing
• User Acceptance Testing
• Authorisation Profile Setup and Testing
• Full Data Preparation for Migration
• Training Manual Preparation
• Change Management Communication

52. Final Preparation: Key Activities
• Master Data Migration
• End User Training
• Cut-Over Strategy
• Help Desk Setup

53. Go Live and Hyper Care Support: Key Activities
• Go Live
• Hyper Care Support
• Monitor SLA
• Project Closure

54. Go Live and Cutover
Implementation Start
April 1, 2015
Go Live
April 1, 2016
Cut Over
April 5, 2016
Black Out

55. Types of Commercial Arrangements
• Fixed Fee
• Time and Material
• Mixed Mode

56. Components of Total Cost of
Ownership in ERP Projects
• License Fee
• AMC for License
• Hardware and Networking
• Consulting Fees
• Travel and Living Expenses
• Taxes and Duties
• Hidden Costs – Cost of Internal Resources, Change Management Costs

57. Calculating “Charge-out Rate”
Heads $
Direct Salary 100
Company Overheads 30
Non Billable Resource Cost 20
Sales and Marketing Cost 40
Bench Cost 30
Margin 80
Charge Out Rate 300
Charge Out Rate: Direct Salary = 3

58. Effort Estimation Template
Module Level of
Resource
Charge-
out Rate
PP BB BB RZ RZ FP PIS
Prj. Mgr PC 100 1 1 1 1 1 1 0.5
SD SC 80 1 1 1 1 1 1 0.5
SD AC 50 0 1 1 2 2 1 1
MM SC 80 1 1 1 1 1 1 0.5
MM AC 50 0 1 1 2 2 1 1
FI SC 100 1 1 1 1 1 1 0.5
FI AC 60 0 1 1 2 2 1 1
ABAP SC 70 1 1 1 1 1 1 0.5
ABAP AC 40 0 1 1 4 4 2 1
BASIS SC 70 1 1 0.5 0.5 0.5 0.5 0.25
BASIS AC 40 0 1 1 1 1 1 1