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What is ERP (Enterprise Resource Planning) Software | ERP Systems

What is ERP (Enterprise Resource Planning)

In this article you will learn what is ERP software and how the ERP systems helps organization for day to day business process.

ERP is a business software system that support business or enterprise throughout the organizing, planning, maintaining, tracking and utilization of  organization resources(Man, Machine, Material and Money).

If you are new to ERP, the first question which arises in your mind is What is an ERP (Enterprise Resource Planning), ERP System, ERP software and why it is so important for business success. 

Let discuss briefly about what is an ERP software and how it helps in business achievements.

Its recommended to read previous SAP training article what is SAP.

  • ERP stands for Enterprise Resource Planning.
  • ERP is gate way to integrate the data and processes of an organization into single system with all modules that supports the core business areas. Its recommended to read about SAP modules list.
  • Enterprise Resource Planning systems cover all basic functions of an organization 
  • Enterprise Resource Planning is developing into a Multi-Module Application Software Package that enables business processes across the supply chain management. 
  • ERP Software allows to integrate all the operational units such as financing, human resources, manufacturing, sales, marketing, finance & accounting, procurement, inventory management and so on.
  • ERP software system allows the business to achieve real time business process, increase productivity,  improves delivery, reduce cost and increase profits, increase product quality,improve information and performance management.

If u get an query what is erp, simply we can explain ERP is a business suite with number of applications that are integrated together and assist a organization in collecting, managing and reporting information throughout the business process.

What is ERP- Enterprise Resource Planning?

Why do we Need ERP Software

ERP is an integrated systems of different business process for e.g. if a company has different departments like sales department, production department, material management, finance department,etc, so in ERP we have an integration of all the departments and they all use common database.

  1. We can have standardization of systems across locations. For e.g. for MNC companies can have different plants in different locations with standard systems.
  2. Erp systems helps to have a better controlling over the different process.
  3. As ERP is a integrated systems, it helps to provide the better reporting.

History of ERP Systems

  • ERP System have took years to emerge and is still evolving. These systems are transformation and ever-changing.
  • Before early ERP-type systems emerged, in the prehistoric age of 1960 and early 1970’s Departmentalised systems came into picture.
  • In 1970’s manufacturing chain was the center of business operations. This led to the development of MRP systems.
  • The second phase of ERP development occurred in 1980’s which focused more on quality measures which led to the evolution of MRP II Systems.
  • In the 1990’s, Enterprise Resource Planning started using multi-module application to increase organizations process. ERP Systems integrates with all the modules of organization’s business modules and this led to the evolution of ERP System.
  • The benefits of  ERP systems are: customer satisfaction, better information, productivity, increased quality and decreases in time to market, product cost, delivery time, inventory levels.

Top ERP Vendors list.

ERP Vendors are classifies based upon clients  they service. We have three types of ERP vendors they are Tier I, Tier II, Tier III. Here we are going to list top ERP Vendors in the following sectors.

  1. Manufacturing and Distribution Industry.
  2. Transport, Communication, Energy and Sanitary service.
  3. Service Sector and finally
  4. Retail Sector.

Top ERP vendors in Manufacturing and Distribution Industry.

 SAPOracleMicrosoftInfor Epicor IFSlawson Others
Market Share28%15%12%7%5%2%2%29%

TOP ERP vendors in Transport, Communication, Energy and Sanitary service.

 SAPOracleMicrosoftInfor Epicor IFSQAD Others
Market Share35%23%15%4%2%1%1%19%

Top ERP Vendors in Service Sector.

 SAPOracleMicrosoftInfor Epicor Netsuitelawson Others
Market Share30%21%15%2%3%2%2%25%

Top ERP vendors in Retail Sector.

 SAPOracleMicrosoftInfor QAD SAGElawson Others
Market Share31%22%22%2%2%2%2%17%

What is ERP software and its components

What Is ERP Systems? Enterprise Resource Planning ERP systems

The important and major components of ERP systems are manufacturing, SCM, Financial Accounting management, Human resources management and Customer relationship management.

ERP Advantages and Disadvantages

Advantages of Implementation of an ERP system :

  • Reduced redundancy in entering data
  • ERP system provides the real time information all needs of the organization in a single system.
  • It Allow everyone to access same source and  share same source of information
  • It allow to access, update instantly and saves lot of time.
  • Integration among different functional areas to ensure proper communication, productivity and efficiency
  • The Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level.
  • Allow standardisation of business processes and enterprise’s information.
  • It is a single source of systems that can be use through out the organization.
  • ERP software enables real time information availability, reduction in inventory and cycle times.

Disadvantages of ERP Systems:- 

The disadvantages of ERP systems are as follows :-

  • Takes a lot of effort and time and requires a lot of training
  • Customization of the ERP software is limited, you may not allowed to design application as per business requirements.
  • ERP systems can be very expensive to install.
  • ERP Systems centralize the data in one place and this can increase the risk of loss of sensitive information in the event of a security violation.
  • The usage of ERP system can be difficult for users, so appropriate training is to required to use the ERP software.

Read more for ERP Advantages and Disadvantages Before ERP What is ERP Systems - Before ERP After ERP systems What is ERP Software - After ERP Systems

What is ERP in Manufacturing

A manufacturing company could use an ERP system to track and manage virtually every operation in the organization. Requests for Proposal (RFP) and corresponding quotes can be entered and assigned to any large database of customers. Quotes can be changed to Sales orders upon receipt of purchase orders, with line items and corresponding prices that represent goods to be delivered to a customer.

What is ERP SAP

SAP is an Enterprise Resource Planning software that supports all the companies business process. It integrates with all SAP modules and provides the accurate business solutions of financial, sales, manufacturing etc.

Common ERP Software Modules

  1. Sales Order (SO)
  2. Purchase Order (PO)
  3. Finance and Accounting
  4. Manufacturing Resource Planning
  5. Customer relationship management (CRM)
  6. Human Resources
  7. Procurement
  8. Marketing

Erp systems modules

The important modules in ERP SAP Systems are as follows-

What is ERP SAP FICO: – SAP FICO stands for Financial Accounting and controlling. It is one of the important module of ERP because it store all the financial transactions data of company. It is used for extract the financial statements of balance sheet and Profit & Loss accounts for external reporting. Read more for ERP SAP FICO

What is ERP SAP MM: – SAP MM stands for Material Management, it supports the procurement process and inventory functions of day to day operations. SAP MM module carriers all the activities of material planning and control, purchasing, inventory management, goods receipt and invoice verification. Read more ERP SAP MM

What is ERP SD: – SAP SD stands for Sales and Distribution, it handles all the process of order to delivery and execute all the process of sales, shipping and billing of goods and services. Read more for ERP SAP SD.

What is ERP SAP HR: – SAP HR is also known as HCM (Human Capital Management), it handles all the activities of employees from hiring to final termination in organization. Read more ERP SAP HR

What is ERP SAP ABAP: – SAP ABAP stands for Advanced Business Application Programming, it is a fourth generation programming language that is used to develop the SAP applications. Read more for what is SAP ABAP


  1. It is a singe application integrated software program.
  2. It is a singe database systems.
  3. ERP systems allows to share the information and communicated more effectively.
  4. ERP automates customer orders, order fulfilment, billing, shipping and tracking and so on.

Also read our ERP SAP training tutorials with scenarios.

  1. SAP FICO Training Tutorials
  2. What is ERP SAP HCM
  3. SAP CRM Training
  4. ERP SAP ABAP Training

ERP Software Packages

  • Baan by Baan corporation.
  • Peoplesoft from oracle corporation
  • Oracle Application
  • JD Edwards from oracle
  • Navigen
  • SAP from SAP AG (With total 60% market share).

ERP related interview questions

  1. What is ERP (Enterprise Resource Planning)?
  2. What are the major components of Enterprise resource Planning?
  3. ERP Systems overview?
  4. What are the advantages and disadvantages of ERP systems?

Read more for SAP Training Tutorials that explains step by step with screen shots.

You are come to know exactly what is ERP systems software and its importance for business process.

Why a Career in SAP? SAP Careers guide and Advice

Why a Career in SAP?  SAP Careers guide and Advice

Why Career in SAP? Which is best SAP module to choose for career, Why  SAP? and many questions comes in mind of SAP beginners. Here we have provided solutions for the frequently asked questions on SAP careers advice, best sap module to choose for fresher & experienced, SAP job opportunities, salaries, how to get job in SAP etc.

From the last 40 years there is a huge technologies change from time to time. From mid-seventies, the usage of Mainframe computers started, in eighties the client server computing and than online internet revolution, etc. With the change of technology, every small and medium organizations are updating to new technologies. In 1970’s five former IBM employees invented new enterprise software application called as Systems Applications and Products in Date processing (SAP). In fact ERP softwares of oracle and SAP  has survived in business market. From time to time SAP has been going strong in world business market and SAP application has become as primary business application.

Why Career in SAP?

It is a good reason to have a career in SAP, because SAP was popularly known as the installed base. Large number of small, medium, large sized organization are moving to SAP application software and making as primary application. According to world ERP market share report 2013, SAP has 24% of market share in world wide.

Every year large number of companies are moving over to SAP software, so it will be a great Job opportunity to have a career in SAP and involved in implementing SAP. Also there are various job opportunities at all the companies that ERP SAP software already installed. The people who are working on SAP gets highly compensation when compared other softwares.Career in SAP

Career in SAP as fresher

When you are starting up career in SAP as a fresher, it is important to choose best SAP modules based on your interests. Modules are categorize in to two types.

  • Functional Modules
  • Technical Modules

The different types of SAP Functional modules are as follows.

List of SAP Technical Modules

So based on your educational background, experience skills, go for the best SAP module to get job. Finally, Career in SAP as a fresher or experienced, its a good choice.

Continue to read our free SAP training tutorials.

SAP FICO External and Internal Reporting

SAP FICO External and Internal Reporting.

SAP FICO External and Internal Reporting – Here we are going to discuss how the external reporting and Internal reporting done in SAP Financial Accounting Module.

In our previous training tutorials, we have discussed briefly about SAP Modules. Let us understand more about SAP FICO module.

The acronym SAP FICO stand for Financial Accounting (FI) and Controlling (CO). It is one of the most important module of all SAP Implementations and it stores the financial transactions data of a organization in real time.

Importance of FICO module for Implementation

  • SAP FI module is used for purpose of external reporting of an organization, you can draw balance sheet, profit & loss account statements for external reporting.
  • SAP CO module is used for Internal reporting, with the help internal reporting management take better wise decisions.
  • SAP FICO modules can be tightly integrated with other modules of MM, PP, SD, PM HR, PS, etc. With integration, SAP FICO external and internal reporting can be done in real time.
  • All the  accounting related transaction that are done in logistics, are posted to financial accounting and controlling in real time by automatic account determination.

FICO External Reporting and Internal Reporting

The accounts of an organization should be record, classify and present business transaction for

  • External reporting – Tax reporting
  • Internal Reporting – Management decision making

Let discuss briefly how the external and internal reporting can be done in SAP.

Transactions record in FI – Every single transaction of company is recorded in Financial accounting through date entry, integration with other modules like Asset accounting, Material Management, HR-Payroll, Sales and distribution, etc. The data that recorded in FI module can be used for external legal reporting.

The transactional date of FI flows to CO through Primary Cost elements. Primary Cost Elements and General Ledger account codes are related on one to one relationship. By design, every expense and revenue GL account there is one Cost Element.

Company Codes and Currencies – Company code in SAP can represent a organization unit i.e. company. All the companies are required to make reporting in particular local currency. So company codes are configured with currency in FI module.

With the help of Financial Statement Versions, you can group all the related account to get the balance sheet and profit loss account statements for external and internal reporting.

SAP Login and Password Change

SAP Login and Password Change

SAP Login and Password Change: – The following SAP Training guides you how to login to SAP and how to change the password. Its an good idea to know how to login in to SAP system.

After opening the SAP GUI, you can find the following options.

  • Client
  • User
  • Password
  • Language
  • New PasswordSAP Login and Password Change

Also Read: – SAP Easy Access Description.

Client: – It is a business unit that is using in ERP SAP systems. SAP administrator can have authorisation for creation / modification of client. When your logging in to SAP, you should enter client ID.

User: – Every SAP user gets an user id and password. SAP system admin creates new sap user id with roles and responsibilities that the user is going to work. First time SAP login with user is and password, you are promoted to change the password.

Password: – Every SAP user should maintain strong password and it should not be like guessing. SAP password shouldn’t be exchange and transferable. So authorized user is only allowed for SAP login with user id and password. SAP systems forces to change the old password in every 30 days.

How to create strong password – Password should consists of Numbers, Symbols, Lower case letter and Capital letters. It is recommended to maintain minimum 12 characters in Password. Don’t forget your new strong SAP password.

Language: – By default, the language option will be with key en (English). However you choose the language option.

New Password: – You are allowed to change the login password at any time. In order to changing password, you are required to enter your SAP Login ID and password. After entering the credentials click on “New Password”. Now password change option is available on initial login screen, enter your new SAP login password. It is a good practice to change password periodically.

Continue to read our free SAP basics training tutorials that explains step by step with scenarios.

What is SAP FI – Introduction of SAP Financial Accounting

What is SAP FI – Introduction of SAP Financial Accounting

SAP FI (Financial Accounting) module and its importance in SAP systems will be discussed in this article. In SAP FICO, SAP FI stands for Financial Accounting and CO stand for Controlling. SAP FI is a backbone of SAP that helps to records, collects and process various financial transactional information on real time time. With SAP Financial Accounting you can extract the necessary data for external reporting.

SAP FI module can be tightly integrated with other SAP Modules like SAP Controlling (CO), Material Management (MM), Sales and Distribution (SD), Human Resources (HR), Production Planning and with various ERP modules.

SAP FI Module Components

The SAP Financial Accounting Application consists the following sub-components.

General Ledger (FI-GL) – The statements of Balance Sheet and Profit & Loss accounting are extracted based on the general ledger accounting. The data that has been entered in SAP system is posted immediately to the GL and SAP CO system.

Accounts Payable: – SAP Accounts Payable sub module manages all the activities of Vendor transactions. FI-AP module links with SAP MM Module, Asset Accounting (AA), Travel Management, etc. In Accounting module you can create payment program for processing payments to vendors from time to time.

Accounts Receivable:SAP Accounts Receivable (FI-AR) sub module manages all the activities of customers transactions. FI-AR module links with SAP SD module. In Accounts Receivable you can create “Dunning Program” for managements of credit functionalities.

Bank Accounting:SAP Bank Accounting (FI-BA) sub module manages the bank transactions and cash management. It can be integrated with Accounts Payable, Accounts Receivable, travel management, MM, SD, etc.

Asset Accounting:SAP Asset Accounting (FI-AA) sub modules manages all the actives of organisational assets like depreciation, Insurance, etc. FI-AA module can be integrated with other modules and sub-modules of SAP like General Ledger, Accounts Receivable, Controlling, MM module, PP module, etc. So asset accounting manages financial activities from procurement of assets to its final scrapping or sales.

Travel Management: – SAP Travel Management (FI-TM) sub module manages all actives of business trips of organization. It can be integrated with Accounts Payable, SAP HCM, SAP controlling, etc. In FI-TM you can manages travel request, travel planning and travel expenses.

Continue to read our free SAP FICO training tutorials with real time scenarios.

What is ERP System Software – ERP Stands for?

What is ERP System?

The following SAP training tutorials explains What is ERP System Software, benefits of ERP systems and how the ERP system is implemented for successful business.

There are many important factors to keep in mind when you decide to start a business in the modern world and the same thins apply for a business that has been around for a long time, but is in need of a modern way to keep things under control. ERP stands for “Enterprise Resource Planning” basically makes any business more efficient and more profitable and that is the main reason why it needs to be implemented in any business venture in the modern world in order for success to be guaranteed.

ERP System is not something that is easy to explain, but we can give you some great examples that will make it very simple for you to grasp the true meaning of this system. Let’s say that you have a new idea for a product that you want to sell and you can build a business around it. With the use of ERP, you would be able to get a comprehensive list of the materials you need in order for that product to be possible. ERP would also make it possible for you to get a proper estimation of the costs that you are going to be dealing with.

ERP System is also going to be essential in order to keep things in order with every aspect of the manufacturing of the products and this is the main reason why you need to emphasise the use of ERP in your business. This system will basically handle everything that is related to logistics in your business.

The use of ERP System will also be extremely powerful when it comes to monitoring your sales team in their performance. The same goes for your internet marketing efforts and for keeping all the important information about every single customer and potential customer that your business has ever had.

ERP Software will allow you to collect their name, address, phone number, email, profession, age and all kinds of information that might be of use for you in order to target new products and services in the future. ERP System can also make it easier for the process of taking order from customer to be automated and that is something that is going to prove to be essential for efficiency.

With ERP system you will also be able to know how much inventory you currently have and what you need to do in order to make sure that you can have everything analyzed as far as the production and manufacturing costs for your products and services.

The best thing about ERP is that it will keep all of your financial documents in order so that you can get everything ready when taxes are due. These are some of the essential things that ERP system can do for you, but it should be more than enough to get you to know the reasons why this has become such a great system that companies all over the world are using in order to keep their business moving forward efficiently.

Conclusion of ERP System

The use of ERP in any business is going to make things ten times easier and it will bring productivity up as well as efficiency in every possible aspect. This is the reason why we recommend that you take the time to consider the implementation of ERP for your business as soon as possible. This is the kind of tool that proves to be extremely important in the process of creating a solid business venture in the competitive world that we are living in today.

Leading Ledger and Non Leading Ledger in SAP New GL

Leading Ledger and Non Leading Ledger in SAP New GL

The following SAP Training Tutorials guides what is leading Ledger and Non Leading Ledger in SAP New GL, its difference and importance in ERP SAP R/3 Systems. General Ledgers are used to record the financial transaction of organization where the transactions are posted through Journal entries.

SAP Systems provides two types of Ledgers i.e.

  • Leading Ledger
  • Non Leading Ledger
Leading Ledger and Non Leading Ledger in SAP

Leading & Non Leading Ledger in SAP

Leading Ledger – In the Leading Ledger all the postings are taken as primarily and default. It is based on accounting principles that is used for the consolidation of financial statements. Leader Ledger in SAP system is defined as 0L and company codes are assigned to this ledger by default.

Non Leading Ledger – This Non leading ledgers are used for the purpose of reporting like International Financial Reporting Standards (IFRS) and taxation. It is parallel to leading ledger and based on the local accounting principles. You can activate non leading ledger for individual company code that you plan to use.

Example of Leading Ledger and Non leading Ledger

  • The Company is located in India and US, where the parent company is located in India.
  • In India, organizations are required to submit final statements from 1st April to 31st March.
  • In US, Companies should submit financial statements from 1st January to 31st December.
  • The main financial reporting is done for parent company India is Leading Ledger and for reporting for US is Non Leading Ledger.

Leading and Non Leading Ledger enables you to maintain financial accounts for more than one accounting principle as per company requirements. The parent company from India is required to prepare financial statements as per India GAAP and Company from US is required to Prepare reports as per USGAAP. In some cases transactions may differ as per accounting standards, so you post transactions in particular ledger instead of both ledgers.

Why SAP Introduced New SAP GL

Why SAP Introduced New SAP GL?

The following SAP Training Tutorials Guides detailed introduction about new SAP GL (General Ledger) and Why SAP was introduced. It is mandatory to refer what is SAP GL accounting before reading this topic.

There has been drastic changes in Markets and the pillars of accounting were shaken. Due to this changes financial accounting of organizations also changing, so to fulfill this changes New SAP General Ledger Accounting has introduced. Most of the companies are rapidly spreading across the nations with various laws. For every Multi National Companies, New SAP GL should be implemented for complete external/internal reporting and accounting as per legal requirements.

Why SAP Introduced New SAP GL


Advantages of New SAP GL

The New SAP General Ledger has following advantages than classic SAP GL accounting in R/3 systems.

User Defined Fields: It is one of the most important features of SAP NEW GL, you can configure customised defined fields as per User/Customer requirements. For E.g. order number, GL Segment, custom fields, reports as per requirements, etc.

Parallel Accounting: – It is a new feature of SAP New GL that helps to prepare statements based on different principles of financial accounting.

How the Parallel Accounting Working in SAP – 

  • When Ledger is created in SAP System (0L – Ledger = GAAP), than another ledger to be created which is non ledger account (IL – Ledger = Tax).
  • When the transaction are done, accounts are posted in both ledger account and non ledger accounts if you don’t specify.
  • If transactions are posted in particular ledger, than GL group field header is filled up with 0L – Ledger.

Document Splitting: – By using this feature, you can split the expenses as per profit centers, segments, etc. Sometimes BL and P&L accounts are needed at characteristic level preferable of company code level. In previous this splitting was managed with the helps of Abap programs, now New SAP GL handles all this functions through document slitting.

Multi Dimensional: – In previous, Separate modules/special ledgers are needed to implement for analyze the financial date. In New SAP GL, fields like Profit center, segment, cost center are added as standard fields. So financial reporting can be extracted directly from new GL.

Real Time Integration of FI and CO: – In Previous, Transaction code “KALC” is used to reconcile SAP FI and CO manually. With new GL, SAP Financial Accounting and Controlling integration is real time so you don’t need to reconcile manually.

Configuration steps of New General Ledger

The following steps are required to configure the New SAP GL.

  1. Define Ledgers for General Ledger Accounting
  2. Define Currencies of Leading Ledger
  3. Define and Activate Non-Leading Ledgers
  4. Assign Scenarios and Customer Fields to Ledgers
  5. Activate cost of sales accounting
  6. Define Ledger Group.

What is SAP Software? Definition of SAP ERP Software

What is SAP Software

SAP Software – SAP acronym for “System Applications and Products in Data Processing”, SAP software is a world largest leading enterprise software of the ERP (Enterprise Resource Planning).

SAP ERP Software meets the needs of customers from the small organizations to Multi-National companies SAP is real time data processing in three tier client architecture.

SAP Software Architecture layers

History of SAP software

  • ERP SAP software was founded by five former IBM employees in the year 1972’s.
  • SAP company head quarters are located at the Walldorf, Germany
  • SAP software has been updated to several versions such as SAP R/1, SAP R/2 and SAP R/3.
  • SAP had subsidiaries in many countries and more than 47k customers organization using this SAP software.
  • SAP company is continuously developing their labs around the world like in Germany, China, United States, China, Canada, India, etc.
  • Further SAP company is expanding and developing their products according to the needs of customers.

What is a SAP Software and Why it is required?

What is SAP software – SAP is a world largest software company in the world. It is a business software package that developed to integrates and implement all the areas of business in one system. Let discuss briefly why SAP ERP software is so important and required for the organizations.

  1. SAP integrates all the information in one systems
  2. SAP software helps in reduction of inventory levels and cycle times and helps to increase productivity.
  3. Software enables better planning, scheduling and tracking everything that is performing in an organization.
  4. It wont allows duplicate data so the data can be accurate in the system.
  5. Data is secures and no data or information is accessible by an unauthorized user.
  6. Supports multi currencies and languages.
  7. Completely developed and needs simple customization there by enabling rapid implementation.

With Out ERP SAP Software in the Organization

Let discuss a scenario of Product sales

  • If customer orders for a product, sales team has to approach the inventory department to check the availability of products and if the product is out of stock, then management contact product department for manufacturing the product.
  • Manufacturing department get started to for manufacturing the product, if the raw are not available then the team has to contact vendors and get the raw materials for Production.
  • Manufacturing department get started working and and updates to production team and then they updates to sales team.
  • So this process take lot time and the customer may fed with the sales department and customers may not get stratified with the organization.

Implementation of SAP software in the Organization

  • By implementing SAP, the all the business area can be integrated in one system.
  • When the customer orders for product, the sales department can check in system and communication with other departments.

Functional Areas in SAP

Functional Areas in SAP

The following Free SAP training tutorials guides how to configure functional areas in SAP step by step. In our previous online training tutorials we have learnt how to configure business areas in SAP.

What are Functional Areas: – Functional areas are organizational units of financial accounting that classifies the expenses as per the organizational functions.

Lets configure functional areas in SAP

Enter transaction code “OKBD” in the SAP command field and press enter.

SAP Transaction code OKBD

On change view functional areas overview screen, click on new entries to define new functional areas as per your organizational requirements.

functional areas overview

On new entries overview screen, update the following details.

  1. Functional area: – Update the New key that identifies the functional area in SAP, it allows maximum four digits.
  2. Name:- Update the name of the functional area.

Functional Areas in SAP

After maintaining the functional areas, click on save button and save the configured data in your customizing request.

Successfully functional areas in SAP are configured.