Is SAP Worth being the ERP Market Leader ?
Author: Ranjit Simon John
I am writting this blog from my limited experience gathered from working in SAP as an end user and in a ERP Product development team as an Software Engineer. So each scenarios mentioned here are from my experience.
The first name that comes when we think about ERP is SAP. There have been many scientific studies and researches done to figure out the market leader in the ERP industry. I would like to comment on this from various scenarios I faced while working in an ERP team, as a product development engineer and working in a Milling Industry as a ERP end user. When every practical situations come across my career I use to compare how those scenarios are handled in SAP and how other ERP packages handle them, espically the ERP I worked.
Bottom line I can say SAP is the best and SAP deserves 100% to be the market leader. I have my own resans to substantiate the statement. Instead of making my thought clear I considered several factors for grading the ERP packages.
I will categorize them based on Priority;
1) Consistency of the Product, Data Consistency, Consistency in terms of run time errors, Consistency in terms of Perfomance.
2) High Level of Security; Data as well as Transcations
3) Perfomance Level
4) Ease of Monitoring
5) Ease of Support
6) Availability of Resource
7) Enhancements released
I have segrigated the system into two parts for easy understandig and comparison, Functional and Technical.
Let me explain the Funcational Point.
In every companie the finance department will be skeptical while moving from one technology to another, espically when it is connected to passing accounting entries. They belive that Finance departments role has shrinked to only the role of receiving and passing invoice, rest all activites are carried out by other departments in the organization. The main reason is because in ERP most transactions carried out by user will invoke a Finance entry, with or without the knowledge of Financne department.
In our situation after the ERP was implemented the most obstruction came was from the finance department. It took some time for them to adjust withe fact that financial entries are posted by most users from other departments.
When the user in Weigh Bridge receives a truck of raw material, raw material stock GL was hit by a debit entry affecting also the moving average price of the raw material. By month end Financne Department only received the invoice and delivered quantity and only activity they had to perform was pass the invoice.
Similarly from other departments also similar entries will be posted; Human Resource, Production Planning, Material Management, Sales & Distribution, Plant Maintenance.
Initially it was very difficult to figure out whether the entries posted were correct, from where entries has been triggered. Example if a user receives a raw material at 100 AED MAP and after one week they reversed the goods receipt due to any reason. By that time the MAP of the material has been updated by 150 AED. In this scenario if they reverse the Goods receipt a price difference account entry will be posted. Either the finance user or material management user will be aware of the price difference entry posted.
The first test that we conducted to figure out the accuracy of the entries posted was by trying to equate Material data with the following formula,
Opening Stock + Material Receipt – Material Consumed = Closing Stcok
We were not able to reach to the closing stock of materials based on the above formula by equating values generate from system, which helped to strengthen the view that system entries were not posted correctly.
After throughly investigation the reason for this was found. The calculation logic used by the system was 100% correct and it was the right procedure. One thing I could confirm is SAP provides the best practice, polices and procedures in every step of the operation of the business, which they implement after throughly studying and testing the operations of various companies throuogh the globe.
Please go through the blog for understanding the calculation logic for closing stock in SAP.
Another area of concern for us was the calculation of moving average price for materials especially raw materials. Certain Raw Materials will be deliverd in 1000 – 3000 deliveries and for each delivery the moving avergae price of the material will get updated.
We appointed a thrid party auditor for calculating th accuracy of moving avergae price calculation of raw materials and they came out with the result that SAP MAP Calculation was 100% correct.
System takes care of several scenarios while calculating the MAP of Material, example Material Receipt done for the same material aginst Two Different Purchase Orders with different price and reversal of delivery done etc.
The accuracy of the entries posted in system can be judged only after the cost sheet for the final product is preapred perfectly.
Please go through the blog for understanding the Calculation of Cost Sheet from SAP.
Let me explain the Technical Point.
One main feature that surprised me was the ease with which we can handle the system, For the last 10 months we are working without an onsite BASIS consultant, every week we analyze the Early Watch Reports generated by SAP and take necessary corrective actions with the help of our offshore / in house BASIS team. We are able to track each and every pulse of the system and take corrective steps at the right time.
Another strength of SAP that I have seen is the security level for each business process. As an administrator I can precisely assign duties to each user as per the requirement of the department manager. Ex. which user should have access to what movement type etc. I find it a very great step in terms of controlling where in the administration team can precisely check each and evry transaction to be performed by user. In the ERP product I worked for we have limitation in restricting the user access beyond a certian limit.
The Authorization concept in SAP is well defined to fit in to business stream. SAP has clearly beifercated the authorization level into various sectors,
Object Class, Authorization Object, Authorization Field, Authorization Value, Authorization Profile which helps us to clearly assign duties for user.
Another main factor I have observed is the number of run time errors while performing business process in SAP is very very less. This is a major factor that I believe is a critical factor for industries like ours where production is running 24/7.
For every ERP the major concern will be after few months of implementation. Whether all the controls are in the right place, have any of the settings made after implementation has a impact on other process, whether authorizations dealt properly, movement of TRs, changes done on the system etc., all these are major concern areas. SAP provides a excellent audit management cockpit for auditing and controlling the system.
Please go through the document for better understanding on SAP Audit Management System;
Conducting Month end activites is a major area where all companies have to concentrate. SAP provides a Closing Cockpit for accomplishing the task.
For generating reports I think the most advance tool has been provided by SAP. Users dosent require too much of technical expertise for creating reports according to their choice.
Another pain area for every company is distribution of knowledge throughout the workforce. SAP has come up with a excellent tool for bridging this gap. SAP Workforce Performance Builder (WPB) is a excellent in house training software. The main advantage is the easy of use of the tool, any user in the company can create business process, SAP training manual with very little technical knowledge.
Also the draw backs I see in SAP is the level of user friendlyness, it requires resource with high funcational and technical knowledge to understand few process(areas) in the system.