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Looking back, it’s a wonder I ever got started in this industry because it was several years before I got a real understanding of what SAP is.  In this field, it’s hard to find information that is clear, concise, and free of jargon.  In the first part of this three part series, my goal is to describe what SAP is and the need it fills.  Whether you’re an entrepreneur who’s wondering what all the fuss is about, a manager looking for a concise description, or a student exploring career options, hopefully you’ll find this helpful!

SAP is a family of software products that can perform a variety of business tasks automatically.  The products are bundled and sold as modules, and each module is targeted at a particular vertical, like human resources.  Since all HR departments tend to be responsible for similar tasks, the HR module provides the ability to automate many of those tasks right out of the box.  For instance, it can process all payroll requests without any human input required.  It might not seem worth the effort and expense of an implementation to automate a task that takes a person a minute to do, but if your business has to process 100,000 payroll transactions every two weeks, it becomes a lot more attractive.

Clearly, automation saves money, but if you want to automate a payroll, you have a lot of software options, and they all cost less than SAP.  Why pay the premium? To answer that, let’s imagine a company buys several solutions from different manufacturers.  Each package will automate tasks within its respective vertical, but they don’t interface with each other, so they can’t handle tasks that span multiple verticals.  As you’re probably aware, there are very few tasks that don’t interact with another vertical at some point, so if you buy individual solutions, you’re setting a very low ceiling on how much of your business you’ll be able to automate.

SAP is different.  SAP offers software for almost every imaginable business need, and the packages are designed to plug together seamlessly.  Your HR software  can talk to your CRM software, your shipping software can talk to your inventory software, and information can move to where it is needed without barriers.  You have a much higher ceiling on the number of business tasks you can automate.  Other products let information flow seamlessly within verticals, but SAP allows information flow seamlessly between verticals.

Now, this capability isn’t necessarily unique.  Anyone who’s worked in IT knows that software from different manufacturers can be wired together because it’s done all the time.  But to get unrelated solutions to talk to each other, you have to build custom interfaces.  That means you’re going to have to spend extra time and money to develop those interfaces.  It means if the interfaces break, you don’t have tech support to call, and it means if the people who developed the interfaces leave your organization, you may encounter problems no one knows how to fix. When you calculate the true total cost of ownership, SAP is often the cheapest option.  As the Germans say:  buy cheap, buy twice.

As we mentioned in a previous post, this solution is not for everyone.  Small organizations don’t need automation, and organizations that only automate one or two functions won’t be able to take advantage of the enterprise-wide integration SAP offers.  But for large organizations, this software can be a lifesaver.  Check us out next week for Part 2 of this series, where we get into the details of how SAP works.

Originally posted at What is SAP? Part 1 |

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