What is SAP?
« - Alex: SAP is what people are calling an ERP (Enterprise Resource Planning) software. It helps companies centralize their data and avoids losing important information on different excel sheets. I’ve seen it first hand at work. We used to waste a lot of time with people sending one version of an excel sheet, and then, after sending different versions back and forth, we would lose track of important information. But with SAP we now have a centralized database, and avoid redundancy. On top of that, different departments, including sales, R&D, accounting, are all linked to the system, so information is shared with everybody. So now when one group needs to do a trial, they have live data regarding what they have in inventory, and what they need to order so they can proceed. Then the purchasing team knows exactly what is needed, and once it is ordered and arrives at the plant, the storekeeper can add the data on SAP and everyone is aware of what they have in stock.
- Isabelle: In France, most companies use an intranet network. So anybody in the company can access any documents and when someone needs a document, he/she always gets the last version of it.
So why is SAP better than a classic intranet network?
Why is SAP better than a classic intranet network?
- Alex: Very valid point, however in a basic « intranet » network, different departments have their own sets of individual excel sheets, which anyone can edit, and there is no way to see who made modifications.
Imagine a sales team, they meet face to face with a client, and when a client asks about what they currently have in stock, the salesperson should have a good idea of what is in stock. But this is where the line is drawn. When they need to know more, they need to make some phone calls, and ask the production team. Based on what the client wants, the sales team may need to speak to the purchasing to determine the costs of mass producing the product. At this point the different excel sheets are no longer useful, because the data is outdated, and needs to be updated with the new information that is available. This is because the individual excel sheets do not communicate with one another.
One of the major advantages to using an ERP system such as SAP is that all department documents speak to one another. Approval lines are created, and information is shared more easily. Now, the sales associate knows what he has in stock, but is also able to know what the manufacturing department has in stock, as well as how much it would cost to mass produce a new product to meet the demands of the client.
- Isabelle: So, SAP standardizes all the documents in the company so it’s easier for anybody to understand them, and requires the different departments to give needed information.
Clearly, this service is very useful in companies where the communication is not easy (for example in big companies). But do you think SAP is useful as well in small companies? Or, from your point of view, how many employees should a company have to really be in need for SAP management?
Is SAP useful as well in small companies?
- Alex: SAP may be less useful for smaller companies. It is an expensive program, and the time and effort it takes to properly setup can be very long. However, you see that over 70% (some statistics say over 80%) of Fortune 500 companies run on SAP. Therefore it helps to centralize all the data for any large corporation which operates in many cities and countries. This way, members of upper management are able to run reports, and these reports are uniform regardless in which country they were analyzed. It also allows large companies to get discounts with distributors because they have data regarding purchases they make at all their locations.
- Isabelle: Does SAP provide any advice to help the company grow?
Does SAP provide any advice to help the company grow?
- Alex: Yes, in fact, when you implement SAP it isn’t “advice” that they give, but rather you are provided with consultants (yes, believe it or not there are people who work as “SAP Consultants” and their job is to help companies transition smoothly from their old ERP to SAP). »
I hope I was able to answer some questions you might have regarding SAP. If you would like to further discuss, or you simply want to learn more about some of the English terminology used when dealing with the most popular ERP system on the planet, I invite you to book a session with me. You can see my availability below. See you later!