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SAP is a type of business application software, as well as the name of the German company that developed it, owns it and sells it. SAP is an acronym for Systems, Applications and Products (in data processing).
The SAP company got started with their software business in the early 1970s. This was at a time when nearly all software development was done on a discrete basis, namely, programs were written to solve one type of business application for usage only within the company where it was designed. There wasn't really much of an industry to commercially develop and sell software programs and applications.
SAP's founders realized that many companies had the same type of software application needs, so why should a company go to all the time and expense to set-up an in-house software application if it could be purchased commercially?
SAP also realized that for the most part, computer software applications used within a company were a conglomeration of stand-alone systems that had nothing to do with any of the other software programs in use within a company. For example, a company would have one stand-alone software system for the accounting dept to do their General Ledger function. Elsewhere in the company the sales dept had its own system for customer sales order administration. If the General Ledger accountants needed data on products sold and invoiced, they'd have to get someone in the sales dept to go into their sales order system to extract the data needed by the G/L team.
SAP's idea was that in a company all the various departments have to interface with each other to be able to run the company. If the sales dept received a purchase order from a customer and entered the PO information in their sales order administration system, how did that information cause a stockroom clerk to pull a new widget off the shelf and give it to the shipping dept to package it & give to the driver of the delivery service coming to pick it up? The old way to do this was each department had to manually cause the system to work - hand carry a typed packing slip to the stockroom and s on.
If a company could have separate, stand-alone software applications for each dept, why not connect all of those discrete systems together into one, companywide software application system? SAP went about the process to create a companywide software system.
Over time, this sort of companywide software system became known as "ERP." Enterprise Resource Planning. By using SAP's enterprise system, it eliminated the various discrete systems and automated the process so that paperwork did not have to be sent/carried from department to another. Each dept had the ability to receive the inbound info they needed via the SAP software system, and each department no longer had to manually process their outbound data to another dept. The entire company's operating system functioned from one, integrated enterprise system.
SAP's software not only provided the function-by-function linkage, it allowed clients to customize their solution. SAP works off of a common platform called ECC. It allows clients to decide which applications it wants to buy & activate on the ECC platform. SAP's modular ERP concept allows the system to be adapted to whatever sort of business you have, such as a factory, hospital, distribution warehouse, etc. The modularized plug-in concept to ECC allows a company to launch the system all at once, or do it in phases.
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