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SAP Explained

George W. Anderson introduces the software company SAP and reviews its history. Then he explores SAP's application legacy and unique collection of acronyms.He wraps up by outlining SAP's current technologies and applications.
This chapter is from the book

What You'll Learn in This Hour:

  • An overview of the software company SAP
  • SAP's business applications and industry solutions
  • Components, modules, and transactions
  • The SAP client concept
  • What it means to run SAP

In this first hour, we set the stage by introducing the software company SAP and reviewing its history. Then we explore SAP's application legacy and unique collection of acronyms. In this way, we can begin to speak the same language. We wrap up the hour outlining SAP's current technologies and applications.

Overview of SAP: The Company

A beginner's guide to SAP is incomplete without a quick look at how the company evolved to its dominant leadership position today. Headquartered in Walldorf, Germany, SAP is the largest enterprise applications provider and one of the largest software companies worldwide. Although SAP and its enterprise competitors are all distinctly different from one another, they are markedly similar as well. Most provide enterprise-class business software, business intelligence and data warehousing solutions, software for small and medium-sized businesses, platforms for web and application development, integration software to tie computer systems together, various cloud computing offerings, and so on. Each competitor helps sustain SAP, too; SAP counts Oracle as its largest database vendor, for example, and Microsoft provides SAP's most popular operating systems in both the data center and in the office. IBM is SAP's largest consulting partner, and both Microsoft and IBM provide business intelligence solutions used by SAP's applications.

SAP was founded nearly 40 years ago in Mannheim, Germany, by a group of former IBM engineers with a singular vision: to develop a software package that married a company's diverse business functions together. The idea was to help companies replace 10 or 15 different business applications—such as financial systems (running accounts payables and receivables), warehousing applications, production planning solutions, plant maintenance systems, and so on—with a single integrated system. Even better, these former IBMers wanted to create a system that embodied all the best practices that various types of businesses and industries had to offer. In the process, it was envisioned that this new software package would minimize a great deal of complexity and provide businesses with more real-time computing capabilities. This vision became real when Systems, Applications, and Products in Data Processing (SAP), or in German Systemanalyse und Programmentwicklung, opened its doors in 1972. Those of us working in the SAP ecosystem have long referred to the company and its products interchangeably using a single word best spelled out as S-A-P (ess aye pea), not sap.

SAP's goal from day one was to change the world, and the company continues to deliver on that goal today. Beyond their initial vision, the company's leaders created a multilingual and multinational platform capable of easily changing to accommodate new business process standards and techniques. Today, SAP is used by more than a million business users working for more than 100,000 customers across 120 countries. Its 50,000 employees and 2,000 SAP implementation and support partners are busy building and implementing software in 40 different languages and 50 currencies. Finally, all of these SAP business solutions are running on more than 20 different kinds of computing platforms.

To this last point, SAP revolutionized the technology foundation for enterprise applications. They purposefully broke away from the monolithic mainframe-based technology models prevalent in business applications in the 1960s and 1970s. Instead, SAP architected its software solutions to run on a variety of different hardware platforms, operating systems, and database releases. Through this flexibility and openness, SAP in turn gave its customers flexibility and choice. Such a revolutionary departure from the norm created a tipping point in enterprise business software development and delivery that helped propel SAP to the forefront of IT and business circles by the early 1990s. In less than 20 years after they opened their doors, SAP was not only Europe's top software vendor but was giving IBM and others a serious challenge in the enterprise marketplace.

New entrants to the enterprise software field also grew popular during the 1990s, including Baan, Oracle Corporation, PeopleSoft, and JD Edwards. Soon afterward, smaller players began gaining ground, as well, including Great Plains and Navision. Although still widespread, mainframe applications had simply grown too burdensome and expensive for many firms, and the enterprise software industry jumped at the chance to replace those aging legacy systems. IT organizations in companies around the world were just as anxious, finding it easier and cheaper to support a growing number of standardized hardware platforms.

In the same way that new enterprise software companies were gaining traction, new databases from vendors such as Oracle, Sybase, and Informix offered attractive alternatives to the old mainframe IMS and DB2 offerings. And new operating systems helped create low-cost mission-critical computing platforms for these new databases and applications. By the mid-1990s, when SAP began supporting the Microsoft Windows operating system and SQL Server databases, followed soon afterward by the Linux operating system, SAP's place in the enterprise software market was firmly planted—the company's founders had completely delivered on their vision of a multinational, multilingual business solution capable of running on diverse platforms operated and maintained by equally diverse IT organizations. SAP had not only grown into a multi-billion-dollar company by that time, but had indeed succeeded in changing the world.

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