IBM Global Services: ERP / SAP Overview

IBM Global Services
ERP / SAP Overview
ERP / SAP Overview | 1.01
March-2005
2005 IBM Corporation
IBM Global Services
Objectives
The participants will be able to:
Recognize the evolution of ERP solutions. Appraise the concept, benefit and use of ERP solution. Define the SAP R/3 Overview. Identify the different SAP R/3 Functional modules/areas. Distinguish the components of SAP R/3. Judge the use of ABAP programming language.
March-2005
IBM Global Services
ERP Overview
Enterprise Resource Planning
March-2005
IBM Global Services

... synchronization of Company functions...
Purchase
Manufacturing
Finance
Sales
March-2005
IBM Global Services

and extended to the complete value chain...
Tier I Component Manufacturer
Vehicle OEM
Tier II Component Supplier
March-2005
IBM Global Services

... delivering administrative and decision support with...
Decision support and analysis
Processes monitoring & feedback
Administrative registration
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IBM Global Services
What is an ERP solution...?

Integrated across the primary and support processes
Distribution
Manufacturing
Marketing
Materials
Planning and Execution
Finance
Engineering
Sales Human Resources
March-2005
IBM Global Services
The ERP application

An integrated suite of business applications, which..
Closely links, monitors, and controls primary enterprise resources like manpower, machine, material, methods, market and money. Enables corporates to readily change their processes to adapt to the ever changing business scenario. Provides expertise in industry specific business processes.
Entails
Parameterization / Configuration
Designing & Customization

Testing and Implementation Training
March-2005
IBM Global Services
Why clients buy ERP?

Corporate Initiatives
Strategic initiatives
A requisite capability in a competitive global business
Operational initiative
A foundation for performance and cost improvement via integration
Organizational initiative
To initiate a major organizational change within the company
Technology
IT is making the transition from a supporting operational entity to becoming a strategic competitive tool.
Because others are buying it !!!
March-2005
IBM Global Services
Recent business trends favoring ERP growth

Business Process Reengineering ( BPR )
Most large companies are attempting to cut in-house development costs, improve customer service, and speed products to market by reorganizing their existing business processes.
Software Pricing
Licensing and pricing of mainframe based packaged applications are tied to the size of mainframe system on which the applications run, but now customers are now demanding user-based licensing options and major corporate applications like SAP provide this instead of the conventional platform-based pricing technique.
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Recent business trends favoring ERP growth

Globalization
As businesses are becoming more global in scope, people are demanding packaged corporate applications that are available in a variety of languages with support for multiple currencies.
Integration
As more and more companies are going for BPR, there is increase in demand for integrated solution e.g.. different applications sharing a common database and thus enabling data definitions and business rules to be applied across an entire organization with the facility of doing modifications at one location only.
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IBM Global Services
Business process benefits clients expect from an ERP project

Global process/ Product management Integrated Supply Chain Management Leverage purchasing and vendor management Order cycle time/ customer service improvement Inventory reductions Reduced information systems costs on an ongoing basis Improved business management through worldwide integration and information
Vendors
Inbound Logistics
Manufacturing
Transportation Distribution
Delivery
Customer
Consumer
Logistics and Distribution
Sales & Customer Service
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IBM Global Services
Major ERP vendors

SAP R/3 Oracle ( Peoplesoft and JD Edwards were independent ERP venders earlier,
but are subsets of Oracle now ) Peoplesoft JD Edwards
Baan
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IBM Global Services
What results can be expected from an ERP culture?

Reduced working capital requirements Improved customer service Improved direct labor productivity Reduced purchase costs Reduced obsolescence Reduced overtime Having the figures to make decisions Having accountability throughout the organization Improved quality of life
ERP
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IBM Global Services
SAP R/3 Overview

Systems Applications & Products
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IBM Global Services
SAP AG At a Glance
Founded in Germany in 1972 Market Leader in Industrial Enterprise Application (IEA)
About 56% market share in the ERP market
Worldwide presence in over 50 countries

18,000+ employees Trained consultants doubled since 1996 (40,000)
About 20,000 companies in 120 countries

Around 64,500 installations of SAP
Strength lies in its high degree of integration, mainly for large, global corporate enterprises Significant presence in Global Fortune 500 companies
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IBM Global Services
SAP R/1 , R/2

The R/1 system
Developed for ICI Chemical Released 1972 Focused on Sales & Distribution and Materials Management Discontinued after release of R/2
The R/2 system

R/2 Basis System
Reorganized as leading mainframe software for large multinational corporations No sales effort planned reactive only 4,300 copies worldwide in 1993 Mainframe-based to replace user legacy software; co-existence and migration strategy underway for R/2 and R/3
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IBM Global Services
SAP R/3 : Latest Release
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IBM Global Services
SAP R/3 : Latest Release (Contd.)
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IBM Global Services
SAP R3E and mySAP.com
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March-2005
IBM Global Services
SAP NetWeaver
Existing Systems
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IBM Global Services
SAP R/3 : 3 Tier Architecture

The Presentation Layer Those SAP R/3 software components that specialize in interacting with end-users form the Presentation Layer.
The Application Layer Those SAP R/3 software components that specialize in processing business applications form the Application Layer.
The Database Layer

Those SAP R/3 software components that specialize in the management , storage and retrieval of data form the Database Layer
IBM Global Services
Presentation Layer components reside in:
Application Layer components

reside in:
Database Layer components reside in:
Presentation servers: Systems capable of providing a graphical interface.

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Application servers: Specialized systems multiple CPUs and vast amounts of RAM.
March-2005
Database servers: Specialized systems with fast and large hard drives.
IBM Global Services

Presentation Layer components are installed across many PCs
The Application Layer components are installed across one or more highend servers. The Database Layer components are installed on high-end database server.
IBM Global Services
SAP R/3 Overview
SD
FI Financial Accounting CO Controlling
Sales & Distribution

MM PP Materials Mgmt.
Product Planning
R/3
Client/Server ABAP/4
TR Treasury
QM Quality Mgmt. PM
PS Project System WF Workflow IS
Plant Maintenance HR
Human Resources
Industry Solutions
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IBM Global Services
Integration
All business processes throughout the supply chain are executed in one system sharing all information
SAP R/3
S U P P L
Workflow
C U S
Procurement MM
Production PP Finance and Accounting
Distribution SD
T O
I E R
M
E
CO FI
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March-2005
IBM Global Services
SD: Sales and Distribution
SAP R/3
SD
Sales & Distribution . . . . . . . .
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March-2005
IBM Global Services
SD Overview
SD
Inquiry
Quotation Materials Planning Sales Order Pricing
Purchasing
Production
Delivery to Customer
Picking Goods Receipt Packing
Goods Issue Invoicing

Customer Stock Transportation
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IBM Global Services
Process Chain: Sales Distribution

Inbound Logistics from Materials Management Sales/Distribution Chain
Sales Order & Distribution Process

Receive Payment
FI
Outbound Logistics to Customer Support Customer Sales (Customer Info Analysis) - Optional Process Customer Inquires - Optional Provide Customer Quotations - Optional Support Customer Agreements - Optional -
Create Invoice
FI/CO/PA
- Create pick list - Create transportation work list - Create loading work list
Issue Goods (Ship Product)

FI MM
(Documents)
- Check credit -
Create Delivery Note

Create Sales Order
FI/CO/PA MM PP
Check product availability - Determine pricing - Estimate delivery schedule - Determine conditions of sale (Activities)
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IBM Global Services
Order Entry
FI
Credit Management Dynamic Availability Check Cash Forecast
PP MM FI
?
OK
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IBM Global Services
Delivery/Shipment Processing
FI
Ship to party: C100 Item Material Qty 10 6301 10 20 6412 10 30 1507 25 . . . .
MM WM
MM
Credit Management Static Availability Check
Picking List
Delivery Note
Picking Packing Transportation

IBM Global Services
Picking/Packing
Sales Order
Delivery
Picking without Picking Confirmation

Print Picking List
Picking with Picking Confirmation

Picking Request
Confirm Picking Request
Picking Confirmation
Goods Issue
IBM Global Services
Invoicing
CO PA CO PCA
Profit Center Accounting/Profitability Analysis Accounts Receivable/General Ledger
FI FI
Cash Forecast
Single Invoices Collective Invoices Invoice Lists Credit/Debit Notes
EDI
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IBM Global Services
MM Overview
SAP R/3
MM
Materials Management . .
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IBM Global Services
MM Overview (Contd.)
MM
Material requirement planning
External procurement Purchasing
Internal procurement Production
Invoice verification
Goods receipt
Warehouse management
Inventory management
Goods issue Transfer posting
Master data Material Batch Vendor Customer G/L Storage bins
Internal and external accounting

Sales and distribution

March-2005
IBM Global Services
MM Overview (Contd.)
MM
Material requirement planning
External procurement Purchasing
Internal procurement Production
Invoice verification
Goods receipt
Warehouse management
Inventory management
Goods issue Transfer posting
Master data Material Batch Vendor Customer G/L Storage bins
Internal and external accounting

Sales and distribution

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IBM Global Services
Material - Central Master Record for Logistic
456
Inventory Purchasing Desc:---------------------
123
Inventory Quality Sales Information Production Information Desc:---------------------
Raw Material - 456
Product - 123
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IBM Global Services
Data in the Vendor Master

Maintenance Level
Client Purchase Organization Mandatory maintenance at the Purchasing Organization Level Optional Maintenance at the Plant Level, the Vendor Sub-Range Level or a combination of the two Company Code
General Data
Address Phone and Fax No. Control Data
Purchasing Data Terms of Payment Contact Person Minimum Order Value
Account Data
Payment Terms Payment Method Accounting Clerk
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IBM Global Services
External Procurement Environment

Requirement Determination RFQ
Source List Quota Arrangement
Purchase Requisition
Quotation
Outline Agreement
Source Determination Vendor Selection
Price History Purchasing Data

Info Record Invoice Receipt
Goods Receipt
Purchase Order
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March-2005
IBM Global Services
Goods Movement
Ad hoc.
Goods Receipt
Delivery Inventory
Production Inventory
Transfer Posting
Goods Issue
Consumption
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Goods Issue
Samples Sales Order
March-2005
IBM Global Services
Invoice Verification
CO FI
Orders / Projects /Cost centers G/L accounts / Accounts payable Payment OK !
Vendor Vendor invoice invoice Vendor 3
Tolerance Check? Blocked Invoice
e.g...
Release of Blocked Invoice
Delivery Invoice Preliminary Posting Automatic Price Update

IBM Global Services
PP Overview
SAP R/3
PP
Production Planning . .
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IBM Global Services
Production Planning Cycle

Sales and Operations Planning
PP
Master Data Material Master Bill of Materials Work Centers Routings PRT
Master Production Scheduling
Sales & Distribution
Demand Management
Materials Management
MRP
Capacity Planning
MRP List
Plant Maintenance
Costing
Production Order Cycle or Purchase Order Cycle
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IBM Global Services
Production : Process Chain

Production Chain Inbound Logistics from Procurement or Production Chain Manufacturing Process Outbound Logistics to Materials Management or Sales Chain
Archive/Delete Order Settle Production Order FI CO Transfer Produced Goods to Inventory FI Confirm production of goods is completed Produce Goods
Determine Production Requirements via MRP Output or Manually) Create production order (via conversion of planned order to production order or manually) Check material availability (Automatic) Release Production Order Print shop floor papers (actual work orders)
Withdraw materials from inventory (automatic/manual)

MM
IBM Global Services
Production Planning
Production Planning Functionality Master Data Sales and Operations Planning & Demand Management MRP Production Order & Capacity Planning
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IBM Global Services
Material Requirements Planning

Demands
Quantity: 12.000
Stochastic Deterministic Planning
Demands 3. Qrt 4. Qrt
Bill of Material Explosion

Capacity Planning Lot Sizing Procedure Net Change
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IBM Global Services
MRP - Planning Procedures

Planning Procedures
Deterministic MRP
Consumption-Based Planning
Forecast-Based Planning
Reorder Point Planning
Automatic Reorder Point
Manual Reorder Point
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March-2005
IBM Global Services
Production Control
MM
FI CO
Goods Issue Costs
Open Production Order
Release Production Order
Planned Orders
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IBM Global Services
QM Overview
SAP R/3
QM
Quality Management . .
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IBM Global Services
QM Overview
QM
The QM application module is a quality FI SD control and information system supporting Financial Sales & Accounting Distribution quality planning, inspection, and control for CO MM manufacturing Controlling and procurement Materials
Product Planning
PP
Mgmt.
R/3
Fixed Assets Mgmt.
AM
Quality Mgmt.
QM
PS
Project System
PM
Plant Maintenance
WF
Workflow
HR
Human Resources
IS
Industry Solutions
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IBM Global Services
QM in Logistics
Goods receipt History-dependent intensity of quality inspections
Production
Inspection during production Defects recording in QM Control charts
Goods issue
Quality management in SD (certifies quality)
IBM Global Services
PM Overview
SAP R/3
PM
Plant Maintenance . .
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IBM Global Services
Plant Maintenance - Overview
PM
Pre-defined work steps Notifications Create Work Orders Emergencies Labor
Parts/Supplies
External Services
Material Requisitions
Reporting
Planned Work Orders
Schedule WOs
Close and Settle WO
Special Tools Preventive/Predictive Maint. WOs
Shop Papers
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IBM Global Services
FI Overview
SAP R/3
FI
Finance . .
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Components of FI
FI
General Ledger FI-GL FI-SL Accounts Receivable FI-AR FI-LC Accounts Payable FI-AP FI-AA Legal Consolidation Special Ledger
Asset Accounting
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IBM Global Services
Corporate Structure
Financial Management Area Financial Management Area Financial Management Area
Corp. Group Level
Company Code (Company) Legal Entity Controlling Area Controlling Area Controlling Area
Controlling Area
Controlling Level
Plant
Cost Centers Management Units
Work Place/Job
Material Product
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IBM Global Services
The Elements of Financial Accounting
Foreign Exchange Management
Business Analysis
Finance Information System Executive Information System G/L Information System
Cash Management and Forecast
Multiledger
Accounts Payable
Bank Accounts Payables General Ledger Extended General Ledger
Accounts Receivable
Credit Management
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Consolidation
IBM Global Services
The Components of FI
Configuration
Organizational Structures Company Codes Business Area Organization of Accounting Ledger/Sub-ledger Chart of Accounts Credit Control Setting Credit Limits Master Records G/L Accounts Customers Vendors Banks Chart of Depreciation Depreciation Areas Assets Extended General Ledger General Ledger Accounts Payable Accounts Receivable Asset Accounting
Functionality
Documents/Transactions Posting Payment Terms Foreign Currency Taxes Special G/L Transactions Planning Payment Program Fiscal Year Adjustments Balance Sheets/Income Statements Closings On-Line Display Interest Calculation Correspondence Fixed Assets Reporting Analysis Legal Consolidations
Modules
Special Ledger Legal Consolidations Credit Management Cash Management and Forecast Treasury
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IBM Global Services
CO Overview
SAP R/3
Controlling. . CO
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IBM Global Services
Components of CO
CO
CO Configuration
Organization Structures Master Data Planning Setup Criteria and Values Valuation
Cost Center Accounting Order and Project Acctg. Transaction-Based Postings Periodic Allocations
CO Modules
Profit Center Acctg. Product Costing Activity-Based Costing Product Costing Budgeting Profitability Analysis Business Planning & Control
Functionality
Settlement Internal Orders Open Item Management Planning Transaction-Based Posting Periodic Allocations Monitoring Actual Activities vs. Planned
Profitability Analysis
Overhead Management
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IBM Global Services
The Elements of Managerial Accounting

Overhead Cost Controlling
Cost Centers
Overhead Cost Controlling
Profitability Analysis
PA
Report Structure: Market Segment Region Division
Cost of Sales PCA
Cost of Period Report Structure: Profit Center, GL Accounts

March-2005
Controlling
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IBM Global Services
Integration within FI/CO

FI Financial Accounting
Asset Accounting Asset Accounting Asset Accounting Gen. Ledger Accounting
Chart of Accounts Management Accounting

Overhead Cost Controlling Cost Center Controlling Product & Production Controlling Mass Production Continuous Flow Prod. Batch Production Make to Order Prod. Project Controlling
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CO
Sales & Profitability Controlling Cost of Sales Accounting Period Accounting
Investment Controlling
Plant Maintenance Account Revenue
Central Documents
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Accounts Receivable
Accounts Payable Cash Management
Actual Costing Static Standard Costing Flexible Standard Costing Order Controlling
Central Line Items Central Totals

IBM Global Services
Integration
MRP Requirement on component level Purchase Order Goods Receipt Invoice Verification
Planned Requirement
PP
Customer Order
SD
MM
Planned Order Production Order
Shipping
Invoicing
Production completed
Account Receivable
CO
Order Settlement
FI
FI
Accounts Payable
Which modules are involved?

March-2005
IBM Global Services
SAP R/3 : Components

Master Data Application
Transaction Data
ABAP Programs
Organization Structure
Configuration Key Data Elements Functionality Configurations
IBM Global Services
What is Customization ?
Customization
The adaptation of application software to customer-specific needs is accomplished in two ways :
Coding
Programming customer-specific code that replaces or complements components of the application
Configuration
Rendering the application appropriate to a specific customer by specifying data on which the application operates
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Organizational Structures in R/3

Organizational Units
Cost Accounting Client Controlling Areas
External Logistics Accounting
Company Codes
Sales Organizations Purchasing Organizations
Internal Logistics (MRP/Production)
Valuation Areas
Plants
Inventory Management
Storage Locations/Batches/Special Stocks

March-2005
IBM Global Services
Organizational Structure in SAP R/3

Production Planning Financial Accounting
Plant
Company Code
Controlling
Client
Human Resources
Controlling Area
Personnel Area
Sales and Distribution
Materials Management
Sales Area
Purchasing Organization
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IBM Global Services
ABAP Programming
SAP R/3 applications are written in the ABAP programming language, and run within the application layer of the R/3 System.
ABAP programs communicate with the database management system of the central relational database (RDBMS), and with the graphical user interface (SAP GUI) at presentation level.
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Why do we need ABAP Development ?
SAP R/3 scope
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IBM Global Services
SAP Solution
SAP R/3 scope
Specific company requirements
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March-2005
IBM Global Services
SAP Solution
SAP R/3 scope
Specific company requirements
New Functionality Development
Non SAP applications
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IBM Global Services
Summary
Materials Requirement Planning (MRP-I) began as a technique for developing enterprise-wide business solutions by providing automated tools for forecasting demands and planning according to the forecast. ERP is an integrated suite of Applications to meet corporate needs. Some major ERP vendors are : SAP R/3, Peoplesoft, Oracle, Baan and JD Edwards. SAP AG was founded in Germany in 1972 and it is a Market Leader in Industrial Enterprise Application (IEA). The latest SAP R3E Enterprise Architecture, have separate release numbers and release cycles for each of the 3 layers. There is no R3E release number as a whole.

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SAP Web Application Server (6.20) SAP R/3 Enterprise Core (4.7) SAP R/3 Enterprise Extension Set (1.10) People Information Business Processes Applications
ERP / SAP Overview | 1.01 March-2005
SAP NetWeaver is a vision, or paradigm, of total integration of :
IBM Global Services
Summary (Contd.)
SAP has a 3 tier architecture comprising of the Presentation layer, Application layer and the Database layer.
The SAP solution is divided in different areas or Functional Modules like SD, MM, PP, QM, PM, FI, CO etc. R/3 applications are written in the ABAP programming language, and run within the application layer of the R/3 System.
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Questions
What is MRP ?
What is ERP ?
When was SAP AG founded ? What are the 3 layers of the SAP R/3 ? What is SAP Netweaver ?
What is the latest version of SAP ?

What are the different functional modules of SAP ? What programming language is used for SAP applications ? Why do we need ABAP developments ?
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March-2005

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IBM Global Services

ERP / SAP Overview

ERP / SAP Overview | 1.01

2005 IBM Corporation