SAP SOFTWARE REVIEW AND

EVALUATION
COMPANY OVERVIEW
SAP AG was founded in 1972 by five ex-IBM employees in Germany. The initial business
software system was a Manufacturing Resource Planning (MRP) application. In the early
1990s, SAP developed a fully integrated Enterprise Resource Planning (ERP) system and in
the mid to late 1990s, SAP expanded their enterprise software solutions to include Supply
Chain Management (SCM) systems and customer relationship management (CRM)
software. SAP is the world’s largest business software company.

The 2007 SCM system revenues were $835 million. Analyst firm Gartner recognizes SAP as
the world leader in SCM software market share with a 19% global market share.

VERTICAL MARKETS
SAP's enterprise resource planning (ERP) and supply chain management software
customers are global midsize and large enterprise retailers, wholesalers, and manufacturers.
Manufacturing segments include aerospace and defense, automotive, chemicals, consumer
goods, industrial equipment and life science.

SOFTWARE PRODUCTS
SAP’s Business Suite of enterprise software solutions includes:

 Customer Relationship Management (CRM)

 Enterprise Relationship Management (ERP)
 Product Life Cycle Management (PLM)
 Supply Chain Management (SCM)
 Supplier Relationship Management (SRM)
 Merchandising, Store Systems and SCM

SUPPLY CHAIN MANAGEMENT SOFTWARE FEATURES

SOFTWARE ARCHITECTURE AND CROSS APPLICATION SOLUTIONS

NetWeaver is SAP’s SOA (service oriented architecture) proprietary software architecture.
NetWeaver and suites of application configuration, system integration and software
customization tools facilitate various types of information system management.

 Application Server for Business Applications and Web Services

 Business Information Warehouse Integration
 Business Process Manager
 Business Rules Manager
 Information Lifecycle Manager

SAP has collaborated with Microsoft to develop an interface between Microsoft’s Office
Suite and SAP’s business processes and data. SAP users can access, synchronize and
organize contact and activity data from the SAP database with MS Outlook and SAP
analytical data with Excel.
Supply Chain Event Management (SCEM) includes autonomous configuration management
tools and provides a framework to monitor and notify appropriate parties for configured
events and milestones.

SALES AND OPERATION PLANNING

SAP does not have a full featured S&OP software product. Their prescription for S&OP is to
cobble together a system using the following SAP solutions:

 Demand Planning
 Supply Network Planning
 ERP and financial accounting suite for financial data
 Customer relationship management for sales forecasting
 Business Intelligence (BI)
 Duet

For large enterprise clients with in house expertise, SAP provides the flexibility to customize
various application solutions to the client’s unique needs and requirements.

DEMAND MANAGEMENT
SAP provides multiple forecast modeling techniques and auto-picks the best fit model for
each inventory item. Forecasting accepts multiple sources of inputs, in addition to demand
history, including causal forecasting, bill of materials, product lifecycle trends and
promotional plans. Both internal stakeholders and external trading partners can collaborate in
the planning. Full feature demand shaping and product lifecycle management requires SAP’s
CRM software and PLM application. Order fulfillment is addressed with Sales Order
Processing.

With SAP’s Demand Planning, ERP, CRM, PLM, BI, NetWeaver and Duet, customers have
the flexibility to configure and structure demand management to varying unique needs and
requirements.

SUPPLY MANAGEMENT
SAP’s Supply Network Collaboration (SNC) can be implemented as a customer, supplier and
contract manufacturer’s solution for collaborative inventory management. 

Supply Network Planning – SNP integrates purchasing, production, distribution, and

transportation for analyzing and planning of mid-term and long-term sourcing decisions.
Planning tools include capacity leveling, cost optimization and demand matching.

Distribution Planning – Planning evaluates which demands can be fulfilled and deploys
transfers to replenish inventory and fulfill customer orders.

Replenishment – Inventory replenishment includes the ability to auto generate POs and
delivery schedules from demand, sales orders, and sourcing agreements.

Vendor Managed Inventory – VMI replenishes customer inventories based on stock and sales
data sent to the supplier or business partner. SAP SNC auto generates a PO from the vendor’s
ASN.
Procurement Management – Strategic sourcing functionality includes long term planning and
Bid, Contract, and Catalog Management. Purchase Order (PO) processing converts demand
into POs, monitors PO activities, and settles invoices against receipts.

WAREHOUSE MANAGEMENT
Yard Management – Users have visibility to inventories located in trailers. Inbound trailers
can be sent directly to a door or a parking space in the yard.

Inbound Processing – Users plan and schedule inbound shipments. Pallet and carton auto-
identifications are matched to the supplier’s ASN (advanced shipping notice) and a receipt is
auto generated. Inventory is directed to bin locations based on multiple put-a-way strategies.

Outbound Processing – Sales orders and inventory transfers are filled from a Warehouse
Order, which uses rules and algorithms to generate picks. Pick methods include LIFO and
FIFO, Shelf Life Expiration and Partial Quantities.

Proof-of-Delivers (POD) are recorded to confirm the receipt of shipments at the destination
locations.

Cross Docking – Inbound goods can be directed to the outbound process. Unplanned
opportunity cross docks can be evaluated and detected during the inbound process.

Value Added Services – Value added services can be scheduled as part of the inbound or
outbound processes.

Storage – SAP provides special handling requirements for tracking serial numbers and
hazardous materials. Slotting optimizes the storage of goods based on cube, weight or future
demand.

TRANSPORTATION MANAGEMENT
Planning – Forecast distribution software features include capturing requests, dynamic
routing, credit checks and sending confirmations. Related software planning capabilities
include:

 Least Cost Analysis

 Multi-modal Options
 Service Levels Optimization
 Zone Routing Optimization
 Carrier Selection
 Multi-Stop Optimization
 Cross Docking Optimization
 Load Optimization

Dispatch – Key software functionality is based on load, pickups, modes of transportation and
route optimization. The dispatcher is empowered to perform and automate the following:

 Assigns carriers to routes

 Produces Shipment Documents
 Generates EDI transactions
Visibility is provided throughout the shipment lifecycle.

Freight Charges and Settlements – Charges are calculated and settlements made with invoice
audits or automated self-billing.

Fleet Management – Driver and asset management are available for customers who manage
their own fleet. A key software feature of fleet management is optimizing the mix of private
goods and common carriers.

SUPPLIER RELATIONSHIP MANAGEMENT

SAP uses their NetWeaver platform to integrate SRM with their SCM, ERP, CRM and PLM
solutions. The integration enhances the overall features and functionality of the SCM
planning and execution solutions.

Catalog Management – SRM includes a centralized master database of spend and supplier
data. Product searches are supported from other SAP solutions. SRM includes web and print
publishing.

Sourcing – SRM manages and automates the supplier evaluation, negotiation and bid
processes.

Contract Management – SRM provides the tools to assess and create a contract from the
bidding process. The contracts interface with SCM execution to fulfill demand requirements.
Contract monitoring tracks trading partner performance and compliance.

Supplier Compliance – SRM tracks and reports on qualitative and quantitative data against
compliance agreements.

CUSTOMER RELATIONSHIP MANAGEMENT

As with other SAP solutions, customer relationship management is integrated with the
company's SCM and ERP products using SAP’s NetWeaver. Through the integration with
SCM, CRM software provides additional data to demand planning and order fulfillment.

SUMMARY OF STRENGTHS AND WEAKNESSES

SAP’s strength includes an impressive lineup of Supply Chain Management software
features and robust functionality. SAP and direct competitor Oracle are the only enterprise
software vendors to have products for each area addressed in this evaluation. The two
business software giants also provide the tools to meet or exceed the busines process
automation and management reporting needs for most global organizations.

The NetWeaver software architecture is impressive in terms of functionality, features and

tools, however, is proprietary technology. Software developers are generally not needed or
their efforts are minimized with NetWeaver’s framework support for standard common IT
functions such as defining process flows, business rules and information sharing.

SAP’s supply chain management system forecasting uses best fit forecast models. The
selection of a forecast model is based on an item’s history at the time the model is selected.
At a later date, changes in an inventory item’s demand behavior may result in using an
incorrect forecast model.
Planning done through the Duet product will have a latency that comes with transferring
spreadsheet data, as opposed to a connected browser or windows application working with
real-time data.

For customers using SAP’s Enterprise Resource Planning software solution, the Supply
Chain Management software solution is a strong candidate for most supply chain
requirements. Without the ERP solution, SAP SCM becomes a less likely candidate. Some of
the other SCM vendors have certified some of their software applications to be integrated
and/or compliant with SAP’s NetWeaver architecture.

SAP’s suite of integrated CRM, ERP, PLM, SCM and SRM across customers and industries
means that each customer has a much larger and complex IT footprint than a suite of products
tailored to a specific industry. Smaller and midsized companies may not have the economies
of scale and the systems expertise to support SAP solutions. Without any custom
programming, a typical implementation requires SAP certified consultants and may take
several months to implement a single module.

ndia’s leading businesses across industries

run SAP
61% of India’s top 100 companies run SAP

Bangalore - October 16, 2006 - Enterprises leading the latest rankings of India’s top 500
companies and featuring prominently across all categories of business leadership run SAP
solutions. This underlines SAP’s strength in servicing industry leading enterprises and be a
trusted long term partner in their pursuit to excellence.

61% of India’s top 100 companies featured in the August 2006 “ET 500” – a listing of India’s
top corporates published by The Economic Times and 9 out of top 10 companies by growth
in profits and market capitalization run SAP. Additionally, top 6 out of top 10 companies by
sales growth run SAP. A total of 176 SAP customers feature in leading positions in the ET
500 listing.

Across key verticals like Auto, Oil & Gas, Telecom, Engineering etc listed in the “ET 500”
enterprises who run SAP once again occupy top slots.

Automotive – 4 out of top 5 companies in terms of market capitalization, sales and net profit
Information technology – 5 out of top 5 companies in terms of market capitalization, sales
and net profit
Oil & Gas – 5 out of top 5 companies in market capitalization and 4 out of top 5 companies in
terms of sales and net profit
Engineering –5 out of top 5 companies in terms of market capitalization and sales and 4 out
of 5 companies in terms of net profit
FMCG – 5 out of top 5 companies in terms of market capitalization and 4 out of top 5
companies in terms of net profit and sales
Metal – 4 out of top 5 companies in terms of market capitalization, sales and net profit
Auto Ancillary – 4 out of top 5 companies in terms of sales and net profit and 3 out of top 5
companies in terms of market capitalization
Power – 4 out of top 5 companies in terms of sales, 3 out of top 5 in terms of net profit and 2
out of top 5 in terms of market capitalization
Banking - 2 out of top 5 companies in terms of market capitalization, sales and net profit
Textiles - 2 out of top 5 companies in terms of market capitalization, sales and net profit

“SAP is very proud to witness its customers featuring in the list of top Indian companies. It
gives us immense pleasure to note that India’s best run businesses have chosen us to be their
trusted partner” said Alan Sedghi, President and CEO, SAP Indian Sub-Continent. “We take
this opportunity to thank our customers who have relied in our capabilities and reaffirm our
commitment to serve them by offering them innovative and industry best solutions,” he
further added.

SAP is achieving broad based growth in India and has become the first enterprise software
solutions vendor to cross the 1000 customer mark in India. Today SAP has over 1130
customers in India from across large, medium and small enterprises spread across over 2500
installations. In 2006 till date, SAP has already signed on over 269 customers.

The ET 500 listing is compiled across eight parameters including Market Capitalization,
Absolute change in Mark Capitalization over the past one year, Sales, Absolute Change in
Sales over the past one year, Net Profit, Absolute Change in Net Profit over the past one year,
Price to Earnings (P/E) multiple and Return on Net Worth (RONW).