Technical and Business

Architecture of SAP

Enterprise Systems Applications 1

 mySAP ERP Modules

SD FI
Sales and Financial
Distribution Accounting
MM CO
Materials

R/3
Controlling
PPMgmt. AM
Production Fixed Assets
SM Planning Mgmt. EC
Service
Mgmt.
Client / Server Enterprise
QM Integrated Business PS
Controlling
Quality
Project
Mgmt.
PM Solution WF System
Plant Maintenance Workflow
HR IS
Human Industry
Resources Solutions

2
Enterprise Systems Applications
 Business Modules

• Collections of logically related transactions within identifiable business

functions
– MM (“Buy”)
– PP (“Make”)
– SD (“Sell”)
– FI and CO (“Track”)
– HR

3
Enterprise Systems Applications
 Logistics

• Materials Management (MM)

• Sales and Distribution (SD)
• Production Planning (PP)
• Quality Management (QM)
• Plant Maintenance (PM)
• Service Management (SM)

4
Enterprise Systems Applications
 Accounting and Finance

• Financial Accounting (FI)

• Controlling (CO)
• Enterprise Controlling (EC)
• Fixed Asset Management (AM)
• Project Systems (PS)

• Human Resources (HR)

5
Enterprise Systems Applications
 Components of Materials Management

Foreign
Valuation Trade/
Customs
Logistics
Service
Invoice
Master
Materials Verification
Product
Management Purchasing MRP
Catalog
(MM) Material
Service
Entry
Master
Sheet
Inventory Physical
Mgmt. Inventory

SEDERA 2011 © SAP AG and SEDERA 2011 6

Enterprise Systems Applications
 Integration
Procurement Process
(Procure-to-Pay)

Purchase
Purchase
Requisition
Order

Notify
Vendor

Payment
to Vendor
Vendor
Shipment
Invoice
Receipt
Goods
Receipt
SEDERA 2011 © SAP AG and SEDERA 2011 7
Enterprise Systems Applications
 Components of Sales and Distribution

Shipping
Transport
Sales
Sales
Information
Support
Sales and System
Master
Distribution Data
Billing
(SD) Foreign
Sales
Trade
Credit
Mgmt.

SEDERA 2011 © SAP AG and SEDERA 2011 8

Enterprise Systems Applications
 Integration
Sales Order Process
(Order-to-Cash)

Sales Order Check

Entry Availability

Pick
Materials

Receipt of Pack
Customer Payment Materials

Invoice
Customer Post Goods
Issue
SEDERA 2011 © SAP AG and SEDERA 2011 9
Enterprise Systems Applications
 Components of Financial Accounting

Accounts
Receivable

Financial General Fixed

Accounting Ledger Assets

(FI) Accounts
Banks
Payable
Special
Purpose
Ledger

SEDERA 2011 © SAP AG and SEDERA 2011 10

Enterprise Systems Applications
 Integration
Procurement Process
(Procure-to-Pay)

Purchase
Purchase
Requisition
Order

Notify
Vendor

Payment
to Vendor
Vendor
Shipment
Invoice
Receipt
Goods
Receipt
SEDERA 2011 © SAP AG and SEDERA 2011 11
Enterprise Systems Applications
 Integration
Sales Order Process
(Order-to-Cash)

Sales Order Check

Entry Availability

Pick
Materials

Receipt of Pack
Customer Payment Materials

Invoice
Customer Post Goods
Issue
SEDERA 2011 © SAP AG and SEDERA 2011 12
Enterprise Systems Applications
 Introduction to configuration
•The system has a combination of logical and physical data/info
stored in Business Elements

•These Business elements come from different modules

•These modules are integrated in the system

13
Enterprise Systems Applications
 Programming Code Modifications

• Changes to the delivered code

• ABAP/4 – Advanced Business Application Programming (ABAP)

• This should be done sparingly and carefully as it can make migration to

new versions of the software much more difficult

14
Enterprise Systems Applications
 SAP R/3 Document Principle

• Each business transaction that writes data to the database creates a

uniquely numbered electronic document
• Each document contains information such as
– Responsible person
– Date and time of the transaction
– Commercial content
• Once created, a document can not be deleted from the database

15
Enterprise Systems Applications
 Business Process Integration

• “The Tri-Pod”
– Components
• Organizational Data
• Master Data
• Rules
• Transactions

SEDERA 2011 © SAP AG and SEDERA 2011 16

Enterprise Systems Applications
 Business Process Integration

FI MM SD
Org Data

Master
Rules

D
FI FI

ata
FI
MM MM
MM
SD SD
SD
SEDERA 2011 © SAP AG and SEDERA 2011 17
Enterprise Systems Applications
 Organizational Data

• A hierarchy in which the organizational units in an enterprise are arranged

according to tasks and functions
• Are static data and are rarely changed
• The definition of organization units is a fundamental step, it is a critical
factor in how the company will be structured

SEDERA 2011 © SAP AG and SEDERA 2011 18

Enterprise Systems Applications
 Master Data

• Master data is relatively fixed

– Material master data
– Vendor master data
– Purchasing information record
– General Ledger master data
• Before making the master data configurations, you must have completely
defined the organizational structures

SEDERA 2011 © SAP AG and SEDERA 2011 19

Enterprise Systems Applications
 Rules

• Defines the parameters for Master Data and Transactions

• Determines functionality for Master Data and Transactions
• Relatively fixed
• Changes as policy changes

SEDERA 2011 © SAP AG and SEDERA 2011 20

Enterprise Systems Applications
 Transaction Data

• Includes internal and external exchanges that describe business activities

• Unlike master data, aggregate transactional data is dynamic – each
transaction is unique

SEDERA 2011 © SAP AG and SEDERA 2011 21

Enterprise Systems Applications
 Observations from a “Purchase Order”

Enterprise Systems Applications

 Where does PO get its details:
The Procurement Process

• In the procurement process (purchasing material/s), what

management and strategic information about the
material, would you require?

Enterprise Systems Applications

 Integration
Procurement Process
(Procure-to-Pay)

Purchase
Purchase
Requisition
Order

Notify
Vendor

Payment
to Vendor
Vendor
Shipment
Invoice
Receipt
Goods
Receipt

Enterprise Systems Applications

 Logical and Physical Questions/Classifications

•Cost of an item •Plant

•Who pays for the •Storage location
goods •Transportation
•Different product
lines

25
Enterprise Systems Applications
 KEY Organizational Elements / Business
Elements of SAP

Enterprise Systems Applications

 Definition

Definition of Organizational Elements:

• In the SAP R/3 System, organizational elements form

structures that represent the legal and organizational views
of a company. These views include: accounting,
manufacturing planning and execution, materials
management, and sales and distribution.
 In summary, the organizational elements and their
structures form the framework in which all business
transactions are processed.

Enterprise Systems Applications

 Integration through Business Elements

Integration of Organizational Elements

Manufacturing Financial/Management
Planning and Accounting and
Execution Reporting

Client
Company Code
Plant
Business Area

Customer Order
Management Procurement

Enterprise Systems Applications

 Organizational Structure - Terminology

SAP

Enterprise
Client

Company Subsidiary Company

Code

Factory Plant

Sales Sales
Organization Organization

Business Division
Department Division
Area
Storage
Warehouses
Locations

Enterprise Systems Applications

 Definition of Client

• Highest Hierarchical Level in SAP(e.g. a corporation)

• Can be Used to Differentiate between a Development, Quality

Assurance, and Production System within R/3

• All Areas of an Organization that are to be Integrated into the SAP R/3
Production System should be Included under one Client

Enterprise Systems Applications

 Client (Cont.)
• Common Set of Rules primarily for external reporting
– Common Tables
– Common Master Files
– Common Databases

• Standardized Data Common Across the Client

– a vendor number and name (vendor master data)
– a customer is common across the client
– a general ledger number and description
– a material number and description

Enterprise Systems Applications

 Controlling View
Controlling View Organizational Elements:
CO

Controlling Area
FI

Company Code

CO
Cost Center Profit Center

FI

Business Area

Enterprise Systems Applications

 FI/CO Organizational Elements

• Company Code:

– Independent accounting entity used to report taxes

– Smallest entity for which a complete set of accounts can be kept

• Controlling Area:
– Independent organizational structure for which costs and revenues are collected (can
have many company codes assigned to it)
• Business Area: Internal organizational unit used to create P&L for common parts of
the business

• Profit Center: a unit that collects revenue usually product lines (cost centers are
assigned to profit centers)

• Cost Center: a unit that collects commonly related costs

Enterprise Systems Applications

 Sales and Distribution View
Sales and Distribution View Organizational Elements:
CO
FI
Controlling Area
Company Code

SD
CO
Sales Cost Center
Organization CO

Profit Center
SD SD

Distribution FI
Sales Area
Channel
Business Area

SD

Division

Enterprise Systems Applications

 What is a Sales Organization?

• An organizational unit responsible for the sale of certain products or

services. The responsibility of a sales organization may include legal
liability for products and customer claims.

• You can assign any number of distribution channels and divisions to a

sales organization. Employees can be assigned to a sales organization.

Enterprise Systems Applications

 What is a Division?

• A way of grouping materials, products, or services. The system uses

divisions to determine the sales area and the business area for a
material, product, or service.

• If a sales organization sells food and non-food products through both

direct and wholesale distribution channels, each distribution channel
could then be further split into food and non-food divisions.

Enterprise Systems Applications

 What is a Distribution Channel?

• The way in which products or services reach the customer.

• Examples include wholesale, retail, online retail, etc.

Enterprise Systems Applications

 Sales Area
 SD is organized according to sales organization,
distribution channel and division.

 A combination of these three organization units forms the

sales area.

 Thus, a sales area is not a new organization element.

 This is how we control what products can be sold by what

methods of delivery and by which selling groups.

 This also has a significant impact on the customer master

data requirements.

Enterprise Systems Applications

 Sales Area
Client

Sales organization 1000 2000 3000

Distribution channel 10 20 10 10

Division 01 02 01 02 01 01

= Sales area

Enterprise Systems Applications

 Materials Management View
Materials Management View Organizational Elements:
FI CO

Company Code Controlling Area

SD CO
Sales Cost Center CO
Organization MM
Profit Center
SD SD
Storage
Distribution Location
Sales Area
Channel
MM MM
SD Purchasing
FI Organization Plant
Division Business Area

Enterprise Systems Applications

 Material Management Organisational Units
• Company Code
– Independent accounting unit
– Set up by FI
• Purchase Organization
– General conditions for purchasing
• Purchase Group
– Group of buyers in charge of certain purchasing activity
• Plant / Warehouse
– Produces goods or makes goods available for distribution
• Storage Location
– Allows differentiation of material

Nyman, Boshag, Kuhlmann, Siddiqui 2002

Enterprise Systems Applications
 Material Management Conditions
• Company Code
– CC has to be linked to one or many plants
– CC can be linked to PO
• Purchase Organization
– PO linked to one, many or no CC
– PO has to be linked to one or many plants
– PO can be linked to one or many purchasing groups
• Purchase Group
– One or many PG can be linked to one PO
• Plant / Warehouse
– PL has to be assigned to a CC
– PL can have one to many Storage locations
• Storage Location
– Many SL to one PL

Nyman, Boshag, Kuhlmann, Siddiqui 2002

Enterprise Systems Applications
 Organizational Elements - MM
Purchasing Organization

• Responsible for Procurement for One or More Plants

• Responsible for Negotiating Pricing and Delivery Terms with Vendors
• Purchasing Organization is Assigned to A Company where Inventory
is Legally Tracked or Costs are Legally Incurred

Enterprise Systems Applications

 Organizational Elements - MM
Storage Locations

• Storage is a location type within a Plant where

Inventory is Stored
• Storage Location is not a specific place within a plant
(i.e. bin, shelf, etc.)

Enterprise Systems Applications

 Material Management Organizational Structure

Client 401

Company USA Germany

Purchasing
N. America Europe
Organization

Plant New York California Hamburg

Storage
Receiving Warehouse Receiving Warehouse
Location

Enterprise Systems Applications

 CONCLUSIONS

Enterprise Systems Applications