SAP for Beginners

Many visitors of our blog are beginners in SAP world and we often received requests to publish a tutorial about SAP for beginners. For this reason, we asked one of the senior SAP consultants to share a story about his journey to working in SAP field. The name of this person is not disclosed for privacy reasons and I am publishing this tutorial about SAP for dummies on his behalf. I’d also like to thank this senior consultant for his contribution that will hopefully make it easier for many people to understand what is SAP and what are the career opportunities related to SAP.

Target Audience of this Article

• Fresh Graduates willing to pursue their career in ERP or Software Designing or Solution Architecture
• Experienced Professionals who are working, very much in the field and gurus of their current line of business and are willing to pursue career in ERP design and implementation
• Experienced Professionals who have come across SAP during their professional career as either as a Power User or End User or Project Coordinator and want to pursue their careers in ERP design and implementation
• Experienced Professionals who are currently involved in developing business software and are willing to switch to an ERP design and implementation
• Experienced Professionals willing to make a drastic career switch from current career to ERP designing and implementation

Foreword

Before I entered in the SAP Consultancy, I had many questions. Mind was boggling with endless questions on how to proceed and become an SAP Consultant myself. All I knew was, that some SAP named product is there outside and its experts are very much high in demand plus this field pays very well with numerous opportunities to travel.

My first encounter with SAP was back in late 1990’s, this was the year when this product was introduced and implemented in that part of the world where I belong. When I was in high school and in ‘Computer Applications’ course, one of our instructor mentioned SAP and gave a brief overview of ERP – Enterprise Resource Planning.

Soon after completing my high school, I got a chance to intern at one of the MNC’s (Multinational Companies) which had an SAP roll-out and was the first company to become an SAP partner back in early 2000. During my internship, I managed to have a look at the SAP screens and due to my curiosity, I requested the guy there in finance (we both shared same first name) who was responsible to park incoming invoices; to teach me and I would like to do the few. He was generous to train me but gently refused to let me use his Login ID to park the invoices.  Same guy taught me about SAP, what is SAP, how it is in demand worldwide and how the consultants holding SAP skills are well paid worldwide.

To cut the story short and before we start with the SAP introduction and way forward if you are interested in making SAP your career, I would like to share a brief introduction of the writer of these words, i.e. myself.

I have been part of SAP industry for almost now 09 years and basically I am an SAP Functional Consultant. I have been involved in SAP end-to-end life cycles, roll-outs, pre-sales, demos, support ticket resolution, troubleshooting, trainings and end user support.

These words which you will be reading are solely based on my experience, observations and what I have learned during these 9 years of roller coaster ride during my career to give you an actual idea of what it is like to be an SAP Consultant.

What is SAP?

SAP ERP or SAP ECC (Enterprise Central Component) stands for:

• In German:
  • Systeme
  • Anwendungen,
  • Produkte in der Datenverarbeitung

• In English:
  • Systems
  • Applications and
  • Products in Data Processing

You can find more information in this post: What is SAP.

SAP: A 44-year History of Success (and Counting)

Headquartered in Walldorf, Germany, SAP is the market leader in enterprise application software. In 1972, five entrepreneurs in Germany had a vision for the business potential of technology. Starting with one customer and a handful of employees, SAP set out on a path that would not only transform the world of information technology, but also forever alter the way companies do business. Now 44 years and approximately 300,000 customers stronger, more than ever, SAP is fueled by the pioneering spirit that inspired its founders to continually transform the IT industry.

SAP is listed on several exchanges, including the Frankfurt Stock Exchange and NYSE, under the symbol “SAP”.

What is ERP?

ERP is an abbreviation of Enterprise Resource Planning. ERP helps an enterprise or an organization or a company to run its business effectively by planning its resources efficiently. These resources may be material, manpower or services. SAP ERP integrates various business functions of a company to eliminate the need of redundant or duplicate data entry. SAP ERP stores all the activities and business functions that the users perform in its database. Eventually all this data helps in making better business decisions in the form of large number of standard reports available.

SAP for Beginners: Major Modules

SAP ERP consists of several important modules based on different business functions of the company. We shall start with the Functional Modules.

Functional Modules

Financial Accounting (FI)

SAP FI Financials module is one of the most important modules behind SAP. It is designed for meeting all the accounting and financial needs of an organization. Within this module Financial Managers as well as other Managers within your business can review the financial position of the company in real time.

The real-time functionality of the SAP modules allows for better decision making and strategic planning. The FI (Financial Accounting) Module integrates with other SAP modules such as MM (Materials Management), PP (Production Planning), SD (Sales and Distribution), PM (Plant Maintenance) and PS (Project Systems).

FI module is formed by several sub-components, but not limited to, also known as sub-modules. Few of them are mentioned below:

• Accounts Receivables
• Accounts Payable
• Asset Accounting
• Bank Accounting
• General Ledger/New General Ledger

Controlling (CO)

SAP CO (Controlling) Module provides supporting information to Management for accurate planning based on costing reports as well as monitoring the operations of their business. Represents the company’s flow of cost and revenue, offers all the support information needed by Management for planning, reporting and decision making. Decision making can be achieved with a high level of information reducing drastically risks. Basically, it is a vital tool for management to carry out organizational decisions.

The CO (Controlling) Module has following, but not limited to, sub modules which are as follows:

• Cost Center Accounting
• Internal Orders
• Product Cost Controlling
• Profitability Analysis
• Profit Center Accounting

Material Management (MM)

It covers business functions such as procurement or purchasing and inventory management. The procurement can be for materials or services. It can be either local or imports (procuring from abroad) or both. Materials management (MM) is integrated with other modules such as SD (Sales & Distribution), PP (Product Planning), FI (Financials), CO (Controlling), PM (Plant Maintenance) and QM (Quality Management). Materials Management is used for channelizing procurement process and managing inventory at store/warehouse level.

MM (Materials Management) Module has following, but not limited to, sub modules which are as follows:

• Maintaining Minimum Stock Level – Re Order point
• Purchasing / Procurement management
• Request for Quotation Management
• Handling Purchase requisitions generated from different modules such as PP, PM.
• Vendor Evaluation
• Goods Receipt
• Invoice Verification
• Inventory Management

Production Planning (PP)

The purpose of PP (Production Planning) is to ensure that the manufacturing runs effectively and efficiently to produce the goods as required by customers. The Production Planning module of SAP takes care of master data needed like bill of materials, routings and work centers.

Production Planning modules caters all avenues for producing a finalized or finished good. It includes the time required to set up machine, the time required to produce a single finished good as well as catering the costs incurred in the process of manufacturing that can be both direct and indirect costs involved in the production of a single unit of finished goods such as: labor hours, machine hours, factory overheads that can be both fixed or variable in nature. Also, production waste, scrap and by-products.

The PP (Production Planning) Module has following, but not limited to, sub modules which are as follows:

• SOP (Sales and Operations Planning) – provides tools for forecasting sales and production planning based on historical, current and future data
• MRP (Material Requirements Planning) – relies on demand and supply elements with the calculation parameters to calculate the net requirements from the planning run
• Shop Floor Control – includes the processing of production orders, goods movements, confirmations and reporting tools for production
• Capacity Planning – evaluates the capacity utilized based on the work centers available capacity to show capacity constraints
• Product Cost Planning – is the process of evaluating all the time values and value of component materials to determine the product cost

Sales & Distribution (SD)

The SAP sales and distribution is part of the logistics module that supports sales to customers starting from quotations, sales order and all the way towards billing the customer.  It is tightly integrated with the MM (Material Management), FI (Finance), CO (Controlling), QM (Quality Management), PS (Project Systems) and PP (Product Planning) functional modules.

Sales and Distribution covers both sales of goods and services. It covers business functions starting from pre-sales such as inquiries, quotations, contracts (either quantity or value), scheduling agreements. Sales order management, pricing, discounts, credit management, executing sales order, creating outbound deliveries, creating invoice, recording accounts receivables, managing credit and debit memos, complaints management, i.e. return sales.

The SD (Sales & Distribution) Module has following, but not limited to, sub modules which are as follows:

• Pre-sales activities, including inquiry and quotation creation
• Managing and committing long term services and / or supply of goods using contracts
• Sales Order processing, including Sales Order (SO) creation
• Shipping, including outbound delivery document creation
• Billing, including billing document and invoice creation
• Complaints processing, e.g. sales returns, credit and debit memos

Quality Management (QM)

Quality Management involves business processes involving quality control and quality checks in all aspects of supply chain management. Quality management is a method for ensuring that all the activities necessary to design, develop and implement a product or service are effective and efficient with respect to the system and its performance. Quality management is the comprehensive solution that supports the company throughout the product life cycle and along the supply chain.

SAP Quality Management (QM) module supports tasks associated with quality planning, quality inspection and quality control through the enterprise. It sets the specifications for quality and standard testing procedures, controls the creation of quality certificates and manages notifications related to quality. It also stores the quality data for raw materials, goods-in-process and finished goods.

The QM (Quality Management) module has following, but not limited to, sub modules which are as follows:

• Quality Planning
• Quality Inspection
• Quality Control
• Quality Certificates
• Quality Notifications

Plant Maintenance (PM)

Plant Maintenance covers preventive maintenance, predictive maintenance and corrective maintenance. The PM component enables companies to maintain their production machines in mint conditions through timely maintenance.

PM module ensures that all the machines installed within the production facility and which are under company’s ownership are in working, properly and are in mint condition. They are looked after regularly to avoid major break down that can result in low production and loss in terms of major disaster if the machine should be scrapped altogether due to low maintenance. System regularly prompts and checks when the maintenance of a machine falls due. It is integrated with MM, CO and FI (Asset Accounting submodule) modules.

Project Systems (PS)

Project Systems module covers business processes of a Project to effectively manage project of any size. It includes Work Breakdown Structure (WBS) elements, network, milestones and confirmation on the progress of each phase of the project whether it is completed or in progress and when it is scheduled to be completed, cost which is budgeted at each phase of the project, the cost already incurred whether it is within the budget or there is cost overrun at any stage of the project.

PS is designed to support the planning, controlling and monitoring of long-term, highly complex projects with defined goals. To be able to control all tasks / activities involved in project execution an organized form is required specifically to monitor the status of the project and which is shared with all departments involved.

Human Capital Management (HCM)

Human Capital Management module includes business processes involving all aspects of company’s human resources, i.e. the employees.

HCM module deals with the various activities carried out in the human resource department of an organization. Such as personal administration, personnel development, training and event management, payroll, etc. This module enables companies to effectively manage information about the people employed and for working for their organization.

HCM module shares information with other modules such as Financial Accounting (FI), Controlling (CO), Production Planning (PP), etc. The payroll process uses accounts payable functionality to print checks, manage payments and bank information and process payments to tax authorities and other third-party vendors in case if third party employees are hired. Payroll results are also posted to General Ledger accounts for use in periodic income and expense reporting. For Management Accounting or CO, information regarding employment costs can be transferred to Cost Centers with in the CO module. Employees can be assigned to Work Centers, which are used in conjunction with modules like Production Planning (PP).

The Human Capital Management (HCM) module has following, but not limited to, sub modules which are as follows:

• Organizational Management
• Personnel Administration
• Recruitment Time Management
• Payroll Benefits Compensation
• Management Personnel Cost
• Planning Budget
• Management Personnel
• Development Training & Event Management
• Travel Management

Technical Modules

Advanced Business Application Programming (ABAP)

ABAP is the programming language of SAP ERP and is used to create customized reports, layouts, screens, designing and developing company specific customized printouts such as quotation, sales order confirmation, delivery note, invoice, purchase order, etc.

NetWeaver – Business Application Software Integrated Solutions (BASIS)

SAP BASIS involves SAP ERP software installation, taking timely backups, disaster recovery, security of the SAP servers, user creation, managing roles and authorizations of the users which includes authorization management to control which process owner is authorized which specific set of business transactions.

Industry Specific Solutions

SAP also offers some industry specific (IS) solutions which are unique in nature due to complexity of their business processes. SAP IS Solutions cover industries’ best practices and provide eminent functionality to carry out industries’ specific complex transactions which are unique due their nature of business.

Some of the examples are mentioned below. However, you can get the complete list of the said solutions at SAP’s official website: https://go.sap.com/solution.html

• SAP IS – Oil and Gas
• SAP IS – Utilities
• SAP IS – Retail
• SAP IS – Automotive
• SAP IS – Banking
• SAP IS – Chemicals
• SAP IS – Telecommunications
• SAP IS – Healthcare
• SAP IS – Insurance
• SAP IS – Consumer Products
• SAP IS – High Tech
• SAP IS – Higher Education and Research
• SAP IS – Life Sciences
• SAP IS – Mining
• SAP IS – Media

Which SAP module to choose?

Now comes the tricky question. After going through all the information about SAP for beginners mentioned above and you have decided to opt for SAP as a career but you are still confused which SAP module you should opt for. To answer this basic question, I shall try to make it simpler for you based on the experience. Read our next post: How to choose SAP Module? (Due to space limitations, we could not fit all this information into SAP for beginners tutorial)

Entering into SAP Market

You have the basic understanding of all SAP modules, are aware of the likely pre-requisites and you also have decided to which module to opt for initially as your SAP career. Now comes the tough and tricky part which triggers a tricky question “How to enter into the SAP market?”

Following are the options, but not limited to, which people have been employing to enter in the SAP world, globally.

SAP Training/Certification Options

You have just graduated or you have been a professional working in another field but would like to switch your career to SAP Consultancy.

First thing and your priority should be, is to get certified in the SAP module which you have opted for. Companies prefer those candidates in fresh category who at least have certification in SAP module. If you are certified from SAP SE, it is a license that the candidate is aware of basic business processes and SAP’s functionality of respective module.

Following are the options to get yourself certified:

• Instructor Led SAP Academy (ILT): such academies are offered by SAP Education Partner in different parts of the globe within their allotted geographical location. This is an intensive academy which is led by an experienced SAP practitioner. This requires your full time, Monday to Friday, and is scheduled usually from 09:00 to 17:00 Hours
• SAP E-Academy: Self-paced SAP Academy where you are virtually connected with the instructor, learning is carried out online and you enjoy and have the liberty to complete the course at your desired pace, time and duration
• SAP Learning Hub: a new dimension introduced by SAP Education which allows you have access to multiple courses (based on the category of the Learning Hub ID you have purchased) for a defined duration of time as offered by SAP

You can have further dive into and gain further insights on SAP Education at:

• https://go.sap.com/training-certification.html
• https://training.sap.com/

Hands-on Training – Client or Consultancy

Once you have acquired SAP certification or completed SAP Academy successfully, now obviously, you would like to enter in SAP world. Now, what are your options? There are preciously following options where you can opt for to start your SAP career.

SAP Implementation Partner (Consultancy)

SAP has partnered with number of implementation partners worldwide. Every SAP fresher’s priority and dream is to work for SAP implementation partner initially. Your options to enter and work with the SAP implementation partner are:

• Internship: an internship is a very good source of entering the SAP world with any SAP implementation partner. There are bright chances that your internship is converted into full time job in the future based on your potential, performance and of course, company’s hiring policy

• Recruitment Drive: companies often start recruitment drive both on campuses or outside where companies hire future potential candidates on certain criteria, then train and groom them to make them their future assets. One should be vigilant and follow the companies when they initiate and offer such drives

• Fresher: companies do offer and advertise vacancies for fresh certified SAP Consultants. The key is to select the implementation partner with whom you want to be associated with and be vigilant, follow the company’s HR announcements and gain market intelligence whenever your selected SAP partner has opened their positions / vacancies for fresh certified candidates

Client End – Companies Implementing SAP

The companies which are opting for SAP implementation are a great source to start your SAP career. Companies opting for SAP do look for and hire SAP Certified Consultants to act as a bridge and liaise between SAP Implementation Partner and the Business Users so that the latter’s routine tasks and operations are not hampered.

You as a fresh certified SAP Consultant will have an exposure of SAP implementation despite being on another side of the table but still you will be able to observe how the Consultant’s interact, understand business processes and design them. You being SAP support resource will be directly interacting with the SAP Consultants and Business Users simultaneously resulting in an understanding of not only company’s specific business processes but also getting trained on SAP front end transactions by the Consultants themselves.

Company and the Business Users shall be heavily dependent on you once the implementation partner has left after completing the implementation cycle. You will be the first line of support and helping the Users in their daily routine of operations as you have end to end knowledge of business processes and have been intensively trained on the designed processes in the SAP.

Client End – Companies already Running SAP

There are many companies globally which have already implemented and have been running SAP over a period. Getting hired in such companies is also beneficial for a fresh certified SAP resource. Since the companies are experienced in running SAP their processes and systems are matured.

You will be required to solve the support tickets on daily basis which can be of different nature related to daily routine of business operations or the business has raised a new requirement in current process or a new business process has identified resulting Change Requests (CRs) for instance new business requirement in terms of adding a new functionality in the system all together or requirement of new report or new printout / output or the company is expanding into new line of business.

One positive aspect is, since the business has matured processes and the system is running smoothly; the companies tend to scale upwards by moving into new dimension products to add value further to their existing systems. You shall be practicing your core implementation module and along with that the probability of learning new dimensions is high.

Life at SAP Implementation Project

Let’s try to give you a flavor of the phases or how is life at when implementing SAP, both from Consultant’s deployed by Implementation Partner or as an SAP Coordinator or SAP resource deployed at Client end. Following is the Accelerated SAP (called ASAP) methodology prescribed by SAP to follow to achieve the goal of successful SAP ERP implementation.

Project Preparation

In this phase, overview sessions on SAP ERP are held to provide an understanding of specific module(s) and functionalities, how they integrated with each other. It also includes preparation and finalization of Project Management Office, basic amenities for instance Projector, meeting rooms, stationary and it also includes identification of Process Experts, Power Users, End Users which will play a major role in successful SAP ERP implementation.

Business Blueprint

In this phase, the existing business processes or business functions, i.e. AS-IS of the company are gained and how the same will be mapped in SAP ERP, i.e. TO-BE is documented and proposed. In other words, how business process owners will perform their business operations in SAP ERP system once the SAP is implemented successfully.

Realization

In this phase, the SAP ERP system is configured in accordance with company’s business processes agreed and signed off during the TO-BE workshops. Several rounds of testing are also held in this phase where the users test the system and provide their sign offs confirming that the tested processes are in conformity with the processes agreed during the business blueprint phase. Testing is carried out based on different business process scenarios.

Final Preparation

The final SAP ERP system is made available to the business process owners. Before the user will enter live and actual data, master data, legacy data and cut over numbers are uploaded in the system. This is a very critical transition stage. Final round of SAP ERP system testing and end-users training can also take place in this phase.

Go-Live and Support

This is the most critical phase of the project when users are entering live and actual data in the SAP ERP and occasionally get stuck in the system. Helping users by quickly attending to any errors or problems encountered ensures that the SAP ERP system runs smoothly.

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We hope that this tutorial about SAP for beginners will help newbies in the SAP area to better understand what is SAP and what are career opportunities associated with it. Besides providing the valuable insights, this SAP for beginners tutorial also contains numerous links to other resources that you might find highly useful.

As usual, your comments, questions, and feedback are welcome in the comments section below.