Careers Business Ownership Supply Chain Management - Introduction to SAP SAP is a market and technology leader in ERP solutions Share PINTEREST Email Print Gordon Chibroski / Portland Press Herald / Getty Images Business Ownership Operations & Success Supply Chain Management Sustainable Businesses Operations & Technology Marketing Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner By Martin Murray Martin Murray Twitter Martin Murray is a former writer for The Balance Small Business, and the author of eight books on supply chain management and enterprise resource planning. Learn about our Editorial Process Updated on 09/30/19 There are a growing number of software suites that can help companies maximize efficiencies in their supply chain. There are specific software packages that can be implemented for purchasing or planning, but there is a software product, called Enterprise Resource Planning (ERP), that can be implemented across the company incorporating all aspects of the enterprise. ERP is a method to manage all of a businesses processes through a series of integrated software applications. Applications may include everything from customer service and accounting to the raw product procurement and product distribution. SAP SE is one of the leading global firms in providing companies with forward-thinking, state of the industry, supply management solutions. ERP for the Supply Chain Enterprise resource planning (ERP) software has been implemented by a large number of Fortune 500 companies in the last twenty years. The common database and real-time processing have allowed companies to benefit from reacting to situations in the supply chain that would not have been possible without ERP software. The market leader in ERP software is the German company, SAP. History of SAP The company was founded in 1972 and is now a market and technology leader in client/server enterprise resource planning software. They provide a set of comprehensive solutions for companies of all sizes and all industry sectors. At present SAP is now the third-largest software supplier in the world and delivers scalable solutions that enable its customers to implement industry best practices. The company's emphasis is constantly developing new products that allow their customers to respond to dynamic market conditions and help them maintain a competitive advantage. In 1979, SAP released its mainframe product called R/2. SAP dominated the German market, and in the 1980s SAP developed a broader market in the rest of Europe. In 1992, SAP developed the client/server application we all know now as R/3. This allowed SAP to bring the software to the U.S. market and within a few years, SAP became the gold standard for ERP software. Integrating Business Components When businesses chose SAP as their enterprise application software, they identified the integration of the business components as a key advantage. Many other software companies used a best-of-breed approach and developed highly complex interfaces to integrate the separate software packages. Supporting and maintaining just one system rather than several systems with different hardware platforms has yielded a significant cost saving for companies. SAP for Small and Medium-Sized Businesses SAP was originally developed as an enterprise application-software package that was attractive to very large manufacturing companies. As the number of companies adopting SAP began to grow, several smaller companies in many different industries came to believe that SAP was the product that could give them a competitive advantage. Many of these companies required just the core SAP functionality. That usually comprises of finance, production planning, sales and distribution, and materials management. Often companies would start their implementations with this core functionality and then on the second and third phases of their implementations, they would introduce functionality such as product costing, warehouse management, human resources, plant maintenance, and quality management. Current Releases of SAP The release of the SAP software—rolled out at the end of 2005—is called ERP Central Component (ECC) 6.0. With this release, SAP announced its plan for future releases dubbed “innovation without disruption. " The upgrade cycles are minimized but some enhancement packages will continue to be released over the lifecycle of the product. As an example, to be responsive to user demands, the firm released the Enhancement Package (EHP8) in 2016. In addition to the core SAP software, the company has introduced specific software for processes such as Customer Relationship Management (CRM), Supply Chain Management (SCM), Product Lifestyle Management (PLM), and Supplier Relationship Management (SRM). SAP software is designed to allow your company to ship your customers what they want when they want it. And when fully optimized, inventory and lead times are managed so that you're accomplishing this by spending as little money as possible.