Analyses the adoption of SAP systems
With the development of science, computer technology plays an important role in people’s daily work. Regarding companies, SAP system, which is an effectively business financial software, is becoming increasingly necessary to operate in many entities. From a financial accounting perspective, SAP system has a significant impact on accounting. This report divided into three parts. The first part will introduce the explanation of SAP system and its financial functions as well. The second section will present the financial benefits and challenges which has been identified. Some recommendations of success factors of SAP adoption will be given in the last part.
2. Definition of SAP
SAP stands for “systems, Applications, Products in data processing” (Yusuf, Gunasekaran and Abthorpe, 2004). Besides, SAP system is a famous ERP (enterprise resource planning), which helps the management of entity, financial operations, risk analysis, the communication between financial and management department (Bierstaker, Burnaby and Thibodeau, 2001).
2.1 Overview of SAP
SAP system is a software platform, which was created by 5 ex-IBM employees in German (Kumar, Scheer and Kotler, 2000). In addition, Robert Jacobs and Ted Weston (2007) states that SAP is not only the largest inter-enterprise software, but also the 4th largest software company in the world. Compared with other ERP softwares in the market, such as the Oracle, JD Edwards, People Soft, IMB, Baan and etc., SAP system has been adopted by most large companies because of its more high integrated version (Robert Jacobs and ‘Ted’ Weston, 2007).
2.2 Functions of SAP
According to the article written by Botta-Genoulaz and Millet (2006), SAP is an integrated software consisted of a series of functions: FICO(financial and control), MM(material management), PP(production planning), SD(sales and distributions), HR(human resources management).
Specifically, FICO functions means that SAP system could help financial accounting management and cost controlling. For example, using SAP system could avoid recording duplicated data. Also, it is easier to use SAP system to store the financial transactions information and keep the consistency of accounting data.
2.2.2 Material Management
Material management could support the inventory management occurring in daily business operations. For instant, sales department could know the correct number of products by checking finished goods account.
2.2.3 Production Planning
Production planning contributes to control and plan the producing activities of a company. For example, production manager could reference the previous production data to make the production plan in a scientific method in order to make the production more efficiently.
2.2.4 Sales and Distributions
SD function could organize and analyze sales data in order to understand the sales situation. For instant, sales manager could understand how far to achieve the sales target of company as well as the individuals by the sales and distributions modules in a short time.
2.2.5 Human Resource Management
Human resource management could complete employees life cycle and make the payroll more effective. For example, SAP system could set the salary into different level according to the position of employees in advance, which is more efficiency and objectively.
3. Benefits of SAP
3.1 Decrease the purchase cost
Firstly, SAP system contributes to enforce standard purchase procedure in order to decrease the purchase cost. Staffs should view the relevant purchase management module to understand and analyze the current raw materials situation in the first step. For example, employees could consult the historical number and price of raw materials to evaluate the supplier performance. In this way, it would be a more effective and scientific way to make the decision about the most valuable...
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