SAP R/3 History

The company SAP was founded in Waldorf, Germany, in 1972 by five ex IBM engineers (Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus E. Tschira, Claus Wellenreuther). SAP stands for Systemanalyse und Programmentwicklung or “System Analysis and Program Development”. This is changed to Systeme,Anwendungen und Produkte in der Datenverarbeitung or “Systems, Applications, Products in Data Processing). Headquartered in Waldorf, Germany, SAP employs 29,000 people in more than 50 countries.

SAP R/1, financial accounting software real time business data processing was the first product and Imperial Chemical Industries (ICI), a British company is the first client. In 1979, SAP released a rudimentary version of its ERP product, R/2 with applications for accounting,manufacturing,supply chain and HR. By 1980 SAP had 50 of the largest 100 German.

The original founders have been so successful in growing SAP into a global player such that SAP AG is now the third largest independent software supplier in the world, with over 140,000 installations, approx 109,000 customers, with approxmately 12 million people users using SAP software each day.

SAP founders Klaus Tschira, Hasso Plattner, Dietmar Hopp, and Hans-Werner Hecto

What made this company so successful?

The first big scale product SAP launched in 1979 was SAP R/2. Running on mainframe computers, R/2 was the first integrated, enterprise wide packaged software, and it was an immediate success in Germany. For years SAP stayed within the German borders until it had penetrated practically every large German company.

companies as customers.

Looking for more growth, SAP expanded into the remainder of Europe during the 80’s. Towards the end of the 80’s, client server architecture became popular and SAP responded with the release of SAP R/3 (in 1992). This turned out to be another success for SAP, especially in the North American region into which SAP had expanded in 1988.

The growth of SAP R/3 in North America has been nothing short of stunning. Within a five year period, the North American market went from virtually zero to 44% of total SAP worldwide sales. SAP America alone employs more than 3,000 people and has added the names of many of the Fortune 500 to it’s customer list (8 of the top 10 semiconductor companies, 7 of the top 10 pharmaceutical companies, etc). SAP today is available in 46 country specific versions, incorporating 28 languages. These solutions are tailored to meet the specific requirements of 23 different industry categories, from aerospace and defense to utilities, giving SAP a competitive advantage that no other company can match.

SAP R3 is delivered to a customer with selected standard processes turned on, and many other optional processes and features turned off. At the heart of SAP R/3 are about 15,000 + tables, which control the way the processes are executed. Configuration is the process of adjusting the settings of these tables to get SAP to run the way you want it to. Functionality included ranges from financial accounting (e.g. general ledger, accounts receivable, accounts payable etc) and controlling (e.g. cost centers, profitability analysis etc) to sales and distribution, production planning and manufacturing, procurement and inventory management, and human resources.

The start of the internet age at the end of the 90’s was a big challenge for the big players of the enterprise software industry. While trying to grow at a high speed, the companies, SAP included, were racing not to miss the internet train. Businesses had to be internetnabled, ebusiness quickly became the buzzword of the decade, and the software companies introduced new concepts, new products.

Today, SAP offers solutions that improve virtually every aspect of business, government, and education.

Why SAP R3 is different?

Traditional computer information systems used by many businesses today have been developed to accomplish some specific tasks and provide reports and analysis of events that have already taken place.

Examples are accounting general ledger systems. Occasionally, some systems operate in a “real-time” mode that is, have up to date information in them and can be used to actually control events. A typical company has many separate systems to manage different processes like production, sales and accounting. Each of these systems has its own databases and seldom passes information to other systems in a timely manner.

SAP takes a different approach. There is only one information system in an enterprise, SAP. All applications access common data. Real events in the business initiate transactions. Accounting is done automatically by events in sales and production. Sales can see when products can be delivered. Production schedules are driven by sales. The whole system is designed to be real-time and not historical.

SAP R3 structure embodies what are considered the “best business practices”. A company implementing SAP adapts it operations to it to achieve its efficiencies and power.

The process of adapting procedures to the SAP model involves “Business Process Re-engineering” which is a logical analysis of the events and relationships that exist in an enterprise’s operations.