What Is the Difference Between an ERP System and SAP?

By Dennis Bortolus

ERP is for Enterprise Resource Planning. ERP software is a suite of business applications such as accounting, sales or payroll. The key difference between the ERP version of these applications and the stand-alone versions is integration. The applications share the same technical architecture, database, look and feel, and processing standards. SAP is one of the world's largest software vendors of ERP systems.


The ERP methodology began in the late 1980s when technology advances in communications and database tools permitted software designers to integrate applications and change from transaction-based processing where data was batched, saved and updated periodically, to real-time processing where update capability was distributed to the source of information and changes were immediate and up-to-the-minute.SAP was formed in 1972 by a group of German employees who previously worked for IBM, which at the time was the world leader in computing systems and hardware. The letters SAP stand for Software Applications and Products.In the 1990s, they developed their ERP product called R/3, which integrated multiple applications and shared a single database.


The primary feature of ERP is that all applications share the same database and, more importantly, the same data definitions. A data element called Account has the same meaning to the sales application as it does to supply chain management.Having information in a single place and format means that large organizations no longer have to gather data from multiple systems, translate it into a single format and meaning, and consolidate it in order to do reporting.SAP has a slogan touting their data integration that says: "If it is anywhere, it is everywhere." This refers to the single source of each piece of data and the availability of information to every application.


SAP, Oracle and Microsoft make up what is considered the top tier list of ERP vendors in the world today. Each has certain market strengths for specific industries such as government, manufacturing and higher education. Oracle has acquired several of the top vendors like PeopleSoft and JD Edwards, but as of this writing (June 2010), SAP continues to have a slight lead over Oracle when it comes to size.


ERP is thought by many to be a product. ERP is more of a methodology and a set of standards on how applications are linked together in a single architecture. All vendors follow that standard to varying extents.

Expert Insight

When selecting the right ERP system for your organization, look at multiple vendors and match your business requirements and technology direction to the software. Going with a major vendor like SAP or Oracle means that support and product improvements will continue for years to come. The availability of technical resources grows with the popularity of the software you select as well.