What Is the Difference Between an ERP System and SAP?

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 worldâ??s largest software vendors of ERP systems.

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SAP - Vendor of ERP Software

History

The ERP methodology began in the late 1980â??s 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.rnSAP was formed in 1972 by a group of German employees who previously worked for IBM, who at the time was the world leader in computing systems and hardware. The letters SAP stand for Software Applications and Products.rnIn the 1990â??s they developed their ERP product called R/3 which integrated multiple applications and shared a single database.

Features

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

Considerations

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 and reduced the size of the top tier considerably, but SAP as of this writing continues to have a slight lead over Oracle insofar as size.

Misconceptions

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. Availability of technical resources grows with the popularity of the software you select as well.