ERP stands for Enterprise Resource Planning. An ERP system helps in developing business applications like accounting, sales or payroll. SAP is the largest software vendor of ERP systems in the world.
The ERP methodology was first used in late 1980s when technology became advanced enough to allow for the integration of applications. ERP technology shifted our stance from transaction based processing to real-time processing which allowed us to update the source of data and any changes were immediately imitated across servers and updates could be pushed in the very last minute.
On the other hand SAP was formed in 1972 by the courtesy of a group of German employees who happened to be ex-IBM employees. During those times, IBM was the world leader in computing systems and hardware. SAP is an acronym for Software Applications and Products. In 1990s, SAP developed their ERP product named R/3 which had the capability to integrate multiple applications and worked through a single database.
The most exotic feature of ERP is that it uses the same database across all applications and also uses exact same data definitions. An attribute called ‘Account’ has the same meaning for a sales application or a supply chain management.
SAP uses the very same technology where a single source of data is maintained which is available to every application. Having a single source of data means that large businesses have to no more worry about handling data across multiple sources, translate them into a single format and consolidate them during reporting.
Many people think of ERP as a product but the truth is that it is more of a methodology to do certain tasks. It sets standards on how a large number of applications can be linked together in a single architecture. All the vendors of ERP follow these standards to varying extents.
It is important to select the right ERP system for your business by going through several vendors and matching if they meet your business requirement and whether you have the technology to use the software. Going with big players like SAP and Oracle will ensure that you go on receiving support and product service for years to come.