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Understanding the Importance of SAP and Why Businesses Need It

by Martin Glover

Whether you operate a small home-based enterprise or you’re part of a multinational corporation, there are probably many ways that your business can benefit from using an enterprise resource planning (ERP) system. An ERP system is a suite of digital software programs that companies can use to manage important business data, functions, and procedures. The main benefit of ERP systems is that they give companies a centralized platform on which multiple departments can easily coordinate. 

Systems, Applications, and Products (SAP) is an ERP software suite containing hundreds of integrated modules that cover almost every aspect of modern business management. The software collects and manages business data in order to facilitate more efficient communication and collaboration between departments. Sales, marketing, inventory and distribution, and product management are just a few integral business functions covered by SAP.

SAP is the most widely used ERP system available to businesses today. Thousands of enterprises all over the world depend on various types of SAP systems to organize their everyday operations and optimize company productivity and performance. The many benefits from using SAP Business One Philippines-based companies enjoy are especially game-changing for small-to-medium enterprises, as the software has been designed specifically to meet the unique needs of such businesses.

Read on for an in-depth explanation of what SAP is, how it works, and how it can benefit your enterprise.

What Is SAP and How Does It Work?

As previously mentioned, SAP is an ERP software system developed expressly to help companies optimize their everyday business management procedures. The system is applied companywide, which means that SAP and its modules have the capacity to cover almost all aspects of an enterprise’s business operations.

The primary benefit of SAP is that it creates a centralized, unified platform that the entire company can use for interdepartmental communication, data management, and other essential business processes. SAP enables individual teams and departments to share information easily, which helps them make smart business decisions with less risk of incurring costly errors. Consolidating business operations in this manner helps create a more efficient and productive work environment for every member of the company—from senior executives to rank-and-file employees. 

SAP is a large and highly customizable system that is also available in many versions. Some of the most popular versions of SAP in use today include the following:

  • SAP Business One is a system designed to cater to the needs of small to medium-sized companies. It can be deployed from the cloud or as an on-premise system.
  • SAP Business ByDesign targets mid-market, rapidly growing enterprises and offers business owners comprehensive real-time perspective on their entire organization.
  • SAP S/4 HANA Cloud is a highly sophisticated ERP system featuring state-of-the-art technologies such as artificial intelligence (AI) and machine learning.

Advantages of Using an SAP System

Using SAP can bring a host of benefits to any company, no matter its size or industry. The following are just a few of the most significant ways an SAP system can help your business:

Boosts Operational Efficiency

SAP systems are capable of automating all sorts of repetitive everyday tasks your company’s employees would otherwise have had to perform manually. These include data entry, calculations, invoicing, and other essential but frequently time-consuming and tedious functions. Extensive process automation will enable your organization to save substantial amounts of time and manpower and drive companywide productivity to unprecedented heights as a result. 

Automating basic business functions through an SAP system doesn’t just ensure that these functions are completed quickly and more accurately, but it also allows your employees to dedicate their time and energy to tasks that actually require human involvement. Many company employees will welcome chances to perform more complex, challenging, and value-adding work, such as handling more complicated customer concerns or performing high-level predictive tasks. This sense of fulfillment is in turn likely to boost both their productivity and their performance.

Enhances Flexibility

Today’s fast-paced and highly volatile business environment has pushed companies to become more adaptable, agile, and responsive than ever before. Companies must be able to respond in real time to changing customer needs and emerging trends or risk falling out of relevance. Luckily, SAP can help businesses achieve these never-before-seen levels of flexibility by expediting companywide data sharing and internal communication. 

The modular nature of most SAP systems also enables business owners to customize the system according to their company’s specific needs and goals. The software comes equipped with a wide range of customizable settings, built-in modules, and add-on functions that will essentially let you build the perfect solution for your particular business. This eliminates the problem of spending precious company resources on functions and tools that you don’t necessarily intend to use heavily just because they come bundled with your chosen system. 

Reduces IT Costs

Prior to the rise of ERP systems, businesses traditionally employed a wide variety of hardware and software solutions to help manage company operations. Maintaining these fragmented, patched systems has proven to be highly inefficient, labor-intensive, and expensive over time. Maintenance problems are especially common for businesses who choose to run their operations from antiquated legacy software, as finding tech experts with sufficient knowledge of out-of-date programs becomes costlier and more difficult the older the software is.

In contrast, the consolidated nature of SAP systems enables companies to make significant savings on maintenance and upgrading costs. Since you’ll have acquired your SAP system from a single provider instead of purchasing multiple programs from a number of vendors, any major tech support needs your company can’t handle on its own can simply be routed back to the one provider. And if your in-house tech support or IT teams are sufficiently trained in the ins and outs of your system, they may even be able to troubleshoot it, including any add-ons, without having to call in assistance from outside entities.  

Streamlines Data Management

Quality data is an exceedingly precious resource for companies today. Efficient data management functions allow businesses to understand and respond to the needs and demands of customers, regulators, and the market at large. 

SAP systems are typically designed with data management in mind and, therefore, come equipped with a range of tools to improve data collection, storage, and analysis capabilities for companies. The software can collect and report on company sales, profits, customer feedback, and other essential pieces of information in more or less real time. Having this information on hand, in turn, enables companies to evaluate their performance accurately and devise strategic plans for the future.

Can Be Scaled Up as Business Grows

A company’s operations are likely to become increasingly complicated and difficult to manage as it grows. Hiring more employees, serving more customers, and processing higher volumes of transaction data and other information each day may take a toll on your company’s incumbent business management systems. 

Luckily, scalable companywide solutions such as SAP are designed to make a growing company’s transition period as fast and frictionless as possible. You can simply reconfigure the software to account for your organization’s present needs and make the necessary adjustments as those needs increase, diminish, or otherwise change.

No matter your industry or the size of your enterprise, an SAP system can help your business achieve levels of operational efficiency, agility, and productivity that would have been out of reach otherwise. Take advantage of the system’s customizability to build a solution that allows you to address your company’s specific difficulties and maximize its unique strengths.

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