What is SAP R/3 System? Characteristics, Vehicle for Business Integration

What is SAP R/3 System?

The SAP R/3 (R stands for Real-Time and the number 3 denotes the three-tier application architecture) system is packaged business software that helps in integrating all functions and processes of a business. It is one of the most popular SAP software applications, and organisations across the world have already implemented SAP R/3 software successfully in their work processes.

The popularity of SAP R/3 as client–server software is chiefly due to the fact that it is made up of groups/layers that run concurrently across multiple individual computer systems. The term, “client–server” is composed of two parts—client and server, where client is that component/layer that requests services and server is that component/layer that provides services.

SAP R/3 Characteristics

SAP R/3 is considered as the most successful SAP version so far and has benefitted many organisations and businesses. Its success is due to a number of characteristics, which are shown in Figure:

• Integrated
  
• Secure Information
  
• Enterprise-wide
  
• Multi-Lingual
  
• Multi-Currency
  
• Best Business Practices

Integrated

SAP R/3 integrates all business functions and modules to provide unified information to the business.

Secure Information

SAP R/3 prevents information from being deleted, modified or shared by any unauthorised person. Only specific, authorised users can make the changes.

Enterprise-wide

SAP R/3 has an enterprise-wide reach, as it collects and processes data simultaneously from all functions and business units. It can be implemented in any organisation or even to individual business units. SAP R/3 provides and maintains a single database for all business master data, without redundancy.

Multi-Lingual

SAP R/3 can input, collect, store or process information in multiple languages. This makes the system easy to use.

Multi-Currency

SAP R/3 accepts data in multiple currencies.

Best Business Practices

SAP R/3 offers multiple benefits to businesses as it provides high adaptability, flexibility and data consistency. It can be customised according to the changes in business requirements or as per any specific one-time event.

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SAP R/3 as Vehicle for Business Integration

Conventionally, organisations used to buy and evaluate individual products or applications themselves from different software vendors and then compile the group of data processing applications. These individual products needed interfaces to assemble them into a system.

For instance, the sales and distribution system would need links to the production planning and financial systems, and the controlling system would require input from the material management system. This implementation of interfaces between individual applications and systems demands a significant amount of time and money.

When SAP was introduced, organisations hoped that the system would enhance the efficiency of their business processes and save their time and money. SAP R/3 version fulfilled their expectations. SAP R/3 is a pre-defined packaged system containing all core business applications required by the majority of business organisations.

These core business applications use a single, common database and a set of tables that are developed and maintained in one standardised environment. For instance, a standard R/3 product contacts approximately 8,000 database tables.

The statement, “R/3 as a Vehicle for Business Integration” is very apt for the SAP R/3 enterprise solutions system. The R/3 system aims at providing a group of integrated, large-scale business applications to the end-user. Owing to this, R/3 is famously known as a business suite package.

The following features of SAP R/3 make it a pre-defined packaged integrated system:

• Common database
• Common data dictionary
• Application update flows to all related systems
• One point of data entry in the system
• Data consistency
• Redundant data removal
• Consistent user interface

SAP R/3 integrates all core business functions to create one integrated data model, which provides one single facet of data across the whole business entity. SAP R/3 offers fast and faultless access to data where data is entered only one time and at one point only.

SAP R/3 was designed while considering the organisation as a whole. Owing to this, SAP R/3 system is considered as a vehicle for business integration. The standard set of core business applications included in each R/3 system comprises 12 core application modules (as discussed under SAP application modules), which are as follows:

• Financial Accounting (FI)
• Controlling (CO)
• Production Planning (PP)
• Materials Management (MM)
• Sales and Distribution (SD)
• Fixed Assets Management (FM)
• Project System (PS)
• Workflow (WF)
• Industry Solutions (IS)
• Human Resources (HR)
• Plant Maintenance (PM)
• Quality Management (QM)

These core business applications are known as functional areas, application areas, or the functional modules of SAP R/3.

The enormous benefits of an integrated information system provided by SAP R/3 software to big companies are very evident. For instance, a sale is made by the sales department and generation of sales order on a computer updates all functions of the entire company with the newly made transaction.

Material and Inventory management functions are updated automatically, worldwide. Delivery schedules and the Profit & Loss report reflect the updation and modifications. Importantly, every employee is provided with the updated function to be performed. The customer service department becomes active and handles customer queries promptly.

However, these benefits are not realised by all organisations that have implemented SAP R/3. Some businesses have experienced serious problems, such as events where budgets exceed, incomplete installations, long delays and so on. This is because the success of SAP R/3 implementation requires changes at all levels in the organisation and in all functional key areas, such as information technology, strategy, planning, human resources, management systems, organisation structure and culture.

Organisations usually give importance to the technical aspect of the SAP R/3 system and ignore the elements of change management, thus experiencing failure in SAP implementation. Hence, the SAP R/3 system performs the role of a vehicle that transfers the best practices to the business, which originally forms the basis of its generic processes. This has made SAP R/3 the most appropriate software application that takes care of data and business processes equally and closes the gap in business practices.