What is an ERP system?

Espresso Tutorials

Fabian Bentz

45Excerpt from First Steps in SAP. 

SAP is the largest software corporation in Europe and is headquartered in Walldorf, Germany. The abbreviation SAP stands for “Systems, Applications, and Programs in Data Processing.” The most commonly known (and most successful) SAP product is SAP ERP (ERP stands for “Enterprise Resource Planning”).

An ERP system is a software system that covers all business functions typically found in a large or mid-size company,
such as:

  • Financial Accounting (external reporting)
  • Controlling (management accounting)
  • Materials Management (purchasing, warehouse management, inbound logistics)
  • Sales and Distribution (quotations, sales orders, shipping, invoicing)
  • Production Planning
  • Human Resources Management

The functionality to support one of the mentioned business functions is called a module in SAP ERP. All of the modules in SAP software are integrated closely with each other so that every transaction you perform in one module will have an automatic impact on the other modules related to it.


The key features of an integrated ERP system like SAP ERP include:

  • Completeness: All of the basic functionality required for a company is available in one single software package.
  • Real-time processing: Every transaction made in the system is executed in real time so that the users can always rely on accurate and timely information.
  • Integration: All of the modules are interlinked closely so that it is not necessary to enter the same information more than once. For example, when sending goods to the customer, the information in the Materials Management module, as well as in the Financial Accounting module, is updated simultaneously. In addition, general
    information about the customer (customer number, address, contact data) is only stored once in the system and is accessible to both sales and accounting.
  • Seamless data flow: Due to the integration aspect, no software interfaces are required between the individual modules. An interface usually means extra maintenance effort, and thus, an increase in cost.
  • Standardization: SAP ERP is a generic software package that can be used in various industries, such as manufacturing, retail, or banking. The system’s functionality can be adapted to the individual requirements of each company by using configuration functionality, which typically does not require any programming

Keep reading First Steps in SAP second edition by Sydnie McConnell and Martin Munzel.

First Steps in SAPDo you want to understand the basic fundamentals of SAP software without having to work through 400 pages or more? Yes? Then this book is for you! The authors concentrate on the essentials and spare you all the details you do not need as a beginner. Using simple, step-by-step examples, walk through the fundamentals of the SAP Enterprise Resource Planning (ERP) system including navigation, transactions, organizational units, and master data. Instructional videos help you experience the look-and-feel of SAP software without requiring access to an SAP system.

This second edition has been enhanced with an overview of the existing SAP product portfolio in addition to SAP ERP. Learn more about the technical side of SAP ERP including industry solutions, ABAP, and enhancement packages (EHP). Get a short introduction to BI, CRM, SRM, SCM, GRC, NetWeaver, SuccessFactors, and HANA. Demystify SAP acronyms and get clarity on the purpose of different SAP products.

– Learn how to navigate in SAP ERP
– Learn SAP basics including transactions, organizational units, and master data
– Watch instructional videos with simple, step-by-step examples
– Get an overview of SAP products and new development trends