1 Brief History of the SAP Enterprise
SAP produces software to support the processes of businesses from different industries and of various sizes. Since it was founded in the 1970s, SAP has become the largest European and fourth-largest global software manufacturer. This chapter outlines the most critical milestones in the development of SAP from the early stages up to today.
This chapter discusses the following:
- Where SAP began
- How SAP became the enterprise it is today
- What the SAP R/3 and SAP ERP products are made of
1.1 Getting Started: From Realtime Financials to SAP R/3
SAP’s history begins in Weinheim, Germany, in the early 1970s. In 1972, five former IBM employees—Hans-Werner Hektor, Dietmar Hopp, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther—founded the enterprise Systemanalyse und Programmentwicklung (System Analysis and Program Development), which was later renamed Systeme, Anwendungen und Produkte in der Datenverarbeitung (Systems, Applications, and Products in Data Processing). In the early stages, they programmed at their customers’ data centers because they didn’t have their own systems yet. The very first product was created on computers that belonged to their first customer, Imperial Chemical Industries (ICI).
The Realtime Financials (RF) system was the first SAP product that supported financial business processes. The computers of the time can’t even be compared with today’s IT systems. The software was operated on large computer systems, punch cards were used as data carriers (Figure 1.1), and memory capacities were limited to only a few kilobytes.
Figure 1.1 Former Data Carriers: Punch Cards
RF formed the basis of further software parts, called modules (components today). Later, RF was also referred to as SAP R/1. The letter “R” stands for real time, and even decades later, this letter is still included in the names of SAP’s core products.
Real-Time Processing
Real-time processing means that actions (e.g., creating or changing data records) are immediately executed in the system and have immediate effect on the processes concerned.
SAP’s software had the following three features from the outset:
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Real-time processing
The processing was supposed to be made in real time; that is, an input is immediately available in the entire system. -
Standard software
The software was supposed to be standardized to a large extent. In other words, every enterprise obtains the same software, which is then customized during the implementation project. -
Integration
The various modules or components are supposed to be integrated, which means that the data from one application are also available to other applications.
You can find more information on these properties in Chapter 3.
Integration
The settlement for a completed procurement process (the Materials Management (MM) component in SAP ERP) is implemented in financial accounting (the SAP ERP Financials [FI] component in SAP). In this process, the relevant departments use the documents that were created or stored in the SAP system during the operation.
Two years after SAP was founded, it established itself for more than 40 additional customers from different industries. SAP GmbH was founded in 1976. In the following year, SAP relocated its headquarters from Weinheim to Walldorf, Germany.
In 1979, SAP redesigned its applications and revised the technologies in system and database development; these were included in the SAP R/2 system (the successor of SAP R/1). The next leap in SAP development was the initial public offering; in 1988, SAP GmbH became SAP AG. In 2014, it became SAP SE.
In 1991, SAP AG presented the first applications of the SAP R/3 system at the CeBIT trade fair in Hanover, Germany. SAP R/3 is a system with new client-server architecture and a graphical user interface. The three layers of this client-server architecture (database layer, application layer, and presentation layer) are represented by the figure “3” in the product name. Relational databases are used internally, and the system can be used in different platforms. Chapter 2 and Chapter 3 provide additional information about this.
[»] Relational Databases
Information is stored as tables for relational databases. The tables are linked with one another so that the information doesn’t need to be stored multiple times in the system. Connections—or relations—emerge between the tables. Relational databases that are well-known today include SAP MaxDB, Microsoft SQL Server, mySQL, Oracle, and DB2 from IBM.
The client-server architecture is based on a three-layer concept that describes the system’s technical task allocation: The presentation layer is a user PC (frontend) in the network, on which the screens are displayed. If one user PC fails, it won’t affect the other users because the applications are “only” presented. The system’s programs and the user’s inputs are processed at the application layer. Various user PCs are connected with a server. One or more servers access the databases, which can be installed on separate machines. Chapter 3 discusses the client-server principle in more detail.
The SAP R/3 system was extremely successful. The hardware required by a client-server system was more efficient and less expensive; at the same time, a greater number of users could work with the system. SAP R/3 consisted of a technical basis, SAP’s “operating system” so to speak, and the applications, which were broken down into various modules for the different enterprise areas.
From the functional perspective, SAP R/3 provided software for all steps in the value chain of an enterprise. The SAP software mapped these steps (i.e., purchase, dispatch, and invoicing) so that all essential departments of an enterprise were now able to use the SAP system for their work: accounting, controlling, sales and distribution, purchasing, production, stockholding, and human resources.