How can I explain what SAP is to a layman?

Imagine you as a person or small business has to plan your monthly budget. You have to monitor your account. You have to maintain your relationship to people from whom you buy and to whom you sell stuff and services. Imagine you have someone from time ti time who helps your in your business and you have to pay him. Also you would need to provide him with instructions what to do and how. You might be able to do this with a notes list, an account book and probably some Excel sheets.

Now imagine you run a company with different business/product lines, several legal entities in different countries with several hundreds or thousands of employees, share holders and tax offices you have to report you. You would need a software to record, transform and report all the business data which is being created and requested. This kind of software is what SAP provides.

It’s really simple. We start in accounting because everything has a cost and money ‘measures’ things in a common language. But everyone has their own separate view into how things are transacting into accounting.

Someone uses ERP to enter a Purchase Order, which we can route a digital copy to the boss for approval, so now we know the cost of the purchase, we have it’s delivery date so the shipping dock can look up when it’s going to arrive, we can scan it in as ‘recieved’ and confirm we got the 12 dozen widgets we ordered, and when the invoice comes in we can match what we ordered, received and now are paying for.

We’ll put the widgets on a shelf and note that shelf location in ERP, so now, when we’re building an advanced widget assymbly, we know where to find them, we can schedule to build 12 dozen and know we have enough raw materials, and when we do build those advanced widget assy, we know we used all our raw material and alert someone to re-order.

So there you have a transactional chain – several people, several departments – each with their own view, no one is running around or making phone calls to communicate activity, they’re simply checking ERP to see what to recieve today, what to build today, what to order today and so on.

We can now go to the next level and build algorithms to predict future events – we see a manufacturing schedule that says we’re building widget assy’s on the 21st – we see it will take all the widgets we have in stock – we know, from tracking the PO process that it takes 22 days for widgets to get here from time the PO is issued – so now we get a suggested purchase order 23 days before the next scheduled manufacturing run for widget assy’s – so we get the next shipment of widgets in stock the day before we need them.

Actually, this is the 21st Answer to this question. Loads of relevant information is available on SAP official web-site. Plus, just google-up. You’ll find many PPTs on this subject.

I am trying to keep it short, simple, yet insightful. More specifically for freshers. Many contemplating SAP as a possible career choice [or an added qualification]. But have near-zero business-exposure.