System Application and Products System in Business Organization - Essay Example

Report on SAP System in Business Organization Student’s Name Institutional Affiliation Introduction Today, technological advancement plays an important role in the business environment more so in accounting. It is good to understand that most of the organizations largely depend on software and computer to get accurate information so as to effectively and efficiently manage their business operations. Most of the businesses are becoming more aware of the importance to incorporate information technology to operate successfully. Many corporations are installing EPR (Enterprise Research Planning) systems as a way of adopting information technology solution on a large scale to achieve their data procession and business transaction needs (Jones & Burger 2009). This paper reports on the business challenges and benefits of using SAP system in the accounting field. Overview SAP stands for System Application and Products. Therefore, System Application and Products is a form of a common centralized database for all system applications used in the organization. The system application is gathered to perform versatile work to include all functional departments in an organization. ERP (Enterprise Resource Planning) systems are referred to as software packages that make use of relational database and technology to put together different units of the information system of an organization. It is in order to declare that ERP system provides many isolated, but integrated, sections that are installable as a package for many organizations (Jones & Burger 2009). It is not surprising to see many large corporations using various information systems simply because merging or acquisition with other larger organization with different systems. An ERP system put together almost all diverse information results and systems in improved data dependability and processing efficacy. For large organizations that required seamless combination of their business, ERP systems are rapidly becoming popular to these organizations. ERP systems are also becoming popular smaller companies nonetheless. ERP system has an excellent ability to fasten transaction processing and improves customer service to bring about outstanding popularity and success of the most organizations. However, ERP systems have caused legacy systems obsolete and outdated for most of the companies and large corporations (Grabski & Sangster 2009). Equally importantly, there are five factors to take into consideration when selecting a good ERP system. These factors include price, functionality, the Relational Data Management System (RDBMS), hardware platforms, and the installed base. Functionality is concerned with the availability, reliability and ease of installing new modules, as well as updated applications. Therefore, SAP advances its product regularly. Considering the essence of upgrading its products, SAP makes its systems such as R/3 system more appealing as it provides an opportunity for the company to improve current R/3 system. However, the regular upgrades to the ERP system are sometimes very expensive if it is the original implementation. SAP R/3 is deemed to be very versatile since it can run on six various platforms. These platforms include Microsoft NT. The RDBMS of the ERP system concentrates on programming language through which the SAP system operates. For example, SAP has its own language for RDBMS such as ABAP/4 proprietary language. SAP system has various benefits and challenges in accounting perspectives (Gelinas, Dull, & Wheeler 2012). Benefits of SAP SAP systems are meant to improve efficiency. An example of a SAP system that has high versatile capability in the field of accounting is the Sap Business By Design. The system is completely integrated to enable customers to combine previously separate businesses, giving greater efficiency level throughout the organization. It is in order to assert that the Sap Business ByDesign system puts all company’s major business functions such as HR, finance, CRM, procurement and supply chain empowering end-to-end business procedures that extend boundaries of the organizations using a single suite of the software. This system is supplied on demand where customers are not required to incur consultation services, upfront costs due to licenses, and constructing facilities that ca support these applications. It eliminates the imminent costs such as support, maintenance and managing upgrades. Therefore, the system is very useful in keeping records to track on customers, debtors, and supplier, as well as details (Gelinas, Dull, & Wheeler 2012). The ERP system has been applied in accounting and managerial accounting to improve the accounting practice through minimizing waste of time and resources, as well as leveraging the rate at which organization can simplify its work and sharing of accounting data and information. The managerial and financial accounting tools in the SAP R/3 system are in the controlling and financial accounting modules. The function of the general ledger in the financial accounting module offers all-inclusive information records required for externally reporting financial information (Rikhardsson & Environmental Management Accounting Network 2005). The SAP system present accounting data in a more accurate and complete manner since it combines all business transactions and activities entered into the system from wide operational areas of the organization. Therefore, the controlling and financial accounting modules have been integrated with other features such as sales and distribution, human resources, material management, and the investment management. The SAP R/3 gives covers larger geographical areas where business operates and enables sharing of accounting data and information in the fastest and accurate way. This feature of the SAP R/3 system provides an opportunity for the businesses to thrive ahead of their competitors who do not have such a system (Grabski & Sangster 2009). In management accounting, SAP R/3 provides with tools that are cost- effective accounting, product costing, internal orders, profitability analysis, profit-effective accounting, and activity-based costing. These management accounting tools featured in these system applications are numerous and are associated with certain accounting functions. These tools are used to analyze overhead cost in accordance to the places they are incurred as far as organization is concerned. They are also used to settling, planning and collecting costs from internal tasks within an organization. These tools are required in the development of cost estimates of a certain product such as future cost, standard cost, commercial costs, or tax cost estimates (Rikhardsson & Environmental Management Accounting Network 2005). Challenges of SAP System The biggest challenge in using of SAP system is the issue of security. Having in mind that SAP systems are the main operational organism of many businesses, the slightest compromise can have detrimental effects to the whole business. Practitioners of the SAP systems have affirmatively agreed that they do not understand how easy it can be for a remote attacker to interrupt with SAP system. Therefore, there is fear, doubt and uncertainty in using SAP systems. There are reasons why SAP system security is a concern. The SAP system is vulnerable to remote attackers because the system is capable of being incorporated in various modules such as CRM, ECC, PLM, ERP, SCM, and SR. These modules can be incorporated in a wide variety of operating systems such as HP-UX, UNIX, MCTOSH, Linux, and windows. These operating systems depend on different databases such as Sybase ASE, Oracle, DB2, MS SQL, and Informix. These versatilities of the SAP systems create vulnerabilities where a remote attacker can comprise with organization database via other entry points (Rainer & Cegielski 2011). There is an issue of complexity of SAP systems is a challenge to many organizations. SAP systems comprise of complex architecture and apply an array of integration options so as to offer interoperability with business systems. Due to this complexity, most of the organizations are incurring heavy costs of training its personnel on how to effectively use them. Additionally, employees waste much of the time trying to understand the varied features of the SAP system. There are fewer experts who are conversant with SAP systems and most of the organizations are forced to pay them higher salaries so as to retain them. Furthermore, SAP system has increasingly become a complex landscape. Apart from BW and R/3 systems, customers are continuously installing SEM, CRM, Portal, and other SAP computer applications. These applications need database server, central by-passes, and application servers where necessary. Additionally, these system applications require complicated usage profiles in need of computer resources at different times. For IT organizations to prop the worst –case situation, they are persuaded to invest large sums of capital into computing areas of high utilization. In an attempt to redeploy these computing resources, their efforts are outweighed by the high costs as employees need time and outages to make the necessary changes (Grabski & Sangster 2009). Recommendation: I would highly recommend the use of SAP system in accounting due to its incredible features and many derived system that can have a place in all areas of accounting. SAP systems have incorporated controlling and financial accounting modules. To address the issue of SAP complexity, organizations need to adopt adaptive SAP computing solutions so as to allow virtualization of computing, storage and network resources. Therefore, organizations are able to transfer IT infrastructure resources to the operational areas that need them most. The transfer of computing resources creates flexibility within the organization that meets the dynamics of business environments, while controlling and managing the complete cost of SAP solutions. For example, IBM N has enlightened SAP technology and proffer solutions to prop adaptive SAP computing environment. Additionally, I would highly recommend SAP systems due to their versatility, comprehensiveness and wide areas of applications. The varied features of the SAP systems offer organizations a greater chance to operate more widely. References Gelinas, U. J., Dull, R. B., & Wheeler, P. R. (2012). Accounting information systems. Mason, OH: South-Western/Cengage Learning. Grabski, S. V., Leech, S. A., & Sangster, A. (2009). Management accounting in enterprise resource planning systems. Oxford: CIMA. Jones, P., & Burger, J. (2009). Configuring SAP ERP financials and controlling. Hoboken, NJ: Wiley. Rainer, R. K., & Cegielski, C. G. (2011). Introduction to information systems. Hoboken, N.J: Wiley. Rikhardsson, P. M., & Environmental Management Accounting Network. (2005). Implementing environmental management accounting: Status and challenges. Dordrecht: Springer. Read More