The R/3 System is a product of SAP AG and is used to manage the business processes of a company. The company logo SAP stands for Systems, Applications, and Products and has been used since the company was founded in 1972. R stands for real time processing.
The integrated application components such as Logistics, Accounting, or Human Resources are used to handle business processes across organizational boundaries.
R/3 uses a common database. Information entered in one company department is available to all other departments immediately. This means that every user has access to up-to-date data.
Which Companies Use the R/3 System?
The R/3 System was developed specifically for medium-sized and large companies. It can, however, also be used by smaller companies. Since R/3 is implemented in an open system environment that grows with a company, it does not have to be replaced. An open system environment is one in which different types of computer from different manufacturers are used. In contrast to the R/2 System, which was designed primarily for the mainframe environment, R/3 was developed for the open system or client/server environment.
Since both systems use the same programming language (ABAP), data can be exchanged between one system and the other via a programmable interface.
SAP technology is so flexible that it can even support a change from centralized to decentralized data processing, if changes in a company make this necessary. The opposite scenario is also supported.
SAP technology supports the client concept. This allows you to handle several legally independent corporate groups or subsidiaries (also known as clients) separately.
R/3 offers the following advantages for companies with independent subsidiaries in different countries. The system takes into consideration country-specific tax laws and accounting regulations; it also supports several time zones, and different languages.
System Platform
The R/3 System architecture comprises various hardware and software technologies. All the software components assigned to the same database are referred to as the R/3 System. The R/3 configuration is based on a server that can be accessed by the respective clients of the user. The clients generally have a Windows interface with an additional SAP graphical interface, known as the SAPGUI. The R/3 System kernel (in other words, the R/3 programs) as well as the R/3 database can be installed on the server, depending on how this is configured.
The R/3 System can run on all major UNIX platforms, Windows NT, as well as AS/400. Various database systems, such as Informix Online, Oracle 7, ADABAS, DB2/6000, and the MS Server can be used. The graphical user interface of the R/3 System (SAPGUI) can run on various desktop systems, such as OS/2 Presentation Manager, Macintosh, and Windows.
System Landscape
The R/3 System architecture comprises various hardware and software technologies. The basis of the R/3 System landscape is the client concept. A client comprises integrated applications within a database. In the R/3 System, a distinction is made between the development, quality assurance, and production environment, which can be installed on one or more computers. Three different types of landscape are possible, depending on whether these environments are installed on one or more computers: the one-system, two-system, and three-system landscape.
In the one-system landscape, the development, quality assurance, and production environment are located on one computer, but in different clients.
In the two-system landscape, the development and quality assurance environment are located on one computer but in different clients. The production environment is in the production system on a separate computer. Development and quality assurance are, therefore, carried out in one system.
In the three-system landscape, the development, quality assurance, and production environment are located on different computers, in a development, quality assurance, and production system.
Basis System
The Basis System, also known as the system kernel, is the engine that drives the R/3 System. The Basis System comprises the following four basic components: the screen interpreter, ABAP interpreter, ABAP Dictionary, and flow control.
The screen interpreter has the following functions: it designs screen templates, checks input data, and outputs warning messages.
ABAP is the programming language used by SAP. All SAP applications are based on ABAP, in which the ABAP interpreter carries out the same tasks as the screen interpreter. The ABAP interpreter has a coordinating and controlling function. The screen interpreter and ABAP interpreter work together to provide a highly sophisticated environment in which the user can communicate with the different applications.
To ensure that business transactions are handled correctly in the R/3 System, specific information and definitions are required. These are stored centrally in the ABAP Dictionary. The ABAP interpreter also has access to this information. Data is constantly exchanged between the ABAP Dictionary, the screen interpreter, and the ABAP interpreter.
Flow control coordinates the program flow on the screen via the administration facility.
Business Framework
The Business Framework is the strategic product architecture of the R/3 System. This architecture aims to map the range of R/3 products as business components, which can be maintained separately, but interact as an integrated whole. The system supports different types of business component. The core components include the Financial Accounting FI, Logistics LO, and Human Resources HR applications, for example. These are accompanied by industry-specific components for mapping applications for specific industries, as well as Internet application components for business-to-business, consumer-to-business, and intranet applications.
The R/3 product architecture enables companies to respond quickly to new business requirements. This means that changes in business processes do not disrupt the business flow, even if these changes affect applications that are physically or organizationally distinct. To provide this level of flexibility, the Business Framework includes the following elements in addition to the business components: business objects, business application interfaces, and the message exchange concept Application Link Enabling.
The SAP business objects, or BO for short, are a core element of the Business Framework and a prerequisite for interoperability. They are modeled for every application according to the business requirements of the company, and are maintained in the Business Object Repository.
The Application Link Enabling concept, or ALE for short, provides support for setting up and running distributed SAP applications that work together. Application integration is not carried out via a central database, but via message exchange between loosely linked systems. To implement a system that is both distributed and integrated, the company uses a data model to specify which applications run on which systems, and how data is exchanged between the applications.
Data retention is redundant. ALE distributes and compares data via asynchronous communication, and reads data by means of synchronous links.
How the R/3 System Works
Integration and Interactive Processing
The R/3 System comprises several applications, which are grouped together as modules to form a single program. Because R/3 is an integrated system, any change in a particular module or application automatically updates the data of all applications affected by the change. The data entered is updated in the common database used by all the applications. All application modules share the same architecture and user interfaces, which are represented in the Business Framework.
All data is checked by the system to determine whether it has been entered correctly and whether it is permissible to save it. User entries are, therefore, processed interactively to ensure that data is consistent.
Examples of data integration:
The “Create invoice” screen, which is normally located in Accounting, can also be called up via the menu path
· Logistics
· Materials Management
· Invoice verification
· Document entry
Similarly, process costs can be called up from various applications
· Accounting
· Controlling
· Processes
- Or -
· Logistics
· Production
· Production control
· Period-end closing
· Dynamic process allocation
Integrating Several Languages
The R/3 System comprises several applications, which are grouped together as modules to form a single program. Within an application, several users can work in different languages at the same time.
The R/3 System implements these dialog options by updating the data entered in different languages during run-time.
Enterprise Structure
The R/3 System uses specific organizational units to map real enterprise structures. The element at the top of the hierarchy is the client, which corresponds to a corporate group with several subsidiaries, for example. In commercial, organizational, and technical terms, the client is a self-contained unit within the R/3 System, with separate master records and its own set of tables.
The company codes in the R/3 System are used to map the level containing the subsidiaries.
A company code is the smallest organizational unit for which a complete self-contained set of accounts can be drawn up for the purpose of external reporting. The process of external reporting involves recording all relevant transactions and generating all supporting documents required for financial statements, such as the balance sheet, profit and loss statements, and so on.
Plant and Storage Location
The R/3 System uses organizational units to map real enterprise structures. The plant is an organizational unit of Logistics, which subdivides an enterprise according to production, procurement, maintenance, and materials planning. A plant is a place where materials are produced, or goods and services are provided. A plant can assume different roles. As a maintenance plant, it contains the maintenance objects that are located in this plant. The maintenance tasks to be performed are defined within a planning plant. As a retail site, it serves as a plant from which goods are distributed or sold. The plant is usually the organizational unit for material valuation.
A plant can be subdivided into storage locations or locations. The storage location structures the material stocks according to specified criteria (for example, according to geographical location or the requirements of materials planning). Subdivisions into plant sections, such as Car and Truck, are also possible. Subdividing plants into locations takes account of spatial criteria; subdividing plants into plant sections takes account of production responsibilities.
Sales Organization and Division
The R/3 System uses organizational units to map real enterprise structures. The sales organization is an organizational unit of Logistics, which structures a company according to its sales requirements.
A sales organization is assigned to precisely one company code, in which its business transactions are entered for accounting purposes. A sales organization is responsible for selling materials and services.
The materials or services can be divided into various divisions, which are assigned to the sales organization. A sales area specifies the distribution channel via which the products of a division can be sold (for example, via a dealer network or direct sales).
Purchasing Organization
The R/3 System uses organizational units to map real enterprise structures. The purchasing organization is an organizational unit of Logistics, which subdivides a company according to its purchasing requirements.
A purchasing organization procures materials and services, negotiates purchasing conditions with vendors, and carries responsibility for these transactions. The type of procurement is determined by assigning purchasing organizations to company codes and plants. This results in three forms of purchasing.
Firstly, a purchasing organization can be corporate group wide. In this case, purchasing procures materials for all the company codes of a client. Secondly, a purchasing organization can be company specific. In this case, purchasing procures materials for precisely one company code. Thirdly, a purchasing organization can also be plant specific, procuring materials for one plant exclusively. Hybrids are also possible, which are mapped using reference purchasing organizations. This enables the purchasing organization to access the more favorable conditions and centrally agreed contracts of the reference purchasing organization.
R/3 Components
The R/3 System contains a series of software applications (also known as modules) for handling all the business processes of a company.
The Logistics, Accounting, and Human Resources components comprise all the applications that can be used by all employees throughout a company, and across organizational boundaries. The individual applications are linked to each other. All data affected by a transaction is updated in a database while it is being processed. In other words, data is updated online on a quantity and value basis.
In the Logistics component, orders are processed, purchased materials are managed, production is planned, the product is made ready for dispatch, and invoice verification is carried out. In Accounting, each business transaction is processed according to generally accepted accounting principles. Asset Accounting is also carried out here, and reports for monthly and annual evaluations are created. The Human Resources component processes tasks such as payroll, time management, application management, and personnel development.
The Logistics, Accounting, and Human Resources components are accessed via menus from the initial R/3 screen. These menus can be used to call up the individual applications.
Basis
In addition to the three application components Logistics, Accounting, and Human Resources, the R/3 Basis System also contains tools for maintaining the R/3 System itself.
The Computing Center Management System, or CCMS for short, is a tool for monitoring, controlling, and configuring the R/3 System. The CCMS operates round the clock from the R/3 System, without an operator being present. The CCMS also supports a number of graphics monitors and administrative functions. The most important administrative functions of the CCMS are starting and stopping the R/3 System, as well as system monitoring and analysis for the R/3 System. It also includes the automatic early warning system for all the components of R/3. The most important CCMS functions also include the R/3 System configuration, which is used for maintaining the R/3 System profiles, processing and controlling background jobs, as well as planning database backups.
The R/3 Basis System also includes the ABAP Workbench. The ABAP Workbench is the graphical development environment of the R/3 System. You can use it to develop new client/server applications and to modify existing SAP applications. The Workbench provides developers with various tools for carrying out these tasks.
Using the Repository Browser, developers can view and process development objects in hierarchically structured lists. The ABAP Dictionary is used to store data definitions and generate database objects such as tables and indexes. In the ABAP Editor, you can create new program code and modify existing code. In the Function Builder, you can create and store function modules. Using the Screen Painter, you can configure the graphical user interface for the graphics in your application. Using the Menu Painter, you can create the menus for your interface.
Logistics
The most important applications in the Logistics component are Sales and Distribution SD, Materials Management MM, Production Planning PP, Plant Maintenance PM, and Quality Management QM.
The Sales and Distribution application handles processes in the areas of Sales, Shipping, and Billing. SD supports Sales by providing information on sales development and competitors, enabling Sales to respond quickly to trends and market changes.
The main task of Materials Management is to ensure a smooth flow of materials within the company and to areas outside the company. Purchasing, stockholding, inventory management, and invoice verification are also carried out with MM.
Production Planning is used to handle all the activities for planning a production process. These activities can include transporting and storing the raw material, planning how operating facilities and production resources are to be used, as well as handling by-products and waste products.
Plant Maintenance PM manages information required for maintaining and repairing a company's buildings and assets.
This information can include details of the maintenance procedures for the machinery used to manufacture a product. PM also contains information on machine utilization and possible machine downtimes.
Quality Management QM contains guidelines and measures for quality control. Product quality is determined by means of inspection plans. After the inspection has been completed, decisions are taken on how to proceed: use, rework, or scrap.
Accounting
The most important applications in the Accounting component are Financial Accounting FI, Controlling CO, and Enterprise Controlling EC.
The modules of Accounting are used to carry out G/L accounting and asset accounting, as well as to create profit and loss statements and financial statements. Reports are also generated here, which are used by the management for enterprise controlling.
Financial Accounting FI includes G/L accounting, in which the financial statements and the profit and loss statement are created.
Controlling CO was developed not only for monitoring costs within the company, but also for monitoring internal objectives. As an element of Accounting, CO provides the management with the most important and up-to-date information for enterprise planning. Enterprise Controlling EC is an information system for the decision-makers of a company. EC combines internal enterprise data with data from the open market in order to propose a marketing strategy.
Human Resources
The most important applications in the Human Resources component - or HR for short - are Personnel Administration PA as well as Personnel Planning and Development PD.
The applications of Human Resources provide a comprehensive personnel management system. The component integrates Payroll, Personnel Planning, Application Management, Personnel Administration, and Personnel Development.
The master data (in other words, the personnel data of all the employees of a company) is stored centrally in the Personnel Administration application. All Human Resources applications as well as modules from other areas can access this data. PA is used to process time recording, payroll accounting, and travel expense accounting.
Personnel Planning and Development PD is used to manage all tasks relating to personnel planning. For example, Personnel Cost Planning can be used to simulate the effects of wage increases or reductions. PD also supports long-term succession or career planning.
Customizing the R/3 System
As a company grows, it develops its own unique methods with regard to planning, control, and organization. It is essential, therefore, that the R/3 System can be adapted to take account of company-specific requirements and changes.
The R/3 System can be adapted at different levels. Existing applications can be reprogrammed to meet the specific requirements of a company. Existing applications can import and process data from non-R/3 systems. Applications that are not currently required can be integrated subsequently or enhanced to provide the required functionality.
Specific Requirements
The R/3 System supports a wide range of business solutions, which meet the requirements of most business processes. The R/3 Analyzer and Customizing are used to adapt the system to match specific requirements.
The R/3 Analyzer contains a Reference Model capable of graphically representing every business process that can be mapped in the R/3 System. The Model helps users find out about and select suitable components before the R/3 System is installed on the server. The presentation and analysis tool of the R/3 Analyzer allows the current status of the company to be mapped. It also allows alternative solutions for optimizing business processes to be discussed and documented. The decision processes in a company are recorded using the documentation tool. When the enterprise model has been created, the results of the changes are made available to R/3 Customizing. Using the R/3 Analyzer to prepare your Customizing activities can considerably reduce your workload. The R/3 Analyzer allows you to display data in the following views: Process flow view, Organization view, Information flow view, Data view, Function view.
The methods and functions of Customizing, which is used to actually implement R/3 in a company, are integrated elements of the R/3 System. Customizing is also required to carry out enhancements and release upgrades. Customizing provides the structural plan (or procedure model) for implementing and enhancing the system, as well as tools for carrying out and documenting system settings.
Data from Non-R/3 Systems
When you implement the R/3 System, you have to import the data previously handled by non-R/3 systems. R/3 supports standard functions that enable data to be transferred non-interactively.
The R/3 System transfers the data on a transaction basis. To ensure that the data is error free, the same checks and updates as for interactive data transfer have to be carried out, which means that the same screens and ABAP programs are used. Batch input functions according to this principle. It simulates a user dialog in the background, but does not require you to enter data at a terminal; instead, it enters the data automatically in the screen fields. Before the data is transferred, it has to be converted to a format that meets the requirements of the screens. A specially developed conversion program (for example, an ABAP program) is required for this purpose.
The R/3 System also contains EDI interfaces, which are used to automatically exchange data (such as invoices) throughout the company. Exchanging data with EDI does not depend on the hardware and software used by the business partners. The EDI message formats are based on international standards such as EDIFACT or ANSIX12.
With PC applications that run on Windows, for example, data is imported and exported via the File Transfer Service. This is an ABAP programming interface that enables data to be read and written.
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