SAP Accounting Software Essay

Question:

Discuss about the SAP Accounting Software.

Answer:

Introduction:

In order to maintain the overall financial matters of the organization, it is very much important or rather significant for enterprises to implement certain accounting software packages and maintain chronological records the respective transactions. Furthermore, with the help of accounting software or packages, enterprises would be able to calculate the financial performance of the organization and analyze the net position in the market place. Moreover, in order to maintain smooth balance between the activities in this fast and competitive world, accounting software and packages comes in very handy for organization to avoid any financial conflicts while delivering the services. Relating the same with the subject matter, the following study would highlight the history, development, and adaptation of SAP which is basically enterprise resource planning software and manage the business operations in an appropriate manner. Thus, the study would also highlight the market size and loop holes present under the same.

History:

SAP was established by German multinational organization which enables the organization to maintain a smooth balance between business operations and customer relations. Currently, the company is providing support in more than 130 countries and earns revenue of more than 20 billion each financial year (Blain, 2016). Furthermore, SAP was founded by Dietmar Hopp, Hans-Werner Hector, and two others in 1972 and is delivering services to all over the globe. Elaborating more about the same, apart from considering the parameters of enterprise resource planning, the software is also meant to restructure the corporate affairs and contribute towards the betterment of the enterprise in terms of maintenance of records or affairs. While the primary version of the above mentioned accounting software or package is recognized by SAP R/98, in 1992 SAP R/3 was introduced with better stability, and accounting features. Thus, the shares of the enterprise are listed at Frankfurt Stock Exchange and New York Stock Exchange.

Development:

Over the years, the organization is constantly developing the features of SAP for ensuring better performance of the organization in terms of chronological records and account maintenance (Buying financial accounting software, 2015). Some of the major development is mentioned below:

  • Inclusion of IBM platform to enhance the services of many corporate
  • Possibility of workload profiles to maintain healthy relationship between processes or procedures
  • Implementation of multiple database system to contribute towards better execution of administrative obligations or tasks
  • Data backup plan has been improved to provide more value to the precious data or information of the organization
  • Expansion towards clouds to provide more storage and maintain stability in terms of maintenance along with easy access
  • Implementation of modern applications to promote the independently of data or information

Thus, all the above developments were implemented for the betterment of the organization and for enhancing the trust of the needful parties and enhancing the goodwill of the organization in the market place (Ciftci, 2010).

Adoption:

Since it is mandatory for both profitable and non-profitable organization to maintain chronological records of the activities, adoption of SAP is required for both of them so to remain valid in the eye of law. Furthermore, since the overall structure of SAP is divided into different modules such as sales and business intelligence, each and every organization after considering its requirement implement the SAP in an appropriate way. Moreover, it has been observed that adoption of SAP is increasing year by year because of the enhancement of the number of incorporations of organization in the current market place. Thus with the increasing benefits and continuous development of the above mentioned accounting and enterprise software, more than 60% of both financial and non-financial organization who is in need of accounting software or packages is implementing or considering SAP over its rivals or competitors (Franks, 2012).

Current Market Size:

As mentioned above, since SAP considers all the parameters of business and pay huge amount of attention towards the customer relations, it is not to be mentioned that the market size of the same is enhancing each financial year by three folds. While the competitors of SAP such as Oracle, Sage, Infor etc is existing in the market place with 6 to 12%, SAP is dominating all of them with huge 24% of share in the market place as stated below.

Figure 1: Market Share of SAP

Source:

Furthermore, with positive feedbacks from all over the globe, the performance of the organization even in this fast and dynamic environment is increasing systematically and the path of the enterprise is headed towards profitable yet positive vision or mission. Moreover, it can easily be said that SAP with its utmost benefits and limited restrictions is becoming one of the favorites and preferable accounting software or packages for organization incorporated or enterprise going to be incorporated (McGee, 2015).

Identification of Leaders in the Market:

While SAP is considered as the most dominating leader in terms of accounting software or packages, some other companies which too are fighting with equal credibility and efficiency are Oracle which is basically engage in the collection and retrieving of data or information from relevant sources and contributing towards identifying the appropriate solutions of the information management. Founded in 1977, the organization is earning in billions each financial year and is registered under New York Stock Exchange. Thus, just like SAP, Oracle too provides data base services all over the globe and contribute towards the betterment of the organization in the market place.

Elaborating more about the same Infor ERP services are considered as remarkable and are known for their positive goodwill and services in the market place. This company was established in 2002 and is providing services to all over the globe for the activities of enterprise resource engagements (Meissner, 2012). Thus, with operating income in billions, the organization too can be considered as one of the competitors of SAP and leader in enterprise resource planning industry. Thus, both Oracle and Infor can be considered as good performer in the accounting software or packages industry and are satisfying millions of customers during each financial year. However, services and goodwill of SAP compare to that of competitors are much high standard and extra ordinary.

Uniqueness of SAP:

The major reason behind the increased performance of SAP as compare to their competitors and the basis of gaining competitive advantage is mentioned below:

Integration of accounting and enterprise resource planning software:

While all the above mentioned competitors are efficient towards providing enterprise resource planning activities, SAP on the other hand is highly efficient and effective in integrating the accounting software along with the parameters of enterprise resource planning to gain competitive advantage over its rivals (Muggridge and Trott, 2014). By implementing SAP as an accounting software and enterprise resource software, organizations do not need any other software or package and as a result the company majority customers or users from the market place. Thus, combination of accounting and enterprise resource software is one of the major uniqueness of SAP which differentiates it from its competitors.

Optimization as per the Size of the Organization:

Also, SAP can be optimized as per the different size of the organization which can either be small, medium, or large. Thus, by designing the software for each type of organization, the company is leading in the market place and gaining competitive edge over its rivals or competitors (Niefert, 2011).

Limitations of SAP:

Since there are two sides of a coin, apart from the benefits and unique features as mentioned above, the software package is also comprises of some limitations or disadvantages which are mentioned below:

High Cost:

Even though SAP can be optimized depending on the scale of the organization, it would certainly not be feasible for small and medium size organization to bear such huge cost in order to perform the accounting and enterprise resource planning activities.

Not user friendly:

In order to implement the enterprise resource planning software in an appropriate way, it is relevant for all types of organization to recruit some qualified professionals as the features of SAP are not very friendly and requires great knowledge and experience to operate it (Zencke and Eichin, 2013).

Compatibility Issues:

Also, there are many applications of SAP which are not supported by all browsers and as a result compatibility issues come into picture which further also affects the response time between the front desk and back desk.

Apart from the limitations mentioned above, it has been observed that many SAP applications are not successful and are enhancing the overall performance of the organization along with the downfall of enterprise portal of many organizations. Thus, if the budget of the organization is high and professionals are qualified enough to manage the SAP applications in an appropriate manner, than this accounting software or package is the best available enterprise resource planning tool in the market place.

Conclusion:

The above study simply highlights the over the top performance of SAP with limited restriction and disadvantages in the market place. Organizations coming from any scale can implement SAP to manage the business operations in an appropriate way and enhance the relationship with the customers all over the globe. Moreover, integration of accounting and enterprise resource planning feature helps the organization to gain competitive advantage in global market place (Zencke and Eichin, 2013).

References

Blain, J. (2016). Using SAP R/3. 1st ed. Indianapolis, IN: Que.

Buying financial accounting software. (2015). 1st ed. Cambridge [Cambridgeshire]: Cambridge University Press on behalf of the British Computer Society.

Ciftci, M. (2010). Accounting Choice and Earnings Quality: The Case of Software Development. European Accounting Review, 19(3), pp.429-459.

Franks, R. (2012). Choosing accounting software. 1st ed. London: Chartered Institute of Management Accountants.

McGee, R. (2015). Accounting for software. 1st ed. Homewood, Ill.: Dow Jones-Irwin.

Meissner, G. (2012). SAP. 1st ed. Blacklick, USA: McGraw-Hill Professional Publishing.

Muggridge, J. and Trott, F. (2014). A guide to accounting software. 1st ed. London: Kogan Page [in association with] the Institute of Chartered Accountants of Scotland.

Niefert, W. (2011). SAP Business ONE implementation. 1st ed. Birmingham, U.K.: Packt Pub.

Zencke, P. and Eichin, R. (2013). SAP Business ByDesign. WIRTSCHAFTSINFORMATIK, 50(1), pp.47-51.

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