SAP Implementation: Cost Accounting Essay


Discuss about the SAP Implementation for Cost Accounting.



This paper aims at giving insight on the meaning of SAP and the distinguishing characteristics of its application in hospitals and other organizations. It also intends to use hospitals in Colombia as a case study in analyzing the correct use of SAP.

What is SAP?

SAP stands for Systems Applications and Products. It was designed specifically to create a channel that enables customers to interact with a shared database for various applications in an organization. Its applications have the capability to be used in the management of assets, financial documents, production operations, cost accounting, personnel and archived material (Grabski, Leech and Lu 2001).

Comparing SAP for Healthcare and the other Organizations

SAP can be considered to be the ultimate remedy to many fields including companies, schools, firms, businesses, and healthcare in general. Hospitals demand more connectivity since the information they deliver to people is imperative and becomes active only when it is passed in time. The loss in healthcare is measured regarding human lives while in the business sector; it is measured in monetary terms thus making the healthcare a more delicate sector where a lot of efficiencies should be accorded. This is the best factor that distinguishes SAP implementation in hospitals against implementation in other organizations.

The healthcare industry aspires to achieve maximum efficiency in its operations at the minimum costs and finally maximize its profits. All these are associated with management activities in the field of supply, inventories, patient relationship management, finance, billing and human resource management. This aspiration is made possible by business process optimization and technology enablement through the successful and proper use of SAP.

It is considered suitable for all types, sizes, and specialties of hospitals whether small, nursing homes, polyclinics or general practitioners. SAP for Healthcare solutions is beneficial regarding helping the organization improve its operational efficiency, mitigate possible risks as well as controlling costs while still making it possible to provide innovative business models and proper patient services (Tsai et al. 2010).

The Exact Benefits of SAP in Healthcare

Due to the constant and rapid multiplication of hospitals, there is dire need to inflict high levels of professionalism and best practices in the sector. This includes medical equipment and practices. Patients expect services to be better than the last time they were served thus hospitals have to be up to date with new methods as well as modern technology so as to retain their customers’ loyalty (Seo 2013). As far as SAP is concerned, hospitals have excelled in investing in new technology and the same time keeping in touch with their costs.

The increased number of hospitals has given patients the freedom to choose where they are served to their satisfaction. The quality of treatment offered by hospitals is measured by the technology used. Modern and practical technology provides comfort and confidence to patients that they are receiving the best treatment available. SAP is currently one of the best sought after technology by patients hence the need to use it by healthcare service providers. Through this, hospitals can maintain their focus on patients and remain competitive in the healthcare arena which is always changing (Agarwal and Garg 2012).

SAP is vital in the reduction of operational costs because it accounts for various functions namely finance, accounts, and human resources and eventually brings all the systems under one shared database of SAP. It can provide real-time data to a hospital which is an aid to departments as they work on making critical decisions about patient care and physical resource management. Hospitals can capitalize on the SAP’s automated solutions to replace the slow paper-based procedures and finally do away with the departmental barriers.

SAP helps an organization minimize risks and increase the reliability of its solutions because it provides the content, tools, and methodologies one needs to design, measure, analyze, improve, and control their organization. It has an easy integration and unlimited scalability thus making it a sound investment project.

SAP Implementation in a Colombian Hospital

The country has faced some challenges in the health sector namely; constrained financial resources, legal and regulatory requirements and the use of official diagnosis- related groups for patient billing, increasing patient expectations and demand for more information and quality care. These issues require that the healthcare providers become the first to answer the questions about affordable, efficient and high-quality patient care. Extreme pressure arises from this terrible situation.

Implementing new technology, for instance, SAP, gives the hospitals an option of increasing the competitive health of the business operations. SAP will help link patient management, administrative services, and clinical processes into one efficient, manageable solution that supports collaborative processes with other participants in the sector to reduce costs, enhance patient satisfaction and finally strengthen their position in the healthcare market in a cost effectively and efficiently manner (Agarwal and Garg 2012). It offers patient-centric solutions tailored to curb hospital challenges through supporting activities that allow clinicians share information and make accurate rapid decisions, and enabling the hospital administrators to work cooperatively with suppliers, physicians, and public authorities.


Agarwal, D and Garg, P. 2012. ERP implementation in hospitals: a case study. International journal of electronic healthcare, 7(2), 157-180.

Grabski, S.V., Leech, S.A. and Lu, B., 2001. Risks and controls in the implementation of ERP systems.

Seo, G. 2013. Challenges in implementing enterprise resource planning (ERP) system in large organizations: similarities and differences between corporate and university environment (Doctoral dissertation, Massachusetts Institute of Technology).

Tsai, W.H., Chen, S.P., Hwang, E.T. and Hsu, J.L., 2010. A study of the impact of business process on the ERP system effectiveness. International Journal of Business and Management, 5(9), p.26.

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