SAP R/3 Reporting and E-Business Intelligence

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PREFACE:

Introduction

The new Internet economy has radically altered the business landscape, transforming how businesses interact with customers, conduct core business processes, and support knowledge management across the organization. In the past, crucial reports about the health of a company were generated by analysts who gathered information, put it in usable form, distributed it across the organization and then, in the next quarter, started all over again. The introduction of Enterprise Resource Planning (ERP) systems dramatically improved how businesses integrated, consolidated, accessed, and managed information from all parts of an organization. Business functions such as human resources, accounting, manufacturing, sales, and customer management were integrated into one cross-functional database system that could respond to business needs with a degree of sophistication never before achieved. ERP's built-in business processes such as standard order handling, make-to-order production, procurement of stock material, customer processing, budgeting, and field service gave management a standardized framework for process level reporting with the aim of optimization or focusing the business.

Because of this sophistication, however, ERP systems have proven to be incredibly complex. While real-time information delivery is commonplace in the open Internet marketplace, it remains a challenge for most organizations. Despite the billions of dollars invested in ERP, most of the corporate world lives in the week-to-week, end-of-the-month reporting style of the post-punch card industrial era. Many Chief Information Officers still struggle to get the information lockedup inside ERP systems out to constituents across the organization, even though this data can often have a tremendous impact on a company's bottom line.

While working at SAP AG in Germany in the late 90's, the authors of this book undertook extensive research of R/3's penetration in the client site. One of the truly amazing statistics that came out of that research is that roughly 7% of business users have access to the corporate information locked away in enterprise software applications from vendors like SAP AG, PeopleSoft, J.D. Edwards, and Baan. Most of the 7% will be involved in some kind of data input or transaction processing. The challenge, therefore, is to harvest the fruits of ERP and distribute them to the people who can make a difference. The fact is, these people are more likely to be accustomed to data processing with MS Excel or the Internet than with R/3.

Today, the ubiquity, speed, and flexibility of the Internet drive bold new initiatives in ebusiness, transforming how business users think about proprietary, expensive, and arcane enterprise technologies. More than ever before, businesses need new structures for information delivery—different ways of accessing, analyzing, and distributing data that can better exploit business opportunities as they arise. Automating transactions is no longer enough. To conduct e-commerce on the Web, companies need to be able to create real-time collaborative environments for business users, customers, supply chain constituents, and partners. A sales manager, for instance, might need to view incoming sales orders via a wireless device. A customer might want to check on the progress of her order over the Internet. Suppliers might need to be notified by pager or fax that their last shipment has been received. Partners often require a remote demonstration of a particular product or service. In the next generation enterprise, all of these tasks need to happen effortlessly and in real time.

The introduction of initiatives such as SAP's mySAP.com suggests that enterprise software vendors understand that the Internet, which connects over 100 million individuals and businesses globally, has radically transformed how businesses work. The server-based architecture of the Internet and its unique ability to deliver on demand such desktop application components as data charting or travel and expense tracking, now drives the development and deployment of enterprise software. If in the last decade ERP systems integrated business processes within the enterprise, in the next generation the Internet and other pervasive computing applications will continue to drive ebusiness intelligence, that is, business-to-business integration and cross-enterprise collaboration.

Market sources indicate that the enterprise application market will continue to grow at a rate of 32 percent over the next five years to $66.6 billion by 2003, fueled primarily by the desire for analytic applications that optimize business processes. To remain competitive, companies will continue to push key decision-making processes down to employees and out to partners. These economic drivers place new demands on enterprise reporting as companies seek complete reporting solutions in easy-to-use formats.

In today's enterprise reporting environment, business managers want to bring real-time information to a wide constituency. As more and more businesses adopt open and collaborative systems for information exchange, however, business managers have discovered that getting the right information to the right people and getting it to them quickly remain very real challenges. Improving customer relations, reaching new markets, and reducing the costs of bringing products and services to market are all potential benefits of ebusiness, but these benefits can only be realized if corporate information can be used to define clear business goals and to determine appropriate measures for determining success.

Because enterprise applications have traditionally focused on automating processes and not on delivering information to key decision makers, the overall value of enterprise applications has yet to be unlocked. Today, new initiatives in personalization, collaboration, and remote delivery have revolutionized the process of data acquisition. Germane to this is SAP's New Dimension Suite, which is a set of specialized R/3 applications targeting more sophisticated transaction processing (APO), front office interaction (CRM), and analytic applications (BW). In many ways, the possibilities for enterprise reporting seem almost limitless. A corporate executive can deliver a boardroom quality report from the back seat of a taxicab using a Nokia Communicator, Psion, or PalmPilot, or access the latest metrics about the health of the organization using a 2-way pager. More and more, good enterprise reporting requires information that is timely, relevant, and accurate. But if enterprise reporting is to fulfill its mission of supporting the analytic requirements of key decision makers throughout the organization, it also requires sophisticated business intelligence. With initiatives like mySAP.com, enterprise reporting can now preserve the best business practices embedded in an information architecture like R/3, while exploiting the connectivity of the Internet and other pervasive computing applications.

In SAP R/3 Reporting and eBusiness Intelligence, we explain how to unlock the data in R/3 and access the information in your system in a way that makes good business sense. Unlike previous reporting books that simply guide readers through the reporting tools of a particular enterprise software system, SAP R/3 Reporting and eBusiness Intelligence will help you create reports with a proven method of analysis, respond to the business needs of an organization, and understand the what, where, and how of enterprise system information.

To help both new and experienced users better manipulate R/3 data for reporting across the enterprise, this book explains how information is stored and delivered in the R/3 system and demonstrates some useful methods for retrieving data from the R/3 system. Before we turn to the information within the R/3 system, we should first outline some basic information about SAP and the R/3 system. If this is familiar territory for you, feel free to skip to the first chapter.

What Is R/3?

Initially, SAP made the move from mainframes to open systems in the late 1980's with R/2, a monolithic, mainframe legacy solution. As early as 1988, however, SAP chose to move toward client/server technology and began developing R/3. In 1992, SAP unveiled R/3 just as client/server and its potential were beginning to be fully realized in the business world. R/3's success is largely due to its ability to provide a highly integrated environment that can fully exploit the potential of client/server computing, and its razor-sharp focus on selling the standard solution to the high echelons of corporate computing.

R/3's advantages lie in its flexibility, scalability, and expandability. It can be used in client/server architectures with 30 seats or in installations with 3,000 end users. This scalability ensures that R/3 can provide support for current business operations and still adapt to change and progress. Designed as a total system, but also suitable for modular use, R/3 is expandable in stages, making it adaptable to the specific requirements of individual businesses. R/3 can run on the hardware platforms of leading international manufacturers and can integrate with customers' in-house applications. It is also open to interoperability with third-party solutions and services. Experts in such scaleable software as Microsoft, IBM, and Apple have all deployed SAP as their enterprise solution.

As we go to press with this book, SAP is busy repositioning the company from enterprise software to business Internet computing. The customers' desire for real-time business information has never been greater. More and more business users now expect personalized and synchronous data that can be delivered anywhere and at any time; in the next generation enterprise, systems that aren't flexible enough to serve the needs of end users will eventually founder. While the marketing literature seems to skim over the fact that R/3 is the core of this outward push, the value that many customers have to gain has less to do with the Internet, and more to do with the basic client/server infrastructure to which R/3 contributes.

mySAP.com

In 1999, SAP introduced mySAP.com, a comprehensive Internet-based initiative that promised to facilitate collaboration, personalize the work environment, and provide end-to-end integration of SAP and non-SAP software solutions. In the 1980's SAP revolutionized business computing by delivering an integrated view of the enterprise; by the 1990's, spurred by the possibilities of the Internet, SAP aspired to provide an equally integrated view of entire markets.

mySAP.com offers the following components:

• mySAP.com Marketplace—a business-to-business Internet site that brings together over 12,000 companies. By connecting buyers and sellers, creating new marketplace opportunities, and reducing transaction costs, mySAP.com Marketplace provides a better infrastructure for companies to conduct business.
• mySAP.com Workplace—an enterprise portal that provides SAP users with a personalized, Web-based work environment. It features an open and flexible infrastructure that delivers resources according to each user's role in the company. In addition, users can employ a Web browser to access intranet and extranet applications, front- and back-office systems, and legacy applications.
• mySAP.com business scenarios—a series of business-to-business and business-to-consumer solutions derived from over 25 years of industry experience. Business scenarios integrate business processes with industry-specific knowledge and services. The business logic intrinsic to these business scenarios helps companies design new business processes, increase productivity, enhance decision support, and improve customer service.
• Web-based application hosting, a cost-effective way for companies to access the full range of mySAP.com solutions.

The concept behind mySAP.com is to enable companies to "push" the business logic embedded in R/3 outward, transforming operations into ebusinesses that can take full advantage of the Internet. Transactions are completed more swiftly because standard Web functions can be integrated with back-office systems. Businesses can more easily find and collaborate with suppliers and partners from around the world. Individuals have better access to services created specifically for them.

mySAP.com aims to deliver a total business process integration that begins with the customer and extends throughout the business operation. Combined with real-time collaboration among participants, it will have a tremendous impact on how information is managed and delivered in the next decade. Fulfilling the vision of "virtual integration" across industries and communities requires sophisticated business intelligence that can be delivered quickly and easily to key decision makers.

How Is R/3 Designed?

The architecture of SAP's R/3 system is a three-tier design of presentation, application, and database servers. SAP pioneered the client/server software design, which is used in much of today's enterprise software and enables the system to be distributed among PCs, workstations and midrange computers. This design allows a functional split to be made between front-end presentation servers and back-end database servers, with application servers operating between.

1. Presentation Server—This is the presentation tier of the client/server system that allows human-to-computer interaction using the keyboard, mouse, and monitor. System users deal directly with this first level only. The software includes a user-friendly graphical user interface (GUI) that takes requests from the user and passes them on to the application server.
2. Application Server—These servers act as the intermediary or the second tier of the client/server system. Using UNIX or Windows NT they can run on one or more computers. Application servers prepare, format, and process incoming data. Sometimes, application servers connect with databases and on-line services to provide information users request or to make changes to the database. Typically, the application server is dedicated to a large group of users, such as a department.
3. Database Server—Databases and other applications constitute the third tier of the client/server system. Briefly, this third tier stores information that servers can use. The software on the database server, or central computer, controls database management and batch processing. The software retrieves the data from the database and contains all the programs downloaded to the appropriate application servers.

The three-tier approach to the design of client/server systems takes advantage of local workplace computers and the computing power of central systems. R/3 architecture ensures that the system is sufficiently flexible to expand with a company's needs and enables individual computers to reach their maximum performance capability. It also helps companies optimize business processes by integrating data and making it available on-line and in real time to every user and workplace.

In addition, the R/3 architecture includes Business Application Programming Interfaces (BAPIs), which comprise an essential architectural layer for interacting on a peer-to-peer basis with a client/server system. For example, Microsoft Excel is used as an interactive presentation-level BAPI for balance sheet consolidation. Without ever leaving Excel, the user triggers consolidation between it and other servers running on the R/3 system.

Besides the benefits offered by utilizing relational databases for data storage and the open BAPIs for incorporating third-party products, R/3 is also oriented around a number of central "business objects." Before client/server technology, business software was designed in a formalistic, data schema-driven fashion. It performed individual business functions such as purchasing, inventory management, or financial accounting in response to functional requirements. In many companies, such functionally oriented applications gave rise to an unmanageably complex maze of data models and system components. Interfaces had to be hard programmed to link the applications together. Once instituted, function-oriented structures could not be transformed into process-oriented structures. Companies sacrificed flexibility and the ability to respond quickly to changing business needs.

By contrast, R/3 is a process-based system geared toward business objects. Business objects such as "order," "goods receipt document," or "financial accounting document" can assume different guises and attributes within the R/3 architecture. An order, for example, can take many forms depending on its context: standard order, delivery schedule, or outline agreement. It can also refer to a purchase requisition or be assigned to an account.

The flexibility of R/3 allows the parameterization of such business objects and makes it possible to use the same system to model quite different processes. R/3 architecture is such that the most important business objects are encapsulated along with the required methods. Business objects can also be freely invoked, permitting context-sensitive integration at any point along a company's business process chain.

What Is the R/3 Business Blueprint?

SAP has packaged 25 years of best business practices in many different industries into a "blueprint" called the R/3 Reference Model. The Reference Model, SAP's Business Blueprint, guides companies from the beginning phases of engineering, including evaluation and analysis, to the final stages of implementation. It is the definitive description of R/3, providing a comprehensive view of all the processes and business solutions available in the system. Technical details, however, are "hidden" so that the business user can focus solely on business process issues. In other words, the Business Blueprint is written in the language of the business user.

The Business Blueprint is often the starting point for business engineering and software implementation project efforts. To date, few companies have been able to provide a comprehensive process-oriented description of a business that fits into almost any industry. The Business Blueprint is a means of streamlining processes and implementing R/3 without having to start from scratch.

The Business Blueprint concentrates on four key areas necessary for understanding business: events, tasks or functions, organization, and communication. This model defines who must do what, when, and how. Events are the driving force behind a business process, prompting one or more activities to one place. This is the essence of SAP's Event-driven Process Chain (EPC) Methodology.

In Release 4.5, SAP offered roughly 800 predefined business processes, with variants, that generally correspond to different industries and corporations. These are illustrated with the EPC graphical method. By connecting events and tasks, even very complex business processes are modeled and analyzed. An EPC model can show where breaks in the chain of tasks and responsibilities hurt the ability of a company to optimize its processes. Graphical models help users select and understand the software, visualizing how data flows through business areas and showing how various functions interact with each other. The EPC model is the central, process-oriented view. Other models show function, process, information flow, and organization views.

The Business Blueprint can be viewed and analyzed with the help of the R/3 Business Engineer. A set of integrated tools for configuring R/3, the Business Engineer has graphical browsing facilities for displaying the Business Blueprint directly from the R/3 Repository (which contains all the data definitions and structures required by ABAP/4 programs). The Business Engineer also includes customizing components that allow a user to adapt or modify the system to meet the user's own specific needs.

If you'd like to learn more about the R/3 Reference Model and supply chain management in R/3, read our first SAP book, SAP R/3 Business Blueprint, second edition (Prentice Hall PTR, 1999).

Who Uses R/3?

R/3 is the accepted standard in such key industries as software, oil, chemicals, consumer packaged goods, and high-tech electronics. Other industries include automotive, building and heavy construction, communication services, consulting (software), financial services, furniture, healthcare and hospitals, pharmaceuticals, public sector, raw materials, retail, services, steel, tourism, transportation, and utilities.

Table I-1 is a partial list of R/3 users.

Conclusion

Changing market dynamics driven by the rise of ebusiness are compelling many enterprises to rethink both their organizational structure and use of technology. In the past, economies of scale produced benefits by offering standardized products to stable, large consumer markets. Technology was used to optimize well-defined, discretely functioning areas within the enterprise. Information specialists created and maintained application software to automate certain business functions. The systems were designed to take snapshots of the business. Each snapshot provided data for hierarchical control, local decision-making, and financial accounting.

Today, the new Internet economy is prompting companies to once again adapt their business processes by adding new applications for employees and developing outward-facing business systems that will support customers, suppliers, and partners. Companies are seeking applications and services that can reduce internal costs and improve margins through self-service applications such as human resources, travel and expense management, recruiting, and procurement. To compete in the ebusiness economy, companies will need to increase customer retention and loyalty by using customer relationship management, supply chain management, order management and fulfillment, and customer and supplier collaboration applications. SAP R/3 and companion initiatives such as mySAP.com provide comprehensive solutions to help companies compete successfully in this new business environment. In combination, the Internet and SAP R/3 are highly flexible means for delivering business information across the enterprise.

The challenge remains: How to get the information to the right people in a timely and convenient manner.

Throughout this book, we will continue to draw from real business experiences and practices to illustrate basic principles of enterprise reporting. We have attempted to provide examples from a wide variety of industries so that the reader can intuit the many possibilities inherent in the R/3 system.

Focusing on the producers and consumers of enterprise reports, SAP R/3 Reporting and eBusiness Intelligence teaches you how to organize, create, and deploy reports in your company using a simple four-step formula: Manage, Analyze, Present, and Publish (MAPP). The MAPP technique allows any business user to create a logical way to organize, analyze, present, and deliver data so that the people who need the information the most can make decisions that matter. Because the most common transaction and presentation systems in business today are SAP R/3, Microsoft Office, and the Internet, we center our attention on R/3 and Microsoft Excel, the tools that provide the best approach to understanding enterprise reporting. We clearly articulate the goals of enterprise reporting and demonstrate how to achieve dynamic reports linked to the live data in your enterprise system.

SAP R/3 Reporting and eBusiness Intelligence also explains how reports can be most effectively published to a corporate Intranet using tools such as Microsoft Outlook/Exchange, personalized business information, data delivery subscription services, as well as analytical tools such as ActiveSolutions, which combines business logic with real-time information delivery to give organizations the competitive advantage they need to make critical decisions about strategic planning, customer analysis, asset management, and product analysis.

While our main focus is reporting and information delivery in R/3, we have tried to explain as much of the R/3 system and its variants as possible. We understand that different parts of this book will interest different readers, and for that reason we have tried in this Introduction to steer readers toward their areas of interest. Generally speaking, the best strategy for readers with specific areas of interest is to follow these option paths.

• Readers who are most interested in the business logic of the R/3 system should begin with Part 1, Information Delivery in R/3.
• Those readers who know about the business side of R/3 and would like to know more about R/3 reporting functionality should begin with Chapter 3, R/3 Reporting
• Readers who would like to examine specific business processes and their reporting content that are available in R/3 should begin with the section that best fits their areas of interest: Section 2, Business-to-Business Sales, Section 3, Business-to-Business Procurement, or Section 4, Business-to-Business Financials.

Finally, the software that accompanies this book is specially designed to help both new and experienced users better manipulate and use R/3 data for reporting across the enterprise.

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