The Difference Between ERP and SAP
When looking for business software, it’s common to see the terms “ERP” and “SAP” a lot. If you’re unfamiliar with either, they might even seem interchangeable. Yet it’s very important to know why they’re different.
The short answer: SAP is a company which develops various types of ERP software.
The slightly longer answer delves into the details of each term:
What is ERP?
ERP refers to enterprise resource planning via a suite of business applications ranging usually within the areas of financials, sales, and related operations. Originally developed to automate manufacturing operations, they are now an all-in-one software for any type of business. The most included modules are:
- Accounting
- Budgeting and forecasting
- Customer relationship management
- Human resources
- Inventory and supply chain management
These solutions can either be implemented straight out-of-the-box or undergo customization to include more modules. ERP can also integrate with third-party software to cover even more business functions.
What is SAP?
SAP is one of many ERP software developers on the market. The company, which originated in Germany in the 1970s, has grown to become one of the largest software vendors in the world. Their first software products were related to financial accounting, although even then they were focused on centralizing data storage for easier access and organization. The first product which resembled an ERP was R/2, released in 1992.
When people refer to “SAP,” they might be talking about the company or its ERP software products. A few of these include:
| ERP | SAP |
| ERP refers to a wide range of business software designed to optimize back office functions | SAP is a company which develops software, including ERP solutions |
| The ERP initialism stands for "enterprise resource planning" | The SAP initialism stands for "System Analysis Program Development" or "Systemanalyse Programmentwicklung" in the original German |
| The first ERP systems can be traced to the 1960s, although the term wasn't coined until the 1990s | The SAP company was founded in 1972 by 5 former IBM technology engineers |
| ERP can serve businesses of all sizes across every industry | SAP ERP solutions primarily serve medium to enterprise corporations |
Why is SAP Mistaken for ERP?
Because SAP is so well known for creating ERP software, the brand name is sometimes used synonymously with the term. This mostly happens with those who have always used a SAP solution as an ERP, like asking for a Kleenex instead of a tissue. However, for businesses looking to incorporate an ERP into their business process, it’s important to know this distinction to avoid limiting software choices.
In summary, ERP refers to the category of software that integrates various business functions, while SAP is a specific company that provides ERP solutions. Some well-known ERP software providers, aside from SAP, include:
