SAP ERP. An Introduction

SAP ERP is a common ERP (Enterprise Resource Planning) software used by companies for the coordination of all core business functionalities, such as procurement, materials management, production, finance, sales, marketing, and human resources. SAP (Systems, Applications, and Products) is believed to be the most common ERP that assists companies of different sizes, small businesses, midsize companies, and large corporations to run their businesses profitably, adapt continuously, and grow sustainably.

Modules in SAP ERP

SAP systems consist of a number of fully integrated modules, which covers virtually every aspect of business management. These modules are divided into functional modules and Technical modules.

  1. The functional modules are subdivided into the following:
  • Human Capital Management (SAP HCM):  The tools required by Human Resource manager to efficiently manage and maintain employee from the point of job application to termination of appointment is provided by this module of SAP. This functional module is further divided into organization management, personnel administration, personnel development, Time management and Payroll. 
  • Production Planning (SAP PP): SAP PP module offers features like Capacity Planning, Material Requirement Planning, Sales and Operations planning, etc. This module is specifically made for production planning and management which consists of the requirements (such as system configuration, master data and transactions) to accomplish the planned procedure for production. SAP PP also integrates with SAP FICO module for product costing through the activity rate and bills of materials thereby giving clear visibility of what is being spent on a product.
  • Materials Management (SAP MM): This module Integrates with other modules like logistics, supply chain management, sales and delivery, warehouse management, production and planning for movement of materials. SAP MM module assists with real-time Supply Chain Management from the vendor to the customer consists of main components like Purchasing (Procurement), Warehouse Management, Inventory Management, Materials Requirement Planning.
  • Project System (SAP PS): The SAP PS module allows controlling funds and resources throughout the project stages, from the project initiation to project closure stage to  A clear and well-structured structured project is the basis for its planning, monitoring, control, and success. SAP PS integrates with other modules such as Production Planning, Procurement, and Finance
  • Sales and Distribution (SAP SD):  SAP SD module is for managing activities ranging from inquiries, proposals, quotations, pricing, and more. The SAP SD module helps to capture the sales to the customer with Price and Taxation, Delivery and Transportation, Billing, Credit Management, and Account Determination. This module also integrates with other modules such as SAP Material Management, Production Planning, and Finance and Controlling modules.
  • SAP Finance (FI): This module provides a comprehensive suite of financial management and accounting systems that assist companies with the tools required to keep track of their finances. It offers General Ledger Accounting, Asset Accounting, Accounts Receivables/Payables, and Bank Accounting, among many other features. This financial accounting module helps companies to manage data involved in any financial and business transactions, and for reporting requirements. SAP FI integrates with other SAP modules such as SAP SD, SAP MM, SAP PP, etc.
  • SAP Controlling (CO): This module supports planning, internal accounting and monitoring the operation of businesses. The SAP Controlling (CO) module enables companies to plan, track, perform and report costs. The Controlling unit covers Cost Element Accounting, Cost Center Accounting, Activity Based Accounting, Profitability Analysis, Product Cost controlling, and Profit Center Accounting. 
  • Plant Maintenance (SAP PM):  This module is used for plant maintenance which consists of key features like equipment inspection, maintenance, repairs, and other measures to maintain an ideal technical system, equipment-Asset integration and Refurbishment maintenance order for spares.
  • Quality Management (SAP QM): This module is integrated with the Materials Management, Sales and Distribution, Production Planning, and Plant Maintenance modules to help companies deal with the quality of both Raw materials and Finished goods as well as equipment maintenance decisions. This module helps in the management of quality in productions across processes within a company.
  1. There are 2 basic technical modules asides functional module which come as a standard bundle during implementation. The technical modules are:
  • SAP BASIS (SAP BC): Critical functions like installation of SAP database and application server, maintenance of profiles and users(users and roles management), maintenance of SAP instances (development, testing, and production), system configuration and change management are done on this module. This module is offered by SAP when a customer purchases the software; no additional license cost is required.
  • SAP ABAP: The SAP system is written primarily in the SAP ABAP (Advanced Business Application Programming) programming language.  Customized reports and enhancements of the custom reports are carried out on this module. Additional licenses to develop and enhance is required.

Common types of SAP Systems

There are various types of SAP but the common ones are SAP ECC (ERP Central Component) and S4HANA (SAP Business Suite 4 SAP HANA). These types of SAP software are similar but are distinguished by the following:

  • Database and Infrastructure: SAP ECC runs on the traditional Open Database Connectivity (ODBC) and/or third-party database systems such Oracle, MSSQL, etc. while S/4HANA can only run on the revolutionary SAP HANA database which is a column-oriented relational database management system and in-memory computing.
  • Report Generation: SAP ECC has limited reporting tools options that require longer development time for customization while S4HANA offers advanced analytic functions such as predictive analytics and has embedded analytics which allows users to create reports in multiple levels. Also, SAP FIORI Apps are available in S/4HANA for performing activities and generating reports in real-time
  • Finance Functionalities: 
  1. In SAP ECC, Multiple documents can be created for one transaction causing data duplication and reconciliation difficulty while Universal Journal is in use in S/4 HANA Universal journal is referred to as “one single source of truth” which records data of a transaction in one document. S/4 HANA Finance provides a database table “ACDOCA”(Universal Journal) which contains all the documents types from FI, CO, MM, SD, PP modules.
  2. SAP ECC has separate Customers and Vendors master data while S/4 HANA uses business Partner to centrally manage customer/vendor master data
  • Migration: SAP ECC has limited migration options from legacy systems while S/4 HANA has central finance which allows multiple migration options based on the client’s IT landscapes
  • I hope now you have a better understanding of SAP as an Enterprise Resource Planning solution.

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