What is SAP? Definition, Overview, and Modules of SAP ERP

What is SAP?

SAP stands for Systems Applications and Products in data processing. It was founded in 1972 by five entrepreneurs (Dietmar Hopp, Hasso Plattner, Hans-Werner Hector, Klaus Tschira, and Claus Wellenreuther) in Germany.

SAP is a software that helps businesses thrive, innovate, and run efficient work processes daily. Today, it is managed by SAP SE, a European multinational software corporation. They are particularly known for their multiple end to end application / service suites and have been expanding in scope covering new generation technologies. To visualize how big the SAP software is, it was stated that 77% of the world’s transaction revenue touches an SAP system.

SAP SE currently has 440,000 customers in more than 180 countries, 21,000+ SAP partner companies globally, and 100+ innovation and development centers.

See references sections of this post for sources of the mentioned statistics.

What is ERP?

ERP stands for Enterprise Resource Planning. In order to understand what this means, let us think about the core processes that are needed to run a company. These core processes can be Finance, HR, Manufacturing, Supply Chain, Procurement, and more. Now, let us take for example the scenario that each of these core processes are handled by different kinds of software’s. That would mean important data in different systems.

What is ERP?

This time let us consider how each of these processes can relate to one another. For example, Financial processes greatly impact (and consider) the other core processes such as HR, Manufacturing, Supply Chain, Procurement, and more.

Why? Because Finance needs to record the other core process transactions. If we procure a material to create a finished product, we need to record the corresponding financial transaction. At the same time, by selling that finished product and even paying the employees, the corresponding financial transaction needs to be recorded.

Recall that the data in our example is scattered throughout several different systems. That entails a lot of data gathering in different formats in different systems just to see, analyze, check on the financial position of a company.

Given this example of how these core processes can impact and relate to one another, let us insert ERP into the picture. The concept of an ERP is to integrate these core processes into a single system.

What is ERP?

SAP ERP Software

SAP is considered as an ERP System but given the advancements in technology, it is no longer just a basic ERP system that integrates several processes into a single system. From research, we can see technologies such as machine learning, artificial intelligence, and even internet of things can be integrated or added to create a next generation ERP system. Today, we even have cloud platforms, robotic process automation, predictive analytics for analysis, and more to enable even greater business efficiencies.

What is SAP?

What Are The Advantages of SAP ERP?

Below are some of the advantages of SAP ERP:

Accelerated Reporting and Better Insights

With the data and core processes streamlined into one system, we are able to obtain data faster and understand where the business stands performance-wise, financial-wise, etc.

Improved Agility

Businesses need a way to improve their agility with the many sudden events occurring today. May it be economic related events, opportunities to grow or leverage a product, ERP systems can help you react to these events quickly.

Road to an Intelligent Enterprise

The outlook is to craft and enable businesses to become intelligent enterprises where processes are automated, innovation is a key factor, and real-time data insight / experiences are improved. ERP systems can enable this transition through the many features and next generation technologies.

What Are The Types of ERP?

  • Cloud ERP – ERP using Cloud.
  • On-Premise ERP – ERP using your own data center.
  • Hybrid ERP – ERP using both Cloud and On-Premise. Also known as two-tier ERP.

When you say “on-premise”, you associate it to actual servers on your company’s premises / offices.

List of SAP Modules

In SAP, the modules are categorized into two: Functional Modules and Technical Modules. You may refer to the table below for more information.

CategoryModuleExpandedAdditional Notes
FunctionalSAP FICOFinancial Accounting and Controlling 
FunctionalSAP HRHuman Resource / Human Resource Management 
FunctionalSAP HCMHuman Capital ManagementBusiness Suite Application
FunctionalSAP MMMaterials Management 
FunctionalSAP SDSales and Distribution 
FunctionalSAP FSCMFinancial Supply Chain Management 
FunctionalSAP PSProject Systems 
FunctionalSAP PMPlant Maintenance 
FunctionalSAP QMQuality Management 
FunctionalSAP PPProduction Planning 
TechnicalSAP BASISPrograms and tools for interfacing with databases, operating systems, communication protocols and other SAP modules. 
TechnicalSAP SecurityRoles and Authorizations 
TechnicalSAP ABAPAdvanced Business Application Programming (Default programming language for SAP)
TechnicalSAP HANAHigh Performance Analytic Appliance (In-memory computing platform. Allows real-time data analysis)
TechnicalSAP NetWeaverTechnology platform that allows organizations to integrate data, business processes, etc. 
TechnicalSAP ISInformation Systems Management 
TechnicalSAP XIExchange Infrastructure 
TechnicalSAP SolManSolution Manager 
TechnicalSAP SCMSupply Chain ManagementBusiness Suite Application
TechnicalSAP SRMSupplier Relationship ManagementBusiness Suite Application
TechnicalSAP PLCProduct Lifecycle CostingBusiness Suite Application
TechnicalSAP GRCGovernment, Risk, and ComplianceBusiness Suite Application
TechnicalSAP SEMStrategic Enterprise ManagementBusiness Suite Application
TechnicalSAP CRMCustomer Relationship ManagementBusiness Suite Application
TechnicalSAP CM SOACompliance Management for SOABusiness Suite Application
TechnicalSAP BWBusiness Data Warehouse (Also SAP BI)Additional Component
TechnicalSAP BIBusiness Intelligence (Also SAP BW)Additional Component
TechnicalSAP APOAdvanced Planning and OptimizationAdditional Component
TechnicalSAP SFASalesforce AutomationAdditional Component
TechnicalSAP ITSInternet Transaction ServerAdditional Component
List of SAP Modules

List of SAP S/4HANA Modules

Following the latest technology (SAP S/4HANA), you may refer to some of the S/4HANA modules below.

Most of the changes lie on the SAP FICO module where it is currently known as SAP Finance. Finance processes have been streamlined, system architectural changes have been made, and other optimizations have been done. For more information, you can read this post: SAP S/4 HANA Finance | Key Features | Summary.

It should be noted that SAP CO is still present in S/4HANA but big changes have been made to prevent redundancy of data. As such, some CO tables and transaction codes have been decommissioned in SAP S/4HANA.

SAP FinancePreviously known as Simple Finance.
SAP PMPlant Maintenance
SAP HCMHuman Capital Management
SAP PPProduction Planning
SAP PSProject Systems
SAP COControlling
SAP SDSales and Distribution
SAP IMInvestment Management
SAP SEMStrategic Enterprise Management
SAP CRMCustomer Relationship Management
SAP LISLogistics Information Systems
SAP SCMSupply Chain Management
SAP MMMaterials Management
SAP SRMSupplier Relationship Management
List of SAP S/4HANA Modules


I hope this helps. Good luck! 🙂

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