What is SAP ERP

SAP ERP

On this page you can read which ERP systems are offered by SAP and for which core processes and company size they are suitable. You will also find information about the deployment models.

SAP ERP solutions have been in use for decades. They not only encompass all of the core processes required to run a company and integrate them into a central system. The latest products from the leading software provider create efficiency and transparency in all areas. The latest technologies meanwhile considerably simplify the flow of real-time data, which means that every department can control its activities directly and with data support.

Which ERP systems are there?

ERP systems can be divided into categories based on several criteria. They can differ in terms of the technology used (programming language, operating system, database).

Another variant is the distinction between open source ERP and closed source software (also proprietary software). In the case of open source software, the source code is freely accessible so that it can be changed by any developer. With closed source software, which also includes SAP, the source code is protected.

A subdivision according to target industries is also possible. In addition to universal ERP systems, there are also industry solutions for industry, trade and the service sector.

Also, one of the most significant differentiators today is the delivery model. The following characteristics should be mentioned here:

  • ERP in the cloud
  • On-premise ERP
  • Hybrid ERP

Due to the high strategic and monetary importance, we would like to explain these three variants of the technical provision in more detail below.

ERP in the cloud

Despite some reservations from German companies, the trend in the ERP environment is clearly heading towards the cloud. We are also talking about Software-as-a-Service, or SaaS for short. In the classic case, the ERP software is not hosted, operated, maintained and updated in-house, but in the provider's data center. The costs are usually paid in the form of a (monthly) rent, which covers all these services. There is no need to invest heavily in your own IT infrastructure (e.g. server and rooms). In addition, there is no need to have specialized IT staff to operate and support the ERP system.

Cloud ERP takes into account current requirements such as scalability, flexibility, mobile working and cross-company collaboration due to the architecture mostly to a special degree.

On-premise ERP

On-premise ERP is the classic license and usage model for enterprise resource planning. In this case, the software is installed and operated locally, i.e. on the user company's own servers. This has the advantage that the data remains in the company, which plays a role in the case of pronounced data protection concerns or risks.

For an on-premise ERP, licenses must be purchased, the price of which is often based on the number of users and the range of functions. Due to the high initial investment, the on-premise version of ERP systems is aimed more at large companies. Often, however, the customizability is also higher than with cloud products.

Hybrid ERP

More and more decision-makers want to benefit from the advantages of the cloud, but prefer to leave critical data on their own servers. Other companies want to gradually move to the cloud. In both cases, hybrid environments represent a compromise.

The hybrid cloud is characterized by the fact that sensitive data is stored in a private cloud environment with limited access. All other applications and data are in the public cloud. Depending on the software, however, the core application can also be operated in-house. Any additional components required are then booked from the cloud.

You can read about the potential of the introduction of the SAP CRM module in this article.

SAP ERP systems for companies of different sizes

Once upon a time, due to its complexity and pricing, SAP ERP was used almost exclusively in large companies and corporations. In the meantime, however, the orientation of the Walldorf-based software provider has changed. The portfolio now includes solutions for companies of all sizes:

  • SAP products for smaller companies: SAP Business One
  • SAP products for medium-sized companies: SAP S / 4HANA Cloud, SAP S / 4HANA, SAP Business ByDesign and SAP Business One
  • SAP products for large companies: SAP S / 4HANA Cloud, SAP S / 4HANA, SAP ERP

Let's take a closer look at the solutions in these three categories.

SAP ERP software for small businesses

There are several variants of the SAP ERP software to choose from for medium-sized companies. SAP Business One can also be used here. SAP Business ByDesign is also a possible option.

The latest SAP ERP generation is also available: SAP S / 4HANA or the SaaS variant SAP S / 4HANA Cloud. In essence, SAP S / 4HANA has a range of functions comparable to that of classic SAP ERP. However, the data model has been simplified considerably.

SAP S / 4HANA

In contrast to previously available technologies, SAP S / 4HANA uses in-memory databases and thus creates the basis for the digitization of companies. In-memory technology makes it possible to analyze large amounts of data in seconds.

With its latest ERP system, SAP has also taken a significant step forward in terms of data integration. With SAP S / 4HANA, different formats such as images, video and text can now be integrated without the data having to be transferred to SAP.

As part of the new product generation, SAP Fiori provides customizable, role-based interfaces that were previously only known from the consumer world. Switching to systems such as a business warehouse or manual steps outside of the SAP system are no longer necessary in order to create individual reports.

It can therefore be stated that with SAP S / 4HANA factors such as personalization and intuitive operation are clearly in focus. In addition, the system creates the technological prerequisites for the analysis of large amounts of data (big data), the connection of Internet of Things objects and cross-company networking.

The main functions and advantages at a glance:

  • Digitization of financial processes, real-time analysis of financial results
  • Digitization of the logistics chain
  • Machine learning to optimize production, logistics, plant management and supplier management
  • Efficient control of the entire product life cycle across company boundaries
  • Company-wide transparency gain
  • Meaningful data for sales, service and marketing to work more proactively
  • Numerous industry solutions available

SAP S / 4HANA can be operated as an on-premise installation and via a public cloud. The content, localization, functionality and support correspond to those of the SAP Business Suite. Since 2017, the software has also been offered as a cloud solution under the name SAP S / 4HANA Cloud. With this variant, SAP takes over the operation and updating of the system. The core functions of S / 4HANA and S / 4HANA Cloud are comparable.

MEINOLF SCHAEFER, SENIOR DIRECTOR SALES & MARKETING

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SAP Business ByDesign

SAP Business ByDesign can be described as the middle ground between the "flagship" SAP S / 4HANA and the comparatively lean SAP Business One. The target group is on the one hand medium-sized companies and on the other hand corporations who want to integrate subsidiaries or branches into their existing SAP landscape.

In contrast to other solutions for medium-sized companies, SAP Business ByDesign is offered exclusively as software as a service in the cloud rental model. All functions are made available via the Internet. Access is either via browser or mobile via tablet and smartphone.

SAP Business ByDesign also uses in-memory technology to access current data in real time. Integrated analysis functions are also available. Important modules and their advantages are:

  • Finance: controlling core processes in accounting, liquidity and cash flow, real-time analyzes
  • Customer relationship management (CRM): Integration of front and back office processes, control of all marketing, service and sales processes
  • Human resources (HR): Organization and personnel management, employee self-services such as time recording
  • Project management
  • Procurement: Purchasing and contract management including strategic purchasing, bid processing and control of suppliers
  • (SCM): Integration of the value chain, cost transparency, real-time inventory valuation

SAP ERP software for large companies and corporations

The solutions SAP ERP Central Component (short: SAP ECC or SAP ERP) and SAP S / 4HANA are aimed at large companies and corporations. As of 2025, SAP will completely stop supporting SAP ECC. For user companies, this means that they have to switch to SAP S / 4HANA by then. Due to the widespread use, we would still like to deal with SAP ECC and its components on this page.

What is SAP ECC?

SAP ECC is a classic on-premises system for enterprise resource planning. It is often referred to simply as SAP ERP. As with any other ERP system, the central task of SAP ECC is to bring together data from all areas in the company. This creates a uniform view of resources that enables managers to make data-driven decisions to optimize business processes.

SAP ECC is the basis of the so-called SAP Business Suite, which includes modules such as SCM (Supply Chain Management) and CRM (Customer Relationship Management). The term “module” no longer exists since the switch from the previous SAP R / 3 system to SAP ECC. Since then, the Walldorf-based software company has been talking about "components".

Both terms, however, refer to parts of the program that were developed to map business processes in areas such as accounting, sales or materials management. All components are directly linked to one another so that the departments can work together smoothly and on the basis of shared data. In total, SAP ECC consists of ten functional components (modules), which we would like to briefly describe below.

Which components does SAP ECC contain?

With SAP ERP (ECC 6.0) the business processes of different industries can be mapped. The most frequently used components include FI (finance), CO (controlling), MM (materials management) and SD (sales). However, companies decide for themselves which of the existing components they want to use. For example, it is also possible to leave function blocks such as PS (project system) unused. Now let's take a closer look at the most common components and their most important features.

FI (finance, financial accounting)

The FI component is responsible for recording all financial transactions in the company. This also includes accounts receivable and accounts payable. Both receivables and payables as well as cash and bank transactions are managed here.

CO (cost accounting, controlling)

Cost center accounting, profit center accounting and financial planning take place in CO. Controlling is also supported by internal orders. Manufacturing companies also use product cost accounting, which compares actual costs with simulated costs.

SD (Distribution, Sales and Distribution)

The sales component is responsible for controlling all sales processes. This includes direct sales to national and international customers as well as sales through distribution networks. Other important functional areas of SD are invoicing, returns management and lending.

MM (materials management)

The MM component covers the areas of procurement and inventory management. In inventory management, the module is responsible for goods receipts, goods issues and the transfer of material. Inventory counts and reconciliations are also carried out in MM.

PP (Production Planning and Control)

PP supports companies in coordinating requirements and production capacities. This results in optimized planning for production, sales and distribution. The production planning and control of SAP can be used in single as well as in process and series production.

QM (Quality Management, Quality Management)

The QM component of SAP ERP extends far into the processes of production, sales, procurement and maintenance. It allows the management of external and internal business processes, analyzes of quality problems and continuous quality improvement.

PM (Plant Maintenance)

The aim of PM is to ensure that systems, machines and rooms are in an operational state. To do this, the component monitors the relevant objects and warns of malfunctions. Plant maintenance covers processes such as maintenance, servicing and inspection.

CS (Customer Service, Customer Service)

Maintenance services for customer systems are managed in the customer service module of SAP ERP. Services provided are also billed via CS.

PS (Project System)

PS supports the management of large, complex projects. This can be the construction of new production facilities, for example. For this purpose, the component bundles all project-related procurements or productions. This ensures that costs are correctly allocated to a project. In addition, this enables the project budget to be monitored.

HCM (Human Resources, Human Capital Management)

In HCM, HR master data is managed, wage and salary slips are created and working times are managed. In addition, functions for personnel development, the administration of business trips and occupational safety are available.

Technical components of SAP ECC

Finally, it should be mentioned that SAP ECC has two technical components, the implementation of which is mandatory: ABAP and NetWeaver. The ABAP programming language is used, among other things, to implement individual reports and to develop applications in the SAP environment. NetWeaver, on the other hand, is the development and runtime environment for SAP applications. The platform also serves to integrate databases and business processes.