What is SAP? Meaning, Definition, and Use

Organizations' complex work structures and processes require a unified solution that assists in managing various aspects of the business. To facilitate the same, an ERP integrates the main functions of the organization's core business processes into a unified system. Contemporarily, SAP is the most used and popular ERP used by organizations.

This blog will give you answer to what is SAP ERP and why it is used,

What is an ERP?

With organizations transitioning towards digitalization and replacing conventional techniques with new, advanced technologies, ERP is becoming the new normal to simplify business processes.

Enterprise Resource Planning (ERP) is software that coordinates the data flow between a company's various processes and streamlines the business operations, automating an organization's core operations.

An ERP comprises various modules that manage essential business processes, such as finance, supply chain, HR, production, and other work operations. These modules can be easily interlinked, and an organization can use only the required ones.

What is SAP ERP?

Systems, Applications & Products (SAP) is an ERP system by SAP AG, a company based in Walldorf, Germany. The various products and modules offered by SAP ERP enable customers to perform day-to-day business processes, such as accounting, sales, production, HR, and finance.

The data from these various modules is stored in a centralized database in an integrated environment, enabling the information and data to flow from one SAP component to another and evicting the need for supernumerary data entries.

What are the modules in SAP?

SAP modules are separated into functional modules and technical modules. Let us overview the different modules under SAP,

Functional Modules

The Functional Modules in SAP provide features like human resource management, finance management, production planning, and other work processes to facilitate the organization's day-to-day functioning. Let us now overview the various SAP functional modules and their uses,

Human Capital Management (SAP HCM)

The Human Capital Management (SAP HCM) module facilitates the management of human resource processes like hiring, onboarding, performance evaluation, payroll, promotion, and so on.

Production Planning (SAP PP)

The production planning module in SAP uses master data for processing manufacturing, sales, and distribution data and helps in planning and managing production.

Materials Management (SAP MM)

SAP Material Management (SAP MM) module assists in the optimization and planning of materials, inventory, and warehousing capabilities.

Project System (SAP PS)

The Project System (SAP PS) module involves project structuring, time scheduling, budgeting, reporting, project process analyzing, and cost planning to manage the lifecycle of a business project.

Sales and Distribution (SAP SD)

The Sales and Distribution (SAP SD) module helps manage processes like selling, shipping, and billing in an organization by integrating various sales transactions.

Plant Maintenance (SAP PM)

The Plant Management (SAP PM) module manages and overviews the product or service's inspection, maintenance, and technical repair.

Financial Accounting (SAP FI)

The SAP Financial Accounting (SAP FI) module helps the organization analyze financial data by integrating other financial modules and components like inventory, tax accounting, and financial statements.

Quality Management (SAP QM)

Quality Management (SAP QM) facilitates the organization in managing quality production by integrating sales, procurement, production, audit management, and more.

Controlling (SAP CO)

The Controlling (SAP CO) module concerns decision-making processes in an organization for improving financial and monetary functions.

Technical Modules

The technical modules in SAP focus on ensuring seamless operations in the SAP landscape. Let us overview the various technical modules and their use.

SAP Basis

SAP Basis involves system administration and a technical foundation enabling the SAP system to function smoothly.

SAP ABAP

SAP Advanced Business Application Programming (SAP ABAP) is a high-level programming language used to develop business applications in the SAP environment.

SAP NetWeaver

SAP NetWeaver enables real-time integration of business users with SAP software and allows tracking of various processes and modules.

Information Systems Management (SAP IS)

Information Systems Management (SAP IS) enables the collection and analysis of functional modules and helps the business in problem-cause identification and rectification.

Exchange Infrastructure (SAP XI)

Exchange infrastructure is responsible for implementing cross-system processes in different versions from different vendors.

High-Performance Analytic Appliance (SAP HANA)

SAP HANA uses in-memory computing to store compressed data into RAM instead of relational databases on disk drives.

How does SAP ERP work?

SAP is an on-premise/Cloud based ERP system deployed in a three-tier (ECC) Four-/tier( SAP S4 HANA), client-server architecture, that is, the presentation tier, application tier, and database tier and mobility(FIORI in case of S4 HANA)

Here, the presentation tier helps provide an SAP graphical user interface (SAP GUI) installed on the system that uses Microsoft Windows or macOS. This SAP GUI acts as a point of communication between the user and the SAP ERP.

In the application tier, the processing transactions, execution of business logic, monitoring access provision for the database, printing, and communication with the application are performed.

Lastly, the records and data related to transactions are stored in the database tier.

What are the key features and capabilities of SAP ERP?

SAP ECC is an ERP system comprising a broad collection of modules for handling other standard business processes, such as supply chain management and product lifecycle management.
S/4HANA is an in-memory ERP platform released in 2015 to replace SAP ECC and to reduce the prevailing complexities.
SAP S/4HANA Cloud is a SaaS version of S/4HANA. It provides the features of HANA's in-memory processing and real-time data accessibility in a subscription-based SaaS model.
SAP Business ByDesign is a SaaS ERP system for enterprise resource planning. It is designed for small and medium enterprises.
SAP Business One is a business management ERP solution designed to automate critical business functions in financials, operations, and human resources.

What are the advantages of SAP ERP for an organization?

The main advantages of SAP ERP include the following:

Increased Work Efficiency

SAP allows data integration with various databases, enabling the system to streamline business processes and collect data efficiently.

Solution for All Business Dimensions

The SAP system provides flexibility for company growth in almost all existing business dimensions.

Module for Simplification of work

The various modules in the SAP system share information to facilitate business managerial obligations and simplify routine business processes.

Avoid Data Replication and Duplication

SAP ERP ensures the confidentiality of the company's critical data and helps avoid duplication.

Standardization

Every business process recorded in the SAP system can be standardized. Thus, the company will have good standardization.

History of SAP

In a Nutshell,

SAP is one of the leading ERP Solutions worldwide. The ever-changing SAP environment offers growth opportunities for business and enterprises.
The vision of SAP is to help users and organizations in building smarter business and a customer-centric experiences to adapt to the dynamic technology, innovate and create ultimate success for the business.

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