SAP has long been on a relentless drive to capture ERP market share in an array of industries and business verticals...
through its internally developed products and product acquisitions.
Yet, the sheer number of SAP's on-premises and cloud offerings has often confused potential customers who want to make buying decisions. Adding to this confusion is SAP's frequent naming and renaming of its products, and the infinitely different ways salespeople, consultants, customers, experts and analysts refer to these SAP products.
Consider two recent examples: SAP renamed three cloud-based applications -- Ariba, Concur and Fieldglass -- as Business Networks, and has recently dubbed its internet of things service as Leonardo.
That confusion doesn't just relate to specific products. Indeed, three of the core terms in the SAP landscape are often misunderstood or misused -- components, modules and applications. Here are some explanations to clear that up.
The core business application is the SAP ERP system. This is often referred to as ECC, which stands for ERP Central Component.
Other on-premises business applications, such as Supplier Relationship Management or Advanced Planning and Optimization (APO), or cloud-based business applications, such as SAP Ariba, rely on data from the SAP ERP system -- or ECC -- to function.
For example, SAP Ariba, a cloud-based procurement solution, relies on vendor or product data stored in ECC to effectively perform procurement activities. Similarly, APO, an on-premises advanced materials and capacity planning engine, transfers planning data back and forth with ECC. The materials planning data is pushed from ECC into APO, where APO optimizes the production, delivery and capacity situations, and then sends the updated data back into ECC.
Using the SAP programming language known as ABAP, it is also possible to create custom-developed applications and programs to meet specific needs that can't possibly be met with standard SAP solutions.
Within each business application, there are SAP components. For example, ECC contains components such as Materials Management (MM), Project System or Human Capital Management. Similarly, in APO, some of the components are Production Planning and Detailed Scheduling, Supply Network Planning, and Demand Planning.
These components capture varied and complex business process scenarios and can also integrate with other components.
For example, the MM component is used for an end-to-end procurement process. When it comes to paying a vendor for the products or services delivered, and for which the vendor has submitted an invoice, the SAP Financial Accounting (FI) component's Accounts Payable subcomponent handles the payment. In this way, and due to integration, data and information from MM flows into FI, thereby providing end-to-end visibility of business processes and ensuring greater business and audit control.
SAP business applications not only have components, they also have subcomponents. In FI, for example, the subcomponents include Accounts Payable, Accounts Receivable and General Ledger. Similarly, in Controlling, which is a main component of ECC, the subcomponents include Cost Center Accounting, Profit Center Accounting, Internal Orders and Product Costing.
The same relationship between components and subcomponents exists in other SAP business applications, such as APO and CRM.
When referring to a component in SAP ECC, such as Materials Management or Human Capital Management, it's still quite common to hear and read the term module. The term module belongs to older versions of SAP ERP systems (known as R/3, R/2 or R/1, where R stands for real time), which many companies are still using, even today.
R/3 was eventually succeeded by the SAP ERP system, but there are still many companies using R/3 that haven't updated their systems. So, for them, the term R/3 holds. Similarly, when referring to R/3, the correct word is module, such as Financial Accounting module or Plant Maintenance module.
With the advent of the ECC system, the modules were renamed components. So, in ECC, the correct term is component. However, due to the continued prevalence of R/3, the term module is still in widespread use, even when the correct term is component.
ECC's components are often interchangeably referred to as modules, with modules belonging to R/3 and components belonging to ECC. Moreover, while module became component, submodule became subcomponent.
Here's a critical point to keep in mind, however: SAP components and modules offer the same functionality. What's most important is what they can do for your business.
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