13 Basic SAP Terms Explained in Plain English (+ Charts)

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This is about essential SAP terms.

You’ll learn the meaning of SAP terms such as:

  • SAP ERP
  • SAP S/4HANA
  • SAP Fiori
  • SAP NW

Get a quick start into SAP or check whether your fundamental knowledge about SAP is complete.

Let’s dive right in!

#1 What Does SAP Mean?

SAP full form is German originally—the SAP full form in German is Systeme, Anwendungen und Produkte in der Datenverarbeitung.

Luckily for SAP, the full form of SAP works out in English as well: SAP stands for Systems, Applications, and Products in Data Processing.

In 1976, the SAP full form changed from the German “Systemanalyse und Programmentwicklung” or in English “System Analysis and Program Development” to what it is today.

SAP is the world’s leading provider of enterprise resource planning software solutions that organize the various processes within companies and across company boundaries.

The SAP definition is:

“SAP (Systems, Applications, and Products in Data Processing) SE (Societas Europaea) is a European worldwide operating software company that makes software for the management of business processes suitable for companies of any size and industry.”

The SAP portfolio includes business applications for large and midsize companies as well as standard solutions for small and midsize companies.

SAP’s flagship software supports industry-specific solutions for:

  • Consumer Industries
    • Agribusiness
    • Consumer Products
    • Fashion
    • Life Sciences
    • Retail
    • Wholesale Distribution
  • Discrete Industries
    • Aerospace and Defense
    • Automotive
    • High Tech
    • Industrial Machinery and Components
  • Energy and Natural Resources
    • Building Products
    • Chemicals
    • Mill Products
    • Mining
    • Oil and Gas
    • Utilities
  • Financial Services
    • Banking
    • Insurance
  • Public Services
    • Defense and Security
    • Federal and National Government
    • Future Cities
    • Healthcare
    • Higher Education and Research
    • Regional, State, and Local Government
  • Service Industries
    • Cargo Transportation and Logistics
    • Engineering, Construction, and Operations
    • Media
    • Passenger Travel and Leisure
    • Professional Services
    • Sports & Entertainment
    • Telecommunications

Here is a complete list of SAP’s ERP modules including the industry solutions.

SAP’s flagship product is the SAP ERP business suite called SAP S/4HANA, which can be tailored to meet specific requirements and business objectives.

SAP S/4HANA is based on the SAP HANA database technology developed by SAP, in which data is no longer stored on the hard disk but in the main memory and is therefore available more quickly.

Recently, SAP invested in the CRM market by acquiring cloud computing companies and their CRM cloud applications.

SAP tied together and integrated the CRM applications into its software portfolio.

SAP called the emerged CRM business suite SAP C/4HANA that contains cloud computing applications for:

  • Sales (SAP Sales Cloud)
  • Customer Service (SAP Service Cloud)
  • Marketing (SAP Marketing Cloud)
  • Commerce (SAP Commerce Cloud)
  • Customer Data (SAP Customer Data Cloud)

Five former IBM (International Business Machines) employees founded SAP in 1972.

They worked together in the German IBM AI department on an enterprise-wide system standard software.

five-sap-founders

They decided to leave IBM and started SAP after IBM canceled their project at a customer and they and IBM could not agree about who would work with whom in the next project.

Leaving IBM turned out to not be the worst idea.

#2 What Does SAP ERP Mean?

By now, you know what SAP means—that leaves us with ERP:

SAP ERP full form is SAP Enterprise Resource Planning.

A definition of ERP is:

“Enterprise resource planning (ERP) is the integrated management of core business processes, often in real-time and mediated by software and technology.”

[source]

To put it more simply:

ERP is software and hardware to run a company. Here is the ERP software market size (including CRM and other ERP subcategories such as SCM and PLM):

Global ERP (Enterprise Resource Planning) Software Market Revenue From 2018 to 2023-100
[source]

ERP software is the main business area of SAP (remember, SAP is #1 in the ERP market). SAP’s flagship product is the so-called SAP ERP business suite—business suite means a bundle of applications. SAP S/4HANA is it’s latest version.

Companies that use SAP ERP applications can manage and view all business-relevant areas of their businesses in context such as Finance, HR, and Production.

Here are SAP’s ERP business suite versions for enterprises in chronological order:

  • SAP RF (Real-Time Financial)
    • Released in 1972 and later renamed to SAP R/1
  • SAP R/2 (Real-Time Tier 2)
    • Released in 1979
  • SAP R/3 (Real-Time Tier 3)
    • Released in 1992
  • SAP ECC (ERP Central Component)
    • Released in 2004
  • SAP S/4HANA (Business Suite 4 SAP HANA)
    • Released in 2015
sap_erp_versions_infographic-100

Until SAP S/4HANA, all SAP ERP business suite versions were on-premise applications but SAP S/4HANA changes that: SAP S/4HANA can be deployed in several ways:

  • On-premise
  • Cloud
  • Hybrid (on-premise and cloud)

SAP’s ERP products for small and medium-sized companies are:

  • SAP Business One
    • Released in 1995 and an on-premise application
  • SAP Business ByDesign
    • Released in 2007 and a cloud computing application

#3 What Does SAP R/3 Mean?

SAP R/3 full form is SAP Real-Time 3 Tier.

SAP R/3 is an ERP standard software developed by SAP and released in 1992.

The SAP R/3 ERP incorporates the key business functions and processes of a company such as Finance, HR, and Material Management.

The Real-Time of the full form of SAP R/3 is because many companies were storing data mechanically on punch cards when SAP was founded in 1972.

On the contrary, SAP systems stored data electronically via a user interface in a database—in real-time.

The 3 Tier of the full form of SAP R/3 is because of the three-tier architecture which SAP R/3 uses.

An SAP R/3 system has three layers:

  1. Presentation layer
  2. Application layer
  3. Database layer

The presentation layer provides the interface to the user, the application layer processes the business logic, and the database layer stores the business data. Each layer is a different system.

Before SAP R/3, there were SAP R/1 and SAP R/2.

SAP R/1 vs. SAP R/2 vs. SAP R/3

Let’s chronologically compare the early SAP ERP versions :

SAP R/1

SAP R/1 (SAP Real-Time 1 Tier) was released in 1973.

At first, SAP R/1 was a financial accounting system.

Later, it served as the cornerstone in the continuous development of further software modules for the system, such as HR (Human Capital Management).

SAP R/1 was running on-site on the customers’ DOS operating systems—it had only one-tier.

The presentation, application, and database were all combined in one layer and thus, one logical system.

SAP R/2

SAP R/2 (Real-Time 2 Tier) was released in 1979.

SAP R/2 expands the capabilities of SAP R/1 to other areas, such as material management and production planning.

SAP R/2 runs on mainframe computers and has two tiers: the presentation layer was separated from the application and database layer.

SAP R/3

SAP R/3 (Real-Time 3 Tier) was released in 1992.

SAP R/3 later replaced the mainframe computing of SAP R/2 with the three-tier or client-server architecture.

Hence, the SAP R/3 full form is “Systems, Applications, and Products Real-Time 3 Tier”.

#4 What Does SAP ECC Mean?

SAP ECC full form is ERP Central Component.

The SAP ECC was released in 2004 as ECC 5.0 and replaced SAP R/3.

The latest version is SAP ECC 6.0, and this was released in 2006.

Since then, it has been updated by enhancement packages.

The most recent enhancement package 8 was released in 2016.

SAP ECC has a three-tier architecture like SAP R/3.

The successor of ECC is SAP S/4HANA.

#5 What Does SAP S/4HANA mean?

SAP S/4HANA full form is SAP Business Suite 4 SAP HANA.

SAP S/4HANA was released in 2015 and is the most recent version of the SAP ERP systems.

SAP S/4HANA runs only on a HANA database.

SAP S/4HANA is simpler and faster in comparison to the previous SAP ERP generations.

Plus, it adds a lot of new features that are all possible due to the underlying HANA database.

SAP S/4HANA can be deployed on-premise like all SAP ERP generations before, as well as in the cloud or through a hybrid model of on-premise and cloud.

SAP entered the world of cloud computing recently and has rapidly built up a full-fledged cloud computing portfolio including SAP S/4HANA Cloud.

The 4 in S/4HANA might have different meanings:

  • 4th generation of SAP’s ERP (SAP R/1, SAP R/2, SAP R/3, SAP S/4),
  • 4 as literally “S 4 HANA”, therefore, “S for HANA” (Suite for HANA), or
  • 4-tier architecture in the sense of an additional tier through cloud applications:
    • Cloud (presenation, application, and database layers combined)
    • Presentation (on-premise)
    • Application (on-premise)
    • Database (on-premise)

#6 What Does SAP HANA Mean?

SAP HANA full form is SAP High-Performance Analytic Appliance.

SAP HANA is a relational database management system.

An SAP HANA database is in-memory and column-oriented.

The primary function of SAP HANA is that of a database server: to store and retrieve data as requested by applications.

But SAP HANA can do more than be a super-fast database, due to its in-memory and column-oriented design: SAP HANA is capable of performing advanced analytics and extracting, transforming, and loading.

Plus, SAP HANA includes SAP HANA XSA (HANA Extended Application Services Advanced), an application server embedded in the database layer.

#7 What Does SAP ABAP Mean?

SAP ABAP full form name is taken from German.

ABAP stood for Allgemeiner Berichtsaufbereitungsprozessor.

Translated to English, ABAP full form is Generic Report Preparation Processor.

Later, SAP ABAP was renamed to SAP Advanced Business Application Programming.

SAP ABAP is a programming language for and by SAP and was released in 1983.

SAP ABAP originally was named Generic Report Preparation Processor because the language was only capable of programming reports. SAP ABAP could not do any database changes. But SAP ABAP has been upgraded and is upgraded continuously.

For example, it is now not only capable of doing database changes but is object-oriented as well.

The newest SAP ERP generation SAP S/4HANA uses SAP ABAP as well, although less than in the previous SAP ERP generation SAP ECC.

However, it is likely never possible to say SAP without ABAP.

#8 What Does SAP CRM Mean?

SAP CRM full form is SAP Customer Relationship Management.

A definition of CRM is:

“Customer Relationship Management (CRM) is the core business strategy that combines internal processes and functions and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high-quality customer-related data and supported by information technology.”

[source]

To put it more simply: CRM is software and hardware to improve the customer relationships of a company.

The first SAP CRM software was an embedded module of the SAP R/3. It was called Sales and Distribution (SD) and was released in 1992.

SAP released its first stand-alone CRM application called SAP CRM 2.0 in 2000.

SAP CRM 2.0 evolved into SAP CRM 5.0, SAP CRM 6.0, and SAP CRM 7.0.

SAP’s most recent CRM products are:

  • SAP Sales Cloud
  • SAP Service Cloud
  • SAP Marketing Cloud
  • SAP Commerce Cloud
  • SAP Customer Data Cloud
  • SAP S/4HANA for Customer Management

The CRM market overtook the DBMS (Data Base Management System) market in 2017 in terms of revenue and has since become the biggest single software market (obvious, the ERP software market as a whole is bigger):

Global CRM (Customer Relationship Management) Software Market Revenue From 2015 to 2023-100
[source]

Recently, SAP as the market leader in the ERP market puts the CRM market in its primary focus—as the former CEO of SAP, Bill McDermott said it in 2018:

“We’re going to turn up the jets, and we’re going after CRM with everything we have.”

The future of the SAP CRM market seems to lie in cloud computing. Salesforce, the market leader in CRM, has offered only cloud computing since its founding in 1999.

Finally, SAP recognized that and recently ramped up its cloud computing portfolio.

Currently, SAP is 2nd placed in the CRM software market:

Worldwide Market Share of CRM (Customer Relationship Management) Software Vendors in 2017 and 2018
[source]

#9 What Does SAPUI5 Mean?

SAPUI5 full form is SAP User Interface for HTML5.

SAPUI5 was announced in 2013 and is the newest user interface technology of SAP.

Increasing numbers of SAP applications are using SAPUI5 and its the main user interface technology of SAP S/4HANA for end users.

Besides SAPUI5 exists a free, open-source variant of SAPUI5 called OPENUI5.

Modern applications consist of three layers:

  1. At the top is the client that contains the user interface
  2. In the middle is an application server
  3. At the bottom is the database

SAPUI5 is part of the top layer of an application—it is the technology behind the surface which the end-user sees and uses.

#screenshot

Besides SAPUI5, there is SAP Fiori.

SAP Fiori describes design guidelines for SAPUI5—how SAPUI5 is supposed to look:

#screenshot

Therefore, SAPUI5 is the technical part and SAP Fiori the determining factor of the optical part of the newest SAP user interface.

With SAPUI5 and SAP Fiori, SAP aims to provide end-users with a consistent user interface for all SAP applications.

SAPUI5 is responsive—it works on desktop computers and mobile devices as well.

#10 What Does SAP Fiori Mean?

SAP Fiori full form is SAP Fiori and here is why:

SAP Fiori is a word for itself. Fiori means flower in Italian.

SAP Fiori is design guidelines for how an SAP application is supposed to look like.

You can find the SAP Fiori design guidelines on the official SAP Fiori website.

#screenshot

It is crucial to differentiate between SAPUI5 and SAP Fiori.

Many interchangeably use SAPUI5 and SAP Fiori and think that they are the same—they are not.

SAPUI5 is the technology behind the new SAP user interface, and SAP Fiori is guidelines on how the new SAP user interface is supposed to look like.

Imagine SAPUI5 as the Lego bricks and SAP Fiori as the manual, which says how the lego bricks are to be assembled.

There are 12,500+ SAP Fiori standard applications, and the number is continuously growing.

The name SAP Fiori standard application might be confusing because one could say an SAP Fiori standard application consists of 97% SAPUI5 and 3% SAP Fiori—probably sounds SAP Fiori just better than SAPUI5.

#11 What Does SAP CDS Mean

SAP CDS full form is SAP Core Data Services.

SAP CDS are the basis of SAP’s new programming model.

SAP’s new programming model pushes most of the back-end logic and, therefore, calculations from the application server to the database—from ABAP to CDS.

This pushing of the logic to the database is also called the code-pushdown and code-to-data.

SAP CDS views are the main component of SAP CDS. They come in two flavor: SAP ABAP CDS views and SAP HANA CDS views. In their function, SAP CDS views are similar to SAP ABAP Dictionary views.

SAP CDS views collect and provide data from a database—they are in the first place an extension of SQL and leverage the features of the SAP HANA database.

SAP CDS views enhance data with information (so-called annotations) that can be consumed by SAPUI5 via OData Services—CDS views can generate OData services.

#12 What Does SAP OData Mean?

SAP OData full form is SAP Open Data Protocol.

Microsoft initiated OData in 2007, and it is released under the Microsoft Open Specification Promise.

OData is a data access protocol based on REST (Representational State Transfer) for querying and updating data. In short and sweet, REST means that something is consistent in the way the web works.

OData allows any front-end to access information exposed by any data source.

Therefore, OData opens up the data silos of SAP—OData is a glue between SAP web-based front-ends (such as SAPUI5) and SAP back-ends (such as SAP HANA).

For example, OData connects an SAP front-end such as a SAP Fiori standard application with an SAP back-end such as a HANA database via SAP CDS views.

OData uses industry standards to provide data as an API (Application Programming Interface) in a simple way—OData is since version 4.0 standardized at OASIS.

OData uses common formats to provide data:

  • Atompub (Atom Publishing Protocol)
  • XML (Extensible Markup Lnaguage)
  • JSON (JavaScript Object Notation)

#13 What Does SAP NW Mean?

SAP NW full form is SAP NetWeaver.

The SAP NetWeaver is a technical foundation and solution stack for SAP applications such as SAP R/3, SAP ECC, and SAP S/4HANA.

The SAP NetWeaver was developed by TopTier Software as a portal technology.

SAP acquired TopTier Software in 2001 and released the SAP NetWeaver in 2003.

The SAP NetWeaver is a heading term for:

  • SAP NetWeaver Application Server
  • SAP NetWeaver Business Intelligence
  • SAP NetWeaver Composition Environment
  • SAP NetWeaver Enterprise Portal
  • SAP NetWeaver Identity Management
  • SAP NetWeaver Master Data Management
  • SAP NetWeaver Mobile
  • SAP NetWeaver Process Integration

The SAP NetWeaver Application Server is the runtime environment for SAP’s on-premise applications such as:

  • SAP R/3
  • SAP CRM 7.0
  • SAP ECC
  • SAP S/4HANA

The SAP NetWeaver allows custom development and integration with other applications and systems.

The SAP NetWeaver is built with

  • ABAP
  • C
  • C++
  • Java

An extension of the SAP NetWeaver is possible with technologies such as:

  • IBM WebSphere
  • Oracle Java
  • Microsoft .NET

More SAP Terms

There are many more terms in the SAP universe such as:

  • BAdI
  • BAPI
  • Gateway

If you want to get SAP terminologies and abbreviations explained in short and sweet, then take a look at this SAP glossary.

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