Tag: SAP Terms

What Is SAP NetWeaver? (+ Interesting Facts)

This is about the SAP NetWeaver.

The SAP NetWeaver is the technical foundation and solution stack for almost all SAP on-premise applications.

The cloud counterpart of SAP NetWeaver is SAP BTP (SAP Business Technology Platform), formerly known as SCP (SAP Cloud Platform).

Let’s get started!

Understand SAP NetWeaver and Its

SAP NetWeaver is a development and runtime environment that serves as a platform for applications. So to speak, it’s the technical underpinning to run and develop SAP applications.

Imagine SAP NetWeaver as SAP’s operating system. Just like Windows. You can run apps on Windows and build apps for Windows.

SAP NetWeaver forms the technical infrastructure for SAP’s on-premise applications. The cloud counterpart to SAP NetWeaver is SAP BTP (SAP Business Technology Platform), formerly known as SCP (SAP Cloud Platform).

SAP NetWeaver sits between an application and the database it uses. It’s the mechanism that makes on-premise magic happen.

Thinking in cloud terms, SAP NetWeaver is PaaS (Platform as a Service). The database is the IaaS (infrastructure as a service). The applications are SaaS (Software as a Service).

SAP NetWeaver is an open, web-based platform that uses SOA (Service-Oriented Architecture). SOA means that an application is made up of modules. Each module provides services to other modules so that they can take advantage of each other.

A major advantage of SOA is that developers can integrate different technologies. In the case of SAP NetWeaver:

  • .NET (Microsoft)
  • WebSphere (IBM)
  • Java (Oracle)

Using SAP NetWeaver you can create pure SAP applications as well as applications that use third-party systems.

SAP NetWeaver has multiple components:

  • 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 main SAP NetWeaver component and divides into two parts:

  • ABAP (Advanced Business Application Programming) application server
  • Java EE (Java Enterprise Edition) application server

Each of these parts has its own stack, and they can be installed either separately or together.

The SAP JCo (Java Connector) is used to communicate between the two stacks. The library connects a Java application to a SAP application via SAP’s RFC (Remote Function Call) protocol.

SAP applications don’t always need both runtime environments (ABAP, Java). Therefore, SAP NetWeaver Application Server offers different installation options:

  • SAP NetWeaver Application Server ABAP: Infrastructure to develop and use ABAP applications.
  • SAP NetWeaver Application Server Java: Infrastructure to develop and use Java EE applications.
  • SAP NetWeaver Application Server ABAP & Java: Infrastructure to develop and use ABAP and Java applications.

Most on-premise SAP systems (SAP R/3, SAP ECC, SAP S/4HANA) use the SAP NetWeaver Application Server as the runtime environment.

The SAP NetWeaver Application Server, together with the database, makes up the application platform of SAP NetWeaver itself.

The SAP NetWeaver Application server provides:

  • A framework to run business processes in compliance with security standards.
  • A runtime environment that has been reliable and tested for more than 20 years.
  • A reliable, efficient, and developer-friendly development environment.
  • Supporting open standards like:
    • HTTP
    • HTTPS
    • SSL
    • SMTP
    • WebDAV
    • SOAP
    • SSO
    • X.509
    • HTML
    • XML
    • WML
    • JSON
  • Support for different operating systems and databases.
  • High scalability.

SAP NetWeaver’s history started in the early 90s when SAP acquired Israeli company TopTier Software. SAP adapted TopTier’s portal technology and used it for SAP NetWeaver.

The first version, SAP NetWeaver 2004, was released on March 31, 2003. Version 7.0 came out in October 2005. The most recent release is SAP NetWeaver 7.5.


SAP Glossary: SAP Terms and Definitions (Short and Sweet)

This is an SAP glossary.

You’ll learn the meaning of SAP terms like:

  • SAP CDS views
  • SAP CRM Web Client UI

If you want a simple explanation of SAP abbreviations and terminologies, you’ve come to the right place.

Let’s get started!

An SAP Glossary: SAP Terminology and Abbreviations Explained

Below are SAP terms with their definitions.

By the way, look here if you need a SAP acronyms list (more than 1,000 SAP acronyms).

Further, here are key SAP terms explained in more depth.



ABAP (Advanced Business Application Programming) is a proprietary programming language from SAP that works only in SAP systems. In the original language form, ABAP was only meant for reports and could not implement database changes.

ABAP has been further developed and includes options for object-oriented application development.


ADT (ABAP Development Tools) allow the ABAP development under Eclipse. The tools can be downloaded here.

Application Server Instance

An application server instance is also known as instance. Provides functions for data processing in an SAP system. An instance is an administrative unit. It gets started, stops, and is monitored as a whole.

An application server instance runs on a physical machine (host) and is identified by a host name and a two-digit number.


ASAP (Accelerated SAP) is a procedure model from SAP for the implementation of new software in a company. This procedure model consists of five stages:

  • Project preparation (Planning and preparation)
  • Business Blueprint (operational and organizational structure)
  • Execution (mapping of business processes in the system)
  • Production preparation (system tests, employee training)
  • Go-live and support (start of production and optimization)



BAdIs (Business Ad-Ins) are like SAP user exits and SAP customer exits: they’re places where customers can implement their own  logic.

The official SAP definition of a BAdI is:

An entity provided by SAP to allow the standard behavior of a specific application, such as Financials, to be enhanced without modifying the standard solution.

BAdIs are just object-oriented versions of SAP user and customer exits. Instead of putting logic in a standard SAP program or function module, you create a class that implements predefined methods from an interface. The SAP standard fires those methods at predefined points.

You can learn more about BAdIs here.


BAPIs (Business Application Programming Interfaces) are APIs (Application Programming Interfaces). So they make SAP systems accessible to other SAP systems and third-party applications.

For example, there is an SAP ECC application server and an SAP CRM application server in your SAP system landscape. Now, you want to call a function in your SAP CRM from SAP ECC. How do you access SAP CRM? Correct: through a BAdI.

You can learn more about BAPIs here.


The term batch is an older term for background processing and batch processing.

This is a throwback to the days before dialogue processing and parallel processing.

Originally, punch cards stored data. This is why batch is literally a batch. The programs were executed one after the other.

The FiFo principle applies: First in, first out.


Booking is the process that causes a database change. This mostly applies to operational transactions that involve more than one step in processing. This is known as a transaction and is done with the command COMMIT WORK.

The SAP booking system ensures data changes in a transaction are saved completely or not at all.

On the data bank, updates happen asynchronously to the transmitted update commands UPDATE, INSERT, and DELETE, which means they have timed transfers to decrease load on the system.


The BOR (Business Object Repository) is a centrally managed database of SAP object types and their associated BAPIs.

Each object is categorized by component hierarchy, which allows for categorical organization and ease of use.

Besides storing all relevant information, the BOR also helps maintain interface stability and records all new release updates and enhancements, upon the creation of a new BAPI (Business Application Programming Interface).

You can access the BOR repository with the t-code SW04 (Business Object Repository)

Business Application Studio

SAP Business Application Studio is the successor to SAP Web IDE.

It’s a modular development environment for business applications. It provides pre-configured environments for developing, testing, and running applications with pre-installed runtimes and tools.

SAP Business Applications Studio is used in key areas including:

  • S/4HANA extensions
  • Full stack business applications
  • Fiori applications
  • Lots more

Its quick integration with SAP solutions and services allows you to build smarter and more intelligent applications.

Business Process

The steps that an organization takes both internally and externally to execute all defined activities seamlessly and efficiently. It affects everything from business development to marketing to order processing.


CDS Views

SAP CDS (Core Data Services) views are part of the new SAP S/4HANA programming model. CDS views provide predefined SQL queries to one or more database tables—kinda like SAP ABAP dictionary views. However, it has a lot more features.

There’s two kinds of CDS views:

  • SAP ABAP CDS views
  • SAP HANA CDS views

ABAP CDS views can be used in SAP R/3 and SAP ECC systems without a SAP HANA database if the ABAP stack is updated to version 7.40 SP05. And of course in an SAP S/4HANA. ABAP CDS views are part of the ABAP data dictionary of the application server.

SAP HANA CDS views work only with a HANA database.

HANA CDS views reside in the SAP HANA XSA (HANA Extended Application Services Advanced Model) in the database layer.

The purpose of SAP’s new programming model and SAP CDS is to reduce business logic in the application server—to move business logic from the application server to the database and from the database to the client.

CDS views transfer logic to both the client and the database layer.

If you make the same request without bundling SQL statements into an ABAP CDS view, there is no performance difference between the SAP R/3 or SAP ECC system standard ABAP stack and an ABAP CDS view—the raw performance is the same. The ABAP stack and the ABAP CDS view both use SQL underneath.

However, using CDS views in a SAP R/3 or SAP ECC system gives the following advantages:

  • Using S/4HANA technology
  • Easily generate full-fledged OData services
  • More effective authorization checks
  • Easily using SAPUI5 smart controls and SAP Fiori Elements
  • Performance advantage when SQL statements are bundled

You can learn more about SAP CDS views here.


In an SAP system, the client is the top classification factor. Clients make business and development processes easier to manage.

Additionally, you can separate a client’s operational user data.

Technically, a client is a three-digit number.

In client-dependent customer tables, the client is always a part of the table keys and comes first in the key hierarchy.

SAP systems can have more than one client.

Client Data

Client data is generated by customers, that means by an SAP licensee. This type of data is further broken down as:

  • Customizing data
  • Operational application data
  • User master data

Client Role

A client role allows you to store what basic functionality is associated with a client via the role. These client roles exist:

  • Customizing
  • Demo
  • Production
  • Quality Control
  • Sandbox
  • Training

Assigning client roles alone isn’t enough. In fact, you need to implement the following settings:

  • Client-dependent changeability
  • Client protection
  • Non-client-dependent changeability

You can complete the settings through t-code SCC4.

Client roles are closely entwined with an SAP system landscape.

Client Server Architecture

The client-server architecture explains how one or more servers provide resources and services to clients within an IT landscape.

A server provides a specific function (service) while a client requests this specific function. This is a logical model and not a physical model.

Just as individual computers can act as clients and servers, software components can also act as such. The role ’t have to be static. The client can become the server and the other way around.

Cloud Foundry

SAP Cloud Foundry is a PaaS (Platform as a Service) open source project. The SAP BTP (SAP Business Technology Platform) uses Cloud Foundry technology to manage multi-cloud applications in one cockpit.

Cluster Table

Cluster tables are database tables (transparent tables) defined in the SAP ABAP Dictionary.

The cluster table’s database instance is assigned to multiple cluster tables in the ABAP Dictionary—or multiple cluster tables are assigned to a table cluster in the database.

Cluster table key junctions are the cluster table primary key. The other cluster table columns are compressed and stored in one column VARDATA. Cluster tables can only be accessed through Open SQL, and only without Joins.

A table cluster has a few cluster tables, each with a lot of data. A table pool has a lot of tables with small data.

A table cluster will hold internal control information like screen sequences, parameters, temp data, and continuous texts like documents. Data on commercial relevance should be stored in transparent tables.


Collection is used in conjunction with the translation environment. It’s used to describe a grouping of all connected objects in a development environment that are grouped together in packets for translations. The collections must be registered.

Core Data Warehouse

The Core Data Warehouse is the central data warehouse, where information is uploaded directly from internal and external data sources.


CRM (Customer Relationship Management) is the practice of building positive relationships with customers and clients in order to facilitate future business growth and lasting relationships.


Customizing is the process of adjusting an SAP system to the individual needs of an organization. The organization’s needs can be functional or technical.

Customizing settings are saved in customizing tables. The programs read the customizing tables and change the way the applications behave.


Data Mart

A data mart is a physically separated extraction, either from a data warehouse or directly from a source system, that is stored in its own database. This data base might be created for example for a specific department, an application or analysis.


The dispatcher is a program that distributes dialog steps entering SAP from the presentation layer, the SAP GUI, to free work processes of the ABAP application layer. By doing so, the communication between logged in users and the ABAP application layer is maintained.

The dispatcher will return results from the SAP GUI dialogue steps to the user. An application layer only has one dispatcher.


A dump is context-related saving extracted at the time of the error. Additionally, the code line where the error was found is shown.


Dynpro (Dynamic Program) is a repository object and is always a part of an ABAP program. It’s made up of two parts: the screen with the elements and the flow logic. Dynpro fields are bound to screen elements.

The flow logic contains processing blocks for events triggered prior to a screen being displayed, and afterwards after the user performs an action on the displayed screen.

Screen Painter tool is used to edit dynpros. Dynpros are the building blocks of user dialogs in an ABAP Application Server.

Each Dynpro has its own identification number.

SAP considers the classic dynpros obsolete for application programs. New developments should be done using SAPUI5 or Web Dynpro.



Eclipse is an open-source development tool.

Historically, it was derived from Visual Age, an IBM development tool originally aimed at developing Java applications. However, Eclipse’s open architecture makes it possible to integrate other development environments.

ADT (ABAP Development Tools) allow the ABAP development under Eclipse.


ERP stands for Enterprise Resource Planning. It’s software that supports the ongoing business processes of a company or organization. That includes any processes like:

  • Accounting
  • Asset management
  • Cost calculation
  • Financial management
  • Human resources
  • Production
  • Sales

An ERP system consists of several modules, such as one for each business area. The components usually share a common database.

In a nutshell, ERP is the process of creating a single efficient system, in which the competency of all the core departments of an organization works together to plan and deliver products seamlessly and reliably.



FiFo stands for First in, First out. It’s the process for working off temporary saved elements. The first elements that are temporarily saved are the ones that are released from the storage for processing.

LiFo is its opposite meaning Last in, First out.


SAP Fiori is SAP’s new UX strategy. It’s a design guideline for SAPUI5, iOS, and Android apps. But not just for those, but also for other SAP applications like SAP Sales Cloud and SAP Service Cloud.

SAP Fiori determines the look and feel of an application. SAP Fiori provides guidelines for how applications’ user interfaces should look and feel like.

SAP describes SAP Fiori this way:

SAP Fiori is the design language that brings great user experiences to enterprise applications. Based on user roles and business processes, SAP Fiori simplifies doing business. SAP Fiori is a paradigm shift away from monolithic ERP solutions towards light-weight apps tailored to the users’ tasks. To accelerate the transformation of the world’s digital economy, SAP is applying this design language to leading technology platforms.

SAP Fiori is based on five principles:

5 SAP Fiori Key Principles
  • Role-based: The user only sees what they need to know.
  • Adaptive: Achieves seamless user experience on all devices (mobile, tablet, and desk).
  • Coherent: Same look and feel across different apps.
  • Simple: Focuses on delivering a simple, intuitive user experience. 1-1-3 (one user, one use case, and three screens).
  • Delightful: It’s beautiful and makes the user feel good.

You can learn more about SAP Fiori here.

Fiori Launchpad

The SAP Fiori Launchpad is a container for SAP Fiori applications. It is the entry point for SAP Fiori applications on mobile, tablet, and desktop.

Each SAP Fiori application is represented by a tile in an SAP Fiori Launchpad. An application starts when the user clicks on its tile. Like the user interface of a mobile phone.


Fiori Standard Apps

SAP Fiori standard apps are ready to use SAPUI5 applications. They’re based on the SAP Fiori design guidelines. They’re customizable and extensible.

SAP Fiori Apps Reference Library contains already 12,500+ Fiori standard applications, and the number is constantly growing.



Firefighting means the use of access rights outside of the normal access rights. Administrators or super users can grant users temporary access to perform tasks outside of their scope of responsibility in case of emergencies.



SAP Gateway ties the front-end and back-end together. It uses the OData protocol as the glue between the two layers.

For example, an SAP Gateway makes a connection between an SAPUI5 application and an application server like SAP S/4HANA or SAP ECC.

The SAP Gateway itself is a back-end system. Either as a standalone gateway server or integrated into an application server like SAP ECC or SAP S/4HANA. Central hub refers to a standalone gateway server, while embedded deployment refers to an integrated gateway.


HANA XS (HANA XS Classic Model)

SAP HANA XS (HANA Extended Application Services) classic model is an application server. An application server that resides in the SAP HANA database.

SAP HANA XS classic supports the development of lightweight SAP HANA applications.

Because of that, it’s possible to create applications without an additional application server: just HANA with integrated HANA XS classic model and a front-end technology such as SAPUI5.

However, HANA XS classic model is deprecated and is being replaced by HANA XS advanced model.



ICM stands for Internet Communication Manager. It’s part of the application layer and ensures communication to the internet.


IMG stands for Implementation Guide. The SAP implementation guide is the starting point for customizing an SAP system. You can launch the implementation guide via t-code SPRO.



SAP Jam is a cloud-based social media platform from SAP.  

SAP Jam allows users to collaborate and share documents and ideas, rather than sharing them via emails or other channels that are harder to track and manage.

SAP Jam is a combination of SAP’s prior social collaboration platform, SAP StreamWork, and SuccessFactors Jam, a platform SAP acquired when it bought SuccessFactors.

SuccessFactors provided human capital management software via the cloud, using the Software as a Service model.

StreamWork and SuccessFactors Jam were both standalone applications that were loosely integrated with some of SAP’s ERP (Enterprise Resource Planning) applications.

In contrast, SAP Jam integrates with SAP ERP modules in order to boost social collaboration in departments, such as human capital management, customer relationship management, and sales.

You can learn more about SAP Jam here.


A job is a work order for background processing, commonly known as batch. When defining a job, you consider:

  • The program that needs to be started.
  • If available, whichever variant should be used to start the program.
  • The job’s start condition

A job is defined using t-code SM36.

You can supervise jobs using t-code SM37.



The SAP kernel is the central program of SAP NetWeaver written in C. It’s an interface between the SAP application and the operating system.

The kernel can’t be seen or changed by the customer. It contains essential components, like:

  • Background processing
  • Booking processes
  • Dialog


Layer Model

The layer model is used for the enclosure of functions.

One layer is viewed as a logical unit with defined tasks.

Layers communicate with each other via data exchange.

The layers are ordered hierarchically.

SAP distinguishes between three layers since the introduction of R/3:

  • Presentation layer
  • Application Layer
  • Database Layer

Lock Object

Lock objects are part of SAP’s lock mechanisms.

In a lock object, one or more tables are named with their keys for which a lock should be issued.

When indicating more than one table, one table must be the primary one. The other tables are secondary tables that are linked to the primary table via a foreign key relationship.

The lock is managed by special functional modules that are automatically created with the lock object.

Lock objects are defined in the ABAP dictionary.


Master Data

Master data is the data that’s fundamental to the operation of a particular business or business unit. The types of information classified as master data vary from one industry to another and between companies within an industry.

Master Data represents the business objects that contain the most valuable information that’s agreed upon and used within an organization. It provides meaning to business activities and transactions, answering questions like:

  • What
  • Why
  • When
  • Who
  • WhereMaster data makes it easier to understand these activities through:
  • Categorization
  • Groupings
  • Hierarchies

Short and sweet, master data is data about business entities which is used to support business transactions. For example, master data categories include:

  • Parties: individuals or organizations, and their roles: customers, suppliers, employees
  • Products: company’s products such as cars.
  • Financial structures: like ledgers and cost centers.

Masterdata should not be confused with reference data. While both are needed for business transactions, reference data focuses on classification and categorization, and master data takes care of business entities.

Master data is almost always non-transactional by definition.

A company may have to treat certain transactions and operations as a form of master data in rare circumstances.

For example, when master data about customers or products is not stored separately but is present in transactional data such as orders and receipts.


Modus refers to an instance of an SAP window. You can open up to six SAP windows using one memory management.



A namespace is a prefix that precedes repository object names. It serves two purposes:

  • Structure
  • Reduce ambiguity in repository objects

The name of a repository object cannot appear twice in an SAP system. There are two types of namespaces in SAP:

  • Z and Y: An initial leading letter for a repository object. SAP customers can only use the letters Z and Y. Rest is up to SAP.
  • Customer’s namespace: You can request your own namespace at SAP. This namespace has two forward slashes /mynamespace/. It must also be put before the repository object’s name.


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

TopTier Software developed SAP NetWeaver as a portal technology.

SAP acquired TopTier Software in 2001 and launched SAP NetWeaver soon afterward 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

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

The SAP NetWeaver is built with

  • ABAP
  • C
  • C++
  • Java

SAP NetWeaver can be extended with technologies like:

  • IBM WebSphere
  • Oracle Java
  • Microsoft .NET

You can learn more about SAP NetWeaver here.


Object Catalog

The object catalog is in sync with the table TADIR.

Object Catalog Entry

An object catalog entry is an entry in the table TADIR.


OData stands for Open Data Protocol. It transmits data.

OData is based on the REST architecture (Represential State Transfer) with the goal of unifying APIs for data access. OData was originally created by Microsoft.

Open Data Protocol opens up SAP’s data silos. It’s the glue between the front-end and the back-end, like an SAPUI5 application and the application server.

OData is a way of sending data between the front-end and the back-end.



Packages serve as an organizational summary of repository objects.

Packages allow one to separate development of repository objects.

Every repository object has to be assigned to a package.

Three types of packages exist:

  • Structure package
  • Main package
  • Development package

Structure and main packages support the structure of packages.

Structure packages make up the first knot in a package structure, while main packages serve as sub-knots under the structure package.

You can only develop in development packages.


A perspective is part of Eclipse. A perspective in Eclipse represents different views of specific programming environments as a whole.


PLM is the use of a suite of tools to ensure a product gets to the public from conception through its final stage.

The PLM process integrates data management with other necessary applications. A range of functions from the following applications are available:

  • Life-cycle data management
  • Program and project management
  • Life cycle collaboration
  • Environment
  • Health and safety

Pool Table

A pool table is a database table (transparent table) defined in the ABAP Dictionary. The pool table’s database instance is assigned to multiple cluster tables in the ABAP Dictionary—or multiple pool tables are assigned to a table pool in the database.

The key field of a pool table consists of two fields:


TABNAME is the pool table name, and VARKEY is the pool table key fields. The other pool table columns are stored in compressed form in a column called VARDATA. Pool tables can only be accessed with Open SQL and no joins.

A table cluster consists of many cluster tables with a lot of data. A table pool is a collection of small pool tables.

A table pool is used for internal control information such as screen sequences, program parameters, temporary data, and documentation. Data on commercial relevance should be stored in transparent tables.



ERP software from SAP that uses a 1-tier architecture. Originally called RF, which stands for real-time finances. R stands for real-time and 1 stands for third generation.


ERP software from SAP for mainframe systems. SAP R/2 has a 2-tier architecture. Operation was handled through text terminals. R stands for real-time and 2 stands for third generation.


ERP software from SAP that uses a client-server architecture (3-tier architecture). R stands for real-time and 3 stands for third generation.

Rapid Deployment Solutions

These are SAP solutions with clear scopes of work and a fixed rate. The SAP solutions connect SAP software with implementation and support services provided by SAP consultants or SAP partners.

RDS applications are complete in the sense that they meet 70 percent of customer needs. SAP consultants match the rest to customer needs.

Reference Data

Think of reference data as fixed data.

Reference data is used to categorize or classify other data. Usually, it remains static or won’t change for a long time.

Here are some examples of reference data:

  • Company codes
  • Country codes
  • Units of measurement
  • Fixed conversion rates (length, temperature, or weight)


In general, repository is the storage of:

  • Data
  • Documents
  • Objects
  • Programs
  • Metadata (metadata is data about other data)


RFC stands for remote function call and describes calling functional modules from other application servers.


SAP System

An SAP system is an installed and configured unit, which contains one or more application server instances, a data bank, and central services.

An SAP system is identified by its alpha-numeric SID (System ID).

SAP System Landscape

SAP System Landscape is an integrated network of individual SAP systems. A single SAP system is self-sufficient. You can couple SAP systems together by defining the transport ways.

SAP recommends in its simplest form a three-layered system architecture:

  • Development system
  • Quality control system
  • Production system

Transport lines should connect from the development system to the quality control system to the production system.


SAPUI5 is a framework for building responsive web apps.

The framework consists of HTML5, CSS, and JavaScript.

SAPUI5 separates front-end development from back-end development with a Model-View-Controller architecture.

SAPUI5 Model View Controller Architecture.

SAPUI5 and SAP Fiori make up the user interface for SAP S/4HANA. SAPUI5 is the technology and SAP Fiori is the design guideline.

OPENUI5 is the open-source SAPUI5 version. It’s free to use under the Apache 2.0 license.

OPENUI5 is the same as SAPUI5 with the exception of some libraries. For instance, charts and smart controls.

OData annotations automatically configure smart controls.

OData services can be implemented manually through SAP ABAP or be auto-generated through SAP CDS views that are part’s new programming model.


Scale-out is the upgrading of the existing systems by adding more servers.


Scale-up refers to upgrading servers that already exist, without increasing their number.


A supply chain is the process of transforming raw materials, concepts or inventory into a finished product.

The flow from the first stage of order to the final stage must be seamless and well-executed in order to build client trust and gain a competitive advantage.

Selection Screen

A selection screen is a simple input mask to enter data selections and parameters. The display looks like a regular Dynpro screen.

Single Sign-on

SAP SSO (Single Sign-On) is a software product that enables users to access SAP and non-SAP applications using a single user ID and password.

Generally speaking, single sign-on is a way to log into an application.

SSO is an authentication method that lets a user log into several related but independent software systems with a single ID and password.

The opposite of a single sign-on is to have one user ID and one password for each system.

You can learn more about SAP Single Sign-on here.


SQL stands for Structured Query Language. SQL is a database query language that is divided into the following parts:

  • DML: Data Manipulation Language (read, change, insert, delete)
  • DDL: Data Definition Language (data definitions)
  • DCL: Data Control Language (assignment of access rights)

Standard Dynpro

A standard Dynpro corresponds with a selection screen with Dynpro number 1000.

Selection screens are generated through ABAP encased in a block:




These simple type of Dynpro screens limit the amount of data transferred as well as the parameters that control the program.

Super User

A super user is a user with special access rights who can grant other users special temporary access during an emergency. They can supervise the activities of the user granted temporary special access via the super user access rights console.



T-code is short for transaction code. See what a transaction is below. With a t-code you can run an ABAP program in the SAP GUI. You enter the t-code into the SAP GUI command field. There’s a t-code for every SAP transaction.

You can learn more about SAP t-codes here.


TADIR is the system table where all SAP repository objects are managed.


A task is assigned to one user and belongs to a transport. A user’s actions that should be transported are documented in a task. A transport can contain multiple tasks, depending on how many users were assigned to it.


TemSe stands for Temporary Sequential Data.

TemSe is a repository of sequential data that’s only stored in SAP temporarily. Spool orders and job protocols are part of this data.

The spool system uses TemSe to temporarily store output data. You can set whether TemSe should store spool data in the SAP database or on the file system.


The recording of program steps.

Transaction (Database)

A database transaction is a series of operations in a database. Its goal is to process finite sequences of operations in one step.

If the transaction was successful, the data changes are saved permanently.

If problems arise during the transaction or it’s rolled back, all the data changes are reverted.

Transaction (SAP)

A transaction in SAP is an execution of a program.

ABAP code is normally executed through a transaction code in SAP. The short form of transaction code is t-code.

You can access transactions through:

  • Role-based
  • System-defined
  • User-based menus

Alternatively, you can also launch any transaction by entering the transaction code directly into the command field in every SAP GUI window.

You can also call transactions programmatically with the ABAP statements CALL TRANSACTION and LEAVE TO TRANSACTION.

A transaction, In the proper meaning of the word, is called a LUW (Logical Unit of Work) in SAP.

You can learn more about SAP transactions here.

Transactional Data

Transactional data is what’s recorded from transactions in the context of data management. 

A transaction is a sequence of exchange of information and related activities (such as updating a database) that is treated as a single unit for fulfilling a request. 

Transactional data can involve everything from a shipping status to employee hours worked to purchase order to insurance costs and claims.

Transactional data is combined with master data and reference data as part of transactional records. Transactional data includes a time and the relevant reference data you need for a particular transaction record. 

Transparent Table

An SAP transparent table is a physical table in a database. Transparent means that it’s just physical data and not a structure or an ABAP dictionary view.

The database table VBAK is an example of a transparent table.



Variant refers to the saved value of a selection screen.

Variants have names and are associated with the program of the selection screen.


Version is one of the standards used to determine the validity of objects in a repository. This condition continues to be valid until it reaches a new validation through a change.

Current valid versions are shown as active versions in the version management.

Version Management

Version management keeps track of changes to a repository object. In addition, you can view, via version management, individual conditions and a version comparison to see what changes have been made. In addition to the individual versions, the matching transport and the responsible user are recorded.


Web Client UI (Web UI)

The SAP Web Client UI is a browser-based standardized user interface that SAP initially developed for their CRM on-premise but is now used by other SAP products such as SAP Solution Manager.

The SAP Web Client UI includes a variety of user interface elements that enable the user to display, search for, and update information.

The WebClient UI is role-based, meaning that its possible to display different content from different applications to the user, such as Sales, Service, or Marketing, or differentiation within an application like a sales rep or manager.

End users can customize the WebClient UI for their personal preferences through the settings within the WebClient UI itself.

Work Process

Work processes in SAP application servers are memory areas in which ABAP programs are executed. The types of work processes are as follows:

  • DIA: Used to execute dialog steps.
  • BTC: Used to execute background jobs.
  • UPD: Used to execute time-critical update tasks
  • UP2: Used to execute non-critical update tasks.
  • ENQ: Manages SAP lock objects.
  • SPO: Spool work processes.

Do You Miss One of SAP’s terms?

Do you miss a SAP term and want to know what it means?

Then submit it via the form below. Just omit the description.

Or do you know any SAP term that wasn’t in the glossary?

Then submit it along with a description using the form below. The SAP term gets added to the glossary so that everyone can benefit from it (thanks!).

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13 Basic SAP Terms Explained (+ the SAP Full Forms)

This is about essential SAP terms and their full forms.

You’ll learn the meaning of SAP terms like:

  • SAP Fiori
  • SAP NW

Get a quick start with SAP or check your knowledge.

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 ERP (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 and organizations of any size and industry.

SAP offers highly customizable business applications for midsize and large companies, along with more standard solutions for small and midsize companies.

SAP’s ERP 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 list of all 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 heavily 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 and later SAP CX (Customer Experience) 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.


They left IBM and started SAP after IBM canceled a project at a customer, and they and IBM couldn’t agree on who would work with whom in the next project.

Leaving IBM didn’t turn out so bad. Today SAP is the the third largest software and programming company worldwide:

So in a nutshell, SAP makes business software to manage the various business processes within an organization.

You can learn more about SAP here.

#2 What Does SAP ERP Mean?

By now, you know what SAP means—that leaves 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.


Let’s put it more simply.

ERP is software and hardware to run a business. Here’s 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

To put that in perspective, another market with about $100 billion is the global entertainment industry.

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.

Businesses using SAP ERP applications are able to manage and view all business-relevant areas of their businesses in context, such as finance, HR, and production.

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

  • SAP RF (Real-Time Financial)
    • Released in 1973 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 business suite versions before SAP S/4HANA were on-premise applications, but 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 businesses include:

  • 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
3-tier architecture

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

Prior to SAP R/3, there were SAP R/1 and SAP R/2.

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

Here’s a comparison of early SAP ERP versions:


SAP R/1 (SAP Real-Time 1 Tier) came out in 1973.

SAP R/1 started out as a financial accounting system.

Later, it served as the cornerstone for developing further software modules for the system, such as the HCM (Human Capital Management) module.

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

1-tier architecture

The presentation, application, and database were all on one layer, so it was one logical system.


SAP R/2 (SAP Real-Time 2 Tier) came out in 1979.

SAP R/2 expands SAP R/1’s capabilities to other areas, like materials management and production planning.

SAP R/2 runs on mainframes and has two tiers.

2-tier architecture

The presentation layer was separated from application and database layer.


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 as shown above.

#4 What Does SAP ECC Mean?

SAP ECC full form is SAP ERP Central Component.

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

Actually, SAP R/3 is SAP ECC in disguise: SAP upgraded the SAP R/3 a number of times and with version 5.0, SAP changed the name from SAP R/3 to SAP ECC.

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

Since then, it’s 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 SAP 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, which is the most recent version of SAP ERP systems.

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

SAP S/4HANA is simpler and faster than previous generations of SAP ERP suites. Plus, it adds a bunch of new features that are possible thanks to the HANA database.

SAP S/4HANA can be deployed on-premise like all SAP versions before it, as well as in the cloud or as a hybrid model with on-premise and cloud.

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

The 4 in S/4HANA might mean different things:

  • 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)
  • 4-tier architecture in the sense of an additional tier through cloud applications:
    • Cloud (presenation, application, and database layers combined in the cloud)
    • 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 DBMS (Relational Database Management System).

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

The primary function SAP HANA fulfills is a database server: storing and retrieving data on request from applications.

SAP HANA is not just a super-fast database. Its column-oriented design enables it to perform advanced analytics and extract, transform, and load data.

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

You can learn more about SAP HANA here.

#7 What Does SAP ABAP Mean?

SAP ABAP full form 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 was originally called Generic Report Preparation Processor because it could only program reports. SAP ABAP couldn’t make any changes to the database. SAP ABAP has been upgraded and is upgraded continuously.

For example, it can now not only make database changes, but is also object oriented.

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

However, it’s probably 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.


Simply put: CRM is software and hardware to make your company better at serving your customers.

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

In 2000, SAP released its first CRM application titled SAP CRM 2.0.

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

SAP’s latest CRM products are:

  • SAP C/4HANA or now SAP CX (Customer Experience)
    • 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

As the leader in the ERP market, SAP has put the CRM market in it’s primary focus—as former CEO Bill McDermott said in 2018:

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


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

SAP finally acknowledged that and upped its cloud portfolio.

Currently, SAP is ranked 2nd in CRM software market:

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

#9 What Does SAPUI5 Mean?

SAPUI5 full form is SAP User Interface for HTML5.

SAPUI5 was introduced in 2013 as the newest SAP user interface technology.

SAPUI5 is the main user interface technology for SAP S/4HANA, and a growing number of SAP applications use it.

There’s also an open-source, free version of SAPUI5. It’s called OPENUI5.

Modern applications consist of three layers:

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

SAPUI5 is the top layer of an application. It’s the tech behind the screen that the end user sees and uses.


Besides SAPUI5, there is SAP’s SAP Fiori.

SAP Fiori describes the design guidelines for SAPUI5—what SAPUI5 should look and feel like.

SAPUI5 is the technical component and SAP Fiori determines the optical part of the new SAP user interface.

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

SAPUI5 is responsive—it works on desktop computers and mobile devices, too.

#10 What Does SAP Fiori Mean?

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

SAP Fiori stands for itself. Fiori is Italian for flower.

SAP Fiori is SAP’s new UX (User Experience) strategy.

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

SAP Fiori’s design guidelines are available on the official SAP Fiori website.

Many use SAPUI5 and SAP Fiori interchangeably, but they’re not the same:

SAPUI5 is the technology behind the new SAP user interface, and SAP Fiori is the guidelines for how it should look. It’s important to differentiate between SAPUI5 and SAP Fiori.

Imagine SAPUI5 as Legos and SAP Fiori as the manual, which explains how they are put together to build a web application.

There are more than 12,500 SAP Fiori standard applications, and the number keeps 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.

You can learn more about SAP Fiori here.

#11 What Does SAP CDS Mean

SAP CDS full form is SAP Core Data Services.

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

SAP’s new programming model moves most of the back-end logic from the application server to the database, from ABAP to CDS.

This push down of logic to the database is also called the code-pushdown or code-to-data.

SAP CDS views are what makes SAP CDS what it is. They come in two flavor: SAP ABAP CDS views and SAP HANA CDS views. The SAP CDS views are similar to the SAP ABAP Dictionary views in what they do.

SAP CDS views provide data from a database, they are first of all an extension of SQL that exploits SAP HANA’s features.

SAP CDS views enhance data with information (annotations) that SAPUI5 can consume through 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 is it part of the Microsoft Open Specification Promise.

OData is a data access protocol based on REST (Representational State Transfer) for querying and updating data. You can sum up REST by saying that something is consistent in the way the web works.

Basically, OData allows a front-end to access information from any data source.

Therefore, OData opens up the data silos in SAP—OData connects SAP front-ends (such as SAPUI5) to SAP back-ends (such as SAP HANA).

For example, OData connects an SAP front-end such as a SAP Fiori application to 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). It’s been standardized by the OASIS since version 4.0.

OData provides data in common formats:

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

#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 like SAP R/3, SAP ECC, and SAP S/4HANA.

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

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

The SAP NetWeaver is an umbrella 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

SAP NetWeaver Application Server is a runtime environment for SAP’s on-premises applications such as:

  • SAP R/3
  • SAP CRM 7.0

SAP NetWeaver offers custom development and integration with other systems and applications.

The SAP NetWeaver is built with:

  • ABAP
  • C
  • C++
  • Java

SAP NetWeaver can be extended with technologies such as:

  • IBM WebSphere
  • Microsoft .NET
  • Oracle Java

You can learn more about SAP NetWeaver here.

More SAP Terms

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

  • BAdI
  • BAPI
  • SAP CRM Web Client

Take a look at this SAP glossary for a quick explanation of SAP terminologies and abbreviations.

Or, if you want definitions of SAP acronyms, stop by this SAP acronyms list.


OLTP vs. OLAP and How Do They Connect to SAP? (+ Examples)

This is OLTP and OLAP and how they connect to SAP.

Both OLTP and OLAP describe how a database is used.

You’ll learn:

  • What OLTP is
  • What OLAP is
  • The difference between them
  • Lots more

Let’s get started!

Understand OLAP vs. OLTP and SAP

First, let’s define these terms:

  • OLAP
  • OLTP
  • SAP

OLTP stands for Online Transaction Processing, and OLAP stands for Online Analytical Processing.

As their names suggest, the difference is how you USE them.

OLTP and OLAP are two different types of databases and two different ways of processing data.

Because the data is used differently, it’s structured differently in the database.

OLTP is designed to handle operational requests in a database. These are basically applications used in standard business operations, like production and sales, generating revenues, general administration, and maintenance.

For instance, maintaining sales orders or onboarding a new employee.

OLAP is designed to handle analytical queries in a database. These are the types of requests the database gets from business intelligence and data mining applications.

For example, a business intelligence application provides information about sales orders, such as the net value for a specified timeframe. Or calculating the average salary of new hires over the last five years.

Now that the basics of OLTP and OLAP are covered, SAP is missing:

SAP stands for Systems, Applications, and Products in Data Processing. It’s a HUGE European company that makes business software to manage the various business processes for a company. More on SAP below.

So that was the introduction. Let’s get to the good stuff:

To understand the differences between OLTP and OLAP and how they work in SAP, you need to understand these terms:

  • DB (Database)
  • DBMS (Database Management System)
  • RDBMS (Relational Database Management System)
  • DW (Data Warehouse)
  • OLTP (Online Transaction Processing)
  • OLAP (Online Analytical Processing)

What Is a Database?

A database, also known as a database system, is a collection of structured data and the software used to access that data (the DBMS, or database management system).

Usually the data is stored electronically (there was a time for punch cards).

A database system serves users and applications:

  • Save high volumes of data in a way that is
    • Efficient
    • Consistent
    • Permanent
  • Provide data subsets in
    • Different presentation forms
    • Needs-based presentation forms

A database system consists of two parts:

  • The actual database in a narrow sense
  • A database management system (DBMS).

The actual database is just data stored in a database system, which is managed by the database management system.

Although the entire database system is sometimes just called a database.

Here’s an example of a zoo:

You want to save all the info about the zoo:

  • Animal names
  • Zoo areas
  • Zookeeper wages


This is the actual database data.

A DBMS is needed to store and retrieve the data:

What Is a Database Management System?

DBMS (Database Management System) is the administration software for a database system that manages the database that holds the data.

Whenever someone wants to add information to the database or get information from it, they submit a request to the DBMS.


  1. Takes the request
  2. Translates the request
  3. Executes the request, retrieving or modifying data as needed

The data base management system organizes the structured storage of the data and controls access to the database.

To manage and request data, a database system provides a database language, called SQL (Structured Query Language).

To make a DBMS request, you have to use for the request the language used by the DBMS.

Here are 10 examples of database management systems:

  • SAP Sybase ASE
  • Microsoft SQL Server
  • Microsoft Access
  • Oracle RDBMS
  • IBM DB2
  • PostgreSQL
  • MySQL
  • MongoDB
  • Amazon RDS

Let’s revisit our zoo example with the above three steps in mind:

You have an application to manage zoo animals, and you add a new animal:

  1. The application takes the data you provide and sends it to the application server.
  2. The application server converts the request into the DBMS language to save the data in the database before sending it to the DBMS.
  3. Finally, the database management system puts the animal data into the database.

What Is a Relational Database Management System?

An RDBMS (Relational Database Management System) is a DBMS that stores data in a relational structure. This means the data is grouped in logical units in tables, and those units link to each other via keys.

The tables are related to each other through keys—what the keys are and how they work is explained in the next zoo example below.

DBMSs are made to retrieve and store data with the presence of redundant data.

RDBMSs are designed to retrieve and store data on a data basis without redundant data.

Let’s say you want to save the zoo animals based on their zoo area:

In a flat non-relational DB, all the animals and their zoo areas would be saved together in one table:


In a relational database, the animals and the zoo areas would be stored in separate tables.

Each entry in the animals table is linked to an entry in the zoo areas table.

The keys are associated with each animal entry in the zoo areas table.

The process of structuring data that belongs together logically into separate tables is called normalization.

Here’s the animals table with zoo area IDs to the zoo areas table:


And here’s the zoo areas table:


There are two main advantages to relational databases over flat databases.

  1. Reduced data redundancy
  2. Improved data integrity

Let’s say you want to add zookeepers to the database, along with the animals and zoo areas.

You want to add who is responsible for which animal and therefore works in which zoo.

In a flat (non-relational) database, you would need to expand your one table.

The table already has data on your animals and zoo areas. The table becomes increasingly crowded, complicated, and redundant:

#flat table

In a relational database, you would just add a table for the zookeepers and use a key to link the entries from the zoo area tables to the zookeeper table.

The key relates each entry in the zookeeper table to an entry in the zoo area table:


Now you know who is responsible for which zoo area by looking at the relation of the zookeeper table to the zoo area table.

Also, you know which zookeeper is responsible for which animal because of the relationship between the zookeeper table and the zoo area table.

Compared to a DBMS and one table, an RDBMS and its multiple related tables are less compact, less complex, and don’t have any redundant data.

An RDBMS is well structured so it makes sense to a human through its logical groupings, like animals, zoo areas, and zookeepers.

Relational database systems are the most common.

What Is a Data Warehouse?

A DW (Data Warehouse) is basically a relational database. It is a relational database designed to meet the needs of analytical requests.

A data warehouse extracts, transforms, structures, and then stores data from operational databases and external sources.

A data warehouse is for analytical applications.

A data warehouse supports analytical applications in:

  • Data consolidation
  • Analysis
  • Reporting, including the aggregation of data

In turn, these analytical applications help make decisions.

Let’s go back to the zoo example:

You want to go on vacation to Hawaii and you think about closing your zoo for a month.

However, you don’t know which month will be the best to close your zoo in terms of revenue.

You use an analytical application to get the net value of zoo tickets sold for each month over the past two years.

Then you can choose the month with the least net value of tickets sold for your Hawaii vacation.

DWing at its best.

What Is Online Transaction Processing (OLTP)?

OLTP describes databases optimized for operational requests.

These requests are used by far the most frequently in business operations, such as making and selling products, generating revenues, and doing general administrative and maintenance tasks.

Operational requests are NOT from applications that do analytics, such as decision support.

An OLTP database is not a DW.

An OLTP database is made to:

  • Process high volumes of requests
  • Respond without delay to requests
  • Process requests as fast as possible
  • Maintain data integrity despite multiple simultaneous requests

The efficiency of an OLTP database is measured by processed transactions per second. Efficient operation is the most important thing in an OLTP database.

OLTP systems are used to serve data to operational applications by providing fast, consistent processing of requests.

As the name suggests, the requests that go to an OLTP database are:

  • Transactions
  • Processed online

What about transactions and online processing? Let’s do this:

The “Transaction” in OLTP

A transaction is a request to a database and it’s a logical unit.

This means that after the request is processed successfully, the request leaves the database consistent.

Consistent means that the data is only changed if the database allows it, so data integrity is preserved.

Data integrity in a relational database is maintained if:

  • Attributes are within their value ranges
  • Primary keys are unique
  • Primary keys are not empty
  • Foreign keys are either empty or an equivalent primary exists
  • Custom integrity rules are met

Basically, either a transaction is successful or it’s rolled back until the database has the same status as it did if the transaction never went through.

Therefore, if a transaction is canceled during processing, then all the database changes made before it was canceled must be undone.

For instance, the zoo has vacations for the animals:

There’s a sign at each zoo area’s entry letting you know what time the zoo area is on vacation.

Each zoo area gets four weeks’ vacation a year during which the area is closed to visitors.

When vacation’s over, the zoo area opens again.

Let’s impose a little artistic freedom and say the animals can decide on their own when they want the zoo to close so they can go on vacation.

The hawk from the mountain zoo area takes two weeks off from January 01, 2021 to January 14, 2021.

The hawk tells Michael, the keeper of the mountain area of the zoo, about its vacation.

Michael then records the vacation in the mountain’s vacation note.

The transaction for this could look like this:

start of the transaction.

  read the field remaining vacations for Chad the hawk.

  write January 01, 2019 into the field vacation from for Chad the hawk.

  write January 14, 2019 into the field vacation to for Chad the hawk.

end of the transaction.

This is a valid transaction that leaves the vacation note consistent if it would be a database.

Suppose the above transaction fails before Michael changes the “vacation to” field: the zoo area gets shut down, and Chad the hawk stays in Bermuda forever.

If this note were left in the database and followed, it would cause problems.

The note would be inconsistant if the transaction failed.

The transaction actually would be no transaction, because of its inconsistent effects on the note.

The invalid transaction would be a mere request to the note.

When a transaction fails, all the changes must be rolled back to maintain the database’s consistency.

Let’s look at another scenario: It’s now June, and Chad the hawk spent two weeks on vacation in January and two more in April.

Unless zookeeper Michael read the field “remaining vacation” before making the vacation request, Chad the hawk could take as much vacation as he wants, even though he’s already used up his four weeks.

Again, it wouldn’t be a transaction but a request, since the request is not consistent.

The transaction doesn’t meet the note’s custom integrity rules, which say that a zoo area can only take four weeks of vacation in a year.


The “Online” in OLTP

The “online” in OLTP means the transactions in an OLTP system are processed in real-time, without any delay.

The data is processed as soon as the request is made and a reply is given as soon as possible.

An ATM (Automatic Teller Machine) is a good example. As soon as you enter your PIN code, the ATM immediately checks if it’s correct, and then allows you to proceed with your transaction.

Batch processing is the opposite of real-time.

Batch processing involves processing the requests in bulk later. That means the answer to the batch processing is provided later as well.

An example of this is a program that optimizes images: during the day, users upload images to a server, and at night when the server’s load is lower, the program optimizes the new images on the server in batches.

The results are then available the next day once the processing is done.

Real-time processing involves constant user interaction: the user interacts with the application, the application sends the request up to the database, the database processes the request, and it sends a response back to the application.

Batch processing requires a user interaction once, or not at all.

The user starts the batch process, and the system runs it until it’s done.

The other option is that the user schedules a batch request, and it gets handled automatically.

Batch processing dates back to the 60s/70s.

In this time, data and programs were stored on punch cards (can you imagine that? — medieval style), and they were read and processed in batches, often at night.

What Is Online Analytical Processing (OLAP)?

OLAP refers to databases that are optimized for analytical requests.

These are requests from applications that provide decision support, like an app to find out the net value of sales per month or the average number of empty seats on flights.

An OLAP database is NOT an operational database but a data warehouse that takes data from operative databases and restructures it.

As the name suggests, the requests to an OLAP system are:

  • Analytical
  • Processed online

The “Analytical” in OLAP

An OLAP database is for analyzing data and answering questions about it.

For example, you, as the zoo owner, want to know all about your zoo, such as:

  • What is the net value of all the tickets sold last year?
  • What’s the average amount of food each animal ate last month?
  • Who’s the zookeeper with the most overtime?

An OLAP database is a data warehouse.

A data warehouse extracts, transforms, and stores data from operational databases or external sources.

Imagine an additional layer to the operational database: a DW or an OLAP database.


An advantage of an OLAP database is that it’s separated from the operational databases.

Therefore, it doesn’t use any of the compute power of an operational database to answer requests, so it doesn’t slow down day-to-day applications.

The “Online” in OLAP

The online in OLAP means the same as online in OLTP: the database is accessed in real time, without any delay.

Data is processed as soon as a request is made, and the results are made available as soon as possible.

Differences between OLTP and OLAP


OLTP, OLAP, and SAP—How Does That Makes Sense?

Until recently, in almost all SAP applications, such as SAP’s ERP and CRM, OLTP databases are used. Data from these databases has traditionally been extracted into OLAP databases used in SAP NetWeaver Business Warehouses.

However, SAP released its own database called SAP HANA in 2010. SAP HANA combines the benefits of an OLTP and an OLAP database in one database.

HANA is an in-memory database.

In-memory means that the data is not stored on a hard drive, but loaded into memory when needed for processing or analysis.

Rather, it exists in memory all the time.

Since the data stays in memory and no hard drive access is necessary, a HANA database is SUPER fast.

This makes it possible to process OLTP and OLAP tasks together in one HANA database—how cool is that?

SAP’s newest ERP and CRM applications use HANA, such as:


What Is SAP SE? SAP Software Meaning (+ Vital Facts)

SAP SE makes business software—it’s the 3rd largest software company in the world.

SAP SE has:

  • 440,000+ customers in 180+ countries
  • 101,450+ employees
  • 340+ products

If you like to learn almost anything about SAP SE, then this article is for you.

Let’s get right into it!

Get Started With SAP SE

SAP, or Systems, Applications, and Products in Data Processing, is an unusually-named European, former German, company that sells enterprise-level software to companies worldwide to manage their business processes.

The SE in SAP SE stands for Societas Europaea. It’s a public company incorporated under the EU corporate law, put in place by a 2004 Council Regulation on the Statute for a European Company.

Let’s just say SAP rather than SAP SE in the following. It would be like always saying Microsoft Corporation instead of Microsoft.

SAP is particularly well-known for its ERP (Enterprise Resource Planning) business applications, which cover things from CRM (Customer Relationship Management) to SCM (Supply Chain Management) to HCM (Human Capital Mangement)—the various business processes of a company.

SAP Exists Thanks to IBM

SAP exists just because of IBM (International Business Machines Corporation): five former IBM employees founded SAP because IBM canceled a project the five employees worked on.

Today, 77%+ of the world’s transaction revenue comes in contact with an SAP system.

Furthermore, they and IBM could not agree about who will work with whom in the following project. Therefore, the five IBM employees quit IBM and started SAP in 1972.

Now SAP is #1 in the ERP market with a market value of $94 billion and #3 largest software and programming company in the world.

SAP dominates the ERP market with a market value of almost $100 billion. In comparison, the global entertainment industry has a market value of $100 billion.

SAP’s initial success can be attributed to the following (keep in mind SAP was founded in 1972):

  • Real-time processing: an action that immediately impacts enterprise-wide processes. The opposite is batch processing, where things get done over night in batches (commonly with punch cards).
  • Standard Software: a customizable standard version of software. The opposite is individual software, which is made for one specific customer and its needs.
  • Data integration: when integration of data is part of the business process of an enterprise. The opposite is non-integrated software, where each area of the business (marketing, finance, production) relies on its own software that cannot talk to each other.

What SAP Does in a Nutshell

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 organizations of any size and industry.

SAP made the way from:

  • 1 pilot product to now 340+ products
  • 1 pilot customer to now 440,000+ customers in 180+ countries
  • 5 founders to now 101,450+ employees
Worldwide Number of SAP Employees From 2006 to 2019-100

Now, SAP is the:

  • #1 in the ERP software market worldwide
  • #1 largest software company in Europe
  • #2 in the enterprise application software market worldwide (Microsoft is #1)
  • #2 in the CRM market (Salesforce is #1) worldwide
  • #3 largest software & programming company worldwide

Here are some SAP fun facts to get you started:

  • 98% of the 100 most valued brands use SAP
  • 97% of the greenest companies use SAP
  • 93% of the world’s greeting cards are produced by SAP customers
  • 86% of the world’s athletic footwear are produced by SAP customers
  • 82% of the world’s medical devices are distributed by SAP customers
  • 82% of the world’s coffee and tea are produced by SAP customer
  • 78% of the world’s food is distributed by SAP customers
  • 77% of the world’s beer is produced by SAP customers
  • 70% of the world’s chocolate is produced by SAP customers
  • 52% of the world’s movies are produced by SAP customers
  • 50% of the world’s packages are couriered by SAP customers

See here the complete SAP facts and statistics list.

So in a nutshell, SAP is a HUGE company that creates business software for process management within companies and organizations.

In this definitive guide to SAP, you’ll learn more about the company’s history, who they target products towards, what their most notable products are, why you should or shouldn’t consider using them, and lots more.

Let’s kick things off with SAP’s history:

The History of SAP

Five former IBM employees founded SAP because IBM canceled a project the five employees worked on. Instead of abandoning the project, they used the experience they gained from working with IBM.

SAP’s founder developed their own software. They began with financial accounting software, then eventually started expanding out to other areas of business.

Back in the day, their very first edge was that they made standard software that processed data in real-time. After their software expanded into other business areas, like material management and human capital management, another edge was created: integration of their software.

SAP’s Edge #1: Standard Software

Standard software is software that covers the standard use cases. Standard software isn’t software that’s made for just one company and its needs. Rather, it’s made with any kind of business in mind.

If a company makes lemonade stand standard software, it doesn’t make it for just one lemonade stand but rather for all lemonade stands.

Instead of considering a particular lemonade stand, the lemonade stand standard software just covers what any lemonade stand does, such as selling lemonades and ordering the ingredients for the lemonades.

If your lemonade stand has special needs, like you also sell snacks, then you can customize the lemonade stand standard software to suit your needs.

Nowadays, almost any software is standard software like Microsoft Office or Netflix.

The opposite of standard software is individual software. Individual software is specifically tailored for one company. For example, if software was made for one particular lemonade stand and its needs.

No other lemonade stand could use the individual software without adapting it since it’s so specific. It covers exactly the requirements of this one lemonade stand.

The difference between standard software and individual software is like suits:

A tailor-made suit is unlikely to fit anyone but you. However, you can find an off-the-peg-suite that fits you and others. However, this suite may need some tweaking to make it fit you perfectly.

SAP was one of the first companies to make ERP standard software.

SAP’s Edge #2: Real-Time Software

Real-time is when a computer is responsive to a user’s prompts, or which ensures the computer keeps up with an external process. For example, you change the price of a product on an online store and the prices immediately update. 

Real-time refers to computers or programs that run in real-time. Real-time is a human sense of time, not a machine sense.

In the days of mainframe batch computers, users with terminals connected to a mainframe were referred to as being online in real time.

A batch job is a computer program which runs without further user input. A printing request or analyzing a Web site log are examples of batch jobs in a computer.

Batch processing originates from punched cards. Back when SAP first came on the scene, it was common to process data overnight in batches using punch cards.

Batch jobs are typically initiated by system users in larger commercial computers or servers. Some of them run automatically every so often.

The term was originally used on mainframe computers, when punched cards were the standard form of input. The computer operator would put all of the cards in a box in the sequence they should be fed into the computer.

So SAP did not use punch cards but an electronic database (remember it was 1972). Because of this, real-time instead of batch processing.

SAP’s Edge #3: Integrated Software

Imagine SAP’s software as building blocks. To make something bigger, connect and integrate the building blocks together. But a building block on its own makes sense, too.

A company splits up in many different business areas such as human resources, production, and finances. Each business area is a building block as well. If you put the building blocks together you have a company.

SAP’s applications are like building blocks: You can add or detach them from the bigger whole. Once they’re attached, they’re fully integrated into the overall structure.

Now SAP makes software for each business area. And since each business is just a part of a bigger whole, the company, the software, needs to be able to talk to other business areas. Therefore, in order to accomplish the purpose of each business area as a part of a whole company, each business area needs to be integrated. And so does their software.

SAP applications are completely integrated with each other. Just like building blocks, you can integrate other applications into the system or detach others.


This first product became known as the SAP RF (Real-Time Financial) or SAP R/1 (Real-Time 1 Tier) system, and it was quickly adopted by many companies in a position to take advantage of its offerings. It started out as a financial accounting system.

SAP released SAP R/1 in 1973.

SAP R/1 used a 1 tier architecture.

A 1 tier system is the simplest ERP system architecture, where the client, the database, and the server are all on the same machine.

For example, installing a database on your system and accessing it via SQL is a 1 tier architecture. These days, such architectures don’t get much use in production.

1-tier architecture

Leveraging the income from SAP R/1, SAP began expanding and improving things, starting with a complete overhaul of their SAP R/1 system that was, perhaps inevitably, named SAP R/2 (Real-Time 2 Tier).

Growth to SAP R/2

SAP R/2 is described as a growth, but it’s essential to understand the environment they were operating in at the time.

SAP R/1 had fewer than 1,000 customers for a large part of its life cycle, and SAP R/2 only had around 2,200 customers, a far cry from the more than 440,000 customers SAP has today.

SAP R/2 was released in 1979.

While many companies were starting to invest in technology in the 1980s, technology didn’t see truly explosive growth until the late 1990s, when heavy investing fueled the meteoric adoption of technology by many more companies.

The most significant change here was the switch to using mainframes for real-time data processing, to the extent that was possible with their current technology.

Mainframes have a two-tier architecture. SAP R/2’s two-tier architecture took over from the one-tier architecture, which SAP R/1 used.

ERP systems that use a two-tier architecture consist of two layers:

  • Presentation tier: runs on a client like a desktop computer, tablet, or mobile phone.
  • Data tier: data is stored on a server.

For example, a two-tier architecture is an application for managing workflows built on Microsoft Access.

2-tier architecture

SAP R/2 also began accounting for supply chain logistics, human resources, accounting, manufacturing processes, and other details that are now a hallmark of modern SAP software.

Continuing Growth

Over the next two decades, SAP began growing and focusing on international developments. It was already used by about half of Germany’s Top 100 companies, and that gave it a degree of real-world experience and support that few competitors could match.

While SAP focused on Europe in its earliest years, complete with exports to Austria, Denmark, Italy, and Sweden, it wasn’t long before it turned its attention to the United States as well.

The Third Generation With SAP R/3

By the 1990s, SAP was growing even more, leading to its SAP R/3 (Real-Time 3 Tier) software release on a three-tier server structure.

The 3-tier architecture is an extension of the 2-tier architecture, just like SAP R/3 is an extension of SAP R/2.

A 3-tier architecture adds an extra layer to a 2-tier architecture:

  • Presentation tier: runs on a client like a desktop computer, tablet, or mobile phone.
  • Logic tier: contains the business logic that enables an application’s core capabilities
  • Data tier: data is stored on a server.

The logic tier is what communicates the user’s request to the DBMS system and sends the response back to the user. In between it takes care of processing commands, logical decisions evaluation, and calculations before passing data down to the data tier or up to the presentation tier to the user.

Three tier architecture is today’s standard for ERP systems because of its advantages:

  • Great scalability
  • Improved performance
  • Efficiency in development
  • High availability

For instance, a three-tier architecture is amazon.com.

3-tier architecture

SAP also partnered with Microsoft, whose own technology offerings were also becoming a fundamental part of modern businesses.

SAP R/3 had about 15,000 customers, which was phenomenal growth but still smaller than what was coming.

By the mid-2000s, SAP settled in as the third-largest vendor for software globally, eclipsed only by Microsoft itself and IBM.

SAP upgraded the SAP R/3 a number of times and with version 5.0, SAP changed the name from SAP R/3 to SAP ECC.

However, SAP ECC is more an evolution of the SAP R/3 than a different product—even though the upgrade from version 4.0 to 5.0 was a major one.

SAP still wasn’t satisfied, although dethroning the tech industry’s leaders would be challenging under any circumstances. That pushed them towards their next primary offering:

Further Innovation With SAP HANA

SAP HANA, released in June 2011, is the world’s first in-memory database. This is relevant to computing for several reasons, but the most important one is that it runs software on a computer’s RAM, rather than reading information off of a hard disk.

RAM is drastically faster than almost any other data-storage medium companies currently have access to.

A modern SSD (Solid-State Drive) is limited by the SATA (Serial Advanced Technology Attachment) interface that connects it to the rest of the computer. SATA can process about 750 megabytes of information per second

That’s quite a lot, but still too slow for some situations.

RAM (Random-Access Memory), in contrast, is limited mainly by its physical design. However, modern RAM can often transfer over 10,000 megabytes per second, making it more than an order of magnitude faster than the hard drives people already think of as fast.

Holding data in RAM, rather than on a physical disc, allows for near-instant responses to complex queries. Eventually, SAP decided to expand further on this system and developed SAP S/4HANA, its now main flagship product.

SAP S/4HANA marks a significant step away from its previous SAP ERP software, which is itself the legacy of SAP R/1, SAP R/2, SAP R/3, and SAP ECC.

SAP ERP had over 100,000 customers thanks to the increasing number of technology-oriented businesses, and newer developments indicated that it was time to change course or get left behind.


SAP is the 3rd largest software and programming companies globally, and even many businesses that provide similar types of software don’t operate on anywhere near the same scale:

That means SAP’s main competition is Oracle Corporation, which is known for databases, cloud computing, and its Java computer software.

As of 2019, Oracle earned about US$39.50 billion, while SAP earned about €27.553 billion (about US$32.42 billion), placing them relatively close to each other in overall revenue.

Global Revenue of SAP and Oracle From 2005 to 2019

However, Oracle is a somewhat larger company overall, with significantly more assets than SAP currently possesses.

Current Status

As of 2020, SAP remains the world’s third-largest software and programming organization and operates more-or-less globally. Although best-known for its work with larger companies, SAP also offers product sets specifically designed and developed for small and mid-size businesses.

Outside of software sales, SAP also manages and maintains data centers for users that help provide various capabilities as a service to users. These services include SAP HANA, cloud platforms, and other ways to access their software at scaling rates.

Who Uses SAP?

“Everyone” is a slight exaggeration, but it’s not too far from the truth. In theory, almost any business can benefit from using SAP software, although that isn’t the same thing as needing to use it. Most customers ultimately fall into one of two primary categories.

Individual solutions cover companies who need help in a specific area. For example, an established business may need help managing its supply chains, but not anything else.

In these cases, SAP provides support for just that area. Unsurprisingly, this is the cheaper of the two options.

SAP also provides full-suite services, which provide access to their entire library of software. This category is mainly for customers who want to work exclusively with SAP, rather than moving between them, Oracle, and any other enterprise software companies.

Services and Sizing

Larger companies get more use out of SAP software than smaller ones do. Part of this is the sheer scale of SAP’s software. With literally dozens of modules, it takes a long time to train an employee on the complete system.

Instead, most companies only teach employees a few modules within the system. This helps narrow things down and allows each person to focus on what matters to their daily activities. 

Smaller businesses don’t have enough people to use every module, much less get the most out of them.

Mid-size businesses typically settle for partial implementation. For example, an e-commerce company may buy SAP software to access its customer data cloud (described later in this guide).

This helps organize customer information and ensure compliance with EU regulations, and that’s much easier for mid-size companies than developing regulation-compliant software themselves.

ERP Offerings

Sometimes known as their Business Suites, SAP offers two types of enterprise resource planning software: SAP ERP and SAP S/4HANA. Together, these comprise a huge part of their business, and most new developments improve either or both of these services.

Important: SAP occasionally moves things around or puts them into different groupings. While services are described below, the actual format of the software may (and likely will) look different if you choose to use it.

That SAP occasionally moves things around or puts them into different groupings, is especially true for SAP S/4HANA systems because that set of enterprise software is still being developed. While SAP has plans for numerous modules, plans can and do change over time, and it’s unrealistic to assume they’ll remain the same forever.

Accordingly, it would be best if you treated this overview as precisely that: a robust, in-depth guide to what the software can do, but not a perfectly-accurate and up-to-date outline of how the systems can look to end-users—this nearly changes on a daily basis.

Further, several modules cross over and perform similar roles, so you may find the same capabilities in fundamentally different parts of the system.


The SAP ERP suite (not to be confused with the SAP Enterprise Resource Planning software, described below, despite the similarity in their names) is SAP’s main legacy business suite. It builds off of the R/1, R/2, and R/3 suites, and it’s the first part of SAP software that integrates with the internet at a large scale.

However, it’s important to emphasize this software’s legacy nature, which means that SAP wants to transition customers away from it by about 2030 so they can focus mainly on SAP S/4HANA instead.

While it may continue functioning past that time, SAP does not currently plan to provide maintenance or updates past that time.

SAP ERP consists of five primary services and systems. Some of these have cross-industry support, while others aren’t relevant to all businesses. Clients can easily use one or all of these systems.

SAP Enterprise Resource Planning

SAP Enterprise Resource Planning is the core of SAP ERP and is distinguished mainly by using its full name to help avoid confusion. It is further divided into eight primary categories, consisting of several additional services, as described below:

Human Capital Management:

The human capital management part of SAP Enterprise Resource Planning focuses mainly on finding and using employees effectively.

  • Talent Management: Talent management includes processes related to finding new employees, developing skills, aligning work with corporate objectives, and retaining top employees. It provides a company-level view of each employee’s performance, education, management needs, and related data that affects their overall performance.
  • Workforce Process Management: Workforce process management covers employee planning and scheduling, with a particular focus on creating optimized schedules based on business needs and captured data. It is particularly useful for workforces with frequently-changing schedules, such as retail environments.
  • Workforce Deployment: Also known as Workforce Management, and not to be confused with process management, Workforce Deployment is a retail-focused category that mainly covers benefits, payroll, and time management systems.
  • End-User Service Delivery: End-user service delivery focuses on deploying software and solutions to many users, rather than providing individual updates to each person. In effect, this part of the service focuses on improving resource allocation to minimize wasted effort and maximize overall performance within the company.

In fact, SAP is one of the leading HCM (Human Capital Management) application vendors worldwide:

Leading Vendors of the HCM (Human Capital Management) Applications Market Worldwide from 2015 to 2019

SAP even surpassed its competitors in the previous years, in terms of market revenue.


The financial sector of this software focuses entirely on money-related processes and services. Some companies leave this mainly to their accountants, but it does impact all areas of a business.

  • Financial Supply Chain Management: Financial supply chain management focuses on broad, end-to-end views of financial needs and operations, rather than examining them as individual tasks. Improvements in this area can help free up funds, reduce errors, and generally support a business.
  • Treasury: SAP’s treasury services cover actively managing money. This includes payment management processes, bank connectivity, and real-time cash positions and forecasts to help improve overall liquidity.
  • Financial Accounting: As the name implies, the financial accounting services focus on paperwork and compliance with regulations. This software can help produce reports, provide information for audits, and check for errors in reports.
  • Management Accounting: Not to be confused with financial accounting, SAP’s management accounting systems focus on planning future costs and comparing them with actual data to help adjust those plans as needed.
  • Corporate Governance: Corporate governance helps focus on regulating businesses from the top down, with a particular emphasis on improving lines of communication between different groups and ensuring people can manage a business well.
Product Development And Collaboration:

Product development modules focus on creating new products and services for customers.

  • Product Development: SAP product development focuses on idea-to-launch strategies for creating new products and services. This includes finding the right personnel, sourcing materials for prototyping, and predicting financial returns from product launches.
  • Product Data Management: Product data management covers all of the data and documents related to each project, from its start to discontinuing it. This includes hosting product documentation, maintaining chemical information about products, and even providing access to data for partners or suppliers to use as needed.
  • Product Intelligence: Product intelligence covers collaboration and innovation, including user interfaces, cloud deployment for systems, and managing data so people can access whatever they need as quickly as possible.
  • Product Compliance: Product compliance is essential for many industries and focuses on ensuring that all aspects of any product meet regulatory hurdles. This is particularly important for companies that operate internationally because different nations or regions may have incredibly different overall product compliance standards.
  • Document Management: Document management, in this context, refers specifically to managing all documents related to each project. This can include development information, messages about the project, legal information, regulatory paperwork, and any other documentation a company should or may need to keep on file.
  • Tool And Workgroup Integration: Finally, tool and workgroup integration covers ensuring that each group within a company has the tools that are best suited for their tasks. This crosses over with talent management to help predict what training specific employees may need to perform at optimal levels.

Procurement covers obtaining non-employee resources that a company needs. This mainly focuses on physical goods, such as office supplies and materials for manufacturing, but may also include software procurement for certain businesses.

  • Purchase Requisition Management: Purchase requisition management gives you better control over all purchasing orders, including dividing them into different categories and helping ensure the correct people receive each order for supplies or materials.
  • Operational Sourcing: Operational sourcing covers more of the day-to-day operational needs for a company, including managing supply chains and maximizing the efficiency of procurement processes.
  • Purchase Order Management: Purchase order management is a higher-level view of procurement needs. This includes making orders, seeing which orders are getting fulfilled, and evaluating suppliers to help determine which of them are the most reliable.
  • Contract Management: Contract management is a legal-focused section of the procurement operations. This area deals with contracts you have with other companies, helps embed legal processes, and provides better user interfaces to access, understand, and ultimately help enforce contracts.
  • Invoice Management: Invoice management is mainly a financial matter and deals with invoices both sent and received. Aside from helping to predict future cash flow, invoice management is also useful for scheduling payments, tracking fraud, and providing other payment services as needed.
Operations: Sales And Customer Service:

Sales and customer service modules focus entirely on selling products and managing relationships with customers.

  • Sales Order Management: Sales order management covers things ranging from quotes to shipments, billing, and obtaining revenues. This also includes sales inquiries (requests from customers for information), sales orders (requests for specific deliverables), and help with ensuring the company can avoid accepting orders it can’t fulfill.
  • Aftermarket Sales And Services: Aftermarket sales and services mainly include additional revenue generated by further interaction with customers, as well as general customer support for dealing with products. That includes troubleshooting, answering questions, replacing faulty products, and any other aftermarket services your company may need to provide.
Operations: Manufacturing:

Manufacturing processes focus entirely on creating physical products. This is separate from creating digital products, such as software and other applications. Most companies outsource their manufacturing, so businesses that use these processes may use little, or none, of SAP’s other software.

  • Production Planning: SAP’s production planning covers aligning demand for products with production and procurement schedules designed to maximize cash flow and minimize trapped value. It also helps monitor and schedule everything from obtaining raw materials to converting things into semi-finished or finished products.
  • Manufacturing Execution: Manufacturing execution focuses on making products, typically at a factory or similar facility. This includes managing supply lines, storage, transportation, quality control, and other processes necessary for creating goods in accordance with company objectives and regulatory standards.
  • Manufacturing Collaboration: Manufacturing collaboration focuses on allowing manufacturing managers to interact with the entire supply network. Benefits of this include higher asset utilization, reduced cycle times, improved delivery performance, and improved ability to minimize liabilities based on product batch issues.
Enterprise Asset Management:

Enterprise asset management is a large part of SAP and focuses on dealing with all of the assets a company might own. Since companies have many types of assets, these modules are more separate from each other than those in many other parts of this software.

  • Investment Planning And Design: Investment planning and design cover capital investments, research and development costs, overhead expenditures like employee training, and anything else that has an initial cost and only may generate revenue. Do not confuse this with general financial investments, such as purchasing stocks.
  • Procurement And Construction: Procurement and construction focus on obtaining new assets for the company as needed, including predicting when it may need them. Many companies eventually build their own facilities, which fall into this part of their software.
  • Maintenance And Operations: Maintenance and operational costs are a necessary part of doing business; even the best machines eventually wear down. This module focuses on optimizing maintenance schedules to minimize losses while increasing overall uptime and performance.
  • Decommission And Disposal: Some assets are no longer worth keeping. Decommission involves taking things down and essentially removing them from active operations. Disposal often means destroying assets, but it could also include selling them to other businesses.
  • Asset Analytics And Performance Optimization: Asset analytics help you understand how valuable your company’s assets are and what you can do to get even more value out of them. This is also useful for determining which assets are candidates for decommission or disposal.
  • Real Estate Management: Real estate is essential for larger companies. Real estate management covers buying, selling, leasing, and paying taxes on land, as well as following any additional laws or contractual obligations that could apply to using those facilities.
  • Fleet Management: Fleet management covers your ability to manage your transportation network. This includes all forms of transport, including ships, helicopters, planes, buses, and shipping containers.
Operations: Cross Functions

Cross functions broadly include software for managing work involving two or more sections of a company. This can be direct, but it also includes parts of the company that, by nature, interact with others regularly.

  • Quality Management: SAP’s quality management focuses on improving overall quality control processes. It helps prevent defects, supports continuous process improvements, and helps establish sustained quality control programs. It may also help meet regulatory hurdles and, in many cases, tends to improve customer satisfaction.
  • Environment, Health, And Safety Compliance Management: These modules focus on meeting compliance requirements, particularly in cases where companies need to report that compliance with a regulatory body. In some cases, it can help indicate when employees need to receive additional safety training before proceeding with a particular task.
  • Inbound And Outbound Logistics: These services cover collecting shipments and goods, as well as picking, packing, and shipping items as needed. This is more specific than supply chain management, which also covers things like transportation options.
  • Inventory And Warehouse Management: Inventory and warehouse management are not the same things as inbound and outbound logistics. These modules cover things like where to store items for maximum efficiency, when to reorder products, and other factors that can affect both warehouse and non-warehouse storage.
  • Global Trade Services: Global trade is significantly different from national trade, especially if it involves finished products rather than raw materials. Accordingly, SAP offers separate software and services for companies that sell internationally.
  • Project And Portfolio Management: Project and portfolio management help provide a bird’s eye view of operations, including what different teams are doing and whether or not you’re allocating resources well.

SAP Customer Relationship Management

SAP Enterprise Resource Planning briefly touches on CRM (Customer Relationship Management) or now also called CX (Customer Experience) with its aftermarket sales software, but that suite purposefully limits its focus on dealing with customers. Instead, most of that is contained in this software suite, which offers many ways to monitor and monetize customers.

SAP Customer Relationship Management has three primary areas of focus:

  • Marketing
  • Sales
  • Service

Marketing covers advertisements and attempts to alert customers to products. It also covers some pre-purchase activities by customers, including identifying likely buyers.

  • Marketing Resource Management: Marketing resources include many different things, ranging from art assets to licensing agreements. To some extent, this also includes marketing employees and their skills, which often determine how fast you can create and start using new marketing materials.
  • Segmentation And List Management: This module focuses on creating and using lists of customers, allowing marketers to target specific audience members with personalized messages that are more likely to generate a return on investment. This module also helps identify sales opportunities.
  • Campaign Management: SAP campaign management software focuses on marketing efforts to promote sales, improve public perception of products, and generate opportunities for cross-selling or add-on purchases. In some cases, this software can run automated marketing campaigns, allowing marketing employees to focus on other tasks.
  • Trade Promotion Management: This module includes planning and budgeting for trade promotions, which are marketing incentives offered through business customers. These customers mostly take the form of retail stores. Manufacturer’s discounts are an example of trade promotions (versus regular store discounts, which are not trade promotions).
  • Lead Management: Lead management includes identifying and capitalizing on lead opportunities. For some companies, this also includes proactively identifying potential leads, but most companies leave that to marketing and focus on identifying leads they’ve already made contact with.

Sales cover everything involved with directly making sales to customers, rather than merely trying to reach customers and get them to buy.

  • Sales Planning And Forecasting: Sales planning and forecasting are an essential part of many businesses because they help you decide when and how to order products to fill those orders. Forecasting is also important for predicting cash flow and making investments to promote future growth.
  • Territory Management: In this context, a territory is a specific sales region, typically anywhere from one city to several states in size. Territory management helps maximize profits by figuring out where to assign employees and how to get the most from each opportunity.
  • Accounts And Contacts: Accounts and contacts are primarily for managing customer information. In most cases, customers provide contact information when they sign up for an account, likely including their name, address, email, and phone number. These are extremely useful for marketing teams.
  • Opportunity Management: This isn’t as spontaneous as the name suggests. In SAP, an opportunity is a known possibility for sales that goes through the company’s sales cycle to try and convert that possibility into a real sale. The opportunity management module helps direct employees and makes it easier to capitalize on as many opportunities as possible.
  • Quotation And Order Management: Companies don’t always have fixed quotes for customers. The quotation and order management system helps record prices offered to customers, so everyone knows what to charge them, and it also helps process orders received from customers so you can process them.
  • Pricing And Contracts: The pricing module mainly covers the prices shown to potential customers and helps ensure consistency throughout the company. The contract aspect of this module covers sale-specific pricing and is particularly useful after negotiating with high-value customers.
  • Incentive And Commission Management: This is an employee-focused sales module. Many companies offer incentives or commissions to encourage good performance from marketing team members. This module helps track what employees earn and can also help measure incentives to figure out the optimal reward level for each employee based on their performance.
  • Time And Travel: Some companies don’t have employees travel around, but when they do, this module helps account for that. Although primarily a record-keeping module, this software also helps automate travel requests and process expense statements.

Service mainly covers post-sale activities and order processing. Customer service is part of this category, but not all of what service does.

  • Service Order Management: Service order management is a high-level module to help define service orders’ processes. In this context, a service order is a post-sale process to help customers and encourage them to buy again, such as repairing products, fulfilling warranties, or providing customer support for setting up the product.
  • Service Contract Management: Service contract management covers the legal contracts that relate to a service order that a customer initiates. This includes checking to see if something is under warranty, so the company does not waste money on service orders it did not agree to fulfill at the time of sale.
  • Complaints And Returns: This module helps manage customer complaints and desires to return products, typically including giving them a refund for its purchase price. Aside from that part, managing complaints can also help identify problems in production practices or errors in software and support improvements to reduce the number of future complaints.
  • In-House Repair: The in-house repair module is a straightforward part of the software that deals with repairs you perform internally. Repaired products could be returned to the customer, but they may also be repackaged and resold if they’re in sufficiently good condition. This helps minimize waste and maximize revenue.
  • Cash Management: The cash management module is a smaller part of its overall financial functions and focuses on managing liquidity to ensure you can cover all payment obligations. This module works closely with other modules to help predict future cash flows as accurately as possible.
  • Installed Base Management: The installed base management module focuses on understanding customer environments, as well as managing some objects in those environments. For example, this module could help you understand what types of devices people are installing your software on if you sell software. That can make it easier to create and test updates.
  • Warranty Management: Warranty management is a relatively small component of the service modules, especially because some companies don’t offer warranties. It helps track which warranties apply to each sale, as well as how much fulfilling those warranties costs.
  • Resource Planning: This module helps you design and execute plans for service requests. That includes assigning employees and tools to meet demands. The plans themselves vary by company, so this is one of the most customized parts of SAP ERP.

SAP Supplier Relationship Management

SAP’s Supplier Relationship Management system is dramatically simpler than most of its other modules. While relationships with suppliers can be complicated, especially when managing a supply chain with dozens of other companies involved, it’s still typically easier than managing internal affairs and customer accounts. This software covers five main areas.

  • Spend Analytics: Spend analytics analyze how much you’re spending on suppliers and looks for opportunities to minimize those costs. If you order products from multiple suppliers, this module may also help your business determine which suppliers are the most cost-effective, and therefore worth ordering more products from in the future.
  • Sourcing: The sourcing software is a high-level solution that helps automate the sourcing processes, up to and including contract management and meeting any compliance standards. Its main objective is to simplify how you buy things, and therefore make it predictable and easier to analyze as needed.
  • Contract Management: This is different from managing contracts with customers. On the supply side, this helps determine who owes what and what the timetables for deliveries are. Contract management is also useful for determining which suppliers are more likely to break a contract, which can have significant effects on your profitability.
  • Operational Procurement: Operational procurement covers requests from different parts of the company and makes it easier to fill those as needed. These range from refilling basic office supplies to getting spare parts for repairs or even raw materials for prototyping. Operational procurement is not the same thing as general inventory and warehouse management.
  • Invoice Management: Finally, the invoice management module helps you keep track of payments you owe to suppliers. This integrates with the other cash flow management modules to predict your liquidity and help you avoid situations where you can’t pay an invoice on-time. This module focuses on what you owe to others, not what they owe you.

SAP Product Lifecycle Management

SAP’s Product Lifecycle Management software focuses on creating, managing, and ultimately terminating specific products. In this context, “product” refers to anything your company could sell to customers. In most cases, this includes physical goods, but it may also cover software, services, and anything else you might be able to sell.

The word “sell” is also somewhat ambiguous here. While most companies focus on straightforward transactions, a sale in this context could also include rental agreements or non-cash payments. The Product Lifecycle Management software has four primary sections.

Product Management:

General product management includes a high-level view of projects, allowing managers to monitor development, allocate resources, and predict future needs.

  • Product Strategy And Planning: Strategy and planning cover your company’s objectives for each product, as well as the steps you plan to take to reach those goals. This often functions as a supervisory module to help determine how well employees are meeting your goals.
  • Product Portfolio Management: The previous module addresses company goals, while product portfolio management addresses administrative goals, particularly when it comes to maintaining alignment with overall product strategy. This module is mainly useful for executives, so other employees will not use it nearly as often.
  • Innovation Management: Innovation is difficult because you can’t always get the result you want when people spend time working. The innovation management software helps bring some support to this by providing a platform to collect and validate ideas, allowing you to better understand which ideas are worth pursuing and which aren’t.
  • Requirements Management: The requirements management system helps analyze, record, and trace project requirements throughout its lifecycle. This covers everything from the materials required for manufacturing to legal and documentation requirements.
  • Market Launch Management: As the name suggests, this module focuses on launching projects. Many companies aim for a sudden, large impact when launching products, but this module also helps with softer, rolling launches that allow you to improve products before launching them to a wider audience incrementally.
Product Development And Collaboration:

Most products that businesses release are a collaborative effort between many different parts of the company. Even employees who don’t actively create the product, such as customer support members, need to get involved at some point so they can learn about the product and prepare to help customers use it. This software focuses on such things.

  • Engineering, R&D, And Collaboration: The engineering and R&D module focuses on actual product development and allows teams to see 2D and 3D models of products, as well as relevant information like the necessary materials to create those products. It also includes opportunities for feedback so developers can update products more effectively.
  • Supplier Collaboration: Supplier collaboration is an integral part of product development, especially once you begin producing physical prototypes. This module helps analyze and predict material requirements, allowing product developers to obtain supplies with minimal downtime, and reducing the risk of violating internal deadlines.
  • Manufacturing Collaboration: The manufacturing collaboration module is similar to the supplier collaboration, but focuses on creating prototypes (and eventually products) rather than getting supplies and raw materials. Many businesses do not create prototypes in-house, so this helps ensure you can create prototypes as quickly as possible.
  • Service And Maintenance Collaboration: This isn’t necessary for the development stages, but many products eventually require some form of service or maintenance, even if that’s telling customers how to do it themselves. This module helps the relevant personnel learn what they need to know so they can provide additional services as needed.
  • Product Quality Management: The product quality management module focuses on continuously improving overall product quality to reduce manufacturing errors and ultimately improve profits. It also helps track problems so you can identify the source and resolve the issue.
  • Product Change Management: Some products change over time. This module helps track changes so you can implement them correctly. It includes collaborating with suppliers and manufacturers, so they don’t start producing something that doesn’t match your specifications.
Product Data Management:
  • Product Master And Structure Management: This module focuses on important master data for projects, including their dependencies, classes, values, and characteristics. By centralizing this information, employees always know where to look, and managers can see the most up-to-date information about the project.
  • Specification And Recipe Management: This is mainly a data-storage module. Specifications and recipes include detailed technical information about creating a product, possibly including sensitive information that competitors would love to know.
  • Service And Maintenance Structure Management: Service and maintenance structures are vital in supporting products after their release. This module helps establish what each product needs and ensures you’re ready to meet those needs the day your product launches.
  • Visualization And Publications: Visualizations and publications are supplementary components for product launches. They include graphic representations of the product, manuals, advertisements, videos, and anything else your company publishes about a particular product.
  • Configuration Management: The configuration management systems are essential for products with options. This module includes important information about each setting the product has, as well as the ways they interact with each other. It is particularly useful for troubleshooting problems.
PLM Foundation:

The Product Lifecycle Management Foundation modules are the last major section of PLM. These modules help support product development by providing important information that is relevant at different stages of the process.

  • Product Compliance: The product compliance module focuses on meeting regulatory standards, especially for hazardous materials. Many products use potentially hazardous materials, and this part of the software makes it easier to determine where a product can be sold with a given design.
  • Product Intelligence: Intelligent product design focuses on networked products, including how, where, and why to consider networking them. This also helps address issues that are important but not fundamentally tied to product development, such as integrating with smart home assistants produced by other companies.
  • Product Costing: The product costing module helps plan out expenditures over the entire life cycle of a product, especially when it comes to material prices for manufacturing. Calculating these costs helps determine the eventual return on investment.
  • Tool And Workgroup Integration: The tool and workgroup integration systems focus on helping people collaborate and ensuring that employees have access to the tools, hardware, and software they need for their jobs. In some companies, this can be predictive and help determine which resources to make available for each workgroup.
  • Product And Resource Management: The product and resource management module has similarities to other modules, but it focuses on all resources that may be necessary throughout the life of a product. That includes cash, employees, raw materials, software, licenses, and other types of resources as needed.
  • Document Management: Finally, most products have extensive documentation requirements. These cover everything from prototype designs to inter-agency communications. Managing these documents makes it easier to find information if anyone needs to reference it again, and to meet certain regulatory or paperwork hurdles that may apply to your projects.

SAP Supply Chain Management

SAP’s Supply Chain Management system is the last of the five main components of SAP ERP, and it’s one of their larger systems. While modules in other components touch on supply chains, this is the system designed to provide robust views, control, and data for people at all levels of your organization.

SAP is actually one of the main SCM (Supply Chain Management) software suppliers worldwide:

Leading SCM (Supply Chain Management) Software Suppliers Worldwide in 2019

Having a revenue of around 4 billion U.S. dollars, SAP maintains its leading position in the supply chain management industry.

Demand And Supply Processing: 

These planning modules focus on forecasting and planning ahead to minimize potential delays when manufacturers start working.

  • Demand Planning And Forecasting: Demand planning focuses on determining how many materials you’ll need at any given time, as well as where you’ll need them. This module also helps cut down waste by limiting the amount of excess material you’d need to store, which can be a problem in some situations.
  • Safety Stock Planning: Safety stocks are excess materials or finished products that you want to keep (as opposed to unwanted extras, as mentioned above). This stock helps account for irregularities in the supply chain, allowing you to continue delivering the number of products you want to send out.
  • Supply Network Planning: This module integrates purchasing, manufacturing, distribution, and transportation to help you apply tactical planning to your sourcing decisions. It also helps plan and optimize product flow throughout your supply chain to reduce order fulfillment times and improve customer service.
  • Distribution Planning: Distribution planning focuses on the part of the supply chain between the manufacturer and the seller (typically a retail store). These networks can get exponentially more complicated as a business grows, so careful planning is essential to success, and that’s what this module focuses on.
  • Service Parts Planning: Also known as “spare parts planning,” this module focuses on acquiring components for products, rather than entire products, to allow for repairs and replacements. Parts often have different shipping requirements than finished goods, so SAP uses this module to help plan and govern that.

These modules focus on procuring supplies and raw materials. Some manufacturers expect you to do this for them, which makes it essential for any large-scale production.

  • Strategic Sourcing: Strategic sourcing focuses on optimizing supply chains by acquiring raw materials and finished products. This may involve networking with a series of suppliers rather than finding a single company to fill your orders. Strategic sourcing also helps reduce costs and improve delivery times.
  • Purchase Order Processing: This is a high-level module that integrates with other parts of SAP software to monitor procurement, help process order lists, group relevant documents together, and otherwise help your company deal with purchase orders.
  • Invoicing: SAP’s invoicing software supports making and receiving payments. These are often complex and time-sensitive payments, so the software also integrates with other SAP modules to help predict cash flow and ensure you can make all payments when needed. This helps avoid disruptions in your supply chain.

These modules cover the main aspects of manufacturing products, especially when it comes to scheduling things to maximize overall performance.

  • Production Planning And Detailed Scheduling: Scheduling is a key aspect of any manufacturing process, both for knowing when products will be done and arranging transportation to take the finished goods to stores. To a lesser extent, this module also helps estimate payment times and, like the Invoicing module, manage your liquidity.
  • Manufacturing Visibility, Execution, And Collaboration: This module helps provide more information about the current status of all manufacturing activities, such as when factories start producing goods. Its collaboration elements help provide manufacturing partners with additional information to reduce wasted time.
  • MRP-Based Detailed Scheduling: This module allows you to create a detailed manufacturing plan without requiring a specific supply source. It’s especially useful for integrating with the main planning functions of SAP ERP outside of the supply chain management systems.

These modules deal with storing items in different warehouses, including accepting them, sending them out, and generally storing things. These do not cover the transportation of products between warehouses, which is a separate part of the software described below.

  • Inbound Processing And Receipt Confirmation: The inbound processing module helps keep track of inventory you receive at your warehouses, with receipt confirmation serving as an extra check to ensure you’re getting what you ordered. This is one of the two fundamental parts of successful inventory management.
  • Outbound Processing: Outbound processing is the opposite of the previous module and focuses on keeping track of products you send out of your warehouse. Aside from helping to manage inventory levels, outbound processing also helps determine when to reorder each product.
  • Cross-Docking: Cross-docking is the process of sorting goods to improve efficiency and reduce transportation requirements. Although not necessary for every industry, companies with complex warehousing requirements usually benefit from this module’s ability to help calculate and predict cross-docking operations.
  • Warehousing And Storage: This module deals with general warehousing issues, including the ability to manage the quantities of stock in different locations. This module is detailed enough to manage things down to the bin level, allowing you to locate any product with minimal search times. It also helps optimize product movement.
  • Physical Inventory: SAP’s physical inventory system focuses on auditing and ensuring that the products physically present in your warehouses match what the system expects. This helps stop fraud, meet legal requirements, and generally support your company’s daily operations.
Order Fulfillment:

Order fulfillment modules help process orders received from customers. This is where many companies make the majority of their profits, so it’s considerably more important than its relatively small size suggests.

  • Sales Order Processing: This module focuses on all aspects of processing sales orders, including selecting a warehouse to ship the product from and optimizing complex orders that may require multiple shipments. For some businesses, this can also help collect useful information about customer buying habits.
  • Billing: The billing module focuses entirely on collecting payments from customers, making it arguably the most important part of the entire software system. Aside from collecting information from customers, it also works together with payment processing systems to collect funds from banks and other financial systems.
  • Service Parts Order Fulfillment: The service parts order fulfillment system focuses on repairs, warranty service, and other needs for parts outside of regular sales order processing. Its main goal is optimizing service orders by reducing storage costs and transportation times, which also tends to make customers happier with you.

Transportation modules focus on moving products around, ranging from transporting things to and from warehouses to shipping orders out to customers.

  • Freight Management: In this context, “freight” refers to all forms of transportation a company may use, including sea and air shipments. This module helps plan, track, and otherwise optimize all freight processes your company needs, which could go as far back as collecting and transporting the raw materials for products.
  • Planning And Dispatching: This module works together with the previous one to help plan, schedule, and deliver instructions for transporters. Communication is a particularly important part of this module because it doesn’t matter how well you optimize your transportation plans if you don’t have the people to operate that plan.
  • Rating, Billing, And Settlement: This is the financial aspect of transportation. Aside from helping calculate transportation fees, it also helps with billing from transportation services and supports prompt settlements that encourage transporters to keep working for you.
  • Driver And Asset Management: This module focuses on managing drivers and transportation assets. Do not confuse it with other asset management systems that apply to the rest of your business. Among other features, it helps determine which drivers are the most reliable and worthy of continued offers.
  • Network Collaboration: Network collaboration systems focus on helping non-company parts of your transportation network get the information you need. For example, this can help a shipping company know when to expect requests and how much transportation capacity they should have available to meet those requests.
Real-World Awareness:

These modules focus on maintaining information about inventory so your company can keep track of all products.

  • Auto-ID (RFID) And Item Serialization: RFID tracking uses small, affordable chips to track inventory in real-time. This makes it significantly easier to find errors in stock levels and resolve problems as they occur, rather than waiting for an annual inventory check to find out that something is missing.
  • Event Management: In this context, an event is something that happens regarding the movement or storage of a particular product. The event management system helps track individual goods and get more information about product movement. It’s also useful for helping ship out older products first, avoiding waste as items decay over time.
Supply Chain Visibility:

These modules are mainly for managers and focus on providing more information about your supply chains, including the performance of each segment. These also help identify weak points and ways to reduce costs.

In most cases, the supply chain visibility modules also make it easier to adjust your supply chain to account for real-world factors. For example, a sudden rush to buy products might trigger temporarily increased production to compensate, while slowing sales can trigger fewer material purchases. The primary modules of this section include: 

  • Strategic Supply Chain Design: Strategic supply chain design focuses entirely on optimizing supply chains to achieve the best results for your company. This includes adjusting the supply chain to account for failures or problems, such as vehicle collisions that destroy finished products while they’re on the road.
  • Supply Chain Analytics: The supply chain analytics module deals with the actual data of the supply chain. It’s mainly useful for identifying strong or weak spots in the network, such as unreliable operators or consistently over-performing drivers. Note that performing too well can be as much of a problem as not doing well enough.
  • Supply Chain Risk Management: This module focuses on identifying and mitigating risks in supply chains. Risks include improper shipping or handling, vehicle collisions, delayed loading or unloading, and anything else that can negatively impact your systems’ performance.
  • Sales And Operations Planning: Finally, sales and operation planning within the supply chain is another level of monitoring performance and planning ahead to minimize waste. This module works together with the rest of the visibility software to provide as close to total awareness of the supply chain as possible.
Supply Network Collaboration:

Collaboration modules focus on interacting with people outside of your company, including suppliers and customers. This is not the same as marketing, which is a completely different type of interaction with customers.

  • Supplier Collaboration: Supplier collaboration systems focus on helping acquire raw materials and finished products. By giving companies access to this information, they can also plan ahead and help optimize your supply chain to ensure the steady delivery of finished products to your retail location.
  • Customer Collaboration: Customer collaboration is somewhat rarer, but retail stores and other environments may collaborate with you to stock shelves or store items. This provides a centralized point for gathering and providing the necessary information.
  • Outsourced Manufacturing: Many companies outsource their manufacturing instead of doing everything internally. This module covers some of the specific needs and requirements of outsourcing, including the extended transportation times and a greater chance of irregularities that these delays can cause.
Demand Planning:

The demand planning module focuses on predicting what you’ll need to meet future demand for your products. For many companies, this includes creating predictions for different scenarios and using them to guide decisions if a product does better, or worse, than anticipated.

  • Demand Planning In MS Excel: Demand planning uses Microsoft Excel and its spreadsheet-creating capabilities to help estimate future demand. This is particularly useful for forecasting different scenarios and adjusting purchase and delivery times as needed to account for the real-world performance of your company.


SAP S/4HANA is the successor to SAP’s previous systems, R/3 and SAP ERP. One of its most notable functions is that it’s optimized for in-memory databases, which makes it fast enough to support the needs of larger businesses.

Notably, SAP S/4HANA is also designed mainly for larger enterprises that have more complex needs than a small business. Small companies don’t need the level of help this software requires, even if it could theoretically help, so most of them use little or none of this software.

As the successor to SAP ERP, SAP S/4HANA is the company’s primary product moving forward and has a much longer life planned for it. That makes it fundamentally better for companies who are just now trying to pick what enterprise software to buy and use.

The name stands for SAP Business Suite 4 SAP HANA. SAP HANA is the in-memory database system mentioned above, and it builds on the SAP ERP systems to provide faster and better support for business operations.

Like SAP ERP, SAP S/4HANA is divided into five primary categories, and users can pick which of these to use for their business.

While they perform at their best when a company uses all of them, it is possible to use separate modules only as needed. This provides a degree of flexibility that full-suite-only systems can’t match.

SAP S/4HANA Finance

SAP S/4HANA’s Finance platform covers financial planning, accounting, treasury services, cash management, risk management, accounts payable and receivable, and similar topics.

It also allows your choice of cloud or on-premise deployment, which can provide extra security on-demand.

However, perhaps the most unique aspect of the financial model is its self-learning data. 

Embedded statistics, reports, and benchmarking algorithms use cross-company data to provide a better view of what works and what doesn’t. That makes forecasting financial information considerably easier for everyone, and without compromising your company’s security.

Other financial systems include simulations of organizational changes, a unified data model that helps simplify processes, and the ability to perform financial analysis at any level of granularity. 

The cash management systems include real-time visibility of bank balances and currency options.


SAP S/4HANA organizes supply chains differently than how SAP ERP does. Instead of having Supplier Relationship Management and Supply Chain Management, it organizes the software into four distinct categories.

  • Sourcing And Procurement: This system focuses on raw materials, including extended procurement needs, operational purchasing, and managing contracts. Essentially, it focuses on helping you get everything you need to start production once you have a manufacturing facility lined up.
  • Manufacturing: This module focuses on product creation. It addresses areas like quality management, scheduling, planning deliveries, operations, and responsive manufacturing that can speed up or slow down based on demand.
  • Supply Chain: The third module focuses on the broader picture, from pre-planning production to delivering finished goods to purchasers. It covers topics like transportation management, warehousing your products, and tracing batches of products in case you need to recall them. This is fundamentally the largest component.
  • Asset Management: This module focuses on fixed assets, ranging from tools to buildings and real estate. It also covers production plant maintenance and other factors. This module typically doesn’t treat products as assets because things you’re selling are fundamentally different from things your business has and uses.


The Sales module is, unsurprisingly, the software that focuses on helping you get and close sales, and it addresses everything that can impact a buyer’s decisions. That starts with pricing products, getting sales inquiries and quotes, and generating sales contracts as necessary.

The Sales module also supports some less-common needs, such as available-to-promise checks, individual requirements for products, credit memo requests, and repair orders. 

However, this system does not support marketing or topics like web design in the same way SAP ERP organizes things. Marketers typically prefer using other systems to collaborate, generate advertisements, and monitor the effectiveness of marketing campaigns.

SAP S/4HANA R&D/Engineering

The R&D/Engineering module focuses on the larger life cycle of a product. This begins with determining the overall product design and the bill of materials for creating it, which is an essential component of forecasting its profitability for the company.

After that, this module can project things into the future to help evaluate product lifecycle costing, often including niche details like replacing manufacturing equipment.

For managers, it also supports a leadership-level view of portfolios and projects, as well as managing innovation (as described earlier in this guide).

Finally, the R&D/Engineering module helps monitor chemical data to help you comply with all health and safety regulations.

This is particularly important in manufacturing because product safety problems could sink a company, so the robust systems provide additional help and support for ensuring your product is safe enough to sell.

SAP S/4HANA Human Resources

Finally, the Human Resources module is one of the system’s newest components, and SAP estimates it will be fully available for on-premise customers by 2022. They recommend using SAP ERP’s human resources systems until it’s ready.

Planned features include most of what SAP ERP offers, including the ability to track employees, evaluate benefits, and otherwise help improve worker performance.

Future Components

SAP S/4HANA is not a complete product in its current form. While the existing modules work well, SAP is developing numerous additional lines of benefits and features for customers. In time, you may hear about new features and services beyond those described in this guide.

Make sure to stay on top of the news from SAP if you choose to use their systems. This can help you decide whether or not to start using their newest modules at your company. 

Announcements can come up to several years ahead of when products release, but you may be able to test their systems earlier if they think you’re a good match for that.

Otherwise, SAP typically updates its software quarterly (for cloud-based customers) or annually (for on-premise customers). These can be large updates, so consider trying to schedule things so that nothing particularly important is scheduled for the update days.

Errors can happen no matter how hard you try to prevent them, and reducing your reliance on the system during update days can help minimize the impact of issues on your business.

SAP maintains a robust customer service network, so chances are you can resolve any problems quickly.

SAP Customer Experience

SAP’s Customer Experience suite (originally known as SAP C/4HANA) is a set of five cloud-based applications designed to support the changing needs of businesses. These are divided into five primary components:

SAP Customer Data Cloud

The customer data cloud focuses on gathering and protecting sensitive customer information, including information provided to your company when customers fill out forms.

Notably, this software also complies with the GDPR (General Data Protection Regulation), a major European Union law affecting your ability to collect and manage some types of data.

Functionally, this service makes it easier to coordinate business activities within the European Union without having to learn as much about its regulations.

This is useful for both European and International businesses, although the customer data cloud is still helpful for companies located outside of the EU.

SAP Marketing Cloud

The marketing cloud is SAP S/4HANA’s home for marketing activities. Notably, it focuses on collecting as much data as possible about all marketing campaigns, then determining the real impact of each campaign.

Armed with that information, you can improve future campaigns in an ongoing cycle.

SAP Commerce Cloud

The commerce cloud isn’t quite as straightforward as its name suggests. This service covers four primary areas: content management for products, experience management for customers, personalization, and managing orders.

It’s particularly useful for e-commerce needs, such as setting up online stores or selling through existing digital retailers.

To a lesser degree, this system also helps support business websites by managing content for products. That’s not the main focus here, but since many companies sell products through their website, the commerce cloud can impact that area.

SAP Sales Cloud

The sales cloud focuses on actual sales to customers, rather than marketing to them and trying to get them to buy. The difference is that marketing mostly occurs before the customer interacts with the company, while sales occur after they start interacting.

This cloud heavily emphasizes data collection and forecasting, providing a broader view of potential customers and maximizing the chances of converting each potential customer into a revenue source.

SAP Service Cloud

The Service Cloud focuses on customer service and helps provide a seamless experience for (potentially upset) buyers. It integrates messages from different locations, ranging from social media messages to live calls, to help customer service teams provide consistent responses.

This system also helps track and monitor service volumes to predict when you’ll want more customer service staff ready to help out. By optimizing shifts, you can both reduce costs and improve overall effectiveness.

Reporting and Analytics with SAP

Analytics is one of the central features of SAP’s software, and with good reason: It doesn’t matter how much data you have if you can’t extract useful information from it. With SAP S/4HANA, most analytics capabilities are included in their relevant modules for easy access.

This is one of the parts of the software most likely to see updates and changes as people figure out new ways of storing and evaluating data.

SAP is already using machine learning and analytics algorithms to create better revenue projections, and they’re in a special place to do that.

As you learned near the beginning of this article, SAP is easily one of the world’s largest enterprise software companies.

That means it has access to extensive amounts of real-world data from customers, most of whom are happy to help improve the software they’re using by sharing that data.

Accordingly, getting analytics isn’t difficult with SAP software. However, companies must proactively choose to use that data’s results, and making organizational changes based on data is challenging.

Keep that in mind when setting your company’s policies on using data and analytics.

SAP User Interfaces

SAP currently offers two primary user interfaces. The first of these, the SAP GUI (SAP Graphical User Interface), is used by SAP’s former generation of SAP ERP applications like:

  • SAP R/3
  • SAP CRM 7.0

SAP Fiori is SAP’s new UI and UX. It’s used by SAP’s latest products, including:

The SAP Back-End

As you know, from reading through this guide, SAP’s software is some of the most complex and robust enterprise software ever created, and it’s built on literally decades of experience and active development. Few pieces of software come anywhere close to this.

While most people stick to the front, user-facing side of the software, there are a few things to consider about the back end of things. Notably, by customizing the software, you can alter it to fit your unique needs and perform routine tasks.

Customizing SAP

Here are the main ways you can customize SAP systems:


Extensions are additions to the basic SAP software that allow it to do new things. These can be as simple as adding a small amount of code to automate certain processes, or as complex as completely new applications that run on, or alongside, a SAP system.

Most extensions use the ABAP (Advanced Business Application Programming) language to code the software, which SAP itself developed for integration with their software. It’s a robust programming language that can use different general principles as needed.

ABAP is also a relatively old language since SAP wrote its R/3 software with it. This means it’s old enough and popular enough that programmers can easily find classes, guides, and other information to help learn it.

However, SAP CDS (Core Data Services) replace SAP ABAP more and more. SAP CDS are a central component of SAP’s new programming model that leverages SAP HANA. The new programming model’s core idea is to push the logic from the application server (ABAP) to the client-side (SAPUI5) and the database (CDS). Anyway, SAP ABAP will stay probably forever a part of SAP even though a smaller part than in the past.

Therefore, programming extensions in-house is entirely possible for larger corporations, and even smaller companies can hire someone else to do it.

Cloud And Mobility

SAP works at the forefront of business needs, and few of those needs are bigger than the need to work on the go.

Between real-world factors encouraging people to work from home and the increasingly high speeds of internet connections, mobility is rapidly changing from a perk to a necessity.

Many of SAP’s services are already cloud-based, which means people can technically access them from anywhere. That isn’t limited to processes hosted on their servers, either.

As you can see below, SAP’s revenue from Cloud Subscriptions and Support spiked from 4,993 million Euros to 16,080 million Euros in the year 2019:

Global Revenue of SAP from 2009 to 2019, by Segment

By using technology like VPNs, employees can access SAP software hosted on their company’s servers, too, all without compromising security.

Any SAP software that isn’t inherently mobile can usually be made mobile through a little extra programming and accessing the SAP Cloud Platform. SAP even provides software development kits (SDKs) to support this.


Despite SAP’s size, most companies don’t rely exclusively on their software and systems. Many businesses have a combination of purchased and customized software developed for their unique needs, and that isn’t likely to stop happening anytime soon.

SAP’s response to this is a collection of integration modules and options that allow their software to interface with other systems.

The value of this varies by company, but most businesses can benefit from linking their existing databases to SAP modules so they can process more information and generate better suggestions.

These types of platform integration are also helpful for working with clients and customers. For example, integration can link business partners with on-premise applications, or cloud applications with relevant public authorities.

While SAP makes this easier on people, that doesn’t make integration as simple as it could be. There are too many systems and variables for a one-size-fits-all solution, so proper integration usually requires creating custom code.

The important point is that integration is possible, and it’s usually easier than people who aren’t tech-savvy realize.


Finally, SAP uses a variety of administration systems to help managers, IT personnel, and other people get more information about how people are using the software and how well the business is running.

Administrative components of SAP software help monitor user access, assign authorizations for accessing different components, and even manage change controls to ensure nobody deletes things by mistake. IT access services help with troubleshooting problems.

SAP Products

These are SAP’s products on an infographic. SAP has 340+ products. This infographic is by no means guaranteed to be complete. See it as a guide to getting an overview.


What Is the Definition of SAP in Terms of Business?

SAP makes software.

That’s the shortest SAP definition, but it’s not very useful.

So, if you would like to learn the complete definition of SAP in business terms and get a step-by-step explanation of SAP, this article is for you.

Keep reading!

The Definition of SAP in Business Terms Step-By-Step

The definition of SAP in a business context (not the plant fluid) 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 organizations of any size and industry.

Let’s break this definition down, step-by-step:

#1 SAP (Systems, Applications, and Products in Data Processing)

SAP stands for “Systems, Applications, and Products in Data Processing” and “Anwendungen und Produkte in der Datenverarbeitung” in German.

When SAP was founded in Germany in 1972 by five former IBM employees, SAP stood for “Systemanalyse und Programmentwicklung”, later abbreviated to SAP. That German translates to “System Analysis and Program Development” in English.


In 1976, SAP changed the name to what it is today, probably because they anticipated going international soon and the previous full name didn’t work in English.

#2 SE (Societas Europea) is a European

SAP is a Societas Europea (SE).

Societas Europea is a Latin term that translates to “European society.”

A Societas Europea is a public company that is registered in accordance with the corporate law of the European Union.

When SAP was founded, it took the form of a private partnership (GbR) under the German Civil Code.

Then, in 1976, in accordance with German law, SAP founded a limited liability company (GmbH) that SAP turned into a stock company (AG) in 1988.

Finally, in 2014, SAP AG became a Societas Europea (SE) in 2014 and therefore transformed from a German company into a European company.

#3 Worldwide Operating Software Company

In 1977, SAP got its first international customers from Austria and France—5 years after SAP’s founding.

Today, SAP operates worldwide and has customers in 180+ countries—quite an impressive number since there are 196 countries in the world.

SAP makes software.

Software is that part of your laptop or mobile phone that you can’t touch; it’s the applications that perform calculations, record, return, and display information to you as a user.

The counterpart to software is hardware.

Hardware is the parts of your computer or phone that you can touch, things like the memory in your phone, the processor, the screen, and the device itself.

SAP doesn’t make hardware.

#4 That Makes Software for the Management of Business Processes

Software companies usually specialize in a particular kind of software, and SAP is no exception.

SAP makes business software that companies use to manage their business processes.

Imagine a business process as a flow of information and work needed to make something happen.

Almost anything can be described as a process.

To make a process more tangible, think of it like a flowchart.

For a personal scenario where you want to use your laptop:

  1. Locate the laptop
  2. Get the laptop
  3. Open the laptop
  4. Press the power button. If the battery is empty, plug the laptop into its power source.
  5. When the operation system is started up, then enter your credentials.

So a business process for a help desk might be:

  1. Answer call
  2. Create ticket
  3. Log details in the ticket
  4. Assess urgency and impact
  5. Assing priority
  6. Assign help desk employee to the ticket
  7. Help desk employee picks the highest priority ticket
  8. Help desk employee takes care of the ticket. If the help desk employee can’t take care of the ticket, then he escalates the ticket to a 2nd level help desk employee.

SAP is #1 in the ERP software market worldwide.

The ERP software market is expected to bring in 96.74 billion dollars worldwide by 2023:

ERP software is divided into subcategories including SCM (Supply Chain Management), PLM (Product Line Management), and CRM (Customer Relationship Management). The CRM market is the largest among them:

CRM software is used to manage customer interactions, like running an online store and communicating with customers. CRM software is predicted to generate revenue of 40.26 billion US dollars by 2023:

SAP is the second biggest CRM software company in the world behind Salesforce:

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

#5 Suitable for Organizations of Any Size and Industry

SAP’s business software solutions suit organizations of any size, from small startups to the world’s largest conglomerates.

Apple, the world’s largest company by market value, uses SAP products to keep track of all its orders on iTunes.


Companies can customize SAP software to meet their needs.

An excavator manufacturer isn’t the same as a bank and so they need different software.

SAP software can be customized to meet these needs.

SAP also offers industry-specific software. The company pre-configured their software for certain industries, including:

  • 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 ServicesDefense 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

The SAP ERP modules list includes all SAP industry solutions and SAP ERP modules.

Now for some numbers about SAP:

Remarkable SAP Key Figures

SAP has:

  • 340+ products
  • 100,330+ employees
Worldwide Number of SAP Employees From 2006 to 2019-100
  • 200,000,000+ users
  • 440,000+ customers in 180+ countries
    • 80% of SAP’s customers are small and medium-sized businesses
    • 78% of the world’s food is distributed by SAP customers
    • 82% of the world’s medical devices are distributed by SAP customers
    • 92% of the Forbes Global Companies are SAP customers
    • 98% of the 100 most valued brands are SAP customers
    • 97% of the greenest companies are SAP customers

77% of the world’s transaction revenue touches an SAP system.


SAP is the:

  • #1 in the ERP software market worldwide
  • #1 largest software company in Europe
  • #2 in the enterprise application software market (Microsoft is #1)
  • #2 in the CRM market (Salesforce is #1)
  • #3 largest software & programming company worldwide
  • #3 in the software & programming market overall

SAP has:

  • €27.63 ($29.9) billion revenue
  • €8.21 ($8.91) billion operating income
  • €3.39 ($3.68) billion net income
  • €60.22 ($65.36) billion total assets
  • €30.84 ($33.47) billion total equity

SAP posted revenues of $29.2 billion in 2019. By comparison, Adidas’ revenue was $25.9 billion.


See here for the complete SAP Facts list.

Anyway, what’s the bottom line?

Super Simple SAP Explanation

You’ve got a business.

Not just any business, but a big one.

Your company has grown so big that it has split into divisions such as accounting, human resources, and production.

Now, your business isn’t a business anymore. It’s an enterprise.

You need to connect every part of your enterprise to make your organization work as a whole.

For example, the sales department sells one of your products.

Accounting needs to know about the sale so they can send an invoice to the customer.

Additionally, production has to know that they need to make the product.

Then logistics needs to know it needs to ship the product to the customer.

On top of that, you have to be able to compare the price to previous sales, and you have to look at the time from sale to delivery compared to the last 1000 sales of that particular item.

You’ll also need sales data for that specific customer in the last 10 years.

It All Comes Down to Information Technology

You need to bring the different parts of your enterprise together and make it easy for your enterprise to share resources across divisions.

In the 21st century, you don’t want to use letters, carrier pigeons, and file archives.

In today’s world, you rely on digital IT (Information Technology).

IT uses applications instead of letters, servers instead of pigeons, and databases instead of files.

IT makes things faster and more efficient.

ERP Software ties everything together. SAP was one of the pioneers in this particular industry in 1972.


Imagine you urgently need a specific screw from a supplier because you run out of stock of it.

Your supplier is located at the other end of the world and it’s the only one who makes this type of screws.

If you don’t get that screw within three days then your project will fail that you worked on since ever.

So do you want to hire and send a messenger with the next ship with the destination other end of the world to your supplier hoping the messenger survives the journey and returns with the screw in perhaps a year or two?

Or just open the supplier’s online store, put the screw in your basket, select extra fast delivery, and push the order button to have the screw within two days in your letter box?

SAP makes the virtual part of IT

This is where SAP comes in.

SAP makes software for applications, servers, and databases.

SAP software combines, manages, tracks, and analyzes everything your business does to archive its goal, all in one place.

Currently, business software is not just for large companies, but for small businesses too.

Particularly since cloud computing applications are ready to go without a big up-front investment for hardware, licenses, and IT experts.

ERP is the biggest segment in business software. CRM is the largest subcategory of ERP in terms of market size and growth.

ERP software combines, manages, tracks, and analyzes everything a company does in order to archive its goals as a company such as human resources, finance, production, and customer management.

CRM focuses on intertwining, managing, tracking, and analyzing everything related to your enterprise and your customers. CRM manages things like customer data, online shops, and service tickets.

Short and sweet:

SAP is a HUGE company that makes software to manage business processes (SAP is #1 in the ERP software market and #2 in the CRM software market).


User Exit vs. Customer Exit vs. BAdI vs. BAPI (SAP)

This is about SAP user exit vs. SAP customer exit vs. SAP BAdI vs. SAP BAPI.

You’ll learn:

  • What user exit, customer exit, BAdI, and BAPI mean
  • The difference between them

If you want to get this SAP fundamental right, this is the article for you.

Let’s get started!

Why User Exits, Customer Exits, BAdIs, and BAPIs?

Let’s divide the four into two categories:

BAdIs (Business Add-ins), user exits, and customer exits belong to the same category.

BAPIs (Business Application Programming Interfaces) are another category.

#1 Category: User Exits, Customer Exits, and BAdIs

User exits, customer exits, and BAdIs all serve the same purpose:

See, SAP applications are standard software. Standard software provides a solution to clearly defined scopes, like standard business processes. Standard software doesn’t cover things like unique business processes. Let’s make this more clear with an example:

There is a standard software that manages lemonade stand materials: 

  • Water
  • Sugar
  • Lemons

These are the standard materials of a lemonade stand.

However, one lemonade stand doesn’t make lemonade like other lemonade stands. This lemonade stand makes its lemonade with mint. Obviously this lemonade stand wants to material manage away the mint too.

Now this unicorn lemonade stand has two options:

  • Pay tons of money for an individual software system that gets created just for them.
  • Use and customize the existing software and save a ton of money.

That’s a no-brainer:

It’s option 2. They buy the standard software for pennies  and customize it to handle the mint material as well.

So far so good?

Now, if SAP made the lemonade stand standard software, you would do the customization that was needed (if you couldn’t do it with the standard customization options, but let’s keep our options simple for now) with a user exit, customer exit, or BAdI (likely the latter since the other two are outdated).

Therefore, sap user exits, customer exits, and BAdIs serve one purpose, and one purpose alone: to customize standard SAP software.

Furthermore, BAPIs:

#2 Category: BAPIs

BAPIs aren’t for customizing standard SAP software.

BAPIs are APIs (Application Programming Interfaces), and they make SAP systems accessible to other SAP systems and third-party applications.

For example, there is an SAP ECC application server and an SAP CRM application server in your SAP system landscape. Now, you want to call a function in your SAP CRM from SAP ECC. How do you access SAP CRM? Correct: through a BAdI.

BAPIs have nothing to do with extending or modifying standard SAP programs. Therefore, there are two categories. However, BAdI sounds like BAPI, so it makes sense to compare the two for clarification.

Let’s take a look at each item:

What Is an SAP User Exit?

The user exit was one of the first SAP techniques to customize standard SAP programs.

An SAP user exit is a point in a standard SAP program where a customer can run its own code. User exit isn’t an enhancement, it’s a modification.

User exits allow developers to modify SAP programs by modifying their data objects and program components. On an upgrade, every user exit has to be re-implemented and verified that it complies with the original but now updated standard SAP program.

There are two types of user exits:

  • User exits using includes: These are customer enhancements that are called directly in the standard program.
  • User exits using tables: These are used and managed using customizing (transaction SPRO).

You invoke an user exit through a subroutine in the standard program:

PERFORM the_user_exit

As mentioned, the PERFORM executes in the standard SAP program. As a result, you have access to pretty much anything the program does. This means you can do pretty much anything but with power comes responsibility.

Furthermore, because the standard SAP program directly implements the user exit, you need an SAP activation key. Additionally, the user exits gets activated whenever you activate the standard program.

What Is an SAP Customer Exit?

The SAP customer exit is the successor to the SAP user exit.

SAP customer exits are like SAP user exits: they are special points where customers can implement their own logic.

But a customer exit isn’t a modification, it’s an enhancement. Unlike user exits, customer exits cannot change program components or data objects in the standard SAP program. 

After you activate a customer exit in an SAP standard program, it calls an empty function module. You have access to this function module’s parameters:

  • Importing
  • Exporting
  • Changing
  • Tables

By putting your code in the function module, you can enhance the standard SAP program.

So when the SAP standard program calls the user exit, the user exit calls the function module, and the function module calls your code:

SAP standard program > user exit > function module > your enhancement of the SAP standard program.

A standard SAP program invokes a customer exit as follows:

CALL CUSTOMER-FUNCTION 'the_customer_exit'

An SAP activation key isn’t needed for a customer exit. Activating a function exit requires creating a project in the transaction CMOD (Customer Exits) and activating the project.

What Is an SAP BAdI?

The BAdI is the successor to the customer exit.

BAdIs are like SAP user exits and SAP customer exits: they’re places where customers can implement their own  logic.

The official SAP definition of a BAdI (Business Ad-In) is:

An entity provided by SAP to allow the standard behavior of a specific application, such as Financials, to be enhanced without modifying the standard solution.

That sounds like an SAP user exit, doesn’t it? Yes, it does:

BAdIs are just object-oriented versions of SAP user and customer exits. Instead of putting logic in a standard SAP program or function module, you create a class that implements predefined methods from an interface. The SAP standard fires those methods at predefined points.

Some BAdIs can have multiple implementations, which is great for software development as many developers can use the same BAdI independently. Furthermore, you can create BAdIs for your own programs.


BAdIs come in two flavors: classical BAdIs and new ones. SAP released the classical BAdIs with release 4.6d and the new ones with the Enhancement Framework in release 7.0. You can migrate the old BAPIs to the new ones so that you can take advantage of the new features in the latest BAPI version.

BAdIs are great because they can be used without modifying the original code such as customer exits. Plus, BAdIs are object-oriented and therefore reusable—before BAdIs, there was no reusable enhancement technique in SAP.

There are both single-implementations and multiple-implementations of the BAdI, and multiple implementations can be created from a single BAdI definition.

A BAdI consists of an interface, a set of filters, and various settings that can be customized depending on the prerequisites in place, and these implementations can be externally controlled through switch framework.

BAdIs can also be used to build screens and menus for dynpros (Dynamic Programs) and SAP GUI (Graphical User Interface) statuses.

BAdls are created and edited inside ABAP Enhancement Builder. They’re in the global class namespace. You can search for BAdIs and see their details with t-code SE18 (Business Add-Ins: Definitions). You can implement a BAdI with the t-code SE19 (Business Add-Ins: Implementations).

What Is an SAP BAPI?

Business Application Programming Interfaces (BAPIs) allow SAP developers to safely access and share SAP business objects with external clients and third-party organizations that support the RFC protocol.

BAPIs are defined within the BOR (Business Object Repository) as either specific SAP interface types or methods of SAP business objects, within the SAP landscape. The BOR stores all SAP business objects, such as:

  • Activity
  • Lead
  • Opportunity

BAPIs provide an object-oriented view of developing business solutions and an interaction method by which objects can be fused and integrated to resolve problems.

BAPIs are implemented and stored as function modules that are usually RFC enabled. An RFC module communicates between SAP systems. It calls a function from one SAP system in another SAP system.

BAPIs allow external applications to access SAP systems:

  • Processes
  • Functions
  • Data

Applications that access SAP systems with BAPIs belong to:

  • The Same SAP system (for example, SAP S/4HANA)
  • Another SAP system (for example, an SAP CRM 7.0 communicates to an SAP ECC)
  • An External system (for example, a .Net system)
  • HTTP Gateway

You can find BAPIs with the t-code BAPI (BAPI Explorer).

What Is the Difference Between a User Exit, Customer Exit, BAdI, and BAPI?

Now it’s easy:

  • User exit
    • One of the first extension methods by SAP
    • Allows you to modify a standard SAP program
    • Obsolete
  • Customer exit
    • Successor of the user exit
    • You can extend a standard SAP program
    • It’s obsolete
  • BAdI
    • Successor of the customer exit
    • You can extend a standard SAP program and get extensions for your own programs
    • Latest ABAP extension technology
  • BAPI
    • You can share objects, functions, and data between SAP systems and with third-party applications that support the RFC protocol
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1000+ Massive SAP Acronyms List (Sortable & Searchable)

This is THE SAP acronyms list.

The list has 1000+ SAP acronyms and is constantly growing.

Never want to search for SAP acronyms in the deepest depths of the internet again?—find the list below.

Let’s get started!

Massive SAP Acronyms List

Below are SAP acronyms with their definitions.

By the way, here’s a SAP glossary with SAP terms and their definitions.

Further, here are key SAP terms explained in more depth.

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Something Is Missing?—Then It Is Your Turn

You couldn’t find the SAP acronym you’ve been looking for?

Leave it in a comment or submit it in the form below without its definition.

Or, if you’ve worked out the acronym yourself, feel free to submit it here on the form with its definition so everyone can use it (thanks!):

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Oh, and you can find out all about SAP with this deep dive.

Plus, perhaps your SAP acronyms you’re looking for is an ordinary IT acronym: Here’s the most comprehensive IT acronyms list.