A short guide to primary SAP S/4HANA modules and LOBs
SAP organizes S/4HANA modules around lines of business. Here's a look at the modules and features, including important tools like analytics and technical modules.
SAP software possesses a well-deserved reputation for complexity. IT leaders can gain some insight into SAP's S/4HANA product by learning about the main S/4HANA modules.
When SAP released S/4HANA, the company reorganized its concept of ERP modules around "lines of business." LOBs are groupings of SAP modules that correspond to business functions within an organization. Some of those groups are finance, HR and manufacturing.
What is SAP S/4HANA?
S/4HANA was released in 2015 and is SAP's ERP software suite. S/4HANA is built on SAP's HANA in-memory database and is the successor to the company's ECC product.
SAP took a new approach to ERP when it created S/4HANA. The company simplified the product's data model, streamlined its architecture and created a more modern user experience. SAP's goal was to increase agility and enable its customers to carry out digital transformation.
Some versions of S/4HANA incorporate technologies like AI and machine learning, IoT integration and analytics. The HANA in-memory technology enables S/4HANA's analytics to run at significantly faster speeds than the ERP's predecessors.
A guide to the SAP ERP modules
Here's an overview of the primary SAP S/4HANA modules as organized into the various LOB groups defined by SAP.
Finance
Finance encompasses all aspects of a company's financial management, including general ledger (GL); accounts payable and accounts receivable; financial planning and analysis, controlling, treasury and risk management; and financial closing and consolidation.
The core elements of the Finance LOB are the Finance (FI) and Controlling (CO) modules, the Treasury and Risk Management module, and Financial Planning and Analysis. FI and CO, which comprise the core of most users' SAP systems, are often referred to as FICO, a nomenclature that dates back to the early days of SAP.
FICO is a natural starting point for most users implementing SAP for the first time. Users migrating to S/4HANA from ECC may need to transition from SAP's classic GL to the new GL, as S/4HANA only supports the latter.
Sourcing and Procurement
Sourcing and Procurement includes the Materials Management/Purchasing (MM-PUR) and Supplier Relationship Management (SRM) modules.
As with many of the modules in S/4HANA, MM and SRM are carryovers from SAP's legacy ECC product. Sourcing and Procurement enables users to carry out purchasing and procurement processes from start to finish and is integrated with manufacturing and supply chain functions. The functions within the LOB include service agreement management, spend analysis, supplier and category management, sourcing, contract management, operational procurement and invoice management.
SAP Ariba, a procurement and supply chain collaboration platform, can operate as a standalone product but is integrated with SAP's Sourcing and Procurement LOB.
Manufacturing
Manufacturing encompasses production planning and execution, quality management and any other processes related to turning raw materials into finished goods.
At the heart of the manufacturing LOB is SAP's Production Planning module, another carryover from ECC. Functions include manufacturing engineering and process planning; production planning; bill of materials management; manufacturing execution for discrete and process industries; outsourced manufacturing; quality engineering, inspection and management; maintenance, repair and overhaul; and maintenance operations planning and scheduling.
These functions are integrated with the Sourcing and Procurement, Supply Chain Management, Sales and R&D/Engineering LOBs.
Supply Chain
Supply Chain is an especially important LOB for manufacturing and distribution companies. Its core module is simply called Supply Chain Management and covers everything from high-level business planning to preplanning production to managing stock levels.
Warehouse Management, Transportation Management, and Production Planning and Detailed Scheduling all offer extended features for specific aspects of supply chain management.
Asset Management
Asset Management covers everything having to do with fixed assets, from machinery, equipment and tools to real estate assets such as land and buildings. The Asset Management LOB also encompasses Plant Maintenance and Environment, Health and Safety management and includes resource scheduling and change management.
The core module for this LOB is Enterprise Asset Management.
Sales
Sales covers all aspects of converting products and services to revenue, from pricing to quoting, customer contracts, returns, order fulfillment, invoicing and revenue recognition.
The Sales LOB includes SAP's Sales Order Management module, Pricing and Billing, Sales Contract Management and Available-to-Promise. CRM and the Customer Service module can also play a key role for companies that carry out post-sales service.
SAP's Hybris, which began as an e-commerce platform, has evolved to include CRM and marketing automation functions. In 2018, SAP rebranded Hybris under the name C/4HANA and later renamed it the SAP Customer Experience suite. It is integrated with the Sales LOB.
R&D/Engineering
R&D/Engineering is built around SAP's Product Lifecycle Management module. It helps companies manage product development and revisions, bills of materials and costing.
In addition, the R&D/Engineering LOB enables companies to manage their product portfolios with Enterprise Portfolio and Project Management and manage their product compliance and health and safety regulations.
Human Resources
The Human Resources LOB encompasses core HR and payroll functions, time and attendance management, and employee access to HR data. Many SAP customers migrating from ECC choose to continue running the company's on-premises Human Capital Management module as a standalone application that is integrated with S/4HANA.
S/4HANA now includes dedicated modules for Personnel Management, Personnel Time Management, Payroll and Talent Management.
SAP's SuccessFactors is a separate suite of HR software that focuses on areas such as performance management and learning and development.
Technical modules
In addition to the functional LOBs and modules described above, SAP designates certain technical components as modules as well. For example, SAP Basis and the NetWeaver platform provide the technical foundation upon which SAP's functional modules are built.
These technical modules are the engine that makes it possible to run all the other components of the SAP ERP machine.
Other important S/4HANA tools
While some parts of S/4HANA are not officially modules or LOBs, they are also critical pieces of the puzzle for virtually any company running SAP software.
Analytics
The SAP Analytics Cloud provides S/4HANA users with a wide range of capabilities, including standard reports, business intelligence, executive dashboards, predictive analytics and planning capabilities. Users who need more expansive analytics that require data warehousing capabilities can use the SAP Business Warehouse or its cloud-based successor, the SAP Data Warehouse Cloud.
Group Reporting, often associated with the Finance LOB, can provide consolidated financial reports for multiple corporate entities.
Industry Cloud
Industry Cloud is also not typically included in a list of standard S/4HANA modules but provides industry-specific capabilities to augment SAP's core ERP.
For example, the construction industry often involves complex progress billing and subcontractor payments that require specialized business processes. SAP's industry cloud software for the construction industry provides those capabilities as a cloud-based extension that users can deploy alongside SAP ECC or S/4HANA.
James Kofalt spent 16 years at SAP working with SME business applications and was a product manager for integration technology at Microsoft's Business Solutions division. He is currently the president of DX4 Research, a technology advisory practice specializing in ERP and digital transformation.
