A short guide to primary SAP S/4HANA modules and LOBs

SAP software has a well-deserved reputation for complexity. That's not surprising, since many of the largest, most sophisticated companies in the world rely on it for core financials, inventory management and supply chain operations, human resources, sales and marketing, and much more.

That complexity has spawned an alphabet soup of SAP products and modules that can be especially confusing, even to those who are quite familiar with the company's products. To make matters even more challenging, SAP's portfolio is constantly evolving, leading to a near-constant stream of name changes and new acronyms. That has been especially true in recent years, as the company has rolled out a new generation of its flagship ERP, reconfiguring many of the modules from the old SAP ERP Central Component (ECC) product.

SAP has reorganized its concept of ERP modules around "lines of business" (LOBs) within S/4HANA. In this article, I'll provide an overview of the primary SAP S/4HANA modules, organized into the LOB groups defined by SAP. Think of LOBs as logical groupings of SAP modules that correspond to broadly defined business functions within your organization.

Finance encompasses everything having to do with financial management in the business, 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 embodied in the Finance (FI) and Controlling (CO) modules, as well as the Treasury Management (TM) module. FI and CO, which comprise the core of most customers' SAP systems, are often referred to as "FICO." This nomenclature dates back to the early days of SAP. FICO is a natural starting point for most customers implementing SAP for the first time. Customers migrating to S/4HANA from ECC may need to transition from SAP's "classic GL" to the so-called "new GL," as S/4HANA only supports the latter.

The Finance LOB also includes the Investment Management module, which helps guide decisions with respect to investment in fixed assets. This LOB also addresses governance, risk and compliance from a financial perspective.

Sourcing and Procurement incorporates the Materials Management (MM) 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. This LOB addresses purchasing and procurement processes from start to finish and is tightly integrated with manufacturing and supply chain functions. The functions within this 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 tightly integrated with SAP's Sourcing and Procurement LOB.

Manufacturing encompasses production planning and execution, quality management and anything else having to do with 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 tightly integrated with the Sourcing and Procurement, Supply Chain Management, Sales and R&D/Engineering LOBs.

Supply Chain is an especially important LOB for manufacturing and distribution companies. Its core module is simply called Supply Chain Management module, which covers everything from high-level business planning to preplanning production to managing optimal stock levels. Another module, Logistics Information Systems, helps companies manage transportation and logistics on a global scale.

Asset Management covers everything having to do with fixed assets, from machinery, equipment and tools to real estate assets such as land and buildings. Asset Management also encompasses plant maintenance, as well as Environment, Health, & Safety management. The core module for this LOB is Enterprise Asset Management. The Plant Maintenance module, familiar to many ECC customers, also plays a prominent role in this area.

Sales addresses all aspects of converting products and services to revenue, from pricing to quoting, customer contracts, returns, order fulfillment, invoicing and revenue recognition. This LOB includes SAP's Sales and Distribution module. CRM and the Customer Service module also play a key role for businesses where post-sales service is important. SAP's Hybris, which began as a flexible e-commerce platform, has evolved to include CRM and marketing automation functions. In 2018, SAP rebranded Hybris under the name C/4HANA. It is tightly integrated with the Sales LOB, and is expected to play an increasingly important role in SAP Sales going forward.

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 businesses to manage their overall product portfolios and comply with product-related health and safety regulations.

Human Resources offers core HR and payroll, 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 (HCM) module as a standalone application, integrated with S/4HANA. Those who prefer a native cloud-based HR application can opt to integrate SAP SuccessFactors with S/4HANA.

Analytics is usually not listed as a module or LOB, but it's a critical piece of the puzzle for virtually any company running SAP's software. For S/4HANA customers, the SAP Analytics Cloud provides a wide range of capabilities, including standard reports, business intelligence, executive dashboards, predictive analytics and planning capabilities. For more expansive analytics that require data warehousing capabilities, SAP offers the SAP Business Warehouse (SAP BW) or its cloud-based successor, the SAP Data Warehouse Cloud.

Technical Modules. In addition to the functional LOBs and modules described above, SAP designates certain technical components as "modules" as well. SAP Basis and the NetWeaver platform, for example, provide the technical foundation upon which SAP's functional modules are built. It's helpful to think of these technical modules as the engine that makes it possible to run all the other components of the SAP ERP machine.

Industry Cloud, although not typically included in a list of standard S/4HANA modules, provides industry-specific capabilities to augment SAP's core ERP. The construction industry, for example, often involves complex progress billing and subcontractor payments that require specialized business processes. SAP's industry cloud solution for the construction industry provides those capabilities as a cloud-based extension that can be deployed alongside SAP ECC or S/4HANA. The list of industry cloud offerings available from SAP continues to grow as the vendor rolls out new innovations every year.