An overview of SAP S/4HANA modules and LOBs

March, 2022

SAP S/4HANA Fundamentals: A Quick ReferenceComplexity is well-known as a characteristic of SAP software. That's hardly surprising, given that many of the world's largest and most sophisticated firms rely on it for basic financials, inventory management and supply chain operations, human resources, sales and marketing, and much more. 

Consequently, SAP has developed an alphabet soup of products and modules that even individuals who are well-versed in the company's products find difficult to understand. Furthermore, SAP's portfolio changes so often that there is an almost continual stream of name revisions and new acronyms. Even more so in recent years, as the company has restructured numerous modules from the previous SAP ERP Central Component (ECC) product and brought out a new version of its flagship ERP and lines of business.

As part of the S/4HANA platform, SAP has restructured its ERP modules into "lines of business" (LOBs). The key SAP S/4HANA modules will be covered in this article, divided under SAP's LOB groupings. This means that you should see your business operations in terms of LOBs rather than as discrete pieces of software. 

Accounting, control, treasury, and risk management are all part of finance, as are general ledger (GL), accounts payable, and accounts receivable, as well as financial planning and analysis, closure, and consolidation. It is the responsibility of the Finance LOB to ensure that all of the aforementioned components, as well as Treasury Management, are properly implemented. It's not uncommon for SAP's FI and CO modules to be together referred to as "FICO." This naming convention stretches all the way back to SAP's infancy. To get started with SAP, most clients choose FICO as their initial application. It is possible that customers moving from ECC to S/4HANA may need to switch from SAP's "old GL" to the "new GL," as S/4HANA only supports the latter.

Additionally, the Finance LOB provides an Investment Management module that assists with decision-making around fixed asset investments. Additionally, this line of business handles governance, risk, and compliance from a financial standpoint.

Sourcing and procurement include Materials Management (MM) and Supplier Relationship Management (SRM). As is the case with a large number of modules in S/4HANA, MM and SRM are carryovers from SAP's previous ECC offering. This LOB is responsible for the whole purchasing and procurement process and is strongly connected with manufacturing and supply chain responsibilities. This LOB manages service agreements, does expenditure analysis, manages suppliers and categories, sources, manages contracts, manages operational procurement, and manages invoices. If you want to buy things and work with your supply chain, SAP Ariba is a good way to do that. You can use it on its own or with SAP's Sourcing and Procurement line of business.

Manufacturing comprises production planning and execution, quality control, and everything else involved in the transformation of raw materials into finished commodities. SAP's Production Planning module, another relic from ECC, lies at the core of the manufacturing LOB. Manufacturing engineering and process planning; production planning; bill of materials management; discrete and process manufacturing execution; outsourced manufacturing; quality engineering, inspection, and management; maintenance, repair, and overhaul; and maintenance planning and schedulingThese tasks are inextricably linked to the sourcing and procurement, supply chain management, sales, and research and development/engineering lines of business.

Supply chain is a critical line of business for manufacturers and distributors. Its central module is simply titled "Supply Chain Management," and it encompasses everything from high-level company planning to preplanning manufacturing to controlling appropriate stock levels. Another element, Logistics Information Systems, enables businesses to handle worldwide transportation and logistics.

Asset management encompasses all aspects of fixed assets, ranging from machinery, equipment, and tools to real estate assets such as land and structures. Asset management also includes plant maintenance and control of the environment, health, and safety. Enterprise Asset Management is the primary module for this LOB. The Plant Maintenance module, which many ECC clients are familiar with, also plays a significant role in this area.

Sales covers everything from pricing through bidding, client contracts, refunds, order fulfilment, invoicing, and revenue recognition. The SAP Sales and Distribution LOB. For firms that value post-sale care, CRM and the Customer Service module are essential. SAP's Hybris, originally an e-commerce platform, now includes CRM and marketing automation features. In 2018, SAP renamed Hybris C/4HANA. It is intimately connected with Sales LOB and is likely to grow in importance in SAP Sales.

R & D/Engineering is based on the SAP module for Product Lifecycle Management. It enables businesses to manage product development and changes, as well as material bills of materials and costs. Additionally, the R & D/Engineering LOB helps organisations manage their total product portfolios and comply with regulatory requirements governing product health and safety.

Human Resources provides essential HR, payroll, time and attendance, and employee data access. Notably, SAP's Human Capital Management (HCM) module works as a stand-alone on-premises solution outside of S/4HANA. Because European privacy restrictions make a cloud-based HR system unviable for many SAP clients, HCM is a direct carryover from ECC. If you desire a native cloud-based HR platform, SAP SuccessFactors may be integrated with S/4HANA.

Analytics isn't normally classified as a module or LOB, but it's vital for every firm using SAP. Customers of S/4HANA can use the SAP Analytics Cloud for regular reports, business intelligence, executive dashboards, predictive analytics, and planning. For more complex analytics, SAP provides the SAP Business Warehouse (SAP BW) or its cloud-based replacement, SAP Data Warehouse Cloud.

Technical Modules In addition to the functional LOBs and modules outlined above, SAP classifies technical components as "modules." For example, SAP Basis and NetWeaver are the technological foundations for SAP's functional modules. These technical modules are the engine that drives the rest of SAP ERP.

Industry Cloud, a non-standard S/4HANA module, gives industry-specific functionality to SAP's basic ERP. A sophisticated progress billing and subcontractor payment mechanism is typically required in the construction sector. SAP's construction sector cloud solution delivers these features as a cloud-based expansion to SAP ECC or S/4HANA. Every year, SAP adds to its array of industry-specific cloud products.