High Level & Fundamental understandings of SAP System Architecture

It is an undeniable fact that SAP gains more and more customers such as big US and global Corporations and government.

SAP’s greatest opportunity probably lies beyond Microsoft or IBM or Oracle. SAP AG is a global software company headquartered in Walldorf, Germany.  SAP simply stands for Systems Applications and Products in Data Processing.   It will be highly worthwhile to go over the essential components of SAP System as more and more companies are moving toward using ERP package such as SAP rather than relying on traditional in-house development of Corporate Application Systems.

First, there is R/3 or ERD or ECC.  The name of this component has been evolved, but the essential function of system component has not changed much.  ERP stands for Enterprise Resource Planning Software product SAP AG.


This component has its own several sub-modules such as MM (Material Management), SD (Sales Distributions), FI/CO (Financial and Costing and Billing), PM (Plant Maintenance/Production Planning), WM (Warehouse Management) and HR (Human Resource Management).   It has Workbench environment where staff can develop customized program using ABAP programming and database tables to support companies’ own internal business processing.  Each sub modules support many screens/transactions and reporting transactions to easily keep track of inventory, orders, movement of goods.  Either Business customers or traditional IT staff can relatively merge together to design and develop various business processes.  ECC (Enterprise Central Component)  is recent name for R/3 or ERD.  Even huge company can be sufficiently supported by this one component.

Second component is called APO (Advanced Planning & Optimization).  This component is all about planning using demand data and the power of forecasting.  Forecasting is one of core sub-modules, and Planning is based on sophisticated planned data which is forecast data.  The name SCM (Supply Chain Management) is also used interchangeably to refer APO component.

However, please remember that SCM itself is a generic term and discipline that is taught at major university or institution.  DP (Demand Planning, i.e. Forecasting) and SNP (Supply Network Planning) are major sub-modules of APO/SCM.  It is interesting to note that as the SAP gains more popularity among companies, SAP is currently adding Industry-unique modules called SPP (Service Part Planning) with cooperation of major US Auto Industry (Ford) and CAT-Logistics.

Third piece is CRM (Customer Relation Management).  This component is most likely corresponding to Traditional Customer Order Processing System.  Customers can place orders, and orders are processed by CRM.  Customer data and Order data and material data are keys to manage this component.

There are also many layers/tools that are interfaced with above three components.  For instance, ICH (Inventory Collaboration Hub), EWM (Extended Warehouse Management under SCM), XI (Exchange Infrastructure), BI (Business Intelligence) and EP (Enterprise Portal) could be those.  SAP connects above three components using CIF (Core InterFace between ECC and SCM) and CRM Middleware (between ECC and CRM) to enhance data integrity and connectivity.


Author attended several SAP classes in MM, SCM and Customizations provided by SAP AG.  There are still strong demands for SAP system and classes, and it is hoped that more affordable training classes and materials will be available by other training agencies very soon.  It is noted that there are also hands-on training site which provides CBT and self study.

Please note that EWM (Extended Warehouse Management) component of SAP landscape is getting popular, and please do not miss looking at this component if you have a project to improve Warehouse Management.

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