what are SAP Modules

SAP Modules: What Are They And Why Do They Matter?



SAP has many modules, so this article discusses the more popular modules and what business functionality they support for your business.

For the past 50 years, SAP has become one of the world’s largest and most successful software developers. The company offers businesses a variety of software capable of bringing nearly all of a company’s processes onto the same platform. Bringing the various aspects of your business together, such as accounting, logistics, and human resources, allows your company to get a better picture of how each of the components interacts and influences one another. Understanding these interactions provides you with greater control of your business.

This article will give a brief overview of a selection of the SAP modules with the most significant demand and explain why your company needs to implement them.

SAP Financial Accounting Module

SAP Financial Accounting Module

Maintaining a precise record of your financial transactions is arguably one of the most important aspects of running a business. Even if you conceptualize and produce the most innovative product or service of your time, your business is doomed to fail if you neglect to maintain your records correctly.

This is precisely why the SAP Financial Accounting (FI) module is one of the most critical components of the SAP business suite. SAP FI is the financial backbone of the SAP system and serves as a general ledger for your company. FI consists of several sub-modules which track and record the movement of all goods, services, and other financial transactions from your company to your customers, clients, vendors, and financial institutions. These sub-modules include: General Ledger (GL), Accounts Payable (AP), Accounts Receivable (AR), Bank Accounting (BA), Asset Accounting (AA), Travel Management (TV), and more.

Each of these sub-modules is capable of integrating across different disciplines. For example, the Accounts Receivable sub-module integrates with the Sales and Distribution module to maintain transaction records between your company and customers. Using the tools provided by the SAP Financial Accounting module, your company can maintain accurate external spending reports in real-time. This will show you how different aspects of your business are affecting your company’s revenue.

SAP Controlling Module

SAP Controlling Module

Planning your company’s finances doesn’t stop at reporting external expenditures. Knowing where your money is being spent internally is just as crucial for reporting and organizational planning. Keeping a watchful eye on your internal expenses allows you to see what areas of your business are adequately funded, where additional funds would be beneficial, and where you can afford to divert funds from.

The Controlling (CO) module provides your company with the ability to do just that. SAP CO is tightly integrated with the Financial Accounting module, and the two are often referred to as SAP FICO. Your internal accounting is recorded in CO, yet it also serves as the financial planning hub for your company. In CO, you can compare live financial data against the company’s financial plans. The Controlling module consists of seven sub-modules: Cost Element Accounting (OM-CEL), Cost Center Accounting (OM-CCA), Activity-Based Accounting (OM-ABC), Internal Orders (OM-OPA), Product Cost Controlling (PC), Profitability Analysis (PA), and Profit Center Accounting (PCA).

The various sub-modules included in CO allow you to check for variances in your company’s finances and determine what changes need to be made to your financial plans. When used in conjunction with one another, SAP FICO provides a complete overview of your company’s financial situation. While these two modules make up only a portion of the SAP business suite, they are two of the most commonly used modules due to their importance in pursuing financial stability.

SAP Treasury Risk Management

SAP Treasury Risk Management Module

The Treasury Risk Management (TRM) module is a comprehensive system that enables your financial department to make wise investment decisions with the company’s liquid cash. The TRM module consists of four main sub-modules: the Transaction Manager, Market Risk Analyzer, Credit Risk Analyzer, and Portfolio Analyzer. The information provided by TRM gives your finance department a birds-eye-view of the company’s financial situations by providing insights into the movement of cash, both internally between departments and externally in the markets.

By bringing all aspects of asset investment under one roof, your company can easily access reports that would otherwise need to be compiled manually. For instance, the Market Risk Analyzer provides an in-depth look at how the market could change and affect your investment. Likewise, the Portfolio Analyzer shows you how well that investment has performed; you can use the data provided to perform a risk/benefit analysis and determine if making similar investments in the future is worth the risk. Using the TRM module to make such decisions ensures that your company has the market information needed to make the best strategic investment decisions possible.

SAP Investment Management Module

SAP Investment Management Module

When someone mentions investments, the stock market is typically the first thing that comes to mind. However, that is not the focus of the SAP Investment Management (IM) module. While the Treasury Risk Management module focuses on financial assets, this module manages your company’s fixed asset investments. These investments can range from the in-house production or purchase of fixed assets, research and development, further education of employees, and more. The module consists of four separate components: Investment Program, Appropriation Requests, Investment Measures, and Information Systems. Together, these components centralize the approval, planning, management, and monitoring of the various investments your company makes.

Whether your company is investing in machinery/equipment, employees, or real estate, fixed assets are the primary generators of revenue. The IM module allows you to effectively track and monitor investments, which provides greater control over your company’s capital expenditures.

SAP Materials Management Module

SAP Materials Management Module

When delivering products to customers, maintaining an unbroken supply chain has to be a top priority. There are serious ramifications for your business if the supply chain breaks down and customers do not receive the products they have purchased on time. This is why implementing an effective supply chain management system is integral to success.

Enter the SAP Materials Management (MM) module. This module acts as the driving force in the supply chain. MM ensures that materials are being appropriately delivered along the supply chain. The process starts at the top with the supplier and goes down the chain to the customer. MM is also responsible for products being sent back up the chain if a product is returned. The module includes Purchasing (PUR), Inventory Management (IM), and Invoicing Verification (IV), along with several other sub-modules.

Using the Materials Management module ensures your business’s supply chain remains intact and functioning so that your customers can order and receive the goods you produce with as few issues as possible. The module integrates with the FICO, SD, and Production Planning modules to create a seamless path from the purchase of goods to their delivery. Using the MM module in conjunction with SD, FICO, and Production Planning helps create a cohesive purchasing ecosystem so your customers don’t end up purchasing goods your company does not have available.

SAP Production Planning Module

SAP Production Planning Module

Similar to the Sales and Distribution module, the SAP Production Planning (PP) module makes creating production orders more manageable than ever before. This module is beneficial when your company is ready to prepare for the future by planning its future production. This module consists of sub-modules such as Assembly-To-Order (LO-ASM), Master Planning (MP), and Sales and Operations Planning (SOP). The various sub-modules work together to convey the orders needed to keep the supply chain running fluently.

SAP PP integrates with all the previously mentioned modules to create a streamlined process. For example, when an order is placed, the Production Planning module works with the Materials Management and Sales and Distribution modules to determine what goods need to be purchased to fulfill that order. The Financial Accounting module would then track the expense required to buy the materials and the income generated from the order.

SAP Quality Management Module

SAP Quality Management Module

Consistently producing quality products is the only way a company can stay in business, so setting up a quality management plan is crucial to your company’s long-term success. The SAP Quality Management (QM) module provides you with the tools needed to implement and execute strategies for ensuring the products being sold are high-quality.

The QM module consists of several components, each having its own features. For example, the Quality Planning (PT) component allows you to create inspection standards for the materials received from vendors and your company’s products. Quality Inspection (IM) will enable you to schedule inspections, record results, and report defects. The Quality Control component (QC) allows you to modify the desired quality level based on previous assessments. Meanwhile, the Quality Certificates (CA) component enables you to produce paperwork certifying the quality of a product, the product’s characteristics, and inspection results. These are just a sampling of how SAP’s Quality Control module can help you provide your customers with well-crafted products.

SAP Sales and Distribution Module

SAP Sales and Distribution Module

Before the miraculous creation of computers and digital technologies, all business transactions and orders had to be done by hand. Not only was the margin for human error high, but tracking profitability over long periods would take an excessive amount of time. Having one centralized tool distribute sales information to multiple different business sectors saves you time and makes sure your records contain few to no errors. This is where SAP Sales and Distribution (SD) comes into play.

The Sales and Distribution module contains multiple sub-modules: Sales (SLS), Shipping (LE-SHP), Transportation (LE-TRA), Foreign Trade (FT), Billing (BIL), and more. In addition, the module acts as a central hub for the Financial Accounting, Controlling, Materials Management, and Production Planning modules. SD is the starting point for customer transactions, and produces order requests, tracks information regarding products, billing, and shipping, and can even place production orders.

Using the SD module allows you to connect and track every sale that your company makes quickly. After each transaction is made in SD, the inventory and billing calculations are updated simultaneously. Since all associated data is updated in real-time, your company is given the ability to plan and adjust the supply of goods based on the rate of sales. Thus, allowing your company to refrain from being overstocked or understocked depending on demand.

SAP Human Capital Management Module

SAP Human Capital Management Module

Managing and optimizing your workforce is one of the most significant ways your company can proactively work to maximize its productivity level. The SAP Human Capital Management (HCM) module grants your company control over many HR components. Everything from employee engagement and workload forecasting to scheduling and payroll can be completed with the tools provided by HCM.

SAP HCM is a comprehensive system that contains modules such as Payroll (PY), Recruitment (PB), Personal Administration (PA), and Organizational Management (OM), among others. The Human Capital Management System provides your company with complete control over the management of its employees. This system allows your company to see how the various aspects of HR are working together by bringing them under one roof. SAP HCM gives your company insight into every part of HR to make informed staffing decisions to increase overall productivity.

SAP Modules

The Syntax Advantage

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