An explanation of SAP ERP, ECC and S/4HANA

By

In this video, Informa TechTarget senior site editor Michaela Goss explains SAP's enterprise resource management products and their pros and cons for enterprise business.

The software powerhouse or the powerhouse software? 

If someone references SAP, they're most likely referring to SAP ERP. But just in case, let's start at the top. SAP, or System Analysis Program Development, is a German software company that -- as of this video -- has over 100 products and more than 480,000 global customers. It is, however, most well-known for its line of enterprise resource management products, SAP ERP. 

Here, we'll go over a brief history of SAP and the basics of SAP ERP.

A timeline of SAP

In its 50-year history, SAP has passed several business milestones:

1972:    SAP is started, with the goal of providing customers with the ability to interact with a corporate database in real time.

1973:    Its first product, a financial accounting system, is launched.

1979:    Then comes a mainframe system for real-time data processing across accounting, manufacturing, supply chain and human resources.

1992:    Next, SAP moves from mainframe computing to a client-server model, which launched the company onto the world stage. 

2004:    SAP launches SAP ECC -- or ERP Central Component.

The SAP product suite

ECC was once SAP's flagship ERP system -- usually implemented in medium-sized or large companies -- and SAP ERP and ECC were once used interchangeably. Today, it would be more accurate to say that "SAP ERP" is now an umbrella term for all of SAP's ERP-related products -- including ECC and its associated ERP suite Business Suite, as well as S/4HANA, Business One and Business ByDesign.  

SAP ERP helps organizations manage nearly every aspect of a business, including:

It does this via a three-tier architecture:

  • The first tier is the presentation tier, home to the SAP graphical user interface, or GUI -- AKA what the user sees on their screen.
  • The second is the application tier. It's responsible for processing transactions, running reports, monitoring database access, communicating with other applications and more. 
  • Third is the database tier -- that's where data is stored.

SAP ERP -- especially the systems designed for large enterprises, like Business Suite and the on-premises version of S/4HANA -- offers many benefits, including:  

  • Standardization of business processes, improving consistency, data accessibility and overall efficiency across departments.
  • A unified view of the business.
  • Customizability, only using the modules relevant to the business.
  • And reporting and analytics features that help decision-making.

But there are disadvantages to SAP ERP as well, including: 

  • High purchase and implementation costs.
  • Complex implementation.
  • And complex customization, if you don't have a deep understanding of programming, or need a specific application tailored to your business. 

SAP S/4HANA, which is based on SAP ECC and Business Suite, is said to address many of these issues, which is -- in part -- why SAP is pushing customers to adopt S/4HANA instead. While ECC is still available, SAP plans to end support for it by 2027.  

Is SAP leaving traditional ERP in the past? What technologies do you think they'll push instead? Share your thoughts in the comments below, and remember to like and subscribe, too. 

Sabrina Polin is a managing editor of video content for the Learning Content team. She plans and develops video content for TechTarget's editorial YouTube channel, Eye on Tech. Previously, Sabrina was a reporter for the Products Content team.

David Essex is an industry editor who covers enterprise applications, emerging technology and market trends, and creates in-depth content for several TechTarget websites.

View All Videos