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App Development
7 minutes read

SAP ECC Explained

By Robert Kazmi
By Robert Kazmi
App Development
7 minutes read

SAP ECC has been one of the leading ERP software solutions for many years. It gives decision-makers the ability to make business decisions based on real-time data. The true strength of SAP ECC is that it helps organizations optimize the business processes at the core of their operations. 

In today’s modern business world, organizations need to make sure that their web services and their physical business processes are connected in order to ensure positive outcomes for customers and key stakeholders. Let’s get a better understanding of what SAP ECC is and how organizations benefit from this HiTech enterprise software. 

What is SAP ECC?

SAP ECC stands for SAP ERP central component. This central component integrates digital information from all of the various areas of an organization in real-time, so decision-makers can get a holistic view of the entire organization’s operations and make decisions based on this information. 

For example, if there is a sale made in one area of the business, SAP ECC updates the data in all other affected areas of the business, such as inventory and materials. SAP ERP central component is the base layer of the SAP Business Suite. Business Suite also includes SAP CRM (Customer Relationship Management) and SCM (Supply Chain Management) software as well. 

Generally, SAP ECC is used by large or medium-sized organizations. SAP ECC includes various components that can be implemented to handle specific business processes. 

SAP ECC Functional Components 

SAP components, or modules as they are sometimes called, are part of the ECC program that have been developed to handle specific tasks or business processes. SAP ECC includes ten core components

In order to access the functionality of a component, it must be implemented, and in some cases, you may need to ensure that your components are integrated with one another in order to achieve optimal performance. An app development partner can help ensure that your components are optimally implemented and integrated with one another. 

Another important note on SAP ECC components is that your organization might not need to implement all ten. Some businesses may only want to implement a few of these components as they are needed, while others might want to implement all ten. 

The ten core components of SAP ECC are:

  • Sales and Distribution (SD)
  • Materials Management (MM)
  • Financial Accounting (FI)
  • Production Planning (PP)
  • Quality Management (QM)
  • Controlling (CO)
  • Customer Services (CS)
  • Project System (PS)
  • Plant Maintenance (PM)
  • Human Capital Management (HCM)

Sales and Distribution (SD)

This SAP ECC component gives organizations tools to handle almost every aspect of sales and distribution. The sales and distribution component covers product or service sales in national and international markets, whether it be through direct sales or a distribution network.

The SD component also provides tools for processing customer returns, billing, and credit issuance. 

Materials Management (MM)

The materials management component covers procurement and inventory tasks. Organizations procure materials from a number of different vendors locally, nationally, and in many cases, internationally as well. Material management also helps organizations track inventory. 

Inventory management includes goods issuance, goods receipts, and the transfer of inventory or materials from one business location to another. The MM component of SAP ECC also allows users to count and reconcile physical inventory. 

Financial Accounting (FI)

The financial accounting component records all of an organization’s transactions. Transactions occur with vendors and customers, and this component logs all transactions in one place for simple retrieval and viewing. Financial accounting also covers receivables from sales, cash management, payables from procurement, reconciliation, and banking fees. 

The larger, more complex an organization is the more transactions that will be occurring. It is important to keep every transaction neatly organized, and the financial accounting component in SAP ECC makes that job much easier. 

Production Planning (PP)

Planning manufacturing requires data insights and accurate demand forecasting. The production planning component includes tools that help organizations align customer demand with manufacturing capacity. Accurate production planning is an important facet of a manufacturer’s supply chain. 

Accurate production planning has been a focus of web and mobile app development projects for many years. SAP ECC’s production planning component offers organizations a very powerful tool. 

Quality Management (QM)

Quality assurance is a major concern for organizations. The quality management component can help organizations find the root cause of product failure. The process of finding the cause of a product failure can be lengthy and costly to an organization. Speeding this process up is a major advantage. 

The quality management component is most effective when integrated with sales, production, materials management, and plant maintenance. This component can also assist in managing internal and external audits of business processes.

Controlling (CO)

The controlling component is designed to handle cost center accounting, profit center accounting, and internal orders. This component can also help with financial planning since it offers a product costing feature that allows organizations to compare actual costs versus simulated costs. This component can be a huge asset to manufacturing businesses. 

In some cases, financial accounting and controlling components might be lumped together. In this case, it would be listed as FICO or FI-CO. If these components come paired in your SAP ECC system, you are not losing any functionality. 

Customer Services (CS)

This component is only valuable to organizations that are providing service and maintenance to equipment that a customer owns. The customer services component gives organizations the ability to bill customers and keep track of maintenance schedules. This is an important component for businesses that employ a fleet of repair professionals. 

Project System (PS)

The project system component of SAP ECC was built to manage large, complex projects. If your organization is setting up a new plant or manufacturing site, for example, this component is a valuable tool. This component covers everything project-related, from procurement costs to production costs, to ensure that your project is staying on schedule and on budget. 

Plant Maintenance (PM)

With the aid of IoT devices, the plant maintenance component monitors and tracks key machinery and systems like boilers or freezers. The plant maintenance component ensures everything is running properly, and it can even send alerts when maintenance is required, or issues are detected in order to prevent failure or disruption to your business processes. 

Human Capital Management (HCM)

The final core component of SAP ECC is designed to handle all human resource-related needs. The HCM component can handle payroll, time off, holiday calendars, employee training, and more. In large organizations with a lot of employees, the human capital management component makes managing everyone’s needs and benefits so much easier. 

The Future of SAP ECC

SAP has been one of the leaders in ERP software for many years. They have recently developed and released SAP S/4HANA. This is a cloud-based ERP software solution that allows organizations to get the same great service provided by SAP ECC on the cloud instead of on-premise. 

SAP HANA is the future of SAP ECC, but organizations that handle a lot of sensitive data or are more concerned with data security can still choose to use an on-premise ERP solution instead of using the cloud. 

Final Thoughts

SAP ECC is a powerful ERP software solution that organizations can benefit greatly from. However, SAP is not the only ERP provider. If your business is looking for a great ERP solution, but you don’t know how to choose the right solution, reach out to an app development partner

A partner can help you gauge the pros and cons of each solution and weigh them against your needs. Plus, implementing ERP software and integrating components can be a difficult task to handle on your own. A partner can help you implement the ERP software of your choice, whether it is SAP ECC or another solution.

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