What are SAP S/4HANA Lines of Business (SAP LoB)?

With the introduction of SAP S/4HANA, fundamental terminology has also changed. While previous SAP ERP software was divided into modules, this is no longer the case with the current SAP S/4HANA system. Today, we are talking about Lines of Business (SAP LoB).

Unlike in previous SAP ERP solutions, however, the terminology and structure no longer only applies to the core ERP system.

This article examines the SAP S/4HANA Lines of Business (LoB), compares them with the previous term SAP ERP modules and brings clarity to the topic.

What are the SAP S/4HANA Lines of Business (SAP LoB)?

SAP Lines of Business (SAP S/4HANA LoB or SAP LoB for short) are the structural elements in SAP S/4HANA. The best way to translate “Line of Business” is “business area”. This translation also describes very well what a Line of Business is: Each SAP LoB comprises business processes and functions for a specific business area of a company. An SAP LoB is therefore a logical structural unit or grouping of S/4HANA. However, SAP does not limit the use of LoB terminology to the SAP S/4HANA software.

In the SAP ECC system, a module was a functional building block. With SAP S/4HANA, SAP has now organized the entire product portfolio into Lines of Business. Accordingly, all SAP products are assigned to one or more LoBs. This applies both to the functions that are available in the SAP S/4HANA basic system and to licenses that can be purchased. However, cloud services or standalone systems such as SAP Ariba or SAP CX are also organized in LoBs. The Lines of Business are therefore structural elements that structure not only SAP S/4HANA, but the entire SAP product portfolio.

Important to know: In SAP ERP and ECC, the structural elements were referred to as modules. Although the term persists, it is no longer part of the software manufacturer's official terminology in SAP S/4HANA.

What lines of business are there in SAP S/4HANA and what do they contain?

Since the release of SAP S/4HANA, new lines of business have been continuously added to the software. Today (as of 2024), the on-premises version of the system comprises the following LOBs

• Asset Management
• Finance
• Human Resources
• Manufacturing
• R&D and Engineering
• Sales
• Service
• Sourcing and Procurement
• Supply Chain

These SAP S/4HANA business areas are described in more detail below.

Asset Management

LoB Asset Management deals with the maintenance of a company's assets (fixed assets). In addition to machinery, equipment and tools, these assets also include buildings and land. Asset Management includes functions for the maintenance and servicing of production facilities (Plant Maintenance).

The functions of this LoB were covered in earlier SAP ERP solutions with the Plant Maintenance (PM) module.

Finance

Finance was the first Line of Business in SAP S4/HANA and is also one of the most comprehensive business areas. LoB offers functions relating to all financial aspects in a company. This includes financial accounting (including the general ledger), accounts receivable and accounts payable, controlling, profitability analysis, financial planning and analysis, treasury, risk management, consolidation and financial statements.

In previous SAP ERP solutions, finance was covered by the Financial Accounting (FI), Controlling (CO) and Treasury (TR) modules.

Human Resources

Die SAP LoB Human Resources stellt alle notwendigen Prozesse und Funktionen für das Personalwesen bereit. Hierzu zählen unter anderem die Personalverwaltung, die Lohn- und Gehaltsabrechnung (Payroll), das Zeit- und Anwesenheitsmanagement sowie Self-Service-Zugriffsmöglichkeiten auf HR-Daten für Mitarbeiter. Im SAP S/4HANA Kernsystem sind diese Funktionen nicht enthalten.

Die Personalverwaltung wurde in früheren SAP-ERP-Lösungen über das Modul SAP Human Capital Management (HCM) abgedeckt.

Manufacturing

Diese SAP S/4HANA Line of Business bündelt alle wichtigen Anwendungen und Szenarien rund um die Fertigung. Zentrale Funktionen sind dabei die Produktionsplanung und -steuerung (PPS), die Durchführung der Produktion (Manufacturing Execution) und das Qualitätsmanagement.

Funktionen für die Produktion wurden in früheren SAP-ERP-Lösungen durch die Module Product Planning (PP) und Quality Management (QM) bereitgestellt.

R&D and Engineering

Der Geschäftsbereich R&D and Engineering liefert Unternehmen alle relevanten Features rund um das Product Lifecycle Management, also die Verwaltung des Produktlebenszyklus. Dazu gehören Funktionen für die Definition von Produktstrukturen und Stücklisten, Revisionen, die Kalkulation, das Projekt- und Portfoliomanagement und das Investitionsmanagement. Weiterhin unterstützt diese Line of Business dabei, produktbezogene Gesundheits- und Sicherheitsvorschriften einzuhalten.

Funktionen für das Projektmanagement wurden in früheren SAP-ERP-Lösungen durch das Modul Project System (PS) bereitgestellt.

Sales

Die SAP LoB Sales vereint alle wichtigen Funktionen für Vertrieb. Unterstützt werden klassische Aufgaben wie Kalkulation, Angebote, Aufträge und Rechnungsstellung.

CRM, Kundenservice und Commerce sind hingegen keine Bestandteile dieses SAP Geschäftsbereichs. Wer diese Sektoren abdecken möchte, benötigt zusätzlich SAP C/4HANA (ehemals SAP Hybris). Es handelt sich dabei um die CRM-Suite von SAP, welche Lösungen aus den Bereichen Customer Experience (CX), Marketing, Customer-Relationship-Management (CRM) und E-Commerce bündelt. SAP C/4HANA ist tief mit der Sales-LoB in S/4HANA integriert und fügt sich somit problemlos in die Systemlandschaft ein.

Funktionen im Bereich Sales wurden in früheren SAP-ERP-Lösungen durch das Modul Sales & Distribution (SD) bereitgestellt.

Sourcing and Procurement

Sourcing and Procurement unterstützt die Geschäftsprozesse in den Bereichen Beschaffung und Einkauf. Die Funktionen der ehemaligen Module MM (Material Management) und SRM (Supplier Relationship Management) wurden in diese SAP LoB übernommen und erweitert. Einkaufs- und Beschaffungsprozesse lassen sich mit dem Baustein End-to-End abbilden. Alle Abläufe sind dabei eng mit den angrenzenden LoBs Supply Chain, Manufacturing und Finance verzahnt. Zu den wichtigsten Funktionen dieser LoB gehören das Lieferanten- und Warengruppenmanagement, das Bestellwesen, das Vertragsmanagement, Ausgabenanalysen und die Verwaltung von Lieferantenrechnungen.

In früheren SAP-ERP-Lösungen wurden diese Funktionen über das Modul Material Management (MM) bereitgestellt.

Supply Chain

Diese SAP S/4HANA Line of Business nutzen Unternehmen, um ihre Lieferkette zu gestalten, zu überwachen und zu optimieren. Besonders relevant ist die LoB daher für die Branchen Industrie und Handel. Ziel ist eine Optimierung aller Aktivitäten entlang der gesamten Supply Chain – von den Lieferanten über die Produktion bis hin zum Endkunden. Dabei fließen kontinuierlich wichtige Informationen wie Absatzprognosen, Produktionsplanung und Bedarfsplanung ein.

Das Modul Warehouse Management (WM) hat SAP-ERP-Lösungen die Funktionen für die Lieferkette bereit gestellt.

How do the LoBs in SAP S/4HANA differ from the modules in SAP ERP?

In previous SAP versions, the functional areas were referred to as modules. This has changed with the introduction of SAP S/4HANA. Since then, the software group has no longer organized its ERP software into modules, but has instead divided the entire product portfolio into lines of business with the introduction of SAP S/4HANA. This does little to change the basic approach of dividing applications, functions and processes into areas that make business sense.

The functions of the classic modules from SAP ECC still largely exist. They can now be found in various places in S/4HANA. The following overview provides information on how the core modules have been reassigned:

What will change with the division into LoB instead of modules?

The new structure changes relatively little for users. From a technical perspective, however, the change from modules to lines of business is by no means trivial. This is because SAP S/4HANA has been given a completely new solution architecture in this context. In contrast to the classic module structure, this is now much more strongly oriented towards business processes in companies. In some cases, functional areas that were previously combined within one module have been split across several LoBs. This includes purchasing and inventory management, which were previously combined in the MM module. In SAP S/4HANA, purchasing is now located in the Sourcing and Procurement LoB, while inventory management has been moved to the Supply Chain business unit.

There are also modules that did not even exist in the core of SAP ECC and were only available in the extended functional area of the SAP Business Suite. One example of this is SAP EWM (Extended Warehouse Management). This can be found in SAP S/4HANA in the “Supply Chain” LoB. The same applies to PLM (Product Lifecycle Management), which has been transferred to the “R&D and Engineering” LoB.

The implementation of SAP S/4HANA therefore provides companies with an ERP system that is significantly more process-oriented than its predecessors SAP ECC and SAP R3. This underlines SAP's approach of increasingly mapping, digitalizing, optimizing and automating processes end-to-end with SAP S/4HANA.