Understanding the ERP core in is critical for making sense of the company’s cloud strategy and how all the various pieces fit together and support your business.
SAP Cloud ERP takes the place of the company’s flagship S/4HANA ERP solution and many of its other offerings, but it is radically different than what came before because a true cloud model required an entirely new architecture. Central to this new architecture, but only a small piece of the whole, is the new ERP core.
Why the ERP Core is Similar but Very Different
Before the cloud, ERP was a hulking, integrated on-premise solution for managing the entirety of an organization’s operations from finance and manufacturing to customer service. The ERP software handled many tasks and came with many functions. It also had applications and add-ons that would extend the system; organizations could change behavior by re-coding core business logic, and there were plenty of hooks for sharing data with third-party software and systems.
Everything was connected to the ERP solution, but this setup was big, complex, and hard to manage. Updates were perilous because they could break things; connections and data sharing were brittle and hard to set up because they weren’t truly integrated with the core software, and adjusting the system as technology and business dynamics changed was like steering the Titanic. This essential business software was also costly, forcing stripped-down versions for smaller businesses.
None of this truly supported the cloud model and the direction of business today, which is why SAP completely redesigned its ERP model from the ground up while still supporting businesses using the old model.
The new SAP ERP model is the opposite of what came before. Instead of a hulking do-everything piece of software, the new ERP core is small and does almost nothing directly. It just handles core business logic, data, and is built with a multitude of hooks for integrating data, services, and applications. The ERP core is no longer the doer; it is the orchestrating layer that brings everything together and makes it work as a whole.
The Advantages of a Small ERP Core
Agility and flexibility are at the heart of this new ERP architecture. Whereas the old ERP model could be made to do anything but at the cost of much time and effort, the new model is built for agility and constant change. SAP Cloud ERP is built to serve as an evolving, future-proof solution that mirrors the cloud and how technology now changes at an ongoing, rapid pace.
1. Updates and Changes Don’t Break the System
Because most functionality lives outside the ERP core, updates to the core don’t break the system unless the hook architecture is destroyed or neglected (which of course is never done, just like a cloud service maintains its core APIs).
Similarly, updates to the applications, services, and integrations that make up the actual functionality of the solution also don’t break the system because they operate independently and just hook into the ERP core that orchestrates.
2. Applications and Services Integrate Easier and More Cohesively
With the core ERP component serving as an orchestration layer instead of as an application itself, the applications and services that deliver the actual functionality are far easier to integrate into the system and work together as a unified whole.
Applications, data stores, and third-party systems connected by an integration all effectively become services that are mixed and coordinated by the ERP core. Automation can be applied across the platform, an AI engine can interrogate and act upon services where allowed, and data can be ferried and acted upon seamlessly across components in the stack.
The ERP core makes everything work together easily as a whole, even when not part of the official SAP ERP “stack.”
3. A Common Core that can be Configured for Infinite Needs
The modularity of the new ERP architecture means that businesses no longer use a distinct ERP solution depending on the size and complexity of their business. Each business just builds out the solution differently.
The ERP component that powers SAP Cloud ERP is the same core whether the business is a small services organization or a large multinational. The difference is the applications and services that sit on top of the ERP, and the cloud capacity the business has purchased.
This common ERP core means that a business can scale and evolve without requiring the disruption of a systems change. It also means that the business can use a system that is exactly right for its needs at every step in its growth journey. The system is future-proof and easily tailored to the current needs of a given business.
4. Prepackaged Solutions for Easier Deployment
Because the functionality and characteristics of the ERP fully stem from the applications and services that are attached to it, this also means that it is dramatically easier for SAP and support partners such as Navigator Business Solutions to develop prepackaged solutions that come ready for a given industry or business size. Developing a turnkey ERP solution is as easy as bringing together the right mix of applications and services, then configuring the system for the specific needs and logic of that industry.
By making it easier to create turnkey industry solutions, the new SAP ERP architecture dramatically cuts the cost, complexity, and time needed to roll out a new ERP solution. Businesses can now implement an industry-specific cloud ERP solution in as little as 90 days and without the numerous headaches or high cost it required in the past.
The Other Components in the SAP Cloud Strategy
The ERP component is the core, but with this new architecture, it is no longer standalone software. SAP Cloud ERP consists of the ERP core and several other important components that collectively make a complete business solution.
Cloud ERP Applications. Where most of the actual business functionality lives, ERP applications help businesses manage core operations such as finance, supply chain, procurement, manufacturing, sales, and human resources, all through a cloud-based platform that is orchestrated by the ERP component.
Business Technology Platform. The BTP is a marketplace and integration platform where businesses can connect third-party applications, services, and data sources to the ERP component so everything connects and acts as a unified whole.
Data Cloud. The SAP Business Data Cloud is a fully managed SaaS solution that centralizes and governs all SAP data while seamlessly integrating with third-party data, feeding a business and its applications with the data it needs for operations and real-time decision-making.
Business AI. The Business AI layer integrates leading AI engines such as Claude or ChatGPT directly into the platform so it can work with company data or provide agentic services where authorized and requested.
SAP combines these components with the core ERP for a complete, cloud-based business solution that is agile, flexible, and future-proof.
Learn More About SAP’s Cloud Strategy and How Modern ERP Can Benefit Your Organization
SAP Cloud ERP is a radical improvement over what came before, and it starts with the redesigned architecture of the ERP core.
Learn more about these changes and how they can help your business by contacting one of our experienced ERP consultants. You can reach us by calling (801) 642-0123 or by writing [email protected].