Understanding the Clean Core Strategy in SAP

The Clean Core Strategy was introduced by SAP in 2020 as part of their approach to managing the SAP S/4HANA Cloud ecosystem. This strategy is designed to keep the core SAP system as close to the standard version as possible. It means using SAP’s built-in features and functions without extensive customization. By doing this, it becomes easier to update the software, add new features, and keep everything running smoothly.

Six Fundamental Dimensions of the Clean Core Strategy

1. Software Stack- This refers to the different layers that make up the SAP ERP software. Example: Think of it like a layered cake. SAP’s standard software stack includes everything a business needs, from handling orders to tracking inventory. When businesses don’t add too many custom layers on top, it’s much easier to keep the system up-to-date without interruptions.
2. Extensibility- It is about adding extra features without changing the core SAP software. Example: Imagine a bakery that wants to add online ordering. Instead of changing the main SAP system, they can create a separate app that connects to it. This way, they still use SAP’s main features but can easily upgrade the system without affecting the online ordering app.
3. Integrations-Integrations focus on how well the ERP system connects with other software or tools . Example: If a bakery uses a delivery app to send orders to customers, it can connect the app with SAP to track deliveries directly through the SAP system. A clean core allows for these integrations to be smooth and simple, without needing major changes.
4. Processes-Processes are the standard workflows that SAP uses to manage business tasks. Example: SAP offers standard processes for things like managing orders, tracking inventory, and handling finances. When a company, like a bakery, uses these standard processes, it’s easier to train employees and keep everything consistent.
5. Data-This refers to the information that the SAP system stores and manages .Example: By using SAP’s built-in data tools, a bakery can track sales, understand customer preferences, and keep accurate inventory records. Keeping data management standard helps make reporting and analysis easier and more reliable.
6. Operations-Operations are the daily activities and tasks managed by the ERP system. Example: In a bakery, the team uses SAP every day to process orders, check stock, and manage customer payments. A clean core means that operations run smoothly, even when there are system updates, allowing the business to focus on serving customers without interruptions.

Why the Clean Core Strategy Matters

1. Easier Upgrades-When a company sticks to the standard SAP features, upgrading to new versions becomes smooth and quick. Benefit: They don’t have to worry about updates breaking customized features. For instance, if SAP adds new features, businesses can adopt them without fearing that their system will fail.
2. Lower Maintenance Costs-Heavy customizations can make maintenance difficult and costly because each update requires testing to ensure everything still works. Benefit: A clean core reduces these costs, allowing businesses to save time and money and focus on growth rather than repairs.
3. Better System Performance-Customizations can slow down the system, causing delays or errors in daily tasks. Benefit: A clean core keeps the system fast and consistent, which is essential for handling important business tasks smoothly
4. Simpler Integrations with Other Tools-A clean core makes it easier to connect SAP to other software, such as a delivery app or a reporting tool, without causing technical issues. Benefit: Businesses can add new tools or features without complex modifications, making it easier to meet their specific needs without changing the core SAP system.
5. Future-Proofing-By using standard features and keeping customizations outside the core, companies ensure their system stays compatible with future SAP updates and improvements. Benefit: The system remains up-to-date and ready for future innovations, avoiding the risk of being stuck with outdated, unsupported customizations.

Example: A Manufacturing Company Using SAP

SteelWorks, a manufacturing company, uses SAP to handle important tasks like production, inventory, sales, and supply chain management. By following the Clean Core Strategy

1. Production and Inventory Management

SteelWorks uses the standard features in SAP to manage its inventory and production. This means they can keep track of raw materials, production schedules, and ensure they have enough stock to meet customer demand. By not customizing the SAP system for special inventory needs, they make software upgrades much easier and quicker.

2. Sales Order Processing

For handling sales orders, SteelWorks relies on SAP’s standard tools. If they want to track a specific kind of sale, they can create a separate tool that connects to the main SAP system. This way, when SAP updates its sales features, SteelWorks can apply those updates without worrying that their separate tool will cause any problems.

3. Supply Chain Integrations

SteelWorks needs to connect with logistics providers for shipping. Instead of changing the core SAP system for this connection, they use SAP’s Business Technology Platform (BTP) to create a link to the logistics providers’ systems. This extension allows them to track shipments in real time without making changes to the main SAP system.

4. Financial Reporting

SteelWorks uses SAP’s standard finance features to manage expenses, revenue, and budgeting. They do not alter these features, which helps them comply with financial rules easily. If they need more detailed reports, they can use SAP’s analytics tools separately, making it easier to keep their financial processes organized.

5. Employee Training and Processes

Since SteelWorks uses the standard SAP processes for inventory management, order processing, and finance tracking, training new employees is simpler. Everyone learns the same standard workflows, which speeds up the onboarding process and helps keep things consistent across different departments.

Real-Life Example

Imagine you have a bicycle. If you keep it close to the original, it’s easy to take it for regular maintenance. The mechanic knows exactly how to fix it without any issues. But if you customize it—changing the wheels, adding special parts, or modifying the frame—each time you go for maintenance, there’s a chance something might break or parts may not fit correctly. You might have to spend extra time and money just to keep it working.

In SAP systems, companies need to update regularly to get the latest features and stay secure. If a company keeps its SAP system “clean” by sticking to standard features, updating is like simple bicycle maintenance. But if they make too many changes, each update could “break” those features, causing downtime or extra work to fix.