Hi jharbor,
there are several options. For SAP on VMware vSphere I usually recommend doing both.
1. Image level backup using Data Protector Virtual Environment Protection Agent (VEPA) that allows restoring the whole VM including VMDKs and VMX files for disaster. This type of backup is usually executed once a week (full) and daily (incr/diff) depending on customer needs.
2. In addition you should do the Data Protector Online Integration backups (SAP R3 if running SAP on Oracle) inside the VM to ensure allow point in time restores of SAP can be done easily. This is usually a daily full with at least a single archive log backup per day (this will vary on how sensitive the customer is to data loss).
Please use the Accept Solution button next to my post and assign a KUDO (thumbs up icon) if this works for you.
Regards,
Sebastian Koehler