SAP has provided two different offerings for companies to be able to use S/4HANA: On-Premise or Cloud. Within the Cloud offering, there are two further options: SAP S/4HANA Private Cloud and SAP S/4HANA Public Cloud.
The key aspects of these different editions are as follows:
Here the S/4HANA application is hosted on cloud. SAP has recently started calling the Cloud offering: SAP Cloud ERP Portfolio. There are two versions available as below:
S/4HANA Public Cloud Edition is a SaaS (Software as a Service) offering of SAP. The Public Cloud Edition is based on Standard Best Practices and provides a lot of business-standard functionalities out-of-the-box. Application, infrastructure and IT support are managed by SAP. SAP also provides regular innovations/upgrades which are managed by SAP themselves. Updates are now typically released quarterly, while hotfixes are delivered monthly as per a schedule published by SAP.
Access to the Public Cloud applications is via Fiori Apps. In the S/4HANA Public Cloud Edition, the customer can use the functionalities made available by SAP, and there is less flexibility to have bespoke functionalities. The Public Cloud edition is suited to businesses with less complexity that can work with standard processes. As S/4HANA Public Edition is out-of-the-box to use, the cost of initial implementation is comparatively low. Testing needed for initial implementation (and also during upgrades) is also less as the available functionality is Best Practice and standard. Less downtime is needed during upgrades. A cloud-based subscription needs to be paid for the Public Cloud Edition.
The Private Cloud is not shared with other organisations. The S/4HANA Private edition provides a lot of flexibility in terms of configuration. It now offers a fair amount of flexibility for customisations and third-party integrations, narrowing the gap with on-premise. Apart from access via Fiori Apps, it’s also possible to use the traditional SAPGUI, which provides more access and control to manage configuration. SAP releases a new version of the software every 2 years and provides seven years of maintenance for the release.
Similarly there are also feature packs for every release every six months that provide new innovation without the need of a disruptive upgrade. The customer chooses when to install the release or the feature pack, and SAP would take care of installing it.
The Private Edition is more suitable for larger companies that typically have a lot of complex, bespoke requirements in various geographies or business divisions. If the customer is already on ECC 6.0, it’s also possible to convert the existing system to S/4HANA Private Cloud. Initial implementation for the S/4HANA Private edition would normally be more complex and will need more time as more bespoke functionality is involved. When the customer decides to upgrade to the new release or install new feature packs, SAP would take care of it. Consumption-based payment needs to be made for the Private Cloud Edition.
The S/4HANA On-Premise Edition is quite similar to the S/4HANA Private Edition in terms of functionalities available and the customisation that is possible, but offers slightly more flexibility and could also cover customer needs that are not met by S/4HANA Public Cloud or Private Cloud offerings. S/4HANA could be managed by customers in their own Data Centre or hosted by hyperscalers. Here, the customer is responsible for taking care of implementation, operations, and support.
Similar to the S/4HANA Cloud Private Edition, the customer can choose when to implement the new versions and the feature packs but needs to take care of these upgrades/installations on their own. Similar to SAP S/4HANA Private Cloud Edition, SAP releases a new version of the software every 2 years and provides seven years of maintenance of the release.
The On-Premise Edition is also suited to larger customers who need complex/bespoke functionalities not available as standard in the S/4HANA Cloud Public edition. Similar to the S/4HANA Private Cloud edition, if a customer is already on SAP ECC 6.0, they can do a conversion (lift-and-shift) to S/4HANA On-Premise. More flexibility is available for customising because, similar to the S/4HANA Private Edition, access to SAPGUI is possible along with Fiori Apps. Traditional perpetual licensing applies to the S/4HANA On-Premise Edition. TCO could be slightly higher here, due to the higher initial cost of implementation and also the cost for ongoing support/maintenance; customers will need to manage this by either developing sufficient in-house capability or identifying a suitable partner to manage it.
SAP continues to encourage cloud adoption, especially for new and mid-sized customers. SAP has also invested heavily in European cloud infrastructure to ensure data sovereignty and compliance with EU regulations, which may influence deployment decisions for European customers. SAP has committed innovation for S/4HANA till 2040 i.e. until 2040, there will always be at least one release of SAP S/4HANA in maintenance. As the Technology changes are happening very rapidly, this should allow SAP to keep its offering up-to-date with the latest advancements and innovations.
A company needs to carefully decide whether it would opt for Cloud or On-Premise option keeping in mind the various pros and cons associated with either option. A company-specific analysis to identify the best match can be supported by Helixr on request.
Further reading:
Offering Comparison | SAP Help Portal
SAP Deepens European Cloud Sovereignty Offering | SAP News Center
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