SAP S/4HANA stands out as one of the premier ERP systems for enterprises, especially with the imminent end of support for ECC in 2027. As companies contemplate the transition, it’s crucial to navigate the diverse deployment options available. Notably, each option is tailored to specific organizational needs, emphasizing the importance of choosing wisely. In this post, we’ll delve into the distinctions among SAP S/4HANA on-premises, public cloud, and private cloud deployments to empower businesses in making informed decisions.

SAP S/4HANA On-Premise

SAP S/4HANA On-Premise involves the installation of the system directly on the customer’s servers. This option provides individual and private hardware infrastructure, granting organizations complete control over their system and data. While it offers the freedom and flexibility to customize service offerings, it requires significant investment in infrastructure and ongoing maintenance. On-Premise is often chosen by organizations with specific security or compliance requirements.

SAP S/4HANA Cloud, Public

In the Public Cloud deployment, SAP S/4HANA services are delivered over a network accessible to the public. This option is characterized by efficiency and scalability, with shared resources among multiple clients. It simplifies IT management as SAP handles the infrastructure. Public Cloud is suitable for organizations seeking rapid implementation and lower initial costs.

SAP S/4HANA Cloud, Private

Private Cloud deployment offers a dedicated virtual private cloud for each customer. It provides greater flexibility and functionality compared to the Public Cloud. Combining benefits of on-premise and public cloud, it allows organizations control over their data and governance. This option is preferred by organizations needing customization, enhanced security, and control over data governance.

Exploring Key Differences Across SAP S/4HANA Deployment Options

When considering SAP S/4HANA deployment options, several critical factors vary among On-Premise, Public Cloud, and Cloud Extended Editions:

1. Licensing:

On-Premise: Typically involves upfront purchase fees and ongoing maintenance costs.

Public Cloud: Adopts a subscription-based model, spreading costs over time.

Cloud Extended Edition: May include additional costs for advanced features and customization.

2. Customizability:

On-Premise: Offers extensive customization capabilities, allowing organizations to tailor the system to specific needs.

Public Cloud: Provides standardization with limited customization to ensure scalability and ease of management.

Cloud Extended Edition: Balances customization with advanced capabilities for organizations with specific requirements.

3. Control and Management:

On-Premise: Organizations have full control over hardware, software, and maintenance but are responsible for system management.

Public Cloud: SAP manages infrastructure, ensuring efficiency and scalability, but organizations have less control.

Cloud Extended Edition: Offers a balance, with enhanced client control compared to the standard Public Cloud.

4. Upgrades and Maintenance:

On-Premise: Organizations manage upgrades and maintenance schedules, providing control over system changes.

Public Cloud: Automatically receives regular updates from SAP, ensuring the latest features and security patches.

Cloud Extended Edition: Balances regular updates with customization needs, allowing organizations to manage some aspects.

5. Implementation Time:

On-Premise: Typically requires longer implementation times due to extensive customization.

Public Cloud: Faster implementation as it follows standardized processes.

Cloud Extended Edition: Falls between On-Premise and Public Cloud, offering flexibility with a reasonable implementation timeframe.

6. Total Cost of Ownership (TCO):

On-Premise: Higher initial investment but potentially lower TCO over the long term.

Public Cloud: Lower initial costs but ongoing subscription expenses.

Cloud Extended Edition: Balances customization costs, impacting the overall TCO.

7. Scalability:

On-Premise: Scalability may be constrained by hardware limitations.

Public Cloud: Offers high scalability with on-demand resources.

Cloud Extended Edition: Provides scalability with a balance between customization and resource availability.

Understanding these factors allows organizations to align their priorities and requirements with the most suitable SAP S/4HANA deployment option.

To know more about the different deployment options for S/4HANA, check the resource below:

SAP S/4 HANA Deployment Models: On-Prem, Essentials and Extended

If you’re planning a migration from ECC to S/4HANA, then you can also check out the following blog:

Comprehensive Guide on SAP ECC to SAP S/4HANA Migration