Cloud vs on-premise – a guide to deploying S/4HANA

By Julian Belotti, Solution Advisor, Solution Architects on
Having made the decision to adopt S/4HANA, through a migration of an existing SAP ERP solution or through a new implementation initiative, customers need to choose a deployment option; cloud or on-premise.

With organisations of all sizes moving to cloud, the choice seems obvious.  Furthermore, SAP openly promotes a cloud first strategy and provides customers with a choice of cloud based deployment options, spanning IaaS (HANA Enterprise Cloud), PaaS (HANA Cloud Platform) and SaaS (SAP S/4 HANA Cloud Edition).  

However, the choice of cloud over on-premise is not straight forward, as SAP’s definition of on-premise can include a Partner Managed Cloud scenario, which is a subscription based delivery of SAP solutions through a partner’s private hosted cloud.  So what’s really the difference? 

This blog will evaluate these two deployment options (cloud and on-premise) in order to help clarify the differences for customers seeking a SaaS based delivery of SAP’s latest enterprise management solution – SAP S/4HANA.

SAP S/4HANA – Two Paths

The latest release of SAP S/4HANA, edition 1511, is offered in two versions: cloud and on-premise

1. SAP S/4HANA Cloud Edition

The SAP S/4HANA Cloud Edition resides on SAP owned infrastructure that is operated and maintained by SAP, with (functional and non-functional) innovations, inclusive of software corrections, applied quarterly.  The cloud edition is available in two offerings:

  • Private – full functional scope of S/4HANA that can provide the extensibility and geographic reach of an S/4HANA on-premise solution
  • Public – a highly standardised multi-tenant cloud service covering selected line of business (LoB) and industry scenarios and a comprehensive ERP scope. At the time of writing, the following LoB and industry scenarios are available:
    • SAP S/4HANA, cloud marketing edition – for the marketing line of business. Scenarios include:
      - Analyse Consumer and Customer
      - Start Mail-Campaign and analyse return rate
      - Marketing recommendations
      - Marketing Planning
      - Marketing Executive Dashboard
      - Integrates with SAP Cloud for Customer (C4C)
    • SAP S/4HANA, cloud project services edition – for the professional services industry. Scenarios include:
      - Project Services
      - Streamlined Procure to Pay
      - Core Human Resources
      - Core Finance
      - Integrates with SAP SuccessFactors Employee Central and SAP Ariba Network
    • SAP S/4HANA, cloud enterprise edition – cross industry offering. Scenarios include:
      - Streamlined Procure to Pay
      - Accelerated Plan to Product
      - Optimised Order to Cash
      - Core Human Resources
      - Core Finance
      - Project Services
      - Integrates with SAP SuccessFactors Employee Central, C4C, SAP hybris for Marketing and SAP Ariba Network

Both private and public offerings of SAP S/4HANA Cloud Edition are offered as standardised packages, with no modifications (i.e. customisations) allowed.

2. SAP S/4HANA On-Premise Edition

SAP S/4HANA, on-premise edition provides the full functional scope of S/4HANA, with innovations, inclusive of software corrections, available from SAP on an annual basis.  Supported scenarios include:

- Streamlined Procure to Pay
- Accelerated Plan to Product
- Optimised Order to Cash
- Enhanced Request to Service
- Core Human Resources
- Core Finance
- Integration with SAP Customer Relationship Management (CRM) and C4C
- Support for 21 Industries (12 with full coverage and 7 with major coverage)

The on-premise edition can be deployed across a range of hosting models, inclusive of private cloud, under a Partner Managed Cloud scenario, and tailored to the needs of individual organisations. As an added bonus, SAP provides customers with the option to run certain classic SAP solutions on S/4HANA installations (known as Compatibility Packages) without the necessity of installing ECC to use them (e.g. special ledgers, consolidations, payroll), provided customers have licensed the applicable solutions.

Importantly, with the exception of quarterly innovations, the on-premise edition offers higher levels of functionality and broader support for industry solutions.  However, over time it is expected that functional parity will be attained across the two deployment options.

Which is best?

Clearly the SAP S/4HANA on-premise is suited for organisations that need the full spectrum of functionality and/or a high degree of flexibility in the solution design.  The cloud edition, on the other hand, is suited to those organisations that can readily adopt standardised processes and adhere to the functional scope of the selected cloud option.

If you are still uncertain about which deployment option to choose, leverage our local S/4HANA experience and expertise to accelerate your journey to SAP S/4HANA and gain access to:

  • Enhanced and simplified business processes
  • SAP S/4HANA specific innovations
  • Flexible deployment of SAP S/4HANA components

For further information please contact us on 1800 002 354 Australia or 0800 008 606 NZ or