The Big Q: SAP S/4 HANA On-Premise or Cloud?

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SAP S/4 HANA On-Premise or Cloud? The selection between On-Premise and Cloud deployment of SAP S/4 HANA is one of the most important questions that the IT CIOs today face when they’re looking to implement SAP S/4 HANA.

Owing to its simplified architecture, real-time analysis, enhancements in performance, SAP S/4 HANA does offer time efficiency and faster ROI. Migration to SAP S/4 HANA does provide competitive advantages to the business.

Before moving to the difference between the two deployment models, let us understand in brief what these models are.

SAP S/4 HANA On-Premise

It is the SAP ERP Business Suite based on the SAP HANA in-memory database platform. This is an internal platform present on the business’s servers and managed by themselves only. The businesses are responsible for managing and controlling the HANA database, applications, servers, networks along with other related systems.

SAP S/4 HANA Cloud

It is the SaaS deployment of the S/4 HANA. The cloud deployment model is available to the businesses in both- public and private cloud. It enables businesses to use functionalities of S/4 HANA without any hardware or database. In the cloud model, SAP is responsible for providing and handling applications, data, runtime, middleware, operating system, servers, storage, and networking for the customers.

Differences in Deployment Models

The two deployment methods can be differentiated on the following parameters-

  • End Users

On-Premise Deployment

SAP S/4 HANA on-premise is extremely beneficial for the businesses that are looking for a complete range of features with flexible customizability options. The on-premise deployment can be the right choice for the large-sized businesses having well-defined business processes and these are not going to change.

Cloud Deployment

The cloud deployment of SAP S/4 HANA can be extremely beneficial for the middle-sized companies who have a flexible database platform that can scale with the business. Cloud-based deployment can be the best option for the businesses that are looking for a high-performance offer that encapsulates their core business operations and providing higher agility, flexibility and quick upgrades.

  • Licensing Model

SAP does have a different licensing model for each of the deployment methods. These licensing models are- a traditional perpetual licensing and a subscription-based licensing.

On-Premise Deployment

Considering the on-premise deployment, they usually have a perpetual licensing model. In an on-premise deployment, businesses are charged with an initial software fee based on the software products and the employee size who are going to use the software.

Cloud Deployment

On the other hand, the S/4 HANA cloud is a subscription-based licensing model. The users have to pay an annual fee covering all the components related to SaaS. The subscription fee varies depending on business metrics like- the number of end-users, number of documents processed, storage volume and bandwidth.

  • Infrastructure and Maintenance

On-Premise Deployment

When the businesses go for on-premise deployment of S/4 HANA, the companies have to provide their in-house database, networks and other components. Also, an in-house dedicated IT team of the business is needed for maintaining it. In the initial deployment phase, businesses have more control over the cost. Also, the businesses don’t need to update their system whenever there is a new update. Instead, the businesses have to update their systems as per their needs manually.

Cloud Deployment

On the other hand, with a cloud deployment of S/4 HANA, SAP is responsible for looking after the entire system, including the maintenance tasks. The businesses don’t need to worry about providing their own database or dedicated IT staff for system updates. The system gets upgraded by itself, ensuring the businesses have the latest software at all times.

  • Customizability

On-Premise Deployment

With the on-premise deployment of SAP S/4 HANA, the businesses get more flexibility and better control in terms of customization. If the businesses have a new set of requirements and are looking to customize their existing ERP system, it becomes very easy for them to do so based on their needs.

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