Understand the key differences between SAP S/4HANA Cloud and On-Premise deployment options to help narrow down which deployment is the best for your organization.
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With SAP ending all support for ECC and earlier versions of their software in the next few years, it’s time to start planning the migration from the older ERP products to SAP S/4HANA.
S/4HANA is the latest and most up-to-date SAP software package used to cover all the day-to-day processes of an enterprise. It runs exclusively on SAP’s own in-memory database SAP HANA. There are two main S/4HANA deployment options; Cloud and On-Premise.
Figure 1: SAP S/4HANA offers the flexibility of consumption. Source: SAP Blog
S/4HANA can be deployed either on-premise or to the cloud, and which deployment you choose affects which S/4HANA implementation approach you’ll be able to take. The S/4HANA deployment options currently available are:
SAP S/4HANA Cloud is the SaaS (Software-as-a-Service) edition of the SAP S/4HANA ERP system designed for the SAP HANA in-memory database. Formally called “Essentials Edition (ES) and Multi-Tenant Edition,” S/4HANA Cloud is a shared public cloud-hosted and operated by SAP. It is shared with other customers and is provided through subscription (available as RISE with SAP). Fixed and mandatory upgrades are managed by SAP. Automated and manual regression tests are also available.
In terms of scope, S/4HANA Cloud covers 42 countries and several specific industries. Key user extensibility and extensions are run through the SAP Business Technology Platform Extension Suite with whitelisted APIs. It also uses Self Service Configuration User Interfaces (SSCUIs). For this deployment, you will need to use the Greenfield method.
SAP S/4HANA Cloud is the “standard” cloud deployment option, with the others providing different scopes of service. For example, S/4HANA Cloud (public) is simply a restricted version of the whole S/4HANA Cloud software, while S/4HANA Cloud (private) has a bigger scope and more flexibility (see below).
Formally called the single-tenant edition, the extended edition of SAP S/4HANA Cloud has all the advantages of Cloud with more flexibility and control. Like S/4HANA Cloud, the extended edition uses a subscription service, and its dedicated landscape infrastructure is operated by SAP. This deployment also relies on the Greenfield method. Unlike Cloud, however, the extended edition needs to be upgraded by SAP and the customer every 2 years.
S4 Cloud extended edition has the same S/4HANA functional scope as on-premise; 64 countries, 39 languages, and 25 industries–but with some third-party add-on limitations. In-app extensibility includes key user extensibility with some classic ABAP extensibility, plus further extensions through SAP Business Technology Platform Extension Suite. SAP S4 HANA Extended Cloud uses the IMG based on fit-to-standard workshops in the Explore phase, with a few restrictions.
Note that to use this deployment option, there must be more than a certain minimum number of users. For example, this option is better suited for mid and large-size organizations.
SAP S/4HANA Cloud Private Edition (previously referred to as PCE) was released in 2021 as the latest deployment option for migration. It is simply the S/4 on-premise software solution stack offered in a private cloud and managed by hyperscalers. Existing ERP customers can move to private using a system conversion, which wasn’t possible in previous Cloud editions.
Available under a RISE subscription contract, the private cloud enables customers to create a deployment closely suited to their needs but must stay in mainstream maintenance (an upgrade within 5 years).
The scope, extensibility, and configuration are the same at the S/4 HANA Extended Edition, and implementation can be done through Greenfield, system conversion (Brownfield), or selective data transition (hybrid).
SAP S/4HANA On-Premise offers individual and private hardware and infrastructure hosted either by SAP, a hyperscaler, or in a data center. It has a Bring Your Own License and infrastructure subscription, allowing more freedom and flexible service offerings. The customer is responsible for managing upgrades and choosing the speed of adoption. Upgrades should be performed annually.
SAP S4 HANA (HEC) has a full S/4HANA industry and country scope, with customization, modification, and extensibility all possible as with ERP. Like S/4HANA Cloud (private), SAP’s on-premise deployment option can be implemented using the new implementation method, system conversions, or selective data transition.
This approach provides tools that selectively transfer configuration and custom code from older ERP systems into SAP S/4HANA by migrating the database, applying software updates, and doing a data conversion from third-party data models to the new, SAP-specific S/4HANA data model. Customers can use the SAP Solution Manager to manage their project design.
SAP S/4HANA On-Premise or managed by cloud provider hyperscalers (a.k.a. SAP S4 HANA Any Premise) is a deployment option managed by a customer database or third party (hyperscaler; such as Microsoft Azure, AWS, or Google Cloud). The license is either perpetual or Bring Your Own, and upgrades are done annually by the customer. Customization, modification, and extensibility are possible as with the ERP, and configuration uses the full IMG based on a fit-to-standard approach in the Explore phase.
Like on-premise (HEC) and private cloud, implementation can be done through the new implementation, system conversions, or selective data transition. Customers can use SAP Solution Manager to manage their project design.
There are several factors to consider when choosing which deployment to S/4HANA is best. SAP S4 HANA deployment factors include implementation method, upgrades, and third-party options.
This article has touched upon the three main implementation methods, which will help determine which deployment to go for.
How often do you want upgrades?
SAP follows a cloud-first strategy. This means that new software features are developed for the regular releases of SAP S/4HANA Cloud (public). Throughout the year, there will be multiple software releases. All other available deployment options operate on the same software “stack” with the same release strategy.
For this stack, the vast majority of software updates come in, in one main release per year. Most updated in SAP S/4HANA Cloud—but not all of them—make it to this “stack.”
What are the differences between S/4HANA Cloud vs. S/4HANA On-Premise?
Only SAP offers S/4HANA Cloud Single Tenant, a Software-as-a-Service. This means that SAP hosts and runs the OS, SAP software, and upgrades, using SAP Best Practices. S/4HANA On-Premise, on the other hand, is managed by the customer or by a third party like Azure, AWS, or Google that offers IAAS (Infrastructure-as-a-Service).
Even though they may not use SAP Best Practices, these providers look after networking, storage, servers, and virtualization, while the customer manages the OS (including upgrades).
Can you combine deployment methods?
SAP S/4HANA Cloud extended edition is available with infrastructure provided by third-party partners and remains a SAAS offering with SAP. S/4HANA Cloud (private), however, is only available with the SAP (HEC) infrastructure.
Understanding these deployment options is necessary during the SAP S/4HANA migration process, as whichever one you choose will be determined by your enterprise needs, size, and existing infrastructure.
Knowing the difference between each deployment prior to migration will also help any organization keep track of the future product name changes, product upgrades, and other important SAP updates.
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