The Cloud and On-Premise wars: SAP S/4HANA

Moving to SAP S/4HANA is not just about following the newest trend in ERP technology. This is a move that can bring real competitive advantages to your business. SAP S/4 HANA is available in two editions: on-premises and in the public cloud. Both have their pros and cons, but how should they be compared?

We have put together a short list of the areas that will be directly affected when considering making a move to the cloud.

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Infrastructure & Maintenance

When choosing to deploy S/4HANA on-premise, customers need to provide their own hardware, database, networks, etc. They also need to have dedicated IT staff to maintain it all. This might be a bit expensive at first, but customers will have more control over costs during the deployment.

Moreover, they don’t have to immediately revamp their system every time there’s a new upgrade. Instead, they will be able to upgrade at their own desired pace.

In the cloud deployment, SAP is responsible for the entire system, including maintenance. So customers don’t have to worry about providing their own database or IT staff.

With S/4 HANA on-premise you opt in – or not – to a yearly upgrade, while the cloud edition automatically enrols you into a quarterly upgrade cycle. There are two time slots to choose from, and that is about the only freedom of choice there is. First you upgrade your testing environment, and then two weeks later the upgrade of your production environment inevitably follows.

Nonetheless, this additionally implies that you won’t have a lot of authority over the framework since it is totally managed by a third party outside of your organization.

Functionality and customisation

SAP S/4HANA on-premise edition is suited for any industry enterprises which require a full range of features consolidated with highly flexible customisation. This edition is perfect for large enterprises with very well-proven business processes, who are not interested in changing.

The on-premise option allows customers to have more flexibility and control in terms of customisation. If the business has a new requirement, and a customer wants to customise their current SAP ERP system, they can do this right away according to business needs. This is a perk that comes with managing the system in-house and with their own IT staff.

Meanwhile, the cloud option uses a predefined configuration. Customers have SAP’s predefined system configuration, which follows SAP’s best practices for the related business process. Because of this, users have less control and flexibility with regards to specialized requirements and thus far less ability to customise. S/4 HANA on-premise, on the other hand, offers the full range of functionality. Anything you require can be provided. If you pay for it, that is.

Implementation Time & Approach

With an on-premise deployment, the implementation might take a longer time and more effort because the customers have to plan and test everything on their own. High compliance with individual business requirements and customization. In addition, they also must spend time creating a team with the right people who are dedicated to setting up the new system and environment.

On the other hand, the cloud option allows for faster implementation, because it is using predefined best-practice configuration with limited specialisation. The customers don’t need to be concerned about planning and testing since the system has already been provisioned and tested by the cloud provider.

In summery

Needs of an organization should define the right choice of the delivery platform. After all, the choice should help your business succeed and achieve planned goals. Is your organisation ready to consider the cloud? The agility and flexibility – with much smaller risks of vendor lock-in – that the cloud offers are definitely benefits worth considering. Having an agile organisation, capable of easily adjusting its business model to a rapidly evolving market, is key in the digital era. So take some time, step back and build a future roadmap for your business.

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