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In this blog post, We are discussing S4 HANA cloud Vs On-premise.

Regarding S4 HANA Migration, Please visit my previous blogs here.

Migrating to S/4HANA is not a trivial matter. Under the hood, S/4HANA represents a significant technical redesign that requires a complex conversion taking up much time, resources, and capital.

Whether you decide to implement S/4HANA enterprise management by migrating an existing SAP ERP solution or you are considering a new implementation initiative, it is necessary that customers choose a deployment option that best suits their business needs, budget, and resources

There are three main questions which typically get asked:

  1. What is the difference between on-premise and cloud editions?

  2. How to choose between them?

  3. How will this choice affect my enterprise?

Let's explore these questions and how you can make the right choice for your business.

SAP S/4HANA can be deployed on two delivery platforms:

On-premise for maximum control, and in the cloud for fast time-to-value. Both have their pros and cons. Although, there is one more option: a hybrid delivery model that supports both on-premise and on-cloud scenarios.

SAP S/4HANA on-premise edition is an internal platform, located on your servers, maintained by your company. SAP upgrades are released annually but have to be implemented and tested by your team.

SAP S/4HANA Cloud edition is Software as a Service (SaaS) hosted on SAP's servers and is maintained by SAP. Software upgrades happen quarterly. The cloud version is available to enterprises in both private and public editions. While private cloud comprises complete S/4HANA functionality and also extends geographical reach, the public cloud helps address challenges in the LOB, overall strategy and ERP.

SAP S/4HANA On-Premise SAP S/4HANA Cloud Edition
1. Licensing Model Traditional Licensing Subscription Licensing
2. Infrastructure & Maintenance Model Deployment and maintenance is implemented and managed by the IT staff of a customer System infrastructure and maintenance are under SAP’s control
3. Speed of Innovation Planning, testing, controlling, upgrading and changing within the system are the full responsibility of a customer The automatic latest innovation upgrades happen quarterly without customer’s participation
4. Implementation Approach High compliance with individual business requirements and customization Predefined best-practice configuration with limited specialization
5. Functional Scope Full ERP Scope, integration with SAP Hybris Marketing, SAP JAM and SAP Ariba Network Key scenarios, Embedded ERP scenarios, integration with SAP SuccessFactors Employee Central, SAP Fieldglass, SAP Hybris Marketing, SAP JAM, and SAP Ariba Networks


  1. On-premise edition has a traditional licensing, which means a preliminary purchase with annual maintenance. The license fee allows the company to own the software and reduces the current maintenance fee. But the cost of the upgrade will be high. The cloud edition has a subscription license, which means that one predictable monthly payment covers everything from infrastructure to system upgrades.

  2. SAP S/4HANA on cloud edition doesn't require you to invest in internal IT support, which ensures the smooth and stable operation of other IT applications and reduces expenses on IT staff. On-premise edition, on the other hand, provides a high cost of entry and IT operations compared to SaaS because of infrastructure needs and staff support.

  3. With S/4HANA on-premise, your team has to plan, test and control all system upgrades which happen yearly. All changes are under the organization’s control, while the cloud edition automatically upgrades the software quarterly without customer’s participation.

  4. SAP S/4HANA on-cloud is a limited version of the on-premise edition. Deployment is faster, but the offering is very restricted. The on-cloud edition is focused on the main key-processes with a limited set of settings. On the contrary, the on-premise edition offers a full range of functions, can be extended for an extra payment.

SAP S/4HANA on-premise edition has the full ERP like the current SAP Business Suite but includes simplifications for SAP Simple Finance. It is integrated with SAP Hybris Marketing, SAP JAM, and SAP Ariba Network.

The SAP S/4HANA cloud edition includes industry scenarios for marketing and the professional services industry. It also includes the most critical scenarios required to run the entire enterprise in the cloud using a digital core. When you sort out the main differences between delivery platforms, you can make a selection between editions best suited for your enterprise.

Choosing between On-premise and Cloud

Who can choose SAP S/4HANA On-Premise Edition

SAP S/4HANA on-premise edition is suited for any industry enterprises which require a full range of features consolidated with highly flexible customization. This edition is perfect for large enterprises with very well-proven business processes.

For large, well-known enterprises, the on-premise platform fits the most. The system located on the company's server provides opportunities for more effective monitoring and configuration than cloud edition.

Who can choose SAP S/4HANA Cloud Edition

Middle size companies who look for a light and flexible database platform to scale while growing should consider SAP S/4HANA cloud edition for their businesses.

On-cloud edition is the best option for companies that require a high-performance offer that covers their core business strategies, but at the same time provides greater agility, flexibility and faster upgrades cycle (quarterly rather than annually). SAP S/4HANA Cloud edition makes sense for rapidly developing enterprises who want a platform that can grow and change with their tempo.

Who can choose SAP S/4HANA Hybrid Model

As was mentioned at the beginning of the article, there is one more deployment option for customers who are interested in rapid business transformation with the reduced initial cost. A hybrid model that uses both on-premise and on-cloud editions enables to store of core data and applications on the organization’s hardware and at the same time, allows to change of the system and adopts new opportunities for business improvement without additional advance charges for a full-scale software license.

The SAP S/4HANA hybrid model is the convenient deployment option for companies who want to get two in one: flexible IT solutions and innovative business transformation under full control of core business applications.


It is required for an organization to choose the right delivery platform. Because the right choice should help your business succeed and achieve planned goals. Therefore, organizations must spend quality time in designing a road-map.


Let us discuss more on Cloud in my next blogs.

Thanks for your support...! 🙂