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SAP is "The Cloud Company Powered by SAP HANA", so it is important to understand what different options we now have with respect to cloud / on premise deployments. This is particularly important if you are trying to work out how S4HANA will impact your Business Suite investment.

So this is my understanding of the options we have ?

Public Cloud - Software is 100% managed by SAP as the "cloud provider" with updates automatically pushed to the systems on a timeline defined by SAP with tightly controlled configuration and extension frameworks. For example SuccessFactors, Concur, FieldGlass, Cloud 4 Customer, Ariba,and Hybris have public cloud delivery models. The first offerings of S4HANA will be offered as Public Cloud offerings. Also HANA Cloud Platform (HCP) is offered in the public cloud model and can be used to extend applications (instead of doing this inside) in any of the other deployment models.

Private Cloud - Software is 100% managed by SAP as the "cloud provider" but update schedules are agreed with the customer, some software modifications are allowed but these will increase the fees to run the system (as it is harder to manage). S4HANA will offer this model and Business Suite is offered this way via the HANA Enterprise Cloud for customers that run it on SAP HANA.

On Premise - This is the model that most SAP customers are familiar with, where software is installed and run by the customer (sometimes this is done by an outsources service provider or hosted by a service provider). In this model we can have as many modification as we like - but they will increase the cost of ownership as each needs to be considered each time an upgrade / patch is applied. S4HANA will be offered in this model.

One analogy that I like is that of the Mobile Phone :-

Public Cloud - This would be how my Mum consumes her SmartPhone, she comes to me and tells me what she wants, I set it up and she uses it. When she wants something difficult, I tell her that the phone can't do that :lol:

Private Cloud - This is a bit like how I use my SmartPhone, I have loads of apps and accessories but all of them have come from the phones app store and are supported by the phones manufacturer.

On Premise - With HANA - This is like my daughters SmartPhone which she has hacked to mean that she has access to the guts of the phone, writes her own apps and downloads stuff from un-official websites - all at her risk.

On Premise - Without HANA - This is like not running a SmartPhone and saying "why do I need to do anything but phone, text ?".

The graphic below shows how I think the software under your system might change depending upon your chosen model.

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