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SAP S/4HANA Cloud: Public Edition vs. Private Edition

The digital revolution has profoundly changed the business world, and one of the driving forces behind this transformation is cloud computing. It has not only revolutionised how organisations shape their IT infrastructure but also how they conduct business.

According to a survey by KPMG and BITKOM on the use of cloud computing in German companies from 2011 to 2022, more and more organizations are adopting cloud computing technology as part of their digital transformation. The trend is increasing, with 84% of the surveyed companies in 2022 stating that they already use cloud services (Private or Public Cloud).

“While the majority of companies in Germany are grappling with the question of ‘Private Cloud or Public Cloud,’ for three percent of companies in Germany, cloud computing is still not a topic in 2022. This percentage remains constant compared to the previous year. In the medium to long term, these companies will find it increasingly challenging to avoid the topic of cloud computing. Because for those looking to modernize their IT, the cloud will inevitably become a crucial consideration.”

(Source: Cloud Monitor 2022, KPMG, BITKOM)

The study “SAP S/4HANA 2024 – Current Cloud ERP Trends,” jointly conducted by CIO, CSO, and COMPUTERWOCHE, confirms this: “61 percent of respondents use the Public Edition of SAP S/4HANA Cloud, a highly standardized multi-tenant solution, while 38 percent opt for the Private Edition, offering a single-tenant solution that can be individually customized.”

(Source: Study Cloud-ERP 2023: SAP S/4HANA is Almost Standard – computerwoche.de)

What is meant by cloud services?

This involves the provision of applications, platforms, or even storage, generally referred to as computing resources, over the internet. On one side, users pay usage fees to avail services from a third-party provider, while on the other side, cloud providers are responsible for the provisioning and maintenance of the infrastructure. Users are highly flexible in implementation; they can request computing resources on-demand and pay accordingly for direct usage, following the pay-as-you-use principle. Immediate access to computing resources is guaranteed at any time, on a short-term basis, and from anywhere. In this blog article, we will first outline the deployment options for SAP S/4HANA and illustrate the potential of cloud usage in conjunction with the deployment of the SAP system.

Deployment Options for SAP S/4HANA in the Cloud

In general, cloud computing services are initially categorized into three main types:

  • Software as a Service (SaaS)
  • Platform as a Service (PaaS)
  • Infrastructure as a Service (IaaS)

“Software as a Service” (SaaS) refers to the use of cloud applications where the cloud provider manages the applications, providing users with direct access through a web browser. The provider takes care of all administrative tasks related to hardware, and users receive the latest releases quickly.

However, we still talk about “Platform as a Service” (PaaS) when the cloud provider hosts development platforms and tools in its own infrastructure, making them available to users via the internet. Developers have the opportunity to choose desired features for specific applications and customize them accordingly.

The third and final form of cloud application is “Infrastructure as a Service” (IaaS). This is a model of cloud computing where cloud providers offer basic IT infrastructure components such as servers, storage, and network resources over the internet. In this model, businesses can rent, customize, and manage these resources on-demand instead of operating physical hardware in their own data centers.

We now turn our attention to the deployment of S/4HANA in the two different options, namely “On-Premise” or in the Cloud. The former is the case when the customer purchases the license and operates or installs the software on their own server (S/4HANA as a Product). However, when the software is provided in the Cloud, the customer rents the license, and the system is operated on a server owned by SAP and made available to the customer over the internet (S/4HANA as a Service).

As part of SAP utilisation, companies have the opportunity to move their IT infrastructure to the cloud. But which cloud option is the right one? SAP offers a clear distinction between public and private cloud models, each with their own advantages and disadvantages. Let’s take a closer look and find out which option best suits your business needs.

S/4HANA in the public Cloud:

The basic idea of the Public Cloud is that the software resides on a multi-tenant server, meaning that two or more customers share the bandwidth of a server. Each customer accesses their software through a dedicated connection, a link over the internet. The server is located in an SAP or partner data center. In essence, the infrastructure is provided and managed by the provider, who is also responsible for maintaining the technical backend of the system. Regular release cycles, during which new features and extensions to existing features are released, ensure that upgrades are installed very quickly and automatically. In summary, SAP takes over the management of the infrastructure, especially concerning the scalability, flexibility, and availability of the data center. SAP is also responsible for the installation of technical upgrades and the continuous service planning and review.

SAP S/4HANA Cloud, Public Edition is based on ready-to-use standardised business processes built on proven industry best practices. With semi-annual automatic release upgrades, the customer is always up to date with the latest business processes and technological innovations.

The Advantages of S/4HANA Cloud in the Public Edition

  • Fastest Innovation through Regular Release Cycles, introducing new features and extensions to existing functionalities. SAP maintains the system with bi-weekly hotfixes and installs release upgrades on customer systems according to the defined release schedule.
  • Lowest Total Cost of Ownership (TCO) as multiple customers share the costs of a server, and because of SAP’s stronger standardization, it can provide far more pre-built resources to simplify the implementation and operation of the solution.

S/4HANA in the private Cloud:

In the Private Cloud, the main idea is that the customer does not share the server with others, even though the computing resource is owned by the cloud provider. Accordingly, the customer is responsible for the maintenance and management of the server. The customer pays a subscription fee for access to the server over the internet and the installation of the software. The software can be installed on a server in an SAP data center or on a server in a data center of SAP hyperscaler partners.

SAP S/4HANA Cloud, Private Edition is a customized cloud-based ERP system that adapts to individual changes. Customers are facilitated with entry through a comprehensive library of ready-to-use business processes. At the same time, there is significant flexibility for developing individual business processes. This high level of flexibility is confirmed by the fact that system upgrades can be introduced on a custom schedule. As part of a migration from an On-Premise system to S/4HANA Cloud, Private Edition, SAP provides an empty virtual server (migration server) for import activities.

Migration to the Cloud with GROW and RISE

SAP offers two migration bundles for different cloud versions. “Grow with SAP” is exclusively designed for the initial move to the Public Cloud and is primarily aimed at mid-sized companies that do not yet have an SAP system. It includes the Public Cloud ERP solution with many best practices plus support for migration using the Greenfield approach.

“Rise with SAP” is targeted at existing SAP customers. It includes comparable components but comes with additional services. Moreover, with Rise with SAP, migration is possible to both the Public and Private Cloud.

Through both offerings, customers can gradually implement specific modules or processes over time to build a cloud-based ERP system that truly adapts to and evolves with the business.

Die Migrationsmöglichkeiten in die Cloud "Rise with SAP" und "Grow with SAP" im Vergleich

Conclusion: SAP S/4HANA Public Cloud vs. Private Cloud

For customers who desire standardized processes that are always up-to-date and prefer their cloud provider to manage their infrastructure, SAP S/4HANA Cloud, Public Edition is the cloud-native ERP that offers the latest industry best practices and continuous innovation.

For customers requiring a high degree of customization for their processes, preferring innovations at their own pace, and seeking more control over their solution, SAP S/4HANA Cloud, Private Edition is the customized cloud ERP that adapts to the unique transformation of a business.

What is your path to SAP S/4HANA? Is the cloud a consideration for you? We are here to support you in all phases, from decision-making to ongoing system management. As a reliable partner in digitization and transformation, we implement your S/4HANA Cloud system and optimize critical processes for competitiveness. Together, we inspire your employees to actively participate in the IT project, ensuring its success. Feel free to reach out to us!

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About the author
Muheb Al Najjar
Muheb Al Najjar
I am Muheb Al Najjar and I am currently studying Business Informatics. At PIKON Germany I am a working student in the ERP department. My tasks involve both researching and evaluating new technologies.

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