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S/4HANA Cloud Vs S/4HANA On-premise

In previous articles, we learnt what is S/4HANA on-premise and what is S/4HANA Cloud. We also discussed the difference between SAP Suite on HANA and S/4HANA.

In this article, we will explain in detail the difference between S/4HANA Cloud and On-premise.

SAP S/4HANA Cloud Vs S/4HANA On-premise

SAP S/4 HANA On-Premise Edition

SAP S/4HANA on-premises is the ERP business suite based on the SAP HANA in-memory database. With on premises, the customer manages everything, including the HANA database, applications, data centers, OS, middleware, servers, virtualization and networking.

SAP S/4 HANA Cloud Edition

SAP S/4HANA Cloud is the SaaS version of S/4HANA. SaaS deployment means that users can take advantage of much of on-premises S/4HANA's functionality without needing the hardware, databases or IT staff required for the on-premises version.
In S/4HANA Cloud, SAP provides and manages almost everything for customer.

SAP S/4HANA Cloud Vs S/4HANA On-premise

S/4HANA On-premise Vs S/4HANA Cloud

Let's compare S/4HANA Cloud and on-premise version on common customer concerns.

Licensing Model

Cloud: Subscription licensing

On Premise: Traditional licensing

Infrastructures and maintenance

Cloud: SAP provides the system and is responsible for the system maintenance

On Premise: The customer is in control of deployment and maintenance with dedicated own IT staff


Cloud: Although able to be customized to some extent, there is far less flexibility compared to on premises.

On Premise: There is far more flexibility with and control of customization since the company manages all customization in-house.


Cloud: The implementation is faster than S/4HANA on premises since the cloud version uses a ready-made platform that has already been provisioned, implemented and tested by the cloud provider.

On Premise: Implementation takes time, cost, effort and the right personnel to set up a new environment. There may also be a need to purchase additional hardware or software to implement new features.


Cloud: Integration among various corporate systems can be complex and involves greater security risks due to data being sent over the internet.

On Premise: Data transfer among systems is faster, and integration over the internet is relatively simpler.

Upgrades and support packages

Cloud: There is less control over an upgrade schedule compared to on premises. However, the cloud provider can inform the customer in advance about the impending upgrades, and the customer can choose the timing and functionality of the upgrade.

On Premise: The company decides the frequency and schedule of software upgrades or whether to implement the latest support packages. This option is time-consuming and expensive, and involves technical or functional resources.


Cloud: Scaling up or down is easier, faster and cheaper to meet the changing needs of the company.

On Premise: This approach needs long-term planning and commitment for resources required for scaling.

How do I know Which SAP S/4HANA Is Right for My Business?

SAP S/4HANA Cloud Vs S/4HANA On-premise

The SAP S/4HANA, on-premise edition is the best fit for enterprises in any industry that need the full spectrum of functionality combined with a high degree of flexibility in customization.

Typically, these will be larger enterprises with very well-established processes that they are not interested in changing.

The SAP S/4HANA, cloud edition is the best fit for companies that need a highly agile offering that covers their core business scenarios, yet offers more flexibility and a faster innovation cycle (quarterly as opposed to yearly). It's perfect for businesses that are changing or growing rapidly and want a platform that can grow and change with them.

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