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What CIOs should know about S/4HANA public cloud vs. private cloud

In addition to on-premises and hybrid models, SAP offers S/4HANA in public and private clouds. Here's a look at the differences between the cloud models.

Understanding the functionality of SAP S/4HANA public cloud vs. private cloud is important for CIOs considering a deployment.

S/4HANA is SAP's next-generation, HANA-powered, in-memory ERP application and is the successor to SAP ERP Central Component (ECC). It is available in both the cloud types: public and private. It is also available in an on-premises version, as well as in a hybrid model, which is a combination of cloud and on-premises software. All versions include the SAP Fiori UI.

CIOs evaluating the available deployment options for S/4HANA in public or private clouds need to give careful consideration to several factors when deciding which cloud option is most suitable to meet their needs in terms of cost, ease of implementation, industry specificity and data security.

Overview of S/4HANA public cloud vs. private cloud

S/4HANA public cloud is a SaaS, multi-tenant version of the software where all tenants share the same cloud. This makes it low-cost, efficient and scalable. In other words, it's an off-the-shelf, out-of-the-box, cloud-native ERP software in which each tenant uploads data, switches on the features required or switches off what's not required. And it's ready to use in a few weeks. In addition, SAP manages the S/4HANA public cloud's infrastructure and takes care of routine system maintenance, including upgrades and patches, all the while ensuring data cybersecurity, governance and compliance.

S/4HANA private cloud offers greater HANA flexibility and functionality than the public cloud. Every tenant using S/4HANA private cloud has its own dedicated virtual private cloud that can be hosted in whatever language country or region in which it needs to be. All S/4HANA private cloud tenants share the data security, governance and compliance protocols. As with S/4HANA public cloud, SAP manages the entire infrastructure for S/4HANA private cloud.

S/4HANA private cloud is a part of the two-tier SAP HANA Enterprise Cloud, which is comprised of custom at the top tier and private at the mid-tier. So, a custom cloud implementation of S/4HANA (or HANA Enterprise Cloud) is top-tier, and S/4HANA private cloud is considered a mid-tier ERP because it can only support S/4HANA implementations that are new (known as Greenfield projects) and not migration from ECC to S/4HANA (Brownfield projects). For Brownfield projects, the top-tier custom HANA Enterprise Cloud, which is a mix of public and private cloud, is available but costs significantly more and is suitable for larger enterprises. (Note that you may also hear S/4HANA private cloud referred to as HANA Enterprise Cloud, private option.)

Let's delve into specific areas separately for an S/4HANA public cloud vs. private comparison.

Cost

When it comes to S/4HANA public cloud vs. private cloud on the issue of cost, public is decidedly less expensive. This is due to the simplicity of the public cloud's features, as well as having the same architecture shared by multiple tenants.

Feature availability

Contrary to general perception, S/4HANA public cloud is not a standard or full-featured version of S/4HANA in the cloud but a limited ERP version.

The functionality of S/4HANA public cloud vs. private cloud is one of the most important areas to understand. Contrary to general perception, S/4HANA public cloud is not a standard or full-featured version of S/4HANA in the cloud but a limited ERP version (compared to S/4HANA private cloud) that offers fewer features and minimal customization options. S/4HANA public cloud eliminates as many implementation complexities as possible thanks to a limited number of the standard ERP features, from which companies can pick and choose. In contrast, S/4HANA private cloud makes almost all of the standard features available, including some of the complex ones.

Implementation or deployment timelines

S/4HANA public cloud provides tools for guided business processes configuration thereby making it easier for companies to load their master data and switch on or off the available standard ERP features, making the new ERP ready to use in the shortest possible time. While S/4HANA private cloud also offers guided configuration tools, companies can choose from the S/4HANA components available that they want to implement to meet their business needs. Since each company may choose different set of S/4HANA components for implementation, the deployment timeline varies according to scope of implementation.

Industries supported

S/4HANA public cloud only supports the following industries: manufacturing, professional services, sourcing and procurement, HR, sales support and financial services. More industries are slated for future support. If a company's specific industry isn't supported in the public cloud, then it makes sense not choose this option. S/4HANA private cloud supports significantly more industries.

Neither public nor private S/4HANA cloud options offer specialized SAP software such as IS-Utilities, IS-Health or IS-Automotive, making them a misfit for companies presently using them.

Languages, countries and regions support

When it comes to global considerations of S/4HANA public cloud vs. private cloud, private is the clear winner. The S/4HANA public cloud version offers support for only a limited number of countries and languages. S/4HANA private cloud offers far more options.

Upgrades, patches and new feature availability

Using S/4HANA public cloud enables all tenants to benefit from upgrades, patches and new features. In contrast, S/4HANA private cloud tenants can pick and choose not just the new ERP features they want or don't want to implement but also the system's upgrade schedule to ensure there's minimal downtime or disruption to the business.

Switching between S/4HANA public and private cloud

When considering S/4HANA public cloud vs. private cloud, CIOs should know that whatever they choose today may be easily changeable in the future. Since both S/4HANA public and private clouds use the same programming codes and logic, companies planning to opt for S/4HANA private cloud today should be able to move to S/4HANA public cloud and take advantage of the public cloud's lower cost when SAP develops security and flexibility in the public cloud to match the private cloud.

Greenfield implementation

A Greenfield implementation is a new ERP implementation and not a migration of legacy ERP systems such as SAP ECC to S/4HANA. S/4HANA public cloud offers companies only the available standard ERP features for a plug-and-play implementation approach. In contrast, S/4HANA private cloud facilitates Greenfield implementation, which means the entire ERP is built from scratch.

As an overall S/4HANA public cloud vs. private cloud comparison, public cloud is more appropriate for small-to-medium sized businesses (SMBs) in supported industries having simpler and straightforward business processes. SAP considers any business making up to $1B in revenue each year part of the SMB category. S/4HANA private cloud is a better fit for mid-to-larger sized companies planning a brand-new implementation that need a software and landscape customization.

This was last published in September 2018

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How does S/4HANA private vs. public compare for your company?
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Very informative!
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