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On Premise vs Cloud SAP S/4HANA: Considering Cloud Deployment  

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  • Thousands of organizations are busy making preparations to switch to SAP S/4HANA to take advantage of next-generation tooling, processes, and capabilities. But, even before implementation begins, those same organizations face dozens of pressing questions. One of the first of those is whether your S/4HANA implementation will be on premise or in the cloud.  

    We interviewed Jos Romijn, S/4HANA Delivery Director and Co-founder at Cognitus EMEA, based on his experience with more than 10 major S/4HANA implementations across Europe.  

    This is part one of our three-part series on S/4HANA cloud vs on premise deployment. If you’d like to read more, check back next week for part 2.  

    Considerations for a Cloud Deployment  

    The cloud, or more specifically, the public cloud, consists of deployment options where your S/4HANA implementation is in a tenant on cloud or a virtual pool of computer resources including data storage and computing power. Of these, clouds like Amazon Azure, AWS, Google Cloud, and, of course, the SAP Cloud are extremely popular and well-known. And, with exponential drops in cost over the last few decades, these resources are both quick to set up and relatively affordable to implement long-term.  

    Cloud is also advantageous in many other ways. For example, cloud implementations are accessible anywhere, providing you have internet access. On the flip side, if your ISP goes down, you lose access to your deployment.  

    • Cost Saving  

    Cloud deployment offers predicable costs, with a single monthly bill.  Your costs won’t spike with maintenance, hardware failure, or increases in energy rates. You’ll also save on costs because:  

    1. Your cloud provider covers maintenance, IT teams, tech support, etc.  
    2. No need to build infrastructure 
    3. No need to build or maintain hardware 
    4. No internal power usage costs 

    Here, it may be important to look at real energy costs across different cloud options when choosing your provider. This is especially true if you want to share energy usage as part of your (green) business model or if energy costs directly impact your monthly rate.  

    However, on average, long-term costs and TCO tend to be very good –because even though many people view never getting to “own” the system after paying monthly costs for it as a disadvantage, technology tends to depreciate fairly quickly and actual ownership costs quite often outweigh the costs of the cloud. Still, TCO increases over time which may not be the case with an on-premise installation. 

    • Transparent  

    All your costs are worked into a single fee. You won’t have to keep track of licensing fees, hardware, electric, payroll, etc., as part of total costs.  

    • Infrastructure  

    Cloud providers build and deliver cloud as their core service, meaning they can easily invest in regular backups, good tech support, and maintenance. You’ll still want some IT staff, but your team can be much lighter than it would be with an on-premises deployment.  

    • Security 

    Most cloud servers are built with strong security standards and typically comply with significant regulatory compliance including physical security. This is so much the case that banks, oil and gas, and pharmaceuticals are more and more often moving to the public cloud.  

    • Reliability 

    Cloud deployments are maintained by It teams, normally with significant maintenance and uptime guarantees. However, especially if you’re connecting implementations across regions, connectivity might not be as good as you’d like and it’s important to assess what your specific cloud provider offers before signing a contract.  

    • Deployment  

    One of cloud’s largest advantages is that it allows you to very quickly implement and get started. While you’ll need personnel training and technical support, as well as secure access, you can normally manage installation, testing, and setup within a few days. That makes for very straightforward, cost-effective, and quick deployment.  

    • Scalability  

    While this won’t be the case if you choose a smaller cloud provider, any of the major ones, from top 3 like Azure, AWS, and Google to SAP’s own HANA, will enable you to quickly deploy in any country you want to deploy in. This allows you to implement for one part of the business and then scale out to other departments, countries, etc.  

    • Customization  

    If you choose to deploy S/4HANA in the public cloud, you opt for minimum customization. In most cases, you’ll be forced into using S/4HANA best practices rather than any custom business processes you have. That’s in stark contrast to an on-premise deployment, where you can do basically whatever you want. SAPs cloud deployment does have advantages in that you’ll have a roadmap for changes over the next 5 years, but the disadvantage is that those are the only changes you’ll get. That often means waiting 6-12 months for any customization, which can be hampering.  

    Eventually, cloud has a lot to offer for most organizations. From quick deployment to long-term predictable costs and no need to source an expensive IT department for maintenance, there are many reasons to opt for a cloud deployment. But, cloud isn’t always the right choice.  

    If you’d like advice now, schedule a call with us to discuss your organization and its implementation needs. We’re more than happy to look at your security, deployment, and cost needs to recommend on-premise or cloud for your S/4HANA implementation.  

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