S/4HANA: On-premise or cloud? The right solution for your company
Most companies have already decided to implement SAP S/4HANA. The real question now is: Which operating model? Public cloud, private cloud, or on-premise – each option has consequences for costs, flexibility, and, above all, your logistics processes. In this article, we categorize the three models and show you the criteria you should use to make the right choice.
Why the deployment question needs to be addressed now
The question "S/4HANA On-Premise or Cloud?" is becoming urgent for many companies. The clock is ticking for SAP ECC: Mainstream maintenance ends on December 31, 2027, and paid Extended Maintenance on December 31, 2030. Those with a RISE with SAP subscription can continue with the so-called SAP ERP Private Edition Transition Option Extend until 2033 – but only under certain conditions and at corresponding costs.
The choice of operating model is not purely an IT decision. It determines how much customization is possible, how often you need to implement releases, and how your warehouse processes will interact with the standard in the future. Those who choose it too late or solely based on license price will pay more later in the project.
The three options at a glance
1. SAP S/4HANA Cloud Public Edition (GROW with SAP)
SAP operates the system as Software-as-a-Service. Standardized best-practice processes are used, and updates are delivered automatically twice a year. Modifications are not provided; extensions are implemented exclusively via in-app and side-by-side extensibility.
2. SAP S/4HANA Cloud Private Edition (RISE with SAP)
You receive a dedicated S/4HANA instance, operated by SAP on a hyperscaler of your choice. Functionally, it largely corresponds to the on-premise version, including full configuration depth. You control the release date yourself within predefined timeframes.
3. SAP S/4HANA On-Premise
You operate the system in your own data center or with a hosting provider of your choice. Maximum control over infrastructure, release cycle and customizations – but also full responsibility for operation, security and upgrades.
S/4HANA On-Premise or Cloud: What exactly differentiates the models?
| criterion | Public Cloud | Private Cloud | On-Premise |
|---|---|---|---|
| Operation | SAP (SaaS) | SAP on Hyperscalers | Own data center / hosting provider |
| Cost model | Subscription (OPEX) | Subscription (OPEX) | License + Operation (CAPEX) |
| Release cycle | twice a year, mandatory | Self-directed within the framework | Self-controlled |
| Individualization | Only Clean Core Extensibility | Highly recommended, Clean Core | Maximum |
| EWM scenario | Embedded, limited scope; decentralized EWM can be connected. | Embedded or decentralized, full scope | Embedded or decentralized, full scope |
| Implementation approach | Fit-to-Standard, Greenfield | Greenfield, Brownfield, Selective Data Transition | Greenfield, Brownfield, Selective Data Transition |
| Typical profile | Medium-sized businesses, near-standard processes | Medium-sized businesses to corporations, complex logistics | High compliance or integration requirements |
Cost factors: More than the license fee
Comparing business models solely based on subscription or licensing costs is too simplistic. The decisive factor is the total cost over at least five to seven years. This includes:
- Infrastructure and operations: Hardware, basic support, backups and security are on-premises and located at your location; in the cloud, they are included in the subscription.
- Upgrade costs: In the public cloud, releases are regular and mandatory – each one including regression testing. On-premises upgrades are less frequent, but larger and more expensive.
- In-house developments: Every Z-series development incurs maintenance and testing costs throughout its entire lifecycle. This applies to every model.
- Internal resources: How much SAP Basis and development expertise do you want and can you keep in-house permanently?
A logistics perspective: What does this mean for SAP EWM?
Especially for warehousing and distribution, the deployment question is often the most critical point. Complex warehouses with material flow systems, wave control, or high-volume picking processes frequently require the full range of EWM functionality. This is available without restriction in the private cloud and on-premises – as embedded or decentralized EWM.
In the public cloud, the warehouse scope is deliberately standardized. Since release 2508, the public cloud can be connected to a decentralized EWM in a private cloud or on-premises, but with limitations, such as regarding handling units or serial numbers at the warehouse level. Our advice: Review your warehouse processes before making a deployment decision, not after.
Regardless of the model, a clean core pays off. The less you modify the standard, the easier upgrades and a later change of operating model will be.
Decision-making aid: Five questions for your project team
- How closely aligned are your processes with standards? If the majority of your processes can be mapped using SAP Best Practices, then the public cloud is a serious option.
- How complex is your warehouse logistics? Automation, MFS connectivity, or special processes argue in favor of private cloud or on-premise.
- How many in-house developments do you bring with you – and how many do you really need? An honest assessment determines whether a project is greenfield or brownfield.
- What release frequency can your organization support? Two mandatory updates per year require well-established testing and change processes.
- What compliance and data protection regulations apply? Regulated industries sometimes have requirements regarding data storage and operation.
Conclusion
There is no single correct answer to the question "S/4HANA On-Premise or Cloud?". The public cloud rewards standardization, the private cloud combines flexibility with cloud operation, on-premise offers maximum control. The crucial factor is that the choice fits your processes, your organization, and your logistics – and not the other way around. Answering this question early, systematically, and with a focus on total costs lays the foundation for a stable S/4HANA project.
Frequently Asked Questions
What is the difference between RISE with SAP and GROW with SAP?
RISE with SAP is the package for the S/4HANA Cloud Private Edition, GROW with SAP is the package for the Public Cloud Edition.
Can I later switch from on-premises to the cloud?
Yes, moving to a private cloud is technically quite feasible. Moving to a public cloud, on the other hand, is practically equivalent to a complete reimplementation.
Is SAP EWM available in the public cloud?
Yes, as an embedded warehouse management system with a standardized range of functions. For complex warehouses, a decentralized EWM system outside the public cloud is possible, with integration limitations.
When does maintenance for SAP ECC end?
Mainstream maintenance ends at the end of 2027, extended maintenance at the end of 2030. An extension until 2033 is possible via the Private Edition Transition Option.
Görkem Serdar, SAP EWM Consultant
Contact & Exchange
A little about me: I'm Görkem Serdar, an SAP EWM Consultant at Noor Vision. I support companies with S/4HANA and EWM projects from the explore phase through go-live and hypercare to subsequent optimization.
What deployment decision are you currently facing? Feel free to share your thoughts in the comments.
The right deployment decision for your logistics
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