Automating and modernizing business processes are two key topics on which the industry is spending a lot of time and resources. There is a constant race among competitors for full automation. Business software development companies offer intelligent ERP solutions and develop them with every update.
This is a product from SAP known by the name of SAP S/4HANA, which is at the forefront of smart ERP technology development. The platform is powered by smart computing power, giving developers complete freedom to create applications and processes.
Accelly’s S4HANA Enterprises are available in two different formats: cloud-based and on-premises.
The solution makes full use of the SAP HANA Cloud database and most of the complex computational tasks are performed on third-party based cloud servers. The on-premises version stores all data on your local storage system.
In this article, we’ll look at different variants and their pros and cons. We hope this helps you understand which one is better suited for your company’s needs.
Differences between the two variants
The two platforms, SAP S/4HANA Cloud and the on-premises version, differ in many ways. Several important points have been considered and the two models are discussed in the following points.
The licensing model is different for the two variants. The on-premises model is licensed as a perpetual licensing model. This license allows the owner to use his SAP S/4HANA forever. Pricing for the on-premise version is an initial software fee only and is based on the number of users using the software.
So if a company has 1000 employees and only a team of 50 uses the SAP S/4HANA on-premises version, the costs are incurred only for those 50 employees. Other overhead costs are maintenance and upgrade fees only.
The SAP S/4HANA cloud version has a perpetual non-extending license. There is an annual subscription fee that the company must pay to maintain access. Subscriptions typically last 2-3 years and costs are based directly on business metrics and are not taken into account.
So, in this case, let’s say your company has 2000 employees, 100 of whom are using SAP S/4HANA Cloud. Still, the price will be for his 2000 employees.
Infrastructure and maintenance
To deploy SAP S/4HANA on-premises, companies need to have hardware, storage systems, and a centralized and secure server that can perform all computation and storage. This is a bit expensive to install and not many companies can do this. However, this gives you more control over the operation being performed. The update is performed on the same hardware setup and no setup changes are required.
SAP S/4HANA Cloud relies on SAP for the entire upgrade and installation. There is little control in the hands of corporations. This saves the cost of expensive hardware and doesn’t require a strong IT team to maintain the process. Upgrades are provided quarterly and updates are largely automatic.
Most of the data and processing is done locally in on-premises systems, giving you a lot of flexibility. If new functionality is required, the in-house IT staff can handle it alone.
However Cloud-based SAP ERP fully relies on SAP for upgrades and changes. Best practices must be maintained according to SAP’s strict guidelines, making the system less flexible.
Support and updates
Users have more control over their on-premises systems, allowing companies to control how often system updates are performed. It is entirely their choice to implement a modern system. However, the update process is a bit more critical for on-premises functionality and often requires outside help.
ERP deployed in the cloud, on the other hand, is updated directly from SAP on a quarterly basis. Updates must be made unless they violate any code of good practice, and other modules will not work properly on those systems.
What should I keep in mind before choosing one of the two?
Both SAP S/4HANA cloud and on-premise versions have their advantages. If you are confused about which to choose, you should first understand your business requirements before proceeding.
If your business is new and your client wants flexibility in their processes, we recommend using an on-premises system. This allows you to control any parameter you want.
Cloud systems are rigorous, but offer a degree of security that on-premises systems cannot provide. Its predefined configurations and its rules ensure best practices are followed.
This also enables scalability as new modules can be added and new processes can be developed very quickly on the cloud platform. It’s also affordable for other businesses due to its minimal start-up costs.
The conclusion is
SAP S/4HANA is a compelling platform and your company is guaranteed to benefit from whichever version you choose. Besides this, every system has advantages and disadvantages. It is imperative to clarify the conditions under which the company will work and choose the platform accordingly.
If your company is new and acquiring an on-premises system would be a huge financial burden, you should opt for the cloud version. Also, the on-premises version may be more suitable.