SAP S4/HANA Cloud, Private Edition

Some companies want to move to the cloud when it comes to ERP, but do not want to give up the individuality, flexibility and controllability of their previous on-premise installation. This is exactly where SAP S4/HANA Cloud, Private Edition (unofficially also called SAP Private Cloud) comes in.

What is SAP S/4HANA Cloud, Private Edition (SAP Private Cloud)?

SAP S/4HANA Cloud, Private Edition is an SAP ERP system that is hosted in a private cloud environment, the company's own data center, or a combination of both. In some cases, the solution is also referred to as "SAP Private Cloud", but this does not correspond to the software provider's official product designation. The special feature of the offering is that SAP S/4HANA can be highly customized in this variant - similar to an on-premise system - and offers maximum control over one's own data.

How does the SAP Private Cloud work?

Every ERP system, including SAP S/4HANA, requires an IT infrastructure on which to run. In the case of SAP S/4HANA Cloud, Private Edition, there are several options for this.

Customers can choose from the following options:

• Build a private cloud in your own data center
• Use IaaS (Infrastructure-as-a-Service) from a hyperscaler (for example, AWS, Azure, or GCP)

The former option is basically no different from on-premise operation. The rule case is therefore the second variant: operation in a private, firewall-protected network on an IaaS (also called single-tenant environment).

SAP S/4HANA Cloud, Private Edition is offered exclusively in the subscription model, i.e. on a subscription basis. However, it is not a classic SaaS solution (Software-as-a-Service). Although all relevant services are included in the price, implementation and application management are not. Companies can either outsource the latter two tasks to SAP partners or use SAP's Enterprise Cloud Services. Viewed as a complete package, one could then again speak of a SaaS offering. However, it would be more accurate to view the approach as outsourcing an on-premise system.

What is the difference between SAP S/4HANA Cloud, Private Edition and Public Edition?

SAP S/4HANA Cloud is offered in two main variants: the Private Edition and the Public Edition. Although both solutions have the same technical basis, there are some differences - particularly with regard to operation, functions and customizability.

First of all, operation: With the SAP Private Cloud variant, customers use a dedicated IT environment (single-tenant instance), as already mentioned. This is provided and configured exclusively for a single company. This ensures maximum control and data security. With the SAP S/4HANA Cloud, Public Edition, on the other hand, hosting takes place in a multi-tenant environment in SAP's data centers (= SAP Public Cloud). In this scenario, several companies share the infrastructure. However, applications and data are still separated from each other. This approach is particularly cost-efficient.

There are also differences between the SAP public cloud and the SAP private cloud option in terms of the range of functions. For example, the SAP S/4HANA Cloud, Private Edition offers identical functionalities to S/4HANA On-Premise, including all industry solutions and country variants. In contrast, the Public Edition provides highly standardized processes for selected company divisions and industries.

SAP S/4HANA Cloud, Private Edition is extensively configurable and customizable in depth (even down to the source code). With this enormous flexibility, it is able to map even very complex, specific business processes that have grown over many years. In contrast, the SAP public cloud variant is based on industry best practices that can be implemented quickly. While the solution is configurable and extensible like all SaaS applications, the software itself cannot be changed (unlike the Private Edition).

At a glance, SAP S/4HANA Cloud, Private Edition and Public Edition differ as follows:

SAP S/4HANA Cloud, Private Edition

• Hosting in private network (single tenant)
• flexible options in operation (mostly use of a hyperscaler like Microsoft or Amazon)
• highly customizable and flexible
• higher costs for acquisition and operation
• self-determined pace of innovation: one upgrade per year, not mandatory to install (installation of at least one upgrade every five years is nevertheless necessary
• to stay in maintenance)
• Migration: greenfield and brownfield (takeover of existing systems)

SAP S/4HANA Cloud, Public Edition

• Hosting in public network (multi-tenant).
• Hosting always takes place in the SAP data center (in the SAP Public Cloud)
• standardized, based on best practices
• lower costs for acquisition and operation
• Update compulsory: the automatic upgrades (two major releases per year) are mandatory
• Migration: greenfield only (new implementation)

For which companies is SAP S/4HANA Cloud, Private Edition suitable?

SAP S/4HANA Cloud, Private Edition is aimed primarily at companies that value the customizability of an on-premise ERP system, but still want the benefits of the cloud, such as scalability, reliability, ease of management, minimization of internal IT effort, and cost efficiency. The target group includes, in particular, companies to which the following apply:

• SAP existing customers who have implemented very specific processes and in-house developments over the years and want to protect the corresponding investments
• New SAP customers who want to set themselves apart from the competition to the maximum extent possible through individual business processes and models
• Companies from niche industries for whom standard processes are not sufficient
• Companies that want to set the pace of their digital transformation themselves despite cloud use

In addition, companies prefer to use the SAP private cloud when particularly high legal, regulatory and compliance requirements have to be met. This applies, for example, to CRITIS operators, the healthcare sector or the biotech industry.

Incidentally, Private Edition is the only cloud option for which SAP offers brownfield migrations and technical conversions in addition to the greenfield approach (new implementation). This enables companies to take existing and internally developed processes with them into the cloud. By comparison, the Public Edition does not offer this option. It only supports the greenfield approach and therefore requires the willingness to create a system together with the processes from scratch.

What are the advantages and disadvantages of SAP S/4HANA Cloud, Private Edition?

SAP S/4HANA Cloud, Private Edition brings several benefits to businesses. In particular, these are:

• Freedom to update: the pace of innovations can be determined by the customer
• Individuality: maximum differentiation from the competition is possible through specific adaptations
• Investment protection: existing developments from SAP ECC can be adopted
• Brownfield support: no need to build a new system and change proven processes
• general advantages of the cloud: scalability, high availability, reduced responsibility for technical operation, conversion of investment costs into operating costs
• compared to SAP ECC: higher performance, real-time insights, new features, modern business processes and innovative technologies such as artificial intelligence
• Availability of numerous industry solutions

Disadvantages include the following:

• less granular resolution of standards and best practices than in the Public Edition
• no Model Company Services
• longer implementation time
• higher costs than public cloud
• no technical support for the "keep the core clean" principle
• general maintenance problem in case of modifications

How does the switch to SAP S/4HANA Cloud, Private Edition work?

The conversion of existing SAP ERP versions to SAP S/4HANA Cloud, Private Edition is supported by "RISE with SAP" as standard. This is a commercial package of various services that helps companies migrate data and processes to the cloud more easily and securely. The core elements of RISE with SAP are:

• Customized Cloud ERP System
• Transformation services
• Business analytics
• Partner expertise

Note: The "GROW with SAP" package is not available for the Private Edition. It was developed purely for the quick switch to the SAP Public Cloud.

What does the SAP Private Cloud cost?

SAP S4/HANA Cloud, Private Edition is provided in a subscription license model. The amount of the corresponding subscription fees to be paid on a regular basis depends on various factors such as the number of users and the scope of functions. Would you like to know more? Then please contact us and get your individual offer!