SAP S/4HANA Cloud, Private Edition is a flexible cloud ERP solution for companies with highly individualized processes. Here we answer all your questions about this SAP software solution.
SAP S/4HANA Cloud, Private Edition is an ERP system from SAP that is operated in a private cloud environment. The solution is often referred to as SAP Private Cloud, but this is not the official term used by the manufacturer. SAP S/4HANA Cloud, Private Edition combines the positive characteristics of the cloud with the flexibility of a dedicated IT infrastructure (held exclusively for a single company).
The key advantage of the SAP S/4HANA Cloud, Private Edition is that the S/4HANA ERP software can be highly customized in this operating model. The solution is just as flexible as an on-premise system. However, unlike locally installed software, the advantages of the cloud can still be used. First and foremost, this is scalability in line with requirements. Another plus point is the high level of data control that operation in a private cloud enables.
On the other hand, there are some disadvantages. For example, the SAP S/4HANA Cloud, Private Edition incurs higher total operating costs compared to the public cloud model. Administration is also more complex. As ERP systems in the SAP private cloud are generally not based on the standard, best practices and technical innovations in the form of updates cannot be easily implemented.
The SAP S/4HANA Cloud, Private Edition has some specific features that are described in more detail in this section. First of all, the solution includes several services, which at first glance could also be described as Software-as-a-Service (SaaS). However, this is only partly true. The following points speak in favor of a SaaS solution:
However, SAP S/4HANA Cloud, Private Edition also has some features that do not fit with Software-as-a-Service. These are:
The SAP S/4HANA Cloud, Private Edition can be operated on the infrastructures of various leading hyperscalers. These include, for example:
From a business perspective, it is irrelevant which provider companies choose, as the functionality of the ERP system always remains the same regardless of the cloud platform. However, there are other aspects that should be considered when selecting a hyperscaler for SAP S/4HANA:
RISE with SAP is an offering that helps companies to bring their business processes into the cloud and modernize them. It bundles all the important components that are relevant for a successful cloud transformation in one package. The aim is to simplify the transition to the cloud by combining software, infrastructure and services.
Essentially, RISE with SAP contains the following elements:
There are basically two ways to switch to the SAP Private Cloud: greenfield and brownfield implementation.
The greenfield implementation is synonymous with a completely new implementation of SAP S/4HANA, in which the existing systems, processes and in-house developments are not adopted. This approach is ideal if companies want to fundamentally redesign their processes.
With the brownfield approach, on the other hand, the existing SAP landscape is migrated directly to SAP S/4HANA. Existing data and processes are transferred. This method is particularly suitable for companies that want to retain their existing structures (often characterized by a high degree of individualization).
Which of the two paths is the better one depends on the specific initial requirements and objectives of a company. If you need help deciding, you can use SAP’s Digital Discovery Assessment (DDA). The program analyzes existing processes, IT systems and business requirements. On this basis, it provides clear recommendations for the appropriate migration strategy (greenfield, brownfield or hybrid solution). Regardless of the strategy, RISE with SAP can be used to simplify the migration.
Incidentally, the existing ERP landscape does not have to be converted to SAP S/4HANA Cloud, Private Edition in one go. A step-by-step approach is also possible. The finance-first approach, for example, has proven successful in this context. Here, only SAP Central Finance is initially activated in order to merge financial data from various existing systems (e.g. SAP ECC and non-SAP software) into a central system. This gives companies a standardized overview of all financial processes such as accounting, controlling or reporting in the first step. Other business areas such as sales, logistics and production will follow at a later date.
Roughly speaking, the differences between SAP S/4HANA Cloud, Private Edition and Public Edition are as follows:
| Criterion | SAP S/4HANA Cloud, Private Edition | SAP S/4HANA Cloud, Public Edition |
| Architecture | Single tenant (dedicated environment) | Multi tenant (shared environment) |
| Flexibility | High customizability, integration of legacy systems possible | Standardized processes, limited adaptability, transfer of legacy systems not possible |
| Hosting | Hosted by hyperscalers or SAP | Exclusively SAP hosting |
| Updates | Customized updates, lower frequency | Automatic, standardized updates; higher frequency |
| Target group | Companies with individual requirements | Companies that want to use standardized processes quickly |
| Costs | Higher, as dedicated resources are used | Cheaper due to shared infrastructure |
SAP S/4HANA can be operated not only in the SAP Private Cloud, but of course also traditionally on local servers in the company – i.e. on-premise. There is no difference in terms of the ERP software. Functions, modules and process handling options are identical for both variants.
There is a major difference in terms of costs. This is because on-premise operation of SAP S/4HANA naturally requires its own servers and an IT team that continuously supports the hardware and the system. The cloud variant, on the other hand, does not require its own server hardware. The corresponding investments are therefore not required.
Access to the SAP Business Technology Platform (BTP) is also integrated into SAP S/4HANA Cloud, Private Edition. This platform enables companies to use cloud services such as integrations, extensions or innovation tools. In on-premise operation, however, this access is not available natively, which means that cloud-based extensions and services cannot be used or can only be used with additional effort.
Other differences between private cloud and on-premise operation of SAP S/4HANA are as follows:
| Criterion | SAP S/4HANA Cloud, Private Edition | SAP S/4HANA On-Premise |
| Updates | Regular updates managed by SAP | Updates must be planned and carried out by the company itself |
| Scalability | Flexible use of resources and rapid scaling | Extensions require investment in hardware and take more time |
| Cost structure | Subscription model with ongoing, predictable costs | High initial investment plus ongoing maintenance and operating costs |
| IT responsibility | SAP takes over infrastructure management and maintenance | Company is fully responsible for maintenance and operation |
SAP S/4HANA Cloud, Private Edition is particularly suitable for the following target groups:
It is also important to know that a brownfield migration can only be implemented with the SAP S/4HANA Cloud, Private Edition. This is because the Public Edition only supports the greenfield methodology (i.e. a complete new implementation). So if you want to migrate your existing ERP system with all its customizations to the cloud, you have no other option than the Private Edition.
However, this point should be carefully considered, as the public cloud variant is being particularly promoted and further developed by SAP. Only this option gives companies full access to technological innovations (see also the last section).
Thanks to the so-called multiple tier scenario, companies have the option of combining systems in the SAP Private Cloud and the SAP Public Cloud. This approach is primarily chosen by corporations looking for a simple, cost-efficient and fast way to connect their subsidiaries.
The architecture in this case is as follows: The parent company operates its complex, customized S/4HANA system in the private cloud (or on-premise). Subsidiaries with less complex processes, on the other hand, are mapped in the SAP public cloud with little care and maintenance effort. Thanks to full compatibility, data can be easily exchanged between the two system environments.
SAP is pursuing a clear strategic path under the motto “Cloud first”: the Group is increasingly developing its entire portfolio in the direction of the cloud. Customers are to be encouraged to follow this path through various measures and services. For the ERP products, especially for S/4HANA, this means that the Group is investing primarily in the further development of SAP S/4HANA Cloud, Public Edition. For some time now, this has seen the greatest further development, which is also reflected in the high update frequency (four new updates per year). SAP will continue along this path in the future. Customers who want to benefit fully from innovations should therefore take a closer look at the possibilities of the public cloud version in due course. In view of the constantly increasing range of functions, the hurdles for a changeover should become lower and lower over the next few years.
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