Not all clouds are the same – an introduction to SAP S/4HANA in the cloud

Don’t worry if you got lost somewhere between the inception of SAP S/4HANA Cloud in 2016 and the present. You are not alone. Even though cloud isn't quite as mysterious these days, there are still a lot of terminology surrounding it that can make anyone confused.

The most recent announcement from SAP regarding "RISE with SAP" included an exciting addition to the product range aimed at customers who want the full SAP S/4HANA OnPremise experience while enjoying the benefits of a cloud commercial model. The latest product is called SAP S/4HANA Private Cloud Edition (PCE) and it puts a new spin on things, but before we go there, I thought we should start from the very beginning by determining what flavour of SAP S/4HANA you might be looking for. Are you a cloud contender or not?

First Question: Where do you want your SAP to go?

1)     In your own basement (on premise)

2)     In someone else’s basement (outsourced operation)

3)     In someone else’s really large basement (hyperscaler)

If you have chosen alternative #1, then you are not a cloud contender, but don’t stop reading just yet. Running your SAP in an external datacenter is as much a thing of the past as it is a thing of the present and the future. In the world of cloud the trend is in favour of really large basements owned by the likes of AWS, Google, Microsoft and Alibaba. We call them hyperscalers, and they provide the infrastructure most people tend to associate with the notion of CLOUD.

Second Question: How do you want to pay for your SAP?

1)     Up-front payment (perpetual license)

2)     Pay-as-You-Go to SAP (subscription license)

3)     Pay-as-You-Go to a partner (subscription license)

Again, if you have chosen alternative #1, I would argue you are not really in the market for a cloud solution. Consuming your solution as a subscription is the cloud-way and it can contractually be set up directly with SAP or with a partner in what is known as a Partner Managed Cloud.

Unfortunately, these two questions don’t take us all the way to demystifying SAP Cloud. Once you have settled on the Where and How, there is still the question on What? SAP has come with a few different market messages over the years, and luckily for you the offering today is probably the easiest to understand.

Hopefully you have already heard about the next generation intelligent ERP called SAP S/4HANA. As of now it has sprouted three different branches emerging from the same code line. The concept of the traditional OnPremise offering should be familiar to all of you who have worked in the ERP space in the last 20+ years. The offering of SAP S/4HANA in the cloud is more recent and now comes in two distinct flavours; Public Cloud and Private Cloud (aka PCE). To better understand what's behind these cloud solutions please look at the following side-by-side comparison.

Let’s explore them one by one:

All SAP S/4HANA offerings come from ONE data model, ONE Semantic and ONE User Experience. The difference lies in the provided functionality. Public Cloud is the native cloud offering providing a comprehensive scope, architectured for a modular adoption of cloud. Private Cloud provides the FULL scope of the SAP S/4HANA OnPremise solution consumed as a cloud service.

The Public Cloud offering only allow new implementations (aka Greenfield), so if you are an existing SAP ERP customer you will re-implement your processes and migrate the relevant data to the new system. The Private Cloud is primarily targeting existing customers who want to convert their current solution (aka Brownfield) to SAP S/4HANA in the cloud.

All customers need to adapt their solution, but for those selecting the Public Cloud the mantra is sticking to Fit-2-Standard as customization is limited compared to the full set of options available in the Private Cloud offering. The latter also allows for enhancements and even modifications to the system (something unheard of in the public cloud world).

As the Public Cloud is a true software as a service it means the lifecycle is managed by SAP and frequent upgrades are mandatory. For customers who want to have more control over when their solution is upgraded the Private Cloud option allows for up to five years of running the software without implementing any of the yearly releases.

These four aspects obviously amount to a simplified description of the SAP S/4HANA Cloud offerings. There are many more dimensions to explore when it comes to responsibilities for system related operations and services, overall governance and management of technical elements such as partner add-ons, but hey … I did call this an introduction.

Still unclear? Then, please reach out to me and I will put you in contact with a colleague with better pedagogical skills and see if we can get you sorted!