What is SAP S/4HANA Cloud?

SAP S/4HANA Cloud is a SaaS version of SAP S/4HANA ERP, a suite of integrated business applications.

SAP S/4HANA Cloud was launched in February 2017. According to SAP, the intent was to provide a "next-generation intelligent ERP" system that enables companies to achieve digital transformation. SAP S/4HANA Cloud is built on the SAP HANA database and takes advantage of HANA's in-memory processing and real-time data access.

Cloud deployment means users can access all of S/4HANA's functionality without committing resources to hardware, databases or IT staff. S/4HANA Cloud includes technologies that can help bring "intelligence" into ERP applications, including machine learning, virtual and augmented reality, blockchain and voice-enabled technology. The main S/4HANA Cloud business modules include finance, sourcing and procurement, sales, professional services and manufacturing.

S/4HANA Cloud is available in a number of cloud editions, including public cloud, private cloud and hybrid or managed-cloud environments. The Rise with SAP initiative, which was launched in 2021, enables customers to deploy S/4HANA Cloud on a public cloud infrastructure -- Alibaba, Amazon Web Services, Google Cloud Platform, IBM or Microsoft Azure -- under a simplified SaaS license structure from SAP.

Three pillars of SAP S/4HANA Cloud's intelligent ERP

SAP S/4HANA Cloud incorporates three technologies that form the foundation of intelligent ERP, according to SAP.

  • Digital assistant. SAP S/4HANA Cloud uses SAP CoPilot, a conversational digital assistant (or virtual assistant) that lets users interact with ERP applications and functions. SAP CoPilot uses contextual data about the user and the task they are performing to provide information relevant to the task.
  • Machine learning. SAP S/4HANA Cloud includes machine learning technology that "learns" how to perform and automate tasks that can be repetitive and error prone when done manually, making them run more reliably and efficiently.
  • Predictive analytics. SAP S/4HANA Cloud includes embedded analytics that can help predict the outcomes of actions. The analytics tools are configurable to the user's needs and can be developed into apps, such as an inventory management app that can predict when stock will arrive or a sales quotation app that enables sales managers to determine the probability of converting sales quotations.

Implementing, configuring and running SAP S/4HANA Cloud

SAP S/4HANA Cloud is available as SaaS in various subscription options from SAP, which owns and operates the platform. It comes configured with best practices and includes a built-in model that allows companies to standardize business processes. All of this is intended to reduce implementation time, cost and risk. SAP handles all of the back-end management, including upgrades, security and governance. All users generally need to do is integrate their data, then turn on the processes they need and turn off the ones they don't.

However, because SAP controls the basic infrastructure, it does not allow extensive customizations. This might make S/4HANA Cloud unsuitable for larger enterprises that typically require ERP systems to be highly customized to meet their needs.

SAP S/4HANA Cloud versions are scheduled to be updated every quarter, according to SAP.

Users access SAP S/4HANA Cloud from a web browser, and all business apps are launched from the SAP Fiori launchpad. To access it, users only need an internet connection, the URL and access rights.

Rise with SAP

In January 2021, SAP launched Rise with SAP, a cloud deployment and managed services offering that enables customers to implement and run S/4HANA in a simplified SaaS model. When it was launched, Rise with SAP included a bundle of products and services centered on the "digital core" of S/4HANA Cloud. In addition to S/4HANA, the initial Rise with SAP offered access to the SAP Business Network, the SAP Business Technology Platform development environment, and the Signavio business process transformation platform, as well as the customer's choice of public cloud infrastructure provider. This was available as a SaaS-like licensing contract from SAP intended to simplify the implementation and management of S/4HANA.

SAP refers to Rise with SAP as "business transformation as a service," because the goal is to provide a cloud-based digital platform that enables companies to drive business innovation by analyzing how the business works and be able to respond more quickly to changing business requirements, customer demands and market conditions. For example, a company could use the process to move from a product-centered focus to a service-oriented focus.

Rise with SAP was designed to evolve and include new capabilities and services as conditions change. Later in 2021, for example, the vendor launched Rise with SAP packages for specific industry segments. It included industry best practices, business process intelligence and analytics, and other services designed to drive business transformation efforts for those specific industries. The five initial Rise with SAP for Industries packages were automotive, consumer packaged goods, industrial machinery and components, retail and utilities.

What are the benefits of SAP S/4HANA Cloud?

SAP identifies five ways that companies can benefit from implementing S/4HANA Cloud, including faster ROI, increased business agility, lower total cost of ownership, improved governance and compliance, and more intelligent ERP that improves efficiency.

As an intelligent, next-generation cloud ERP business suite, S/4HANA Cloud prepares businesses for the digital future, SAP claims. It integrates business processes, can turn real-time data into actions and can increase employee productivity, thus enabling companies to transform existing business processes and develop new ones, according to the vendor.

What is the difference between SAP S/4HANA on premises and S/4HANA Cloud?

S/4HANA Cloud shares much of the technical DNA of its parent, the on-premises version of S/4HANA. For example, both were developed on the SAP HANA in-memory database. However, there are some significant differences between S/4HANA Cloud and the on-premises S/4HANA.

  • Licensing. S/4HANA on premises has a traditional licensing model, which means the customer pays upfront for the software, which usually includes a maintenance and support agreement. The customer owns the software, but the upfront cost is high and the customers are responsible for version upgrades. S/4HANA Cloud, in contrast, uses a cloud subscription model which includes maintenance and support. This means customers have a predictable periodic payment with lower upfront costs, but development and support options are limited.
  • Management. S/4HANA on premises requires customers to invest in their own development, maintenance and support teams. S/4HANA Cloud requires no internal support.
  • Upgrades. S/4HANA customers must plan, perform, test and support version upgrades. S/4HANA Cloud upgrades occur automatically on a quarterly basis without the involvement of the customer.
  • Functionality. S/4HANA Cloud is a limited version of S/4HANA, which means that it has lower cost and faster implementation time than S/4HANA, although customers don't get the full set of features and capabilities.

What are the challenges of S/4HANA Cloud?

S/4HANA Cloud's main drawback is that is has more limited functionality than the full on-premises S/4HANA and generally can't be customized. This makes it less suitable for large organizations that have complex and flexible business process requirements and need customized capabilities.

Many organizations can still take advantage of S/4HANA Cloud by using it in hybrid environments where they may use some S/4HANA Cloud functionality, such as S/4HANA Finance, while keeping more complex S/4HANA functions on premises. Larger organizations may also use S/4HANA Cloud in smaller organizational entities, such as different geographic locations or corporate divisions, while using S/4HANA on premises in headquarters.  

This was last updated in March 2022

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