SAP S/4HANA deployment options: Legacy ERP vs. cloud
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Three forks in the road to S/4HANA
S/4HANA, SAP's latest ERP, is the unavoidable future for organizations that stay with SAP when standard support for Business Suite expires in 2027. And there are reasons to move sooner rather than later.
Companies ready to retire legacy ERP systems from other vendors might be enticed by S/4HANA's modern UI and in-memory analytics. But it is challenging to find clear, complete and trustworthy information on the costs and capabilities of the three main S/4HANA deployment options.
S/4HANA is a major rewrite of its predecessor, SAP ERP Central Component (ECC), which makes deploying it more than a mere upgrade. It's an entirely new implementation.
The on-premises version is the most popular of the S/4HANA deployment options, with the most modules and support for vertical industries. It can also be hosted on a private cloud. The multi-tenant SaaS version, S/4HANA Cloud, has fewer functions, and its standardized business processes aren't easily customized. This lack of flexibility is a virtue for companies that want to save on IT support and simplify how they do business. But it can be a straightjacket for an industrial company that spent decades customizing ECC for tight integration with production and distribution systems.
This handbook weighs the pros and cons of the various S/4HANA deployment options. First, we examine the implementation, maintenance and cost saving advantages of S/4HANA Cloud versus on-premises ECC, while noting that extensions provide some customizability. A key point: The single-tenant S/4HANA Cloud has much of the efficiency of SaaS but allows customization and flexible upgrade schedules.
Next, we discuss the tradeoffs between staying with ECC and moving gradually to S/4HANA as well as the risks of missing the SAP deadline entirely. Finally, SAP executives explain the differences between on-premises and private-cloud S/4HANA and the two SaaS versions. The reality is none of the options provide an easy migration from ECC.