SAP has offered a cloud deployment option for S/4HANA for quite some time now. However, there are actually multiple flavors of cloud deployment that are often confusing and difficult to keep track of, especially given SAP’s affinity for changing the naming of their products and offerings on a regular basis. In this blog post we are going to discuss the S/4HANA cloud deployment options and main differences between them.
First of all, it is worth mentioning that customers can certainly still choose to deploy S4/HANA on-premise in their own data centers or in their existing cloud infrastructure providers such as AWS at Amazon. This approach implies that the customer is completely responsible for the installation, maintenance and monitoring of the SAP system. Although SAP is clearly pushing for cloud deployment options in terms of their marketing and sales efforts, many companies will choose to remain on-premise due to legal, security and legacy requirements. As expected, the on-premise deployment path offers the most control and enhancement flexibility, but typically results in a higher total cost of ownership (TOC) over the long term.
In terms of cloud deployment for SAP S4/HANA, it is important to distinguish the infrastructure and support services components available with each option. Cloud infrastructure options include SAP HANA Enterprise Cloud (HEC), an SAP owned and managed cloud infrastructure, or Hyperscalers, which are the main Infrastructure-as-a-Service providers such as Amazon (AWS), Google (Cloud) and Microsoft (Azure). SAP optionally offers installation, monitoring, upgrade and maintenance services (historically referred to as “Basis” in the SAP ecosystem) on all of these cloud infrastructures. Ultimately, it is the combination of the infrastructure, support services and SAP licensing model (purchase vs subscription) that distinguishes each of the deployment options discussed below.
First, customers can choose to install their S4/HANA environment in HEC with bare minimum “keep the lights on” support services from SAP. HEC deployment supports both the up-front software license purchase and subscription pricing models from SAP. In many ways, this option is almost identical to the “on premise” deployment, except that SAP systems are installed in an SAP-managed data center, instead of your own. Customers can then purchase various administration and monitoring services on top of HEC hosting, if they choose to do so. However, customers retain full control over the upgrade schedule and custom development and enhancements that they might want to implement in their S4/HANA environment.
Next, we have the S/4HANA Cloud Extended (EX) Edition, which used to be called S/4HANA Cloud Single-Tenant Edition. This option can either be hosted on SAP infrastructure or via Hyperscalers and involves a subscription licensing model from SAP, where there is no large license purchase up front, but rather periodic subscription payments. The code base and functionality offered with this option are basically identical to the on-premise and pure HEC deployment options discussed above. However, the key difference is in the Basis support services provided by SAP. With S/4HANA Cloud EX Edition SAP provides the installation, monitoring and scheduled upgrade and maintenance services. In fact, this option enforces certain upgrade obligations, where the customer is not allowed to remain on an older version of SAP indefinitely, but does have some flexibility over the exact timing of each upgrade. In addition, there are restrictions on types of ABAP enhancements that can be implemented with EX edition. Specifically, in contrast to the on premise and pure HEC deployment options, customers utilizing the S4/HANA Cloud EX Edition are not allowed to use implicit ABAP enhancements (pre-method, post-method and method override), which can be a significant consideration. You can refer to the following document for a detailed description of enhancement limitations present in the EX (aka Single-Tenant) edition.
Finally, there is the S/4HANA Cloud Essentials (ES) Edition, previously called S/4HANA Cloud Multi-Tenant Edition, which is also based on a subscription pricing model. This option typically provides the lowest cost of ownership, but comes with the most limitations. The ES Edition runs on a different code base than the other options that we’ve discussed, missing many of the “advanced” features present in the on-premise and EX Edition offerings. There are also considerable limitations on the types of enhancements that can be made in the system. Refer to the document linked to in the previous paragraph for a detailed explanation of what can and cannot be changed in the S/4HANA Cloud Essentials Edition. Lastly, ES Edition customers are subject to a concrete upgrade schedule dictated by SAP.
Based on our experience and recent results of the ASUG Pulse customer survey (2020), most SAP customers are choosing between the traditional on-premise, pure SAP HEC or S/4HANA Cloud Extended Edition deployment options, with still relatively few customers choosing the S/4HANA Cloud Essentials Edition, given its many constraints and limitations.
