3    Cloud, On-Premise, and Hybrid Scenarios

You can use SAP S/4HANA in various cloud-based and on-premise editions. But what are the differences between these operating models? And what are the differences between the individual SAP S/4HANA editions?

When migrating to SAP S/4HANA, you’ll have to make some basic decisions. You’ll have to select the type of system landscape and decide which SAP S/4HANA functions you want and how they are supposed to be used (see Figure 3.1). First, you’ll need to choose whether you want to run SAP S/4HANA on-premise (i.e., the software runs on your enterprise’s hardware); in the cloud (i.e., the software is leased and hosted by a provider); or as a hybrid scenario (i.e., some parts of the business scenarios are outsourced to the cloud, other parts are kept on-premise). Furthermore, you’ll have to decide whether you want to leverage the migration process to redesign your own business processes (greenfield approach) or whether to keep existing business processes (brownfield approach).

Strategic Decisions for Migrating to SAP S/4HANA

Figure 3.1    Strategic Decisions for Migrating to SAP S/4HANA

This chapter covers the basic options for and differences between the various operating models and provides you with the basic information required to make these necessary decisions. First, we’ll provide an overview of the operating models and define critical concepts. Then, we’ll introduce and compare the individual editions of the SAP S/4HANA product family.

Usually, an enterprise wants to customize its business processes. In addition to business configuration settings, individual enhancement options can be an essential way for an enterprise to differentiate itself from competitors. The last section of this chapter describes in detail SAP S/4HANA’s enhancement concepts.

3.1    Overview of Operating Models

To enable you to choose an SAP S/4HANA operating model, the following section describes the basic characteristics of the different operating models. Section 3.3 then compares the operating models.

3.1.1    On-Premise Operating Model

Usually, the on-premise operating model refers to using software that a customer has purchased and runs and manages on hardware owned by the customer. As a result, the customer is in full control of the hardware and software, of mission-critical application data, and of software maintenance schedules. Moreover, the customer achieves maximum flexibility with regard to custom enhancements and integration with other systems (in-house solutions or external systems).

But the customer is also fully responsible for the availability of the software as well as access, security, and system stability. In addition to the costs for hardware and software, powerful and complex ERP systems incur further costs for the IT experts needed to introduce, manage, and maintain the software.

3.1.2    Cloud Operating Model

In cloud operating models, a customer does not operate or manage the software himself but rather engages a service provider for this purpose. The software and the corresponding services are leased for a defined period of time in the cloud operating model. Hardware and operating system software are not required on-premise. The enterprise’s IT staff can thus focus on other tasks.

Internet access is usually necessary to access the solution, and users can access the cloud software from anywhere and in most cases also via mobile end devices. One of the major benefits of the cloud operating model is the associated cost transparency. The infrastructure of cloud-based software is shared by multiple customers.

However, to ensure efficient operation, individual customers can only impact the maintenance cycles and schedules of the cloud software to a limited extent. Thus, usually the customization options in the cloud operating model are more limited than in the on-premise operating model. Another issue that needs to be analyzed specifically in each case is data security (cloud security). In general, the data security standards and processes of trustworthy cloud providers are higher or more extensive than the security infrastructure of the average enterprise.

How to evaluate the cloud operating model, however, also significantly depends on the service and deployment models used. Figure 3.2 provides an overview of these service and deployment models, which are based on the definitions from the National Institute of Standards and Technology (NIST, https://www.nist.gov).

For service models, the following three categories are differentiated:

For the cloud deployment models, we differentiate between three types:

3.1.3    Hybrid Operating Model

In hybrid operating models, some parts of the business scenario are operated on-premise, and some parts are operated in the cloud. Hybrid operating models enable you to combine the characteristics of the on-premise operating model and the cloud operating model. For example, core areas of your enterprise, where you want a high degree of control and a high level of flexibility, can be operated on-premise, while other enterprise areas can be operated in the cloud because common industry standards are sufficient.

[eg]  Hybrid Structures in Human Resources

An example of an enterprise area in which business processes are largely outsourced to the cloud is human resources (HR). As described in Chapter 1, SAP’s target architecture for HR business processes is the cloud. With the SAP SuccessFactors solution portfolio, SAP enables HR departments to outsource to the cloud functions such as workforce administration or managing job candidates and applications, employee performance, or talent.

Hybrid scenarios can also make sense based on the organizational structure of an enterprise. For example, you might want to run global business processes at headquarters on-premise, while the regional business processes at your subsidiaries can be standardized and outsourced to the cloud.

With regard to technology and content, a combination of on-premise processing and cloud-based processing poses specific requirements for integrating the various solutions used, as shown in Figure 3.3.

Integration in Hybrid Scenarios

Figure 3.3    Integration in Hybrid Scenarios

Therefore, when choosing an operating model, you should consider your specific requirements regarding master data and process integration. For more information on the integration scenarios for the various SAP cloud solutions, see Chapter 8.