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Author's profile photo Raja Prasad Gupta

S/4 HANA On-Premise Vs S/4 HANA Cloud

In this blog, I will focus on the difference between S/4HANA Cloud and On-premise.

SAP S/4 HANA On-Premise Edition

SAP S/4HANA on-premises is the ERP business suite based on the SAP HANA in-memory database. With on premises, the customer manages everything, including the HANA database, applications, data centers, OS, middleware, servers, virtualization and networking.


SAP S/4 HANA Cloud Edition

SAP S/4HANA Cloud is the SaaS version of S/4HANA. SaaS deployment means that users can take advantage of much of on-premises S/4HANA’s functionality without needing the hardware, databases or IT staff required for the on-premises version.

In S/4HANA Cloud, SAP provides and manages almost everything for customer.

S/4HANA On-premise Vs S/4HANA Cloud

Let’s compare S/4HANA Cloud and on-premise version on common customer concerns.


Licensing Model

Cloud: Subscription licensing

On Premise: Traditional licensing


Infrastructures and maintenance

Cloud: SAP provides the system and is responsible for the system maintenance 

On Premise: The customer is in control of deployment and maintenance with dedicated own IT staff



Cloud: Although able to be customized to some extent, there is far less flexibility compared to on premises.

On Premise: There is far more flexibility with and control of customization since the company manages all customization in-house.



Cloud: The implementation is faster than S/4HANA on premises since the cloud version uses a ready-made platform that has already been provisioned, implemented and tested by the cloud provider.

On Premise: Implementation takes time, cost, effort and the right personnel to set up a new environment. There may also be a need to purchase additional hardware or software to implement new features.



Cloud: Integration among various corporate systems can be complex and involves greater security risks due to data being sent over the internet.

On Premise: Data transfer among systems is faster, and integration over the internet is relatively simpler.


Upgrades and support packages

Cloud: There is less control over an upgrade schedule compared to on premises. However, the cloud provider can inform the customer in advance about the impending upgrades, and the customer can choose the timing and functionality of the upgrade.

On Premise: The company decides the frequency and schedule of software upgrades or whether to implement the latest support packages. This option is time-consuming and expensive, and involves technical or functional resources.



Cloud: Scaling up or down is easier, faster and cheaper to meet the changing needs of the company.

On Premise: This approach needs long-term planning and commitment for resources required for scaling.


How do I know Which SAP S/4HANA Is Right for My Business?

The SAP S/4HANA, on-premise edition is the best fit for enterprises in any industry that need the full spectrum of functionality combined with a high degree of flexibility in customization.


Typically, these will be larger enterprises with very well-established processes that they are not interested in changing.


The SAP S/4HANA, cloud edition is the best fit for companies that need a highly agile offering that covers their core business scenarios, yet offers more flexibility and a faster innovation cycle (quarterly as opposed to yearly). It’s perfect for businesses that are changing or growing rapidly and want a platform that can grow and change with them.


Have any doubt or question? Please post that in comment.

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      Author's profile photo Amit Sharma
      Amit Sharma


      Very informative. Thank you for sharing..!!




      Author's profile photo Raja Prasad Gupta
      Raja Prasad Gupta
      Blog Post Author

      Thanks Amit. Glad you liked it.

      Author's profile photo Mike Doyle
      Mike Doyle

      I think the colours on your 2nd chart may be the wrong way round.  With S/4HANA Cloud surely the provider (SAP) takes care of everything?



      Author's profile photo Raja Prasad Gupta
      Raja Prasad Gupta
      Blog Post Author

      Thanks Mike. By mistake I had switched the colors. Have corrected it.

      Author's profile photo Sebastiano Marchesini
      Sebastiano Marchesini

      Hi Raja,

      simple to read and useful , thanks you .

      Author's profile photo Sumit Naik
      Sumit Naik

      Very good information, thanks for sharing!

      Author's profile photo Abdul Rahman
      Abdul Rahman

      Thank you!!

      This is really nice information.

      Author's profile photo Kamran Avini
      Kamran Avini

      Thanks for for this very accessible summary. Any example of large companies going to cloud ? can cloud APPS be easily plugged to on Premise system ?

      Author's profile photo Manuel Otero López de Rego
      Manuel Otero López de Rego

      Thanks Raja for so clear explanation.

      I have a question, Does S/4HANA On Premise run over traditional databases such as IBM, Oracle?  or need the specific SAP Hana Database in house.



      Author's profile photo Renaud VAN DEN DAELE
      Renaud VAN DEN DAELE

      Hi Manuel,

      SAP S/4HANA means SAP Suite for SAP HANA. Whether it is on Premise or in Cloud, it always run with a SAP HANA database (in-house or hosted or at hyperscalers)

      Best regards


      Author's profile photo Igor Ushakov
      Igor Ushakov

      Nice comparison, thanks. Do these editions have the same functionality and business capability, such as full ERP scope? Does it make sense to have both versions deployed for one organization and have implemented data synchronization between the two?

      Author's profile photo Gustavo Barboza
      Gustavo Barboza

      Hi, Raja. Thanks for your nice and clear comparison.

      I have a question: the way for create and develop CDS (data definition with joins, associates, etc.) with Eclipse, and use of Data definition from ABAP programs, is the same with S/4Hana Cloud and S/4Hana on Premise?

      Best regards.


      Author's profile photo Raja Prasad Gupta
      Raja Prasad Gupta
      Blog Post Author

      Hi Gustavo,

      For S/4HANA (both onpremise and cloud), recommended way to create CDS view is via in-app extension. You may also look into side-by-side extensibility. Check below documents.





      Author's profile photo Julliana Züllig
      Julliana Züllig

      Thank you Raja for putting this together! Looking forward for the release of S/4HANA Cloud 1908.

      Author's profile photo Sumit Dubey
      Sumit Dubey

      Very Informative. Thanks for sharing!

      Author's profile photo Vijay S J
      Vijay S J

      nice comparison and thanks good information

      Author's profile photo Iñaki Rivas García
      Iñaki Rivas García

      Thanks for sharing