The Difference Between SAP S/4HANA Public Cloud and Private Cloud Editions

An ERP market leader for more than two decades, SAP continues to innovate its products to serve the evolving needs of its customers. One of its most powerful products today is SAP S/4HANA, SAP's most advanced enterprise resource planning system.

In 2018, SAP released SAP S/4HANA Cloud, putting all the functionality of the on-premise version at the user’s fingertips, plus the benefits of the cloud – increased scalability, reduced IT costs, and a more agile environment.

However, SAP’s ERP cloud customers come in all shapes and sizes, from growing companies ready to adopt a complete solution to large enterprises looking for a platform that will further their digital transformation efforts.

To provide a best-fit system for all its customers, SAP has created different cloud versions of S/4HANA:

• SAP S/4HANA Public Cloud Edition – formerly known as the multi-tenant edition and the Cloud Essentials edition (ES)
• SAP S/4HANA Private Cloud Edition – formerly known as the single-tenant edition and the Cloud Extended edition (EX)

Which one is the best fit for your business depends on what you want out of your ERP system. Both bring a layer of simplicity and agility to the table that the on-premise version can’t offer. Yet, the two versions serve different needs.

With greater speed and standardisation, the public cloud is the best fit for most organisations today, including those with a large ERP. However, the private cloud is there for companies that have complex needs.

Let’s dive into the details to help you understand what version is a better choice for your company when it comes to SAP S/4HANA.

Public vs Private Cloud Solutions

Before digging into the distinctions between SAP’s cloud-based ERP solutions, you need to know what the two different cloud models offer.

What’s the public cloud?

The public cloud is a multi-tenant architecture owned and managed by a third-party vendor. With the public cloud, the provider delivers IT services over the internet. Because multiple parties are accessing cloud services from shared infrastructure, the vendor can charge lower fees.

When to use it?

The advantages of the public cloud are lower costs, technical agility, and the ability to access unlimited amounts of computing power without having to invest in and maintain the IT infrastructure.

The public cloud is a good fit for startups and growing companies that don’t have a lot of in-house IT expertise. If you’re looking for easy scaling and reduced complexity but don’t need a lot of control over the cloud infrastructure, a public cloud might be more practical.

What’s the private cloud?

With a private cloud, your business has a dedicated cloud solution, but a third party manages the underlying infrastructure for you. No other users store data or access computing power from the same cloud IT your company is using.

When to use it?

Because it’s a single-tenant architecture, you have more control over the infrastructure. This can be useful in heavily regulated industries such as finance and healthcare. If you’re operating compliance-sensitive IT workloads, greater control and security are essential.

How Do the S/4HANA Cloud Versions Differ?

When comparing SAP S/4HANA Cloud editions, the distinction mirrors the differences between public and private clouds, in general.

What sets the two versions apart is the cloud infrastructure – it’s either shared, low-cost, and more scalable or private, more expensive, and customisable.

• S/4HANA Cloud – the public, multi-tenant edition – is a complete ERP system with a public cloud infrastructure managed by SAP. It’s designed for new customers who are ready for a greenfield approach and want to start their S/4HANA project in the cloud. It’s also a popular choice for subsidiaries of larger enterprises that are running SAP on-premise systems, and any business that wants to be able to scale quickly with an all-in-one subscription-based solution.
• S/4HANA – the private edition – offers a dedicated cloud infrastructure operated by SAP. This version is hosted by SAP or one of SAP’s approved hyperscalers (Google Cloud, Microsoft Azure, or AWS). Companies that need a system conversion or a selective data transition might opt for the private cloud version of S/4HANA. This is the better option if your organisation requires a lot of customisation. 

Both of these versions provide unique benefits of S/4HANA Cloud:

• A digital assistant, SAP CoPilot, and a consumer-grade user experience
• Embedded AI and machine learning that lets users automate repetitive tasks
• Analytics, including personalised insights delivered to each user based on their role

These advanced technologies help SAP’s customers spot real-time trends, reduce human error, streamline processes, and make better-informed business decisions.

And with S/4HANA Cloud, your business will also get SAP’s standardisation and recommended best practices. There is a common set of infrastructure processes and service-level agreements that all cloud users will have.

The difference is, with the public cloud version, you can count on more standardisation and simplicity. This works well for companies that have predictable technology needs and want to follow SAP’s suggested best practices.

Most organisations choose the public cloud version because you're getting all the power of SAP S/4HANA but at a lower price point and with easier adoption. Here are some of the primary advantages:

• Pre-configured content and standardisation
• An attractive time-to-value of 4 to 4.5 months
• Compelling end-user experience

For organisations that already have established processes or that need a higher degree of flexibility, however, the public cloud edition might be a better fit.

With the private cloud version, you get more customisation capabilities and more third-party integrations. There is also a wider range of interface options and expanded functionality, including in-app extensibility features that let you create new fields and add business logic.

You can’t, however, alter SAP’s existing functionality.

How Do the Costs Differ?

The private cloud version costs more than the public cloud edition. This is because of the increased complexity and the cost of a dedicated cloud infrastructure. Also, S/4HANA Cloud Private Edition requires a higher user count – so it’s better suited to medium and large organisations that can justify the higher costs with the need for customisation.

SAP S/4HANA Public Cloud Edition is more cost-effective and the implementation timeline is shorter. Users can also count on a simple configuration, and all future innovations are included in updates.

This is why it’s such a good fit for companies that want to get a new, powerful ERP system off the ground quickly with minimal interruption and a short learning curve.

Get Started with SAP S/4HANA Cloud with Confidence

If you’re ready to take your operations to the next level with industry-leading cloud ERP, the good news is, you don’t have to choose a solution that doesn’t align with your business’s needs. SAP has created distinct editions to cater to different types of businesses.

Get all the functionality of S/4HANA – all the modules that can help your business thrive, from Finance to Human Experience Management – plus the enhanced agility, intelligent analytics, and seamless processes of the cloud versions, all wrapped up in a system that fits your business like a glove.

To make your journey even more efficient, let our team of SAP experts help. We’ll listen to your needs and ensure you’re getting the best possible experience with SAP S/4HANA. Contact Discovery Consulting today to get started.