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SAP S/4HANA ERP system offers speed, flexibility, simplicity, enhanced analytics, cost-efficiency, and the robustness of HANA’s in-memory database to enterprise clients to operate in today’s demanding marketplace.

SAP S/4HANA was launched in 2015 and in 2016, SAP introduced the SAP S/4HANA Cloud operating model. Today, SAP provides three different operating models for the implementation of S/4HANA. They are on-premise, public cloud, and private cloud. These models are aimed at addressing specific solution scopes.

During migration, the choice of SAP S/4HANA operating model covers not just technical considerations (cloud versus on-premise), but the functional scope required by the enterprise.

In this blog, we provide in detail SAP S/4HANA’s operating models so that prospective clients can get a comprehensive understanding of each and select the one suitable for their needs.

SAP S/4HANA On-Premise Edition

In the on-premise edition of SAP S/4HANA, companies get more options for implementing business processes while bearing responsibility for landscape and implementation. Supporting processes across 64 countries or regions, 39 languages, and 31 industries, SAP S/4HANA covers a wide array of areas. These include asset management, human resources, procurement, sales, supply chain, finance, production, R&D/engineering, and service. Enterprises are independently responsible for hardware procurement, software installation, and administration. In this setup, companies can customize the implementation landscape according to their needs. Typically, a development system with various extensions, a test system, and a production system are set up. The creation and management of clients fall under the company’s purview.

Maintenance tasks encompass importing corrections and updates, with companies retaining the autonomy to decide when and whether to implement them. The timeline for SAP maintenance runtime can be found in the Product Availability Matrix (PAM). For instance, mainstream maintenance for Enhancement Pack 1 (EHP 1) for SAP ERP 6.0 extends until the end of 2025, after which all corrections become the responsibility of the company. SAP generally releases system updates (upgrades) every two years, supplemented by Feature Pack Stacks (FPS) throughout the upgrade cycle.


Compatibility Packages

To enable the transition from SAP ERP 6.0 with EHPs to SAP S/4HANA, the on-premise version offers compatibility packages for a transitional period. These packages allow migration to on-premise SAP S/4HANA without immediate conversion of business processes, thereby, facilitating subsequent transition to new intelligent processes within SAP S/4HANA. While compatibility packages provide familiar functions from SAP ERP, such as Human Capital Management (SAP HCM) and warehouse management, they are not the target architectures technologically. Instead, the target architectures are SAP SuccessFactors, SAP Extended Warehouse Management (SAP EWM), and SAP Transportation Management (SAP TM). Compatibility packages will remain available until the end of 2025, with certain exceptions.

Gradual Migration to Target Architecture

Enterprises have the option of either going for a direct migration to the target architecture or continue using traditional functions in specific subareas. However, the usefulness of functions covered by compatibility packages is time-limited as most of them will be available till the end of 2025. After which, the license for their usage in SAP S/4HANA expires.

Solution Extensions

SAP and its partners offer a wide range of apps, add-ons, and solution packages for various business areas, industries, and regions. While some partner add-ons are certified by SAP, companies using the on-premise edition of SAP S/4HANA are allowed to utilize non-certified add-ons or develop their own extensions. Once companies start using solution packages, updates are not feasible.

Gemini Consulting & Services, a global partner of SAP, is well-placed to assist enterprises in selecting the optimal operating model for deploying the SAP S/4HANA ERP suite. Contact us to capitalize on the advantages of S/4HANA, enhancing both productivity and efficiency within your organization.

SAP S/4HANA Cloud, Public Edition

It is one of the two cloud operational models within the SAP S/4HANA family. Each of these models has its own distinct technical and business-related characteristics. This edition, also known as SAP S/4HANA Cloud, caters to operations across 48 countries or regions. It provides support in 32 languages. Its functionalities span various domains, including asset management, procurement, sales, supply chain, finance, production, R&D and service that covers both services and product industries.

Operated and maintained by SAP as a public cloud solution, SAP S/4HANA Cloud, Public Edition, undergoes regular updates on a quarterly basis, with SAP providing add-ons for corrections every two weeks. It offers extensive pre-configurations for business processes and follows a standardized system landscape comprising development, test, and production environments, along with optional starter, demo, and sandbox systems. Business processes are configured through SAP Central Business Configuration. As a result, customers will not be able to create additional tenants. This means new implementations for each instance.

While extensions with partner apps or modifications of the SAP code are not possible in this edition, customizations are allowed through configurations and extensions, supporting key-user extensibility, developer extensibility, and side-by-side extensibility. However, modifications to the existing code are not allowed. Access to SAP S/4HANA Cloud systems and tenants is done via any internet-enabled browser using a unique, customer-specific URL, with support for various end devices and access through SAP Fiori.

Stringent security measures, including Transport Layer Security (TLS) encryption, safeguard communications between companies and the SAP S/4HANA Cloud system. In addition, adherence to security and quality principles ensures compliance with data protection regulations. Authentication and identity verification are required for users accessing business data. Enterprises retain ownership of their respective data stored in data centers with the highest security standards.

SAP S/4HANA Cloud, Private Edition

This is the second cloud operational model within the SAP S/4HANA suite. It differs from the other two in terms of technical and business facets. Its solution breadth, unextended, aligns closely with the on-premise model, facilitating operations across 64 countries or regions, accommodating 39 languages, and servicing 31 industries.


Operated by SAP, SAP S/4HANA Cloud, Private Edition offers enterprises the flexibility to set constraints around update schedules (including updates and upgrades). With a two-year update cycle similar to the on-premise version, inclusive of feature packs, enterprises must adhere to a mandatory upgrade every five years to maintain SAP’s standard maintenance. Accessible through SAP Fiori and SAP GUI, this edition allows enterprises to customize their implementation landscape, with options encompassing new implementation, system conversion, and migration with selective data.

Optimal implementation entails leveraging multiple clients within both the development and test systems, ensuring comprehensive testing of all processes and extensions. Enterprises can initiate processes with pre-configured setups from SAP and its partners. SAP partners offer solution packages customized for various lines of business, industries, countries, and regions.