Enterprise management is hurtling into 2023 along a rocky road. Despite challenges, it is time for businesses to identify what internal processes require transformation and how they can reduce IT costs.
To do that, SAP provides enterprise software with the most modern user experience. As a next-generation business suite fully built on the most advanced in-memory platform, SAP S/4HANA enables real-time analytics, award-winning user interfaces, and the linking of operational and analytical functions.
In this article, you will learn how SAP S/4HANA delivers instant value across business functions and how the on-premise edition covers all day-to-day processes of an enterprise.
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What Is SAP S/4HANA On-Premise Edition
Staying out of digital transformation is a path to nowhere for a fast-growing business. Suffice it to say, the absence of core business operations integration across all departments, including accounting, finance, HR, production, distribution, sales and marketing, and human resources, damages the whole company. And, among other things, configuring timely communication, a modern EPR system increases the chances of success in the market.
The SAP S/4HANA ERP system will help you build a single digital landscape, combining all the company business processes and keeping them under complete control. It allows complete transparency to a reconciled ledger that enables accounting and corporate shared services.
The S/4HANA product offering consists of two editions: SAP S/4HANA On-Premise and SAP S/4HANA Cloud. The deployment and maintenance of S4/HANA On-Premise are implemented and managed by the customer’s IT staff, which provides high compliance with individual business requirements and system customization.
Why Choose an On-premise ERP System
Both of the aforementioned systems are flexible, simple, and convenient, designed to guide users to improve their workflow. But why choose an on-premise ERP?
Let’s dive into the details of on-premise edition benefits.
Since an ERP system is installed in the company’s capacity and supported by the internal IT department, the business does not depend on the third-party vendor. The on-premise system offers a full range of functions, which can be extended for an extra payment. Even though the upgrade cost will be high, the complete control over the systems allows you to choose what to focus on. Moreover, there’s no need for the vendor’s approval for security testing or update implementation.
The subscription licensing prices and the automatic latest innovation upgrades are constantly growing, which implies additional expenses on staff training. Long-term ownership for an on-premise ERP is more cost-effective than using a cloud version.
An on-premise ERP system provides a harmonized look across all internal products, with a variety of opportunities for customizability. It can be easily modified in-house and transformed according to current business needs.
Utmost data security
The system handles data protection and business continuity by enabling strong access control with high-security measures and a stable internet connection. Since all your data is stored in-house, no external access will be allowed to the ERP.
Effective monitoring and alerting
Software is core to the business’s success; even a minor glitch can become a problem. Therefore, it is crucial to know that systems are up and running correctly. An on-premise ERP solution has an alerting system that ensures actionable and meaningful notifications for taking timely measures.
The embedded ML-based intelligent user guidance allows for fast adaptability. Also, the in-built digital assistant pushes time-critical content, so users immediately know what needs their attention.
As an on-premise ERP system is accessible across multiple devices, it integrates content from different products into a single screen and eliminates time-consuming cross-product navigation.
What Companies Should Choose SAP S/4HANA On-Premise?
The above-mentioned benefits consequently attract a lot of enterprises. According to the Panorama Consulting Group report, over 65% implement cloud ERPs. However, obviously, this system doesn’t work for all businesses.
Covering mission-critical business processes across multiple lines of business, SAP S/4HANA On-Premise is configurable by focal points and is best suited for large, well-known manufacturing enterprises. The industry doesn’t matter if well-established internal processes need not be changed.
It is important to note that the former version of SAP S/4HANA, SAP ECC, won’t be supported after 2027. So this ERP edition will be suitable for enterprises that already use SAP ECC as well.
On-premise is the right choice for enterprises that:
- Need better control and management over IT-environment.
- Require embedded cross-system integration for day-to-day workflow.
- Require critical business data to be kept within the organization.
- Need specific customizations of the operational workflow.
- Strive to achieve the highest process accuracy and flexible third-party integrations.
- Have compliance requirements that do not allow data to be processed in the cloud.
- Have an internal dedicated IT department to handle server and application maintenance.
How Does SAP S/4HANA On-Premise Work?
SAP S/4HANA On-premise operates on the standard SAP licensing model. It is installed on the company’s servers and receives annual upgrades developed by SAP.
This SAP product is based on the most advanced in-memory platform (SAP HANA) and modern design principles (SAP Fiori UX). SAP S/4HANA delivers massive simplification features, ranging from customer adoption and decision-making to business processes and models. This ERP system also provides innovations like the Internet of Things, Big Data, business networks, and mobile-first to help businesses run simply in the digital economy. The most noticeable difference in the SAP S/4HANA on-premise edition is that features and innovations are highly customizable and can be quickly tailored to ever-changing business needs.
Cons of Implementing SAP S/4HANA On-Premise
Despite all the benefits, before SAP S/4HANA On-Premise implementation, businesses should consider that it comes with certain challenges.
1. High upfront costs.
The on-premise edition requires significant upfront hardware, software, and dedicated IT team investments. High spending levels can remain as the system requires constant maintenance, configuration, and updates. But in the long run, SAP S/4HANA On-premise may be more profitable because the subscription prices for cloud ERP constantly grow.
2. System adaptation
SAP S/4HANA On-premise is a customizable system, but its configuration according to your business needs can also be challenging. Since the ERP modules are closely related, the alignment process may affect multiple modules and require additional costs and efforts.
3. Sole responsibility
Complete control over the entire ERP system has its reverse side — your sole responsibility for system performance and security. In this case, human errors increase your risk of costly security breaches. Moreover, the on-premise system isn’t updated automatically; this is your IT team’s responsibility.
4. Lack of remote accessibility
To work with an on-premise ERP, you need to be located onsite at the ERP to leverage this technology. Lack of mobile accessibility can limit a company’s growth potential and leave the business less adaptable to circumstances that prevent employees from being onsite.
5. Delayed implementation
The on-premise ERP implementation takes longer than the cloud one because of additional modification and configuration. It might defeat the organization’s target and/or plans, especially the time-sensitive goals.
Obviously, there’s no one-size-fits-all answer for any business. To make the right choice, businesses should analyze their specific needs and keep their industry requirements in mind.
If you are ready to migrate to SAP S/4HANA but experience any difficulties in decision-making, LeverX Group is here to help you. Contact us, and our experts will help you at any project stage.