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SAP S/4HANA Public Cloud Edition – An In-depth Overview (2024)

Reimagine Your Business with SAP S/4HANA Public Cloud Edition.

As the demand for agile, cloud-based solutions accelerates, businesses must adapt or risk being left behind. Did you know that 85% of businesses will rely on cloud solutions by 2025, according to Gartner?

SAP S/4HANA Public Cloud Edition is designed to help businesses adapt, offering a flexible, scalable ERP system that powers real-time decision-making and drives growth.

With continuous updates and unmatched efficiency, it’s a smart choice for companies looking to stay ahead in the digital age. Let’s explore what makes SAP S/4HANA Public Cloud Edition a game-changer for modern enterprises.

Understanding SAP S/4HANA Public Cloud – What is It?

SAP S/4HANA Public Cloud Edition is a next-generation ERP system hosted on the cloud, designed to bring together real-time data processing and analytics, supported by SAP’s powerful in-memory HANA database. Unlike the on-premise or private cloud versions, the public cloud edition focuses on delivering out-of-the-box functionality with faster implementation timelines and reduced total cost of ownership (TCO).

As a multi-tenant SaaS solution, multiple businesses share the same infrastructure but have completely segregated data and configurations. This ensures that organizations benefit from continuous innovation delivered through quarterly updates, without the complexities of managing upgrades or infrastructure.

The system offers pre-configured industry best practices, allowing businesses to quickly deploy solutions with minimal customization.

Two-Tier ERP Strategy with SAP S/4HANA Public Cloud

The two-tier ERP strategy in SAP S/4HANA Cloud refers to a deployment model where a company uses a combination of S/4HANA on-premise (or private cloud) at the corporate headquarters (Tier 1) and S/4HANA on-premise at its subsidiaries, regional offices, or smaller business units (Tier 2). This strategy allows companies to leverage the robustness of a centralized ERP system for the core operations at HQ while maintaining flexibility and agility at their smaller units or regions with the cloud version.

Key aspects of the two-tier strategy in SAP S/4HANA Public Cloud

1. Centralized control – The corporate HQ has a centralized, integrated ERP system that manages critical business processes, financials, and compliance.

2. Agility and flexibility – Subsidiaries or smaller units run on a simplified, leaner S/4HANA Public Cloud environment, which is more adaptable to regional requirements.

3. Seamless integration – The two-tier structure allows for smooth data sharing and process integration between Tier 1 (HQ) and Tier 2 (subsidiaries).

4. Cost efficiency – Subsidiaries benefit from a lower-cost, scalable public cloud model while still being connected to the main ERP.

5. Faster deployment – The public cloud option for subsidiaries or new regions enables quicker go-lives compared to traditional on-premise systems.

Three-Tier Development Structure in SAP S/4HANA Public Cloud Edition

To maintain system stability and ensure seamless software upgrades, SAP S/4HANA Public Cloud Edition adopts a three-tier development approach. This model helps businesses categorize their development needs while ensuring that custom developments don’t jeopardize the integrity of future upgrades.

Tier 1– Cloud-Ready, Upgrade-Safe Development

Tier 1 is the most preferred option for SAP S/4HANA Cloud Public Edition customers. This tier ensures that all development is fully cloud-compliant and upgrade-safe, allowing businesses to adopt SAP’s best practices without the risk of future software disruptions. In Tier 1, development is conducted using SAP-approved and released APIs. This ensures all enhancements, extensions, and modifications remain within SAP’s guidelines for public cloud deployment.
Tier 1 developments typically involve the following:
  • Usage of SAP Fiori Apps and SAP Business Technology Platform (BTP) to extend functionalities without customizing core ERP processes.
  • Adoption of In-App Extensibility tools, allowing businesses to configure the system with UI changes, business rules, and process extensions in a safe and manageable manner.
  • Ensuring seamless upgrades—SAP takes full responsibility for delivering quarterly updates without disrupting customer developments.

Benefits of Tier 1 Development

  • Seamless updates – Since Tier 1 development is aligned with SAP’s standards, businesses can receive quarterly updates without worrying about compatibility issues.
  • Faster time-to-market – The use of SAP’s pre-configured tools and APIs accelerates deployment and minimizes customization efforts.
  • Cloud-compliant – Developments are secure, scalable, and compliant with cloud infrastructure, reducing operational risk.

Tier 2 – Usage of Custom Wrappers for Non-Released APIs

In some cases, businesses require functionalities that go beyond what SAP provides through its released APIs. This is where Tier 2 development comes in, offering a middle ground between flexibility and compliance. Tier 2 development is used when custom functionality requires non-released SAP APIs.

In Tier 2, custom wrappers are built to interact with these non-released APIs, ensuring that custom developments still adhere to cloud compliance standards. While more flexible than Tier 1, this tier requires careful governance to ensure that future upgrades are not impacted by the custom code.

Key Aspects of Tier 2 Development

  • Utilization of SAP BTP to create custom extensions while staying within cloud-compliance frameworks.
  • Development of custom wrappers around non-released APIs that aren’t natively supported by SAP S/4HANA Public Cloud.
  • Risk mitigation: While Tier 2 development offers more flexibility, it must be carefully managed to avoid future upgrade disruptions.

Benefits of Tier 2 Development

  • Enhanced functionality – Tier 2 allows businesses to go beyond standard SAP APIs, enabling advanced customizations tailored to specific needs.
  • Maintained compliance – Despite custom developments, the use of wrappers ensures the system remains compliant with SAP cloud guidelines.

Tier 3 – Higher Risk Customizations

Tier 3 represents the last resort in SAP S/4HANA Public Cloud development. It is employed when highly customized development is required that goes beyond the flexibility offered by Tiers 1 and 2. Tier 3 developments often involve complex code that can disrupt quarterly software updates and introduce significant risks to system stability.
SAP strongly advises against using Tier 3 unless necessary. This tier is usually reserved for exceptional cases where the business cannot achieve its objectives through the other tiers or where business processes demand extensive customization.

Key Aspects of Tier 3 Development

  • Involves deep customization beyond the scope of SAP’s cloud-compliance standards.
  • Typically leads to complex code that increases the risk of disruption during SAP’s regular software updates.
  • Requires extensive testing during each update cycle to ensure compatibility.

Drawbacks of Tier 3 Development

  • Higher risk – Tier 3 customizations pose a significant risk to system stability and can result in upgrade failures.
  • Increased maintenance – The organization’s IT team must invest significant resources in ensuring custom developments remain compatible with future updates.
  • Upgrade disruptions – Businesses may face delays in receiving new features and innovations due to the complexity of custom code.

SAP S/4HANA Public Cloud Architecture

The architecture of SAP S/4HANA Public Cloud leverages SAP’s advanced in-memory computing database (HANA) and cloud infrastructure to deliver an intelligent ERP system. The architecture can be broken down into several layers:

1. SAP Fiori (User Interface Layer)

At the top of the architecture is SAP Fiori, the user interface framework that offers a consistent and intuitive experience for users across devices. Fiori’s responsive design ensures that employees can interact with SAP S/4HANA from desktops, tablets, and mobile devices, improving productivity and accessibility.

2. Application Layer (Business Logic)

The application layer is where SAP’s business logic resides. This layer processes transactions, applies business rules, and ensures data consistency across the system. SAP S/4HANA utilizes real-time processing, making it easier to execute complex business scenarios at lightning speed.

3. Database Layer (SAP HANA In-Memory Computing)

At the heart of the architecture is the SAP HANA database. HANA is an in-memory computing platform, meaning it stores and processes data directly in RAM rather than disk storage. This enables real-time data analysis and transaction processing, allowing businesses to run complex queries on live data without performance degradation.

How SAP S/4HANA Public Cloud Functions

SAP S/4HANA Public Cloud integrates all core business processes—from finance and sales to supply chain and procurement—into a single, cloud-based platform. By leveraging the in-memory HANA database, businesses can process large volumes of data in real-time, enabling rapid decision-making and providing detailed insights into operations.
The system follows industry best practices and offers pre-configured templates, allowing for a faster implementation process compared to traditional ERP systems. Quarterly updates ensure that businesses always have access to the latest innovations and security enhancements.

Key Benefits of SAP S/4HANA Public Cloud Edition

1. Cost Efficiency

SAP S/4HANA Public Cloud operates on a subscription-based pricing model, which eliminates the need for large upfront investments in hardware and infrastructure. This reduces the total cost of ownership (TCO) for businesses while providing access to an enterprise-grade ERP system.

2. Faster Implementation and Flexibility

The pre-configured processes and industry best practices enable businesses to get up and running faster than traditional on-premises ERP implementations. This flexibility allows businesses to scale and adapt their ERP systems as needed.

3. Scalability

The cloud infrastructure of SAP S/4HANA allows organizations to scale their operations as needed, whether adding more users or expanding functionalities to accommodate business growth.

4. Continuous Innovation

SAP provides quarterly updates that bring new features, functionalities, and security patches without requiring businesses to pause operations or undergo lengthy upgrade processes.

5. Enhanced User Experience

The modern, intuitive interface powered by SAP Fiori enhances user productivity by offering a seamless experience across all devices.

Value Add-Ons to SAP S/4HANA Public Cloud Customers

SAP S/4HANA Public Cloud customers benefit from a range of additional value-added services that improve system efficiency, enhance compliance, and drive innovation. These include:
  • AI and Machine Learning – SAP leverages advanced AI and machine learning algorithms to automate routine tasks and provide predictive insights.
  • Real-Time Data Analytics – The in-memory HANA database provides businesses with the ability to conduct real-time analytics on live data, ensuring faster decision-making.
  • Robust Security – SAP’s cloud infrastructure includes built-in security measures like encryption, access control, and compliance with industry regulations (e.g., GDPR).

Key Takeaway

SAP S/4HANA Public Cloud Edition is a flexible and scalable ERP solution that helps businesses streamline operations and adapt quickly to market changes. With its three-tier development structure, real-time data processing, AI integration, and robust security, it ensures continuous innovation while maintaining stability.

At LMTEQ, we specialize in offering SAP S/4HANA Public Cloud Edition solutions tailored to your business needs. Whether you’re looking to modernize your ERP infrastructure, improve operational efficiency, or leverage cutting-edge technologies, we are here to help you navigate your digital transformation journey with expert guidance and industry-leading expertise.

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