Distinguishing Cloud Computing from On-Premise Installations: What You Need to Know

Introduction

As businesses transition to digital-first models, understanding the differences between cloud computing and on-premise installations has become essential especially for organizations leveraging SAP solutions.

What is Cloud Computing?

Cloud computing involves the delivery of computing resources such as applications, platforms, data storage, and operating systems over the internet. Instead of owning the infrastructure, companies subscribe to services from cloud providers, much like a utility subscription. This model allows users to scale resources based on demand, without worrying about physical infrastructure maintenance.

How is it Different from On-Premise?

On-premise computing is like owning a private well: you pay upfront, install, maintain, and operate the entire system yourself. While it offers complete control, it also demands significant investment in IT resources, hardware, and ongoing maintenance.

In contrast, cloud computing shifts the responsibility of system updates, security patches, and scalability to the cloud provider. Customers benefit from flexibility and continuous innovation while reducing their operational overhead.

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Why This Matters for SAP Users

For SAP customers, especially those using SAP S/4HANA, cloud deployment can offer substantial benefits in terms of cost-efficiency, scalability, and system reliability. As organizations strive for digital transformation, cloud adoption becomes a strategic advantage.

Understanding Cloud Service Models: SaaS, PaaS, and IaaS

To better grasp how cloud services are consumed, SAP classifies them into three main models:

1. Software as a Service (SaaS)

• Delivers ready-to-use applications over the internet.
• Customers use the software; the provider handles everything else.
• Example: SAP S/4HANA Cloud Public Edition or SAP SuccessFactors.

2. Platform as a Service (PaaS)

• Offers a development and deployment environment in the cloud.
• Developers build, run, and manage applications without managing infrastructure.
• Example: SAP Business Technology Platform (SAP BTP) for app development.

3. Infrastructure as a Service (IaaS)

• Provides virtual computing infrastructure such as servers, storage, and networking.
• Customers control the OS and applications but not the underlying infrastructure.
• Example: Using AWS or Microsoft Azure to host SAP systems.

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Cloud Architectures: Multi-Tenant vs. Single-Tenant ?

Another dimension of cloud computing is the architecture type, which defines how resources are shared among users.

Multi-Tenant Architecture

• Similar to an apartment building—multiple tenants share the same infrastructure.
• Offers standardization, lower costs, and reduced maintenance.
• Example: SAP S/4HANA Public Cloud.

Single-Tenant Architecture

• Dedicated environment for one customer, like owning a private house.
• Provides greater control, customization, and security, but at higher cost.
• Example: SAP S/4HANA Private Cloud

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