On Premise Vs Cloud SAP: What to choose among them?

Preface – This post is part of the ABAP Beginner series.

What is the Difference between SAP On-Premise and SAP on Cloud: On-Premise Vs Cloud?

To know the difference between SAP on-premise vs cloud, we need to understand both of them one by one. SAP on-premise is based on the physical position of the ERP system while SAP on-cloud is an SAP Software-As-A-Service.

What is SAP On-Premise?

When SAP started its ERP services, it has to go physically to the place/company where it wanted to install its software.

On-premise software is the one, which is installed and runs on the premise(the work area/building) of that company. All the ERP solutions provided by SAP, i.e. SAP CRM, SAP Suite, SAP HCM, etc., are on-premise solutions.

sap On-Premise

Advantages of SAP On-premise:

  • Preconfigured hardware
  • Preinstalled software
  • Solution validation by SAP and partner
  • Reduced risk
  • Increased flexibility and control


Disadvantages of SAP On-premise:

  • High initial investment
  • Hardware management required
  • Software update required


What is SAP On-Cloud?

SAP recently came with a service called SaaS, i.e. Software AS A Service. It is nothing different, but SAP S/4 cloud platform for the entire ERP suite it has. Following are some of the SAP versions both on-cloud as well as on-premise.

SAP On-Premise SAP S/4 Cloud
SAP HCM SAP SuccessFactors
SAP FSCM SAP Ariba Network
SAP CRM SAP Hybris Cloud

on Premise vs Cloud

Advantages of SAP On-Cloud:

  • Quick return on investment
  • Monthly pricing
  • No hardware management
  • Automatic software updates
  • Good data security
  • Scalability
  • Better utilization of resources

Disadvantages of SAP On-Cloud:

  • Data compliance issue for confidential data
  • Existing infrastructure cannot be utilized
  • Customization and integration restriction

What to choose between SAP On-Premise and SAP Cloud: On-Premise vs Cloud?

This is a very important question regarding service selection. SAP provides ECC & ERP services in two ways. Both of them have HANA Database. The selection is purely based on the requirement of the customer. In the given table, we will explain possible conditions where these two services (on-premise vs cloud) are applicable:

Feature SAP On-Premise SAP On-Cloud
Infrastructure It is installed within the premise. You have to pay for infrastructure installation. It is a cloud-based service. You need to pay for the service as per your use.
Support The support team of the enterprise can handle it. Total support dependency is on SAP.
Upgrade Every year new upgrades will be required. The cloud is upgraded by SAP itself.
Functional Full ERP solution is available Limited ERP solution is available
Investment Hardware, Software and support team Payment as per service and time


You can even choose a hybrid version where you can have functionality and the advantage of both on-premise and on-cloud. For more information, click here.


  • Barry Allen

    A Full Stack Developer with 10+ years of experience in different domain including SAP, Blockchain, AI and Web Development.

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