From cloud-first to cloud-only: In August of this year, SAP unsettled many companies with its verbal announcement that it would only make major innovations available to cloud customers in the future. On-premises customers in particular feel they have been deceived. They have sometimes only just invested in a new S/4 system - and are now no longer to receive any major innovations? The user association DSAG speaks of a "showstopper" and a "major disappointment.
According to DSAG, the announcement does not mean "that on-prem solutions will generally not be further developed functionally. But on-prem customers will not be able to benefit from major innovations such as artificial intelligence and green ledgers, for example. And this applies "just as much to larger function modules and enhancements based on the Business Technology Platform". The displeasure is understandable. However, as of mid-August, many questions have not yet been answered conclusively, such as the possible technical implementation. The only thing that is certain is that the message does not come as a complete surprise.
Cloud trend is irreversible
As early as the fall of 2020, SAP announced its intention to transform the Group into a pure cloud company and, according to its own statements, has reached the "tipping point" for the cloud in 2023. A look at SAP's strategy also shows the inexorable shift to the cloud - from the monolithic ERP system of the early days to the clean-core ERP with cloud components of the present to the composable suite of the future, i.e., a modular and thus enormously flexible cloud network architecture. In this sense, S/4 Hana has always been more than a purely technical upgrade of an existing ECC system. It has always been about the strategic realignment of business models and the active shaping of digitization through new technologies - technologies like the cloud.
In addition, the cloud has never been a specific SAP topic, because all the relevant players in the market have long been following a similar path, some even ahead of the others - whether Salesforce, Oracle, Infor or Microsoft. Against this background, the fact that SAP is the only company to permanently commit to on-prem is therefore missing the point. The question of SAP's approach is debatable, but it does not change the reality.
The trend toward the cloud is irreversible. It is both an expression and a means of digital transformation - a transformation that, with its speed, its imponderables and its sometimes disruptive effects, poses major challenges for many companies. In the face of all this, companies need to become even more agile, innovative and resilient. The cloud offers the best opportunities for this.
Seen in this light, the current discussion is above all a further wake-up call for companies to deal intensively with the topic of cloud ERP now at the latest and to make the best possible use of the opportunities that present themselves. It has to be said so clearly: Anyone who does not rely on the cloud today is ignoring the future! There may still be reasons for other operating models at times. But SAP and a contemporary system architecture without cloud? That is hard to imagine.
Both the extensible and extensively equipped private cloud and the lean and highly standardized public cloud therefore belong on every agenda for S/4 Hana today. This applies above all to companies that are still planning to switch to S/4 and to those that already switched technically to an S/4 on-prem system a few years ago. One thing is clear: there is no other operating model than the cloud, which already offers a solution for almost every challenge of digitization - be it process optimization for greater efficiency, resilience to change, the higher pace of innovation or dealing with demographic developments.
Flexibility and agility
The advantages of a cloud ERP system are obvious: companies are significantly more flexible and agile. Acquisition and total cost of ownership are lower. Implementation is also much faster - especially with the immediately available Public Cloud Edition. Last but not least, companies can use and implement innovations and new technologies more quickly.
Every company should therefore take advantage of the opportunities offered by cloud solutions now and work towards achieving a flexible, fast and consistent system architecture with S/4, with which it can also reliably achieve its own strategic and operational goals. Understood in this way, S/4 in the cloud becomes a kind of "future field", i.e. the best environment for future success: based on an individually suitable cloud operating model, immediately available SAP best-practice processes, modern and modular extensions, real-time communication of applications and applications, and the clean digital core in the SAP standard.