The cloud hype has yet to upend the traditional on-premises SAP S4H deployment model for large enterprises

Our ongoing SAP S4 HANA services Top 10 research shows that approximately 50% of enterprise clients use an on-premises deployment model. Despite the initial setup cost, the on-premises deployment model provides more control of customization and greater flexibility of upgrades and security.

• The service providers’ revenue data clearly shows enterprises’ preference for on-premises deployment models over cloud and hybrid for their ERP systems. It also reflects that customers desire data protection and less restriction on ERP systems so they can deploy partner-developed software and content.
• On average, 37% of Tier 1 service providers’ revenue comes from cloud deployment. This cloud deployment includes SAP cloud and third-party cloud providers. Cloud deployments may suit large, complex ERP requirements with extensive customization, but they are a good fit for a simple cloud ERP system.
• Seventeen percent (17%) of services providers’ revenue is generated from the hybrid deployment model. Though the current adoption rate is low, clients are still exploring this option. We expect the hybrid deployment model to see a surge as it offers the right blend of scale and control.

The Bottom Line: Control and flexibility are keeping on-premises deployment as the preferred model

In every deployment model, buyers will find pros and cons. There’s no universal solution for all client needs, but clients can choose their deployment model based on their goals and requirements. For example, cloud deployment has substantial ongoing costs, flexibility, and cyber issues and may not be appropriate for complex customized ERP systems. With that in mind, enterprise leaders’ mandate is to spend adequate time analyzing suitable deployment models from a long-term perspective and planning how to achieve business goals faster.