The traditional on-prem model, in which the software is operated on the company's own hardware, offers ERP users full control over data, business processes and licenses. It also enables complete control and adaptability of compliance measures and individual business processes (Abap modifications). However, this ERP autonomy comes at a high price: On-prem solutions are associated with high acquisition costs for hardware and software, must be designed for potential load peaks, which causes unnecessarily high costs, and are heavily affected by the shortage of skilled workers and dependent on qualified IT personnel required for 24/7 operation. In addition, legacy systems are often unable to support new technologies such as AI or analytics. However, existing SAP customers can switch to the Business Technology Platform (SAP BTP), which can also be operated in combination with an on-prem Business Suite 7.

The public cloud of hyperscalers (such as AWS, Azure or GCP) takes the opposite approach: it offers services publicly via the internet, uses a multi-tenant structure and attracts customers with high flexibility and elastic scalability as well as usage-based billing (pay-as-you-go). However, this convenience is not risk-free for existing SAP customers. The assumption that the public cloud is generally more cost-effective than in-house operation has not proven to be true in recent years. Many existing SAP customers have optimally orchestrated their data centers in recent years.

On the other hand, ERP users report a feeling of helplessness in the event of service outages, as there is no direct access to the data center and their own IT staff. And the concept of cloudification does not automatically mean simplification, as the complexity of data center operations, see also Rise with SAP, remains. There is also the risk of vendor lock-in and security concerns, as valuable company data is located outside the company firewall.

Cover story November 2025