Introduction
As organisations embrace digital transformation, the cloud has become a pivotal factor in modernising business operations. For finance departments, SAP S/4HANA offers two compelling cloud deployment options: Public Cloud and Private Cloud. Choosing between the two depends on various factors, including cloud mindset, security, customisation needs, cost, and scalability.
The Lagom team have considerable experience delivering both Public and Private cloud solutions in New Zealand and Australia, as well as globally. In this post, we will delve into the key differences between SAP S/4HANA Public Cloud and Private Cloud for finance, assisting you in making an informed decision that aligns with your business requirements.
Understanding SAP S/4HANA Public Cloud
SAP S/4HANA Public Cloud is a cloud-based ERP solution that offers a standardised and pre-configured set of functionalities, making it ideal for organisations seeking rapid deployment. The infrastructure, maintenance, and updates are managed by SAP while the Lagom team can ensure alignment and provide application management. This eliminates the need for in-house IT teams to oversee the system. Public Cloud is hosted on a shared infrastructure, meaning multiple customers use the same resources, leading to cost-effectiveness. However, customisation options may be limited compared to the Private Cloud option.
The Lagom.FM solution offers a swift deployment of S/4HANA Finance module, utilising standard templates and tools – meaning you’re up and running in a fraction of the time of a traditional implementation.
Exploring SAP S/4HANA Private Cloud
SAP S/4HANA Private Cloud, on the other hand, provides a more tailored approach to ERP implementation. The entire infrastructure and application stack are dedicated solely to your organisation, offering enhanced security and more extensive customisation possibilities. The Private Cloud option is suitable for businesses with strict data compliance requirements or specific customisation needs. However, the added control and customisation come with a higher cost and require IT teams to manage the environment.
Security and Data Compliance
Security is a primary concern for finance departments handling sensitive financial data. In the Public Cloud, SAP takes responsibility for security and compliance, providing robust measures to safeguard data. However, as the infrastructure is shared, some organisations with strict data regulations may have reservations.
In contrast, the Private Cloud offers an isolated environment, giving organisations greater control over security configurations and data access. This makes it an attractive option for industries with stringent compliance requirements, such as healthcare, finance, and government sectors.
Cost Considerations
Cost is a crucial factor in any technology deployment decision. With SAP S/4HANA Public Cloud, you benefit from a pay-as-you-go model, where you only pay for the resources you use. Additionally, the elimination of infrastructure management reduces operational costs. Small to medium-sized businesses or those looking for cost-effective solutions often find Public Cloud more appealing.
The Lagom.FM solution has attractive options for customers looking to implement SAP at lower cost. In particular, the swift and streamlined implementation process is less of a drain on the budget and means you can enjoy the benefits faster.
While SAP S/4HANA Private Cloud provides a higher degree of customisation and control, it requires a larger upfront investment. Organisations with complex finance operations, long-term strategies, and a need for extensive customisation may find the Private Cloud option more suitable in the long run.
The Lagom team can walk you through these options as part of the Business Case, so you can feel confident of delivering within time and budget.
Scalability and Flexibility
As your business grows, scalability becomes critical. SAP S/4HANA Public Cloud offers automatic scalability, where the system adjusts resources to meet demand fluctuations. This makes it ideal for businesses with unpredictable or seasonal workloads.
Private Cloud also offers scalability, but it requires planning and allocation of additional resources to accommodate growth. If your organisation anticipates substantial growth or has unique requirements, Private Cloud may offer more flexibility in tailoring the environment to your needs.
Upgrades and Maintenance
With SAP S/4HANA Public Cloud, SAP takes care of system upgrades and maintenance. This ensures that your finance department always operates on the latest version with access to the newest features and functionalities. Upgrades are usually seamless, reducing downtime and minimising disruptions to business operations.
With Lagom.FM you can also rest assured that any upskilling, training, or documentation updates are taken care of – with a continuous learning mindset at the heart of our planning.
On the other hand, SAP S/4HANA Private Cloud puts the responsibility of upgrades and maintenance on your IT team or the cloud service provider. While this allows for more control over the upgrade schedule, it may require additional resources, and delays in upgrading could lead to missed opportunities for accessing new features. This is where Lagom’s AMS services come in handy – ensuring that you have experts working with you to manage the process.
Time to Deployment
SAP S/4HANA Public Cloud offers a faster time-to-deployment compared to the Private Cloud option. The pre-configured system reduces implementation time by up to 50%, allowing finance departments to start using the ERP solution more quickly. This can be beneficial for organisations looking to streamline their finance processes rapidly.
The Lagom.FM solution has been designed with this in mind, with all our implementation tools and frameworks modelled so you are up and running faster.
Conversely, SAP S/4HANA Private Cloud may have a longer time-to-deployment due to the need for infrastructure setup, customisation, and more extensive testing. If your finance department requires extensive configuration and integration with existing systems, it may take more time to launch the solution.
IT Expertise and Resources
The level of IT expertise available within your organisation can influence the decision between Public and Private Cloud. SAP S/4HANA Public Cloud requires minimal IT support, as most of the technical aspects are managed by SAP. This makes it an attractive option for organisations with limited IT resources and a focus on core business functions.
On the other hand, SAP S/4HANA Private Cloud demands a higher level of IT expertise to manage the dedicated infrastructure, handle customisations, and ensure smooth operations. Organisations with robust IT teams or those willing to work with experienced cloud service providers may find the Private Cloud option more suitable.
Multi-Tenancy vs. Single-Tenancy
SAP S/4HANA Public Cloud typically follows a multi-tenancy model, where multiple customers share the same resources and infrastructure. While this model is cost-effective, some organisations may have concerns about data isolation and potential performance impacts caused by other tenants.
In contrast, SAP S/4HANA Private Cloud offers single-tenancy, where the environment is dedicated solely to your organisation. This ensures data isolation, enhanced security, and greater control over resource allocation. If data segregation is critical for your finance department, Private Cloud may be the preferred choice.
Compliance with Industry Regulations
Consider the industry regulations and data compliance standards your finance department needs to adhere to. Industries such as healthcare, finance, and government often have strict data security and compliance requirements. SAP S/4HANA Private Cloud may provide the level of customization and security needed to meet these regulations effectively.
User Adoption and Change Management
When transitioning to a new ERP system, the workforce needs to embrace the change and understand the benefits. User adoption is often a critical determinant of project success. For SAP S/4HANA Public Cloud, the standardised and pre-configured nature of the solution may ease the training effort. However, some employees might still be resistant to change or feel overwhelmed by the shift in processes. This mindset shift is coined by SAP as a “cloud mindset” and refers to recognising and promoting the advantages of cloud-based solutions and encouraging a culture of agility and innovation.
Our Lagom change team have deep expertise in embedding a cloud mindset and promoting a “cloud ready culture”. To drive user adoption successfully, we’ve seen it is essential to communicate how the move to the cloud aligns with the organisation's long-term strategic goals and promotes a forward-thinking approach to business operations. Finance teams need to understand that a cloud-based ERP system empowers them with real-time data, seamless collaboration, and the ability to work from anywhere.
Implementing SAP S/4HANA Private Cloud, on the other hand often involves more extensive customisations to align the system with specific business processes. While this can lead to a system tailored to the users' needs, it may also introduce complexities that require additional training and support.
Our Lagom change consultants facilitate user adoption through comprehensive training programs to ensure that finance teams are equipped with the necessary skills to navigate and utilise the new system efficiently. Change management strategies should focus on communicating the benefits of the ERP solution, addressing concerns, and involving key stakeholders in the decision-making process. By fostering a culture of continuous learning and support, organisations can encourage user buy-in and enthusiasm for the new system.
Furthermore, engaging employees early in the implementation process, providing ample opportunities for feedback, and addressing their pain points will foster a sense of ownership and empowerment among the finance team. At Lagom, we advise that establishing a robust support structure, including dedicated help desks or internal champions, can provide reassurance and ensure that users receive the assistance they need during the transition period.
Ultimately, successful user adoption and change management will lead to higher productivity, improved data accuracy, and better decision-making across the finance department. Organisations that prioritise user training, involvement, and support are more likely to maximise the benefits of SAP S/4HANA Public Cloud or Private Cloud, making the finance transformation journey a smoother and more rewarding experience for all stakeholders involved.
Conclusion
Deciding between SAP S/4HANA Public Cloud and Private Cloud for your finance operations involves a careful evaluation of your organisation's unique needs, budget, IT resources, and data compliance requirements. SAP S/4HANA Public Cloud offers rapid deployment, cost-effectiveness, and scalability, making it an attractive option for businesses seeking standard functionalities and ease of management.
In contrast, SAP S/4HANA Private Cloud provides greater customisation, enhanced security, and data isolation, making it well-suited for organisations with specific finance requirements and strict compliance needs.
By weighing the pros and cons of each option and consulting with SAP experts, such as the team at Lagom you can make an informed decision that aligns with your finance operations and sets your business on the path to success in the digital era.
For more information about Lagom.FM or our Lagom Services, check out our website: www.Lagomgroup.co.nz
