SAP S/4HANA Cloud (RISE) vs. On-Premise Licensing – Key Differences and How to Choose

SAP S/4HANA Cloud (RISE) vs. On-Premise Licensing

Enterprise IT leaders face a pivotal decision when adopting SAP S/4HANA:

Should you use a cloud subscription model (such as RISE with SAP or S/4HANA Cloud SaaS) or stick to the traditional on-premise licensing model?

This article compares cloud vs. on-premise S/4HANA licensing from a CIO/CFO perspective.

We break down differences in cost structure (OpEx subscription vs. CapEx license + maintenance), user licensing metrics (Full User Equivalents vs. Named Users), contract flexibility, upgrade responsibilities, and vendor lock-in considerations.

By understanding these differences and the pros and cons of each model, CIOs and procurement heads can make an informed decision that aligns with their business strategy.

This guide will help you select the optimal S/4HANA licensing approach for your enterprise, whether you prioritize cost, flexibility, or control.

Read Migrating from SAP ECC to S/4HANA – Licensing Conversion.

Overview: Subscription (Cloud) vs. Perpetual (On-Premise) Licensing

At the highest level, the difference between S/4HANA Cloud and On-Premise comes down to how you pay and what you control:

• On-Premise Licensing: You purchase a perpetual license for the S/4HANA software. This one-time purchase (CapEx) allows you to use the software indefinitely. You also pay an annual maintenance fee (typically around 20–22% of the license price) for support and updates. You (or your hosting partner) are responsible for managing the infrastructure, performing upgrades, applying patches, and other necessary maintenance tasks. This model is analogous to buying a car – you pay upfront, then pay ongoing maintenance, and you own the asset.
• Cloud Subscription (RISE or S/4HANA Cloud): You subscribe to S/4HANA as a service, paying periodic fees (OpEx). In RISE with SAP or the public S/4HANA Cloud, you do not own the software; you have access for your subscription term (like leasing a car or using a ride-share). The subscription includes the software license, cloud infrastructure, basic support, and other bundled services. You generally pay per user (or per FUE) on a monthly or yearly basis. SAP (and its cloud infrastructure partners) handle the behind-the-scenes technical operations and updates. If you stop subscribing, your rights to use the software end.

This fundamental difference affects many aspects, including cost planning (upfront vs. recurring), flexibility to scale up or down, total long-term cost, and how you negotiate the contract.

Key takeaway:

On-premise gives you more control and potentially lower costs over a long horizon (since you can use licenses for a long time even if you stop maintenance, albeit without support).

Cloud computing provides quicker time-to-value and offloads infrastructure and upgrade burdens, but it comes at the cost of ongoing payments and less control over the environment and timeline.

Get an overview of RISE vs on‑prem.

Traditional On-Premise S/4HANA Licensing Model

Let’s detail the on-prem model first:

• License Purchase: You purchase S/4HANA licenses, typically measured by Named Users and package metrics. For example, you might purchase 500 Professional User licenses, 100 Limited User licenses, and so on, plus any additional engine licenses (such as SAP Extended Warehouse Management or SAP Treasury module, if these aren’t included in the base). This purchase is a big one-time expense (subject to discounts). It can often be in the millions for a large enterprise deployment. These licenses are perpetual – once paid, you can use the software version forever.
• Annual Maintenance: To receive support, patches, and the right to upgrade to new versions, you must sign a support agreement. Standard SAP Enterprise Support is 22% of your yearly net license value. Therefore, if you spend $5 million on licenses after the discount, the annual maintenance cost starts at $1.1 million. SAP typically increases this by a small percentage every few years, and as your license footprint grows, so does maintenance. Maintenance is essentially the “subscription” you pay for ongoing benefits, but crucially, if you choose to stop paying maintenance, you still own the licenses – you just won’t get updates or support (your software would be frozen at the last version you had rights to).
• Infrastructure & Operations: With on-prem, you decide where to run S/4HANA – it could be in your data center or even on a public cloud (IaaS) like AWS/Azure that you manage (this is sometimes called “hosted on-prem” or IaaS-hosted but from a licensing standpoint, it’s still an on-prem license). You are responsible for installing the system, sizing the hardware, performing backups, applying patches, and performing version upgrades as needed. This provides scheduling flexibility – for example, you can choose to stay on a certain release for a few years if stability is important, and upgrade on your timeline.
• Customization and Integration: On-premises S/4 provides maximum flexibility for customizing the system (in terms of extensions and modifications), as you have full access. SAP still has guidelines (and custom code can affect support), but there’s no technical limiter from SAP’s side – it’s your system. Integration with other systems is also fully in your control.
• User Metric: As mentioned, you manage user licenses as Named Users. That requires periodic user audits to ensure that each person accessing the system has the correct license type. You should purchase additional licenses if your user count grows (true-up at your next audit or purchase cycle). If user count shrinks, you generally still own the licenses – you can’t get money back, but you could repurpose them for other users in the organization.
• Contract Terms: On-premises contracts often allow flexibility – for example, some contracts include clauses that allow swapping a limited number of licenses for others (although not always). Also, if you acquired licenses you no longer need, you can stop paying maintenance on those specific licenses (with 3 months’ notice before support period renewal), effectively shelving them. You won’t get a refund for the license fee, but you will save on maintenance in the future.
• End of Life/Escape: With on-prem, you’re not time-bound by a vendor contract for usage. If, after 5 years, you decide not to use SAP at all, you can drop maintenance and simply continue or stop using the software at will (if you stop using it, there’s no cost; if you continue using it without support, no new costs, but also no support). There’s no “give the software back” concept – it’s yours (like owning a car after loan payoff, you don’t return it).

Learn more about the cost comparison of S/4HANA Cloud vs on-premise.

S/4HANA Cloud Subscription Model (RISE with SAP and SaaS)

Now, the cloud model:

• Subscription Pricing: In a cloud model like RISE, you pay an annual (or quarterly) subscription fee. This fee is often calculated based on some metric, commonly users (FUEs or named users by type) or sometimes revenue metrics for certain cloud products. Still, S/4HANA is typically user-based. For example, SAP might quote $250 per user per month for a Professional user in the cloud. If you have 200 users of mixed types, they’ll tally a subscription price per year for your required mix. For example, 200 users averaging $150 per month = $ 30,000 per month, or approximately $ 360,000 per year. (Actual prices vary widely by deal and user category; enterprise deals might not be strictly per user, but SAP presents an overall figure.)
• All-Inclusive (Software + Infrastructure + Basic Support): The subscription includes the S/4HANA software license (for the term), the HANA database license, the infrastructure (servers, storage, network) typically hosted on a hyperscaler of SAP’s choice, and standard support and system maintenance. SAP (or its partner) will handle applying patches, upgrades, and monitoring uptime, among other tasks. You get Service Level Agreements (SLAs) for system availability. Essentially, a lot of the IT overhead is outsourced to SAP.
• RISE vs. Public Cloud: “RISE with SAP” is a brand that usually indicates a private cloud S/4HANA (either single-tenant edition or customer-specific landscape) managed by SAP. The SAP S/4HANA Cloud (public edition) is also a multi-tenant SaaS with more standardized processes. Licensing-wise, both are subscriptions, but RISE gives you more flexibility (you can bring more customizations and choose some add-ons) at potentially higher costs. In contrast, the public cloud is less expensive but less customizable. In this article, we treat them broadly similarly in contrast to on-prem. However, CIOs should know the public cloud has some functional differences (some features may lag on-prem in earlier releases, though the gap has closed over time).
• User Metric (FUEs): SAP commonly uses Full User Equivalents (FUEs) in the cloud, which we explained earlier. You don’t buy “500 Professional and 300 Limited” – instead, you say, “I need to cover X amount of usage,” and SAP calculates that in FUEs. However, some RISE contracts might enumerate users by type for clarity and then convert to a point system. The key is that the subscription usually allows some elasticity up to a limit, but generally, you commit to a certain number of users. If you need more during the term, you upsell (increasing fees). Still, if you use fewer, you usually don’t get money back until renewal time, where you can try to adjust the committed number (SAP often doesn’t allow decreases mid-term).
• Contract Lock-In: Cloud contracts are typically time–bound, with 3-year or 5-year terms for RISE deals, sometimes including renewal clauses. You are committing to pay for that period. If you want to leave early, there are likely penalties, or you may simply pay for the remainder, regardless of usage (similar to breaking a lease). After the term, if you don’t renew, you lose access to the software unless you transition to another model (which would require a new contract or go back to on-prem licensing).
• Flexibility and Updates: In the cloud, SAP controls the update schedule. You receive automatic upgrades (for example, major S/4HANA Cloud updates are released quarterly or biannually). This is beneficial for introducing new features, but you must be prepared to test and adapt continuously – you can’t easily skip updates. SAP handles the technical upgrade, but your team tests your processes on new releases. On the plus side, you’re always on a supported version; on the minus side, you have less control over the timing. Customizations are also more restricted; SAP encourages the use of their BTP side-by-side extensions or in-app extensibility frameworks rather than classic modifications.
• Exit Considerations: If you decide to leave SAP (or go on-prem) after your subscription term, you don’t own any license to keep using S/4HANA. You’d export your data and cease using the software. There are usually provisions for data extraction (SAP will give you your database or allow a data dump), but it’s a non-trivial move. Suppose you want to convert to on-prem at the end of an RISE term. In that case, you’d need to negotiate that (SAP might allow conversion of your subscription into a perpetual license at that point, possibly for an additional fee – but it’s not guaranteed unless pre-negotiated).

Further reading on negotiation strategies for Cloud vs on-premise.

Cost Structure Comparison

Cost is a major factor in making an informed decision. Let’s compare cost elements side by side:

In many scenarios, we see that on-prem vs. cloud TCO crosses over around the 4-7-year mark. The cloud can be more cost-effective in the first few years because you can avoid big CAPEX and get bundled.

Over a decade, paying a yearly subscription fee often proves more costly. However, some CFOs are okay with that premium because it delivers other benefits (agility, no hardware refresh cycles, etc.).

The exact numbers vary significantly by deal: SAP may heavily discount a RISE deal to entice customers (especially early adopters), or conversely, a customer with strong negotiating skills might receive a substantial discount on on-premises licenses.

That’s why each organization should model their situation with their specific quotes.

Flexibility, Control, and Risk Considerations

Beyond pure cost, here are strategic factors to weigh:

• Flexibility to Reduce Scope: On-premises – once you purchase it, you can deploy it however and whenever you need. If you downsize your user count, you’re not forced to pay more (you already own the licenses). In a cloud, if you want to reduce users, you typically have to wait until contract renewal to adjust commitments (and even then, SAP may not allow a big drop without some penalty). Cloud contracts often have minimum commitments (like you can add users but can’t drop below a certain number).
• Scalability Upwards: If you suddenly double your user count or add a new module on-premises, you simply purchase the additional licenses and hardware, which can take time and negotiations. However, technically, you can do it quickly if the budget allows. In the cloud, scaling users or system size is usually technically easier (SAP just provisions more resources), but you’ll pay for it in the next invoice. Scaling down is the bigger issue, as noted.
• Upgrades and Innovation: The cloud keeps you on the latest version, which means you get new features faster (great if your company values that innovation). On-prem, you might lag (some companies still run older versions for stability). However, if your company prefers a slower change management approach, on-premises might feel safer (no forced change until you decide).
• Compliance and Data Residency: Certain industries or governments may require data to be on-premises or under specific controls. On-prem allows that. SAP’s cloud does offer local hosting in many regions and compliance certifications (such as GDPR and industry-specific ones), but you need to verify whether these meet your needs. Highly regulated industries sometimes prefer on-premises ERP solutions due to data control, or at least a single-tenant cloud where they have more control.
• Performance and Custom Integration: If you integrate frequently with on-site systems (shop floor machines, custom apps on-premises), an on-premises S/4 might integrate with lower latency. Cloud S/4 can integrate via APIs and connectors, but it’s something to consider (network latency, reliance on stable internet/VPN, etc.). Most large companies can make cloud integration work, but it’s part of the discussion.
• Vendor Lock-In: With on-premises, you’re “locked” because you’ve invested heavily, so you’re likely to stick with SAP for a long time, but at least you hold the licenses. You could consider third-party support or negotiate if SAP raises maintenance by 5%. In the cloud, you’re locked in for the term, and at renewal, SAP has leverage (they know switching off a live ERP is extremely difficult). If they decide to raise prices or enforce some change, you have limited alternatives other than migrating off SAP (a huge undertaking). Some feel that on-premises gives a bit more negotiating leverage over time (because, worst-case, you can keep running what you have or use alternative support). The cloud is a true lock-in for the term, and somewhat beyond, due to the effort required to exit.
• Hybrid Options: It’s not a strictly binary choice. Some organizations adopt a mixed approach – e.g., keeping their core ECC on-premises for now (or moving core to S/4 on-premises) while trying out some peripheral cloud SAP products or a smaller S/4HANA Cloud instance for a subsidiary (a two-tier ERP strategy). Or vice versa: use RISE for core but maintain an on-premises instance for a specific plant that requires autonomy. SAP’s contracts in such cases need careful handling – you could end up with two sets of licensing (one subscription, one perpetual). It can be done, but it can add complexity.

Making the Decision: Key Factors for CIOs and CTOs

When choosing between cloud and on-prem S/4HANA, consider these factors in the context of your business:

1. Financial Strategy: Does your company prefer operating expenses (OpEx) over capital expenses (CapEx)? Some companies have a cloud-first mandate to avoid large capital expenditures on IT. Others have cash and would rather invest upfront to lower long-run costs. Additionally, consider your current position regarding existing SAP investments – if you already own licenses (from ECC) and infrastructure, sticking with an on-premises S/4HANA might maximize those investments. Conversely, the upfront cost hurdle might push toward subscription if you’re looking at a net-new SAP implementation.
2. IT Talent and Resources: Running SAP on-premises requires skilled Basis administrators, hardware management, and other specialized skills. If your organization doesn’t have that strength (or doesn’t want to continue doing it), the cloud removes a lot of that burden. On the other hand, if you have a strong internal IT team and data center, you might leverage them and keep more control in-house.
3. Need for Customization: On-prem might be necessary if you have heavily customized ECC processes that you intend to carry forward or expect to heavily customize S/4HANA. While SAP S/4HANA Cloud (especially the public edition) has improved in extensibility, it’s still not as open as on-prem, where you can modify anything (though SAP will still say “don’t modify standard” – but many do). The cloud is viable if you can adapt to standard processes or use side-by-side extensions. If not, on-prem might be the safer bet to ensure you can do what you need.
4. Timeline and Phasing: Are you under pressure to move quickly? Cloud can be faster to start (hardware procurement is not waiting, and SAP has rapid-deployment approaches). If you need a system to be live in 6 months, a RISE approach might shave off some time. If you have a longer timeline and want a highly tailored implementation, either model could work.
5. Contracts and Negotiations: Sometimes, it comes down to what deal SAP gives you. Evaluate the specific proposals. If SAP wants you to be a cloud customer, they might offer a steep discount or extra goodies (including some SAP BTP services or extended support on old systems). Or, vice versa – perhaps your SAP representative is more flexible on pricing for perpetual licenses. Don’t assume the list price – negotiate both options and compare. Let SAP know you are considering both; they might sharpen the pencil to sway you one way, which works to your advantage either way.
6. Long-Term Strategy: Think about beyond 5 years. If your company is outsourcing more IT and focusing on core business, having SAP in the cloud aligns with that (less ERP technical management in-house). If your strategy prioritizes internal control for critical systems, you may opt for on-premises solutions or use a private cloud that you manage. Also consider the “endgame” – if, in 10 years, you wanted to switch off SAP, would having on-premises perpetual licenses help (because you could wind down gradually without paying new fees), or is that not a scenario you worry about?

Also, read about the digital access differences between Cloud and on-premises.

Recommendations

• Do a 5–10 Year TCO Analysis: Model the costs of both options over a realistic period (at least 5 years, better 10). Include license/subscription fees, maintenance, infrastructure, personnel, and upgrade costs. This will highlight the cost crossover point and help justify your decision to stakeholders.
• Align with Business Priorities: If agility and rapid innovation are top priorities, lean towards RISE or cloud. If cost control and autonomy are paramount, consider on-premise. Ensure the IT strategy aligns with the overall business strategy (e.g., a digital-first company may be willing to incur higher costs for the flexibility of the cloud).
• Negotiate Safeguards in Contracts: Regardless of the route, negotiate key terms. For cloud services: cap annual price increases, ensure transparency on what’s included (e.g., storage capacity, disaster recovery environment), and include provisions for transition assistance if the contract ends. For on-prem: negotiate price protections for future purchases, the ability to swap some license types if needed, and maybe cloud extension options (so you can move some licenses to the cloud later with credit).
• Consider a Pilot or Phased Approach: You don’t have to go all or nothing if uncertain. For example, you could pilot S/4HANA Cloud in a smaller subsidiary or for a specific module while maintaining on-premises for core, and then decide on a company-wide approach later. Or start on RISE to get up and running and have a clause to evaluate a switch to on-prem at renewal (though SAP might not make that easy, it’s something you can discuss).
• Infrastructure Reality Check: If your current data center is aging or your hardware can’t support S/4’s requirements (which are substantial, especially for HANA memory), you may consider moving to the cloud to avoid new hardware CapEx. Conversely, if you have just refreshed your hardware or have a private cloud setup ready for SAP, use it and save costs with on-premises licensing.
• Examine Compliance Requirements: Double-check data protection, regulatory, or performance requirements. If the cloud can meet them (it often can, with proper SLA and location choices), that would be great. If not, that’s a non-negotiable reason to stay on-prem.
• Long-Term Exit Plan: Even if it’s uncomfortable, consider what-if scenario: “If we had to exit this model in X years, what would it entail?” For on-prem, exit might mean the software stays, but you stop paying maintenance. For the cloud, exit means migration. Planning for this ensures you don’t inadvertently trap yourselves. For instance, if you’re going cloud, keep an archive of each upgrade’s release so you know what custom data might need to be extracted, etc. If on-prem, ensure you have the right internal skills to maintain if budgets tighten and you drop maintenance.
• Keep Leveraging Existing Investments: If you already own certain SAP licenses (such as SRM, CRM, etc.), be aware that transitioning to RISE may result in the “sunset” of those licenses if their functions are integrated into S/4. You may end up paying again for the functionality you had. In on-premises S/4, SAP sometimes provides conversion credit for those component licenses. This could also be a negotiating point for Cloud (maybe they’ll give a break for having those). Don’t let prior investments be ignored.
• Involve IT and Finance Teams: The CIO, CTO, and CFO should jointly evaluate the options. IT might favor one for technical reasons and finance another for cost reasons—a balanced view is needed. Procurement should also be involved once a direction is chosen to hammer out the best contract terms.

FAQ

Q: Will SAP eventually force everyone to go to the cloud?
A: SAP encourages the cloud model (RISE is heavily marketed). They have supported S/4HANA on-premise until at least 2040, so there is no near-term forced migration. Many large customers run on-prem, and SAP will continue to sell and support it. That said, SAP’s investments in innovation may initially appear in the cloud, and pricing incentives may increasingly favor cloud-based solutions. But ultimately, you have a choice today and for the foreseeable future. Choosing what’s best for your business is wise rather than assuming one is mandatory.

Q: Can we convert our existing ECC licenses into a RISE subscription?
A: Not directly one-to-one. If you have ECC licenses, you can negotiate a RISE contract where SAP may give you credits or incentives because you’re an existing customer. You won’t use those ECC licenses once you move to RISE (they’ll be terminated or shelved). SAP might, for example, offer a discounted RISE rate for the first term in recognition of past investments. But you don’t “apply” your license to RISE; it’s a new contract. If you later decide to return to on-premises S/4, you would likely need to perform a conversion at that time. (SAP may reinstate some of your old entitlements if negotiated, but this is not automatic.)

Q: How do user licenses differ between on-prem and cloud in practical terms?
A: On-prem, you manage individual user licenses (e.g., audit user assignments). In the cloud, you contract for several users (often via FUE). The practical difference is that on-premises compliance ensures you have purchased enough licenses for the actual named users created in the system. In the cloud, compliance is more about usage aligning with what you contracted (SAP might monitor that you aren’t dramatically exceeding, although usually you won’t be able to exceed certain limits without SAP being aware). For internal management, on-premises solutions require careful tracking of user license types. Cloud simplifies that by not having multiple types of your own, but you still must ensure you don’t invite 100 extra users into the system beyond your contract, or you’ll need to amend the contract (and pay more). More information about FUE vs named users in Cloud vs on-premise.

Q: If we choose RISE, can we later decide to bring it on-prem (or vice versa)?
A: Switching models is possible but not seamless. If you start on RISE and you want to go on-prem after your contract term, you’d need to negotiate a whole new license purchase (perhaps SAP gives you a deal, maybe even convert some of what you paid as credit, but it’s case-by-case). Technically, you’d have to migrate the system from SAP’s cloud to your environment. Essentially, a reimplementation or a system copy with some adjustments, since the infrastructure and certain integrations would change. And you’d need to have hardware and a Basis team ready. Conversely, if you start on-prem and later want to go to RISE, you’d negotiate a RISE contract and likely migrate your system to SAP’s cloud (which could be relatively straightforward using backup/restore to the cloud). SAP offers a program called “Rise Transition” for existing S/4 customers to transition into RISE. It can be done, but plan for it as a project.

Q: Are there functional differences between S/4HANA on-premise and S/4HANA Cloud?
A: Yes, particularly with the public cloud edition. The on-prem version (also used in the private cloud) has the full scope of features and the ability to customize more deeply. The public cloud S/4 (sometimes called “Essentials edition”) historically had a reduced scope (fewer industries, and some advanced features were not immediately available). SAP has rapidly closed the gap, and many core functionalities are now in both. Still, certain industry solutions or very advanced configurations might only be available on-prem. Always check SAP’s latest “Feature Scope Description” document, which outlines which features are available in the cloud versus on-premises. That could decide if you need something that’s only on-prem (e.g., certain utilities or retail functionalities). Private cloud via RISE typically uses the same code as on-prem to have all features, but SAP might impose some restrictions on custom modifications.

Q: How does the contract renewal work in RISE with SAP?
A: Typically, before your term ends (say in year 3 of a 5-year contract), you’ll start discussions with SAP about renewal. At renewal, SAP could increase the price – many contracts have a clause like “prices for the renewal term will not exceed X% increase,” or sometimes it’s “prevailing rates at time of renewal” (which is scary because it’s open-ended). That’s why we recommend negotiating a cap up front (e.g., no more than 5% increase, or ideally lock the same price for first renewal). If you don’t negotiate it, you’re at SAP’s mercy at renewal time – although practically, they won’t want to scare you off to another product, but if you have no alternative, they hold cards. Additionally, at renewal, you can adjust user counts (often only upward, unless you negotiate a reduction option). It’s essential to prepare thoroughly for renewal – review your actual usage and value from RISE, and approach SAP with data to either negotiate a better deal or consider alternatives.

Q: We have a global presence; is a hybrid approach (a mix of cloud and on-premises) feasible?
A: It is, but it adds complexity. Some organizations run, for instance, S/4HANA Cloud for smaller subsidiaries because it’s faster to roll out and have the main S/4 on-prem at HQ. This means you’ll manage two different environments and two contracts. SAP can sometimes bundle a hybrid deal (they might give some discounts if you’re doing both). Integration between an on-prem and a cloud S/4 system uses standard interfaces (like any two SAP systems talking). You just need to ensure data consistency and possibly implement central governance to ensure that master data is synced. A hybrid approach might be a stepping stone – e.g., moving some pieces to the cloud and keeping the core on-premises for now. It’s possible, but you’ll want a clear strategy to avoid it becoming permanent technical debt.

Q: Does RISE with SAP cover all SAP licenses or just S/4HANA?
A: RISE is a bundle that primarily includes S/4HANA (either private or public cloud edition) and the basic platform stuff for it. It also includes some credits for the SAP Business Technology Platform (for extensions). Depending on your deal, it might include starter packages for other cloud services (like Ariba or SuccessFactors connectors, etc.). However, SuccessFactors, Concur, Ariba, and others remain separate cloud products with their subscriptions (though you can include them in an overall proposal). If you have other SAP software on-premises (such as old SAP SRM or BW), these are not automatically covered. You’d either keep them on-premises or move to cloud equivalents (SAP has some offerings, including SAP Analytics Cloud or others). So RISE is not “All-you-can-eat SAP”. It’s focused on core ERP. You need to handle licensing for other SAP components separately; however, SAP sales can coordinate a combined package if you request it.

Q: In terms of performance, will a cloud system be as good as an on-premises system for our users globally?
A: Generally, yes, if sized and configured properly. SAP’s cloud runs on top of hyperscalers with robust infrastructure. Many users report good performance. However, you should consider network connectivity: accessing a cloud ERP from, say, a remote plant in a country with poor internet could be a concern, whereas that plant might have a local server in an on-prem scenario. Mitigations include using SAP’s recommended network setups and possibly locating your instance in a region that serves your users well (SAP lets you choose the data center region). Additionally, for latency-sensitive operations (such as factory automation connecting to ERP), you may consider keeping some edge processing on-site and only syncing summary data to the cloud. But for normal business use (finance, HR, etc.), cloud performance is usually on par with on-prem, if not better (because SAP ensures high-end hardware and tuning).

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