Status
Owner	DA VINCI-ext, Daniel
Stakeholders	Gabriella Azzali, Frank Bolata, Owen Pettiford, Boris Foiselle

Issue

As ERP Rebuild evaluates its functional deployment for future state SAP S/4HANA, the decision between utilising a public cloud or a private cloud environment, on which to build business capability, is a critical consideration. This document (when completed post reviews) will provide a clear concise comparison of the primary options to inform this decision.

Recommendation

Option B) SAP S/4HANA Private Cloud Edition

While the charter principles of Simplification, Standardisation, and Adopt/Adapt seemingly align closely with the principles of SAP's public cloud offering, the primary reason for not choosing the public cloud is that it simply does not meet Syensqo's platform requirements.

SAP S/4HANA Public Cloud, with its benefits of low touch maintenance and standardised business processes, presents a simple and straightforward solution. However, for a global chemicals company like Syensqo, the realities of running a scaled operation with multinational compliance obligations and potential for future acquisition/divestments challenge the viability of this option in it's current offering from SAP. While SAP S/4HANA Public Cloud offers cost efficiency, the need for enhanced security, additional compliance, and control over Syensqo data favours the SAP S/4HANA Private Cloud Edition. Additionally, SAP S/4HANA Private Cloud Edition provides flexibility in project deployment options, allows Syensqo to determine its own schedule for maintenance and adoption of new technologies and business capabilities (such as generative AI), that are rapidly emerging and will advance during the lifecycle of the ERP Rebuild. Changing position on capabilities through deployment lifecycle is a likely scenario that is not supported under the constrains of SAP S/4HANA Public Cloud.

Finally, SAP S/4HANA Public Cloud is generally used for new greenfield deployments, especially for emerging companies without significant standing investments in SAP solutions. Given Syensqo's extensive implementation of SAP dating back to 2001, transitioning to SAP S/4HANA Public Cloud is not feasible. Our existing infrastructure and substantial investments in on-premises SAP solutions necessitate a tailored approach that ensures advancement in business capability that leverages on existing deployed assets and Syensqo IP.

Background & Context

In recent years SAP has been marketing and constructing it's product offerings towards cloud subscription models in order to become a 'Cloud' company. For SAP S/4HANA core systems the product offerings are including SAP S/4HANA Public Cloud, GROW with SAP, SAP RISE and Private Cloud Edition each of these options offer varied configurations of which customers may consider. Broadly speaking (and in order to refine the conversation for decision making) these models are either public or private options thus this KDD is narrowed down to option A) SAP S/4HANA Private Cloud Edition or option B) SAP S/4HANA Public Cloud. For the purpose of this KDD Private cloud edition can be also considered as an SAP RISE construct, however SAP RISE or Private Cloud will have it's own consideration with it's own pro's and con's as SAP licensing negotiation commences and as ERP Rebuild aligns on it's understanding and it's requirements on how it aims to operate SAP more fully.

Assumptions

No on-premise data center
Building on-premise data center with a perpetual license model is out of the question due to there being no indicators that this would be a preference and ERP Rebuild charter alignment and Syensqo goals means building a modern future proof solution which aligns with cloud. It is such an obvious elimination of choice that it not sensible to take effort to validate this assumption.
Requirement to support intentional but disruptive events
As commonly indicated by executive leadership, Syensqo will at some point undergo mergers/acquisitions/divestments in it's future, possibly even during the ERP Rebuild project lifecycle. These events will have demands and requirements to integrate or onboard / off-board organisational units with speed and flexibility.
No product deviation from SAP
SAP do not alter their product offerings so significantly in the time period between this decision and securing a license to operate that the recommendation becomes invalid.
Uptime and Problem Resolution
SLA's for availability and support offered through products considered meet Syensqo's requirements
Cost Control and Vendor Lock-in
Ensuring the power dynamic does not shift heavily in SAP's favour while transitioning to a cloud subscription model is a critical non-functional requirement
Portioned adoption of public cloud overly complex
The option to move some business capabilities that are very 'vanilla' into a public cloud offering and operating more complex parts of the business into a private cloud construct would lead to undue complexity to operate and maintain.

Constraints

SAP are heavily pushing cloud adoption to it's customers, thus we do not consider on-premise perpetual platform model and the model will be subscription based
Vendor lock-in to SAP and cost control become an increasing challenge under any cloud platform model
The decision needs to be taken early (in conceptual design phase) in order to progress with the ERP Rebuild agenda and negotiate an ideal outcome

Impacts

At inception of the S/4 transformation project, now is the only point in time it is feasible to consider starting fresh with a public cloud option. With the decision to move forwards SAP S/4HANA Private Cloud Edition will restrict the viability of changing direction in the future. Once acquired and deployed the feasibility to change course and pursue a public cloud solution becomes unwieldy, the same (but to a lesser extent) goes for a reversal to an on-premise based model.

Business Rules

Cloud Platform must support business requirements, the cloud platform itself caters for business requirements but does not directly service business rules.

Options considered

Option A: SAP S/4HANA Public Cloud

Deployment: Core ERP system in a multi-tenant cloud environment aka 'public cloud'.
Customisation: Minimal level of customisation, expects highly standardised deployment.
Management: Fully managed by SAP, including infrastructure, software updates, maintenance, and security.
Focus: Standardised processes and configurations to ensure ease of use and consistent updates.

Option B: SAP S/4HANA Private Cloud Edition

Deployment: Private cloud environment.
Customisation: High level of customisation, similar to on-premise capabilities.
Management: Managed by SAP partner, including infrastructure, updates, and patches.
Focus: Primarily focused on providing a dedicated SAP S/4HANA environment with flexibility in customisation and control over updates and management.

Evaluation

	Option A -SAP Public Cloud	Option B - SAP Private Cloud
Vendor Lock-in	Pro Streamlined, single vendor management, integrated SAP services. Con High lock-in due to reliance on SAP's managed environment.	Pro Syensqo have ultimate control over the solution and its implementation
Security and Compliance	Con Limited control over data residency and governance.	Pro Syensqo have greater control over implementing our own security measures and compliance policies to suit international regulations.
Data Residency / Regulation Compliance	Con Managed by SAP, simple compliance with global data regulations	Pro More options for data residency, better for syensqo as a highly regulated industry Pro Greater control over compliance with industry-specific regulations.
Cost	Pro Predictable subscription fees, lower initial investment.	Con Higher total cost of ownership, due to requirements of Syensqo
Customisation	Con Limited customisation options.	Pro Supports customisations for Syensqo specific needs and industry requirements.
Performance	Con Optimised for average customer performance needs, managed by SAP.	Pro Performance requirements are tailored and configurable by Syensqo
Future Proofing	Pro Frequent scheduled updates with the latest features supported on public cloud	Pro Controlled and planned upgrades according to Syensqo’s timeline.