SAP S/4HANA Deployment Options – Cloud vs. On-Premise | LeanIX (2023)

The Ultimate Guide

Set the stage for S/4HANA

Understand the key differences between SAP S/4HANA Cloud and On-Premise deployment options to help narrow down which deployment is the best for your organization.

► Find out how to get started with your SAP S/4HANA migration!

Set the stage for S/4HANA

Shortcuts

  1. Introduction
  2. S/4HANA deployment options
    1. SAP S/4HANA Cloud
    2. SAP S/4HANA Cloud Extended Edition
    3. SAP S/4HANA Cloud Private Edition
    4. SAP S/4HANA On-Premise managed by SAP (HEC)
    5. SAP S/4HANA On-Premise: On-Premise or managed by cloud provider Hyperscalers
  3. Deployment factors
  4. Conclusion

Introduction

With SAP ending all support for ECC and earlier versions of their software in the next few years, it’s time to start planning the migration from the older ERP products to SAP S/4HANA.

S/4HANA is the latest and most up-to-date SAP software package used to cover all the day-to-day processes of an enterprise. It runs exclusively on SAP’s own in-memory database SAP HANA. There are two main S/4HANA deployment options; Cloud and On-Premise. 

This article will go over all On-Premise vs. Cloud deployment options so that your SAP Architects and the rest of the SAP center can plan a smooth transition to S/4HANA.

S/4HANA deployment options

SAP S/4HANA Deployment Options – Cloud vs. On-Premise | LeanIX (3)Figure 1: SAP S/4HANA offers the flexibility of consumption. Source: SAP Blog

(Video) SAP S/4HANA Deployment Options - Cloud, On-Premise, SaaS, and Hybrid

S/4HANA can be deployed either on-premise or to the cloud, and which deployment you choose affects which S/4HANA implementation approach you’ll be able to take. The S/4HANA deployment options currently available are:

  1. SAP S/4HANA Cloud: Provides a full cloud approach, resides on the provider's server, and is fully operated and maintained by SAP.
  2. SAP S/4HANA Cloud extended edition: Has the same advantages of S/4 HANA Cloud with more flexibility and control.
  3. SAP S/4HANA Cloud private edition: Provides cloud services that are not shared with other organizations.
  4. SAP S/4HANA On-Premise managed by SAP (HEC): An on-premise solution hosted by SAP.
  5. SAP S/4HANA Any-Premise: On-Premise or managed by cloud provider Hyperscalers / a third party.

Each deployment option provides a different scope of services from SAP, which is important to consider when thinking about which deployment option can be used for SAP S/4HANA Cloud.

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SAP S/4HANA Cloud

SAP S/4HANA Cloud is the SaaS (Software-as-a-Service) edition of the SAP S/4HANA ERP system designed for the SAP HANA in-memory database. Formally called “Essentials Edition (ES) and Multi-Tenant Edition,” S/4HANA Cloud is a shared public cloud-hosted and operated by SAP. It is shared with other customers and is provided through subscription (available as RISE with SAP). Fixed and mandatory upgrades are managed by SAP. Automated and manual regression tests are also available. 

In terms of scope, S/4HANA Cloud covers 42 countries and several specific industries. Key user extensibility and extensions are run through the SAP Business Technology Platform Extension Suite with whitelisted APIs. It also uses Self Service Configuration User Interfaces (SSCUIs). For this deployment, you will need to use the Greenfield method.

SAP S/4HANA Cloud is the “standard” cloud deployment option, with the others providing different scopes of service. For example, S/4HANA Cloud (public) is simply a restricted version of the whole S/4HANA Cloud software, while S/4HANA Cloud (private) has a bigger scope and more flexibility (see below).

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SAP S/4HANA Cloud Extended Edition

Formally called the single-tenant edition, the extended edition of SAP S/4HANA Cloud has all the advantages of Cloud with more flexibility and control. Like S/4HANA Cloud, the extended edition uses a subscription service, and its dedicated landscape infrastructure is operated by SAP. This deployment also relies on the Greenfield method. Unlike Cloud, however, the extended edition needs to be upgraded by SAP and the customer every 2 years. 

S4 Cloud extended edition has the same S/4HANA functional scope as on-premise; 64 countries, 39 languages, and 25 industries–but with some third-party add-on limitations. In-app extensibility includes key user extensibility with some classic ABAP extensibility, plus further extensions through SAP Business Technology Platform Extension Suite. SAP S4 HANA Extended Cloud uses the IMG based on fit-to-standard workshops in the Explore phase, with a few restrictions.

Note that to use this deployment option, there must be more than a certain minimum number of users. For example, this option is better suited for mid and large-size organizations.

SAP S/4HANA Cloud Private Edition

SAP S/4HANA Cloud Private Edition (previously referred to as PCE) was released in 2021 as the latest deployment option for migration. It is simply the S/4 on-premise software solution stack offered in a private cloud and managed by hyperscalers. Existing ERP customers can move to private using a system conversion, which wasn’t possible in previous Cloud editions.

Available under a RISE subscription contract, the private cloud enables customers to create a deployment closely suited to their needs but must stay in mainstream maintenance (an upgrade within 5 years).

The scope, extensibility, and configuration are the same at the S/4 HANA Extended Edition, and implementation can be done through Greenfield, system conversion (Brownfield), or selective data transition (hybrid).

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SAP S/4HANA On-Premise managed by SAP (HEC)

SAP S/4HANA On-Premise offers individual and private hardware and infrastructure hosted either by SAP, a hyperscaler, or in a data center. It has a Bring Your Own License and infrastructure subscription, allowing more freedom and flexible service offerings. The customer is responsible for managing upgrades and choosing the speed of adoption. Upgrades should be performed annually. 

SAP S4 HANA (HEC) has a full S/4HANA industry and country scope, with customization, modification, and extensibility all possible as with ERP. Like S/4HANA Cloud (private), SAP’s on-premise deployment option can be implemented using the new implementation method, system conversions, or selective data transition.

This approach provides tools that selectively transfer configuration and custom code from older ERP systems into SAP S/4HANA by migrating the database, applying software updates, and doing a data conversion from third-party data models to the new, SAP-specific S/4HANA data model. Customers can use the SAP Solution Manager to manage their project design.

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SAP S/4HANA On-Premise: On-Premise or managed by cloud provider Hyperscalers

SAP S/4HANA On-Premise or managed by cloud provider hyperscalers (a.k.a. SAP S4 HANA Any Premise) is a deployment option managed by a customer database or third party (hyperscaler; such as Microsoft Azure, AWS, or Google Cloud). The license is either perpetual or Bring Your Own, and upgrades are done annually by the customer. Customization, modification, and extensibility are possible as with the ERP, and configuration uses the full IMG based on a fit-to-standard approach in the Explore phase.

Like on-premise (HEC) and private cloud, implementation can be done through the new implementation, system conversions, or selective data transition. Customers can use SAP Solution Manager to manage their project design.

Deployment factors

There are several factors to consider when choosing which deployment to S/4HANA is best. SAP S4 HANA deployment factors include implementation method, upgrades, and third-party options.

Implementation options

This article has touched upon the three main implementation methods, which will help determine which deployment to go for.

  • System Conversion (Brownfield approach): Deployments that allow system conversion are all on-premise deployments and also include S/4HANA Cloud private edition.
  • New Implementation (Greenfield approach): All deployment methods can be implemented using the Greenfield approach. 
  • Selective Data Transition (hybrid approach): Deployments that allow selective data transition are all on-premise deployments and also include S/4HANA Cloud private edition.

How often do you want upgrades?

SAP follows a cloud-first strategy. This means that new software features are developed for the regular releases of SAP S/4HANA Cloud (public). Throughout the year, there will be multiple software releases. All other available deployment options operate on the same software “stack” with the same release strategy.

For this stack, the vast majority of software updates come in, in one main release per year. Most updated in SAP S/4HANA Cloud—but not all of them—make it to this “stack.”

What are the differences between S/4HANA Cloud vs. S/4HANA On-Premise?

Only SAP offers S/4HANA Cloud Single Tenant, a Software-as-a-Service. This means that SAP hosts and runs the OS, SAP software, and upgrades, using SAP Best Practices. S/4HANA On-Premise, on the other hand, is managed by the customer or by a third party like Azure, AWS, or Google that offers IAAS (Infrastructure-as-a-Service).

Even though they may not use SAP Best Practices, these providers look after networking, storage, servers, and virtualization, while the customer manages the OS (including upgrades). 

Can you combine deployment methods?

SAP S/4HANA Cloud extended edition is available with infrastructure provided by third-party partners and remains a SAAS offering with SAP. S/4HANA Cloud (private), however, is only available with the SAP (HEC) infrastructure. 

Conclusion

Understanding these deployment options is necessary during the SAP S/4HANA migration process, as whichever one you choose will be determined by your enterprise needs, size, and existing infrastructure.

Knowing the difference between each deployment prior to migration will also help any organization keep track of the future product name changes, product upgrades, and other important SAP updates.

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Answers to frequently asked questions on SAP S/4HANA deployment options

What are the three SAP's S/4HANA cloud deployment options?

SAP customers have three three cloud deployment options to choose from:

  1. SAP S/4HANA Cloud provides a full cloud approach, resides on the provider's server, and is fully operated and maintained by SAP.
  2. SAP S/4HANA Cloud extended edition has the same advantages as S/4HANA Cloud with more flexibility and control.
  3. SAP S/4HANA Cloud private edition provides cloud services that are not shared with other organizations.

What is the latest version of SAP S/4HANA?

The latest SAP On-Premise edition was released in October 2021, called SAP S/4HANA 2021.

The latest SAP S/4HANA Cloud edition was released in October 2021, called S/4HANA Cloud 2111 but will soon be replaced by a new release in February 2022, called SAP S/4HANA Cloud 2202.

What is shared between all deployment options for SAP's S/4HANA cloud and on-premise?

All SAP S/4HANA deployment options, either cloud or on-premise, share the same code line, simplified data model, and consistent user experience. Both options run on a faster HANA in-memory database, bring new business capabilities, and offer to adopt innovation along with simplification of the IT landscape.

Learn more about

Other Topics

SAP S/4HANA Cloud What advantages does SAP S/4HANA Cloud have compared to the on-premise ERP system and how does a successful and fast migration work? SAP S/4HANA Migration Migration to SAP S/4HANA requires planning in advance, knowing key migration approaches, and best practices that will make the transition a smooth process. SAP S/4HANA What advantages does the ERP system SAP S/4HANA offer and what other editions does it include? You can find out more here. Greenfield vs. Brownfield Implementation Compare Greenfield vs. Brownfield scenario and choose one or a hybrid that best suits your needs, based on your company size, state of your data, and future business needs.

FAQs

What is shared between all deployment options for SAP's 4 HANA cloud on-premise )? ›

All SAP S/4HANA deployment options, either cloud or on-premise, share the same code line, simplified data model, and consistent user experience. Both options run on a faster HANA in-memory database, bring new business capabilities, and offer to adopt innovation along with simplification of the IT landscape.

What is the difference between S 4HANA on-premise and cloud? ›

The on-premise version is slower as it sets up a new environment for the user. The Cloud edition is faster as it uses a ready-made and pre-tested platform. Since the On-premise edition is for enterprises, it is more costly. Cloud version is comparatively lower in cost.

What are the three SAP's 4HANA cloud deployment options? ›

SAP customers primarily have three cloud deployment options:
  • The public cloud (the DIY option) The public cloud is essentially the DIY option for SAP cloud deployment options. ...
  • SAP-managed: HANA Enterprise Cloud (HEC) (the cookie-cutter option) ...
  • Managed private cloud (the tailored suit option)
21 Sept 2022

Which is the best choice for a customer's S 4HANA deployment? ›

While HEC offers a good framework for managing an S/4HANA environment, some users may prefer to use a different set of tools and processes to manage the environment themselves or select a third-party provider to do so. The customer-managed version of S/4HANA Any Premise is likely a good option for them.

What are the 4 cloud deployment types? ›

NIST defines four cloud deployment models: public clouds, private clouds, community clouds, and hybrid clouds. A cloud deployment model is defined according to where the infrastructure for the deployment resides and who has control over that infrastructure.

What are the benefits of both the options on premises and cloud based? ›

Overall, on-premise solutions offer more security in the area of data protection, but require a significantly higher effort, while cloud software offers maximum flexibility for you and your employees through the SaaS principle.

Why choose on-premise is better than cloud? ›

On-premise software requires that an enterprise purchases a license or a copy of the software to use it. Because the software itself is licensed and the entire instance of software resides within an organization's premises, there is generally greater protection than with a cloud computing infrastructure.

What is the difference between cloud based and on-premises systems? ›

Cloud vs On-Premise Software Comparison. Essentially, the fundamental difference between cloud vs on-premise software is where it resides. On-premise software is installed locally, on your business' computers and servers, where cloud software is hosted on the vendor's server and accessed via a web browser.

What is more advantageous SAP on cloud or SAP on-premise? ›

The benefits of the SAP cloud platform are numerous, including faster time to value, because there is no need to make the large up-front time investment required for On-Premise, and increased agility, because you can deploy, scale up and customize your cloud instance with a few clicks.

What are the three 3 main cloud computing deployment models? ›

There are also three main types of cloud computing services: Infrastructure-as-a-Service (IaaS), Platforms-as-a-Service (PaaS), and Software-as-a-Service (SaaS).

What are the 3 deployment models? ›

2.1 Cloud computing infrastructure

In cloud computing, there are four deployment models (i.e., private cloud, public cloud, community cloud, and hybrid cloud) and three architectures (i.e., Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS)) (Mell and Grance, 2011).

What are the 3 cloud delivery models? ›

IaaS, PaaS and SaaS are the three most popular types of cloud service offerings. (They are sometimes referred to as cloud service models or cloud computing service models.)

Which deployment option is good for no maintenance? ›

A public cloud deployment model offers companies the ability to consume highly available and scalable services hosted on shared infrastructure. These services are on-demand, maintenance free, and low cost.

What are the reason that clients will have to go for on-premise deployment of S 4 Hana? ›

SAP S/4HANA Cloud offers the power of an on-premise solution in that it can be the core of an organization's technology platform while the nature of cloud deployment allows it to benefit from the constant innovation SAP delivers through the quarterly upgrade cycle.

What are the benefits of public cloud deployments of SAP's 4HANA? ›

The Advantages: Availability, Flexibility, Scalability, and Services. First, there are IT infrastructural arguments in favor of operations in the public cloud. As the central hub for all ERP processes: S/4HANA can be scaled easily and quickly in the public cloud as required.

What are different types of deployments? ›

Various Types of Deployment Strategies
  • Blue/Green Deployment. In this type of deployment strategy, the new version of the software runs alongside the old version. ...
  • Canary Deployment. ...
  • Recreate Deployment. ...
  • Ramped Deployment. ...
  • Shadow Deployment. ...
  • A/B Testing Deployment.
3 May 2022

What's the difference between cloud deployment and cloud services? ›

A cloud deployment model defines the cloud services you are consuming and the responsibility model for who manages them. It defines your cloud architecture, scalability of your computing resources, what you can change, the services provided to you, and how much of the build you own.

Which cloud deployment is the most common? ›

The public cloud deployment model is the most widely understood out of the four. Chances are you use some sort of public cloud product already. Some of the most common examples of public cloud model offerings are: SaaS – Gmail, Microsoft 365, Dropbox, etc…

How cloud deployments differ from on-Prem deployments? ›

Cloud deployment frees you from worrying about server hardware, infrastructure, and maintenance costs. Building on-prem infrastructure requires more upfront capital. There are also costs for hardware maintenance, power consumption, software updates, and IT staff to keep things running smoothly.

What is a benefit of deploying an on-premises infrastructure versus a cloud infrastructure deployment? ›

The major difference between on-premise and cloud computing is that on-premise infrastructure allows you to store data and run services locally. In contrast, cloud computing must be accessed over the internet, with your data and services saved on the service provider's servers.

What are the main give 3 advantages of using choosing cloud based solutions over the desktop applications? ›

Benefits of cloud computing
  • Reduced IT costs. Moving to cloud computing may reduce the cost of managing and maintaining your IT systems. ...
  • Scalability. ...
  • Business continuity. ...
  • Collaboration efficiency. ...
  • Flexibility of work practices. ...
  • Access to automatic updates. ...
  • Also consider...
11 May 2022

What is the disadvantage of on-premise? ›

Maintenance & Support

The most significant disadvantage from a maintenance and support perspective is that on-premise automation relies on internal resources for upgrades and general support and maintenance of the software's infrastructure. These high dependencies limit agility and performance.

Why is cloud cheaper than on Prem? ›

One of the things that makes the cloud less expensive than on-premise hardware is that you don't have to replace or repair physical hardware infrastructure. If you use on-premise, your hardware may need to be replaced every few years. As technology evolves, businesses must upgrade to remain competitive.

Which is more secure on-premise or cloud? ›

A huge security advantage the cloud has over on-premises servers and infrastructure is segmentation from user workstations. The most common way attackers get into networks is through phishing and email-borne threats. The attacks almost always enter through user workstations.

Which benefit is offered by a cloud infrastructure deployment but is lacking in an on-premises deployment? ›

The cloud offers scalability, flexibility, and speed that traditional on-premises deployments often lack.

Which advantage does cloud computing have compared with on-premises deployment? ›

Scalability: Cloud technologies offer greater flexibility as these can be scaled up on demand as per the companies requirements. Costs: Since the need to maintain on premise servers is eliminated, the cost of power and other resources are not present.

What are the advantages of using cloud storage instead of on-premise storage? ›

On-premises storage can be costly but offers the highest level of security, whereas cloud storage is typically more affordable and can be accessed from anywhere. Hybrid storage is a great option for organizations that want the security of on-prem storage with the flexibility of cloud storage.

Is SAP HANA cloud based or on premise? ›

If you are already an SAP HANA customer, you are familiar with the power of SAP HANA and its benefits as an on-premise data management platform.

Which is better on premise or cloud ERP? ›

Cloud ERP providers offer superior performance, greater accessibility, and improved security. They offer industry-standard data security certifications that comply with PCI DSS and SAS 70 standards. In contrast, their security, data recovery, and backup procedures are more affordable than on-premise ERP solutions.

How do I know if SAP is on premise or cloud? ›

ABAP programmers can call IS_S4H static method in their custom code to learn if current system is S/4HANA or not and if response is true then programmers can call method IS_S4H_CLOUD or IS_S4H_ON_PREMISE to identify if SAP system is on cloud or is on premise.

Which is the best deployment model and why? ›

The public cloud deployment model is the most popular one. In a public cloud deployment model, you do not own any hardware, since all the resources are provided by the cloud service provider. It is available for the general public and the resources can be used by all.

What are the 3 types of cloud computing with examples? ›

Types of Cloud Computing
  • Infrastructure as a Service (IaaS) ...
  • Platform as a Service (PaaS) ...
  • Software as a Service (SaaS)

What are the differences between various cloud deployment models? ›

There's just one difference - it allows access to only a specific set of users who share common objectives and use cases. This type of deployment model of cloud computing is managed and hosted internally or by a third-party vendor. However, you can also choose a combination of all three.

What is the best cloud deployment model? ›

The Comparison of Top Cloud Deployment Models
PublicHybrid
Data controlLittle to noneComparatively high
ReliabilityLowHigh
Scalability and flexibilityHighHigh
Cost-effectivenessThe cheapestCheaper than a private model but more costly than a public one
3 more rows
8 Apr 2020

What are the different deployment environments? ›

The major deployment environments used in software development are production, staging, UAT, development, and preview environments (or in other words, ephemeral environments").

What are cloud deployments? ›

Cloud deployment is the process of deploying an application through one or more hosting models—software as a service (SaaS), platform as a service (PaaS) and/or infrastructure as a service (IaaS)—that leverage the cloud. This includes architecting, planning, implementing and operating workloads on cloud.

Which one is not a cloud deployment model? ›

The correct option is C) Compound Cloud. The Compound Cloud is not a deployment model in cloud computing.

What are the 3 basic components of cloud computing? ›

Cloud computing is a general term for anything that involves delivering hosted services over the internet. These services are divided into three main categories or types of cloud computing: infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS).

Which are the three deployment options of SAP's 4HANA? ›

SAP S/4HANA Deployment Options
  • SAP S/4HANA Cloud.
  • SAP S/4HANA Cloud Extended Edition.
  • SAP S/4HANA Cloud Private Edition.
  • SAP S/4HANA On-Premise managed by SAP (HEC)
  • SAP S/4HANA On-Premise: On-Premise or managed by cloud provider Hyperscalers.

What is the best deployment strategy? ›

The most common strategy is to use a blue-green deployment. The new version (the blue version) is brought up for testing and evaluation, while the users still use the stable version (the green version). When ready, the users are switched to the blue version.

Which deployment mode is suitable for most deployments? ›

Digital Vaccine contain deployment settings for filters that address specific types of deployments. Provides a balance between high quality security and appliance performance, and is suitable for most deployments.

What are the benefits of cloud deployment models versus on-premises models? ›

Why is cloud better than on-premise? Dubbed better than on-premise due to its flexibility, reliability and security, cloud removes the hassle of maintaining and updating systems, allowing you to invest your time, money and resources into fulfilling your core business strategies.

What are the 3 clouds offered by SAP? ›

SAP Customer Experience is a customer experience suite of solutions that consists of five cloud applications: SAP Commerce Cloud, SAP Customer Data Cloud, SAP Marketing Cloud, SAP Sales Cloud, and SAP Service Cloud.

What do S 4HANA cloud and S 4HANA on-premise has in common? ›

SAP S/4HANA on-premise edition is an internal platform, located on your servers, maintained by your company. SAP upgrades are released annually but have to be implemented and tested by your team. SAP S/4HANA Cloud edition is Software as a Service (SaaS) hosted on SAP's servers and is maintained by SAP.

What is different between on cloud and on-premise select the most correct? ›

Essentially, the fundamental difference between cloud vs on-premise software is where it resides. On-premise software is installed locally, on your business' computers and servers, where cloud software is hosted on the vendor's server and accessed via a web browser.

What are the different connectors available to connect SAP cloud platform integration and on-premise system? ›

Integration: Integrate your on-premise systems with cloud applications: Using Cloud Integration, part of SAP Integration Suite, we can create integrations between cloud applications and many types of internal systems that communicate through different protocols, e.g. OData, HTTP, LDAP, Mail, SFTP.

What is on-premise deployment in cloud? ›

On-premise deployment is when data is stored on your own servers, and you install and manage the software. An on-premise software infrastructure means that all the software is stored on your hardware on your company's premises. This requires your company's IT department to maintain the infrastructure on their own.

What is an advantage of selecting the public cloud edition of SAP's 4HANA instead of an on-premise SAP's 4HANA solution? ›

SAP S/4HANA Cloud edition offers higher quality performance, faster upgrade cycles (quarterly, unlike annually for on-premise version) at the cost of greater agility and lower flexibility in customization.

How do you decide between on-premise and cloud? ›

On-premise software requires a much larger investment up front due to the required hardware. For small to medium-sized businesses looking for a low barrier of entry and a low-risk investment, cloud-based software is usually a more viable option.

How do you integrate between a cloud and an on-premise Order application? ›

How to Implement Hybrid Cloud and Seamlessly Integrate Your On-Premises Apps
  1. Understand Your API Options. ...
  2. Factor the Environment Correctly with Workload Data. ...
  3. Integrate and Automate User Access. ...
  4. Support Real-Time Multi-Sourcing with Bidirectional Integration. ...
  5. Test and Optimize Process Performance.
4 Oct 2017

Which component connects SAP Cloud Platform with on-premise systems? ›

The Cloud Connector serves as a link between SAP Business Technology Platform applications and on-premise systems.

What are different types of integration available in SAP? ›

An integration strategy empowers organizations to connect systems, data, and business processes. There are four types of integrations available to organizations: data, application, business process, and presentation.

What are the three types of cloud deployment? ›

There are also three main types of cloud computing services: Infrastructure-as-a-Service (IaaS), Platforms-as-a-Service (PaaS), and Software-as-a-Service (SaaS). Choosing a cloud type or cloud service is a unique decision.

What are the advantages and disadvantages of cloud vs on-premise? ›

With on-premises storage, a malfunction in the system or a compromised system held for ransom can cause you to lose your data permanently. While a cloud-based system will keep your data backed up, on-premises storage systems have all the data stored on an internal server, meaning you assume a greater amount of risk.

What is the difference between private cloud and on-premise? ›

While privately hosted clouds are located at an offshore location, an on-premise cloud will provide you with the option to host a cloud environment internally. Such cloud solutions require an internal data center to host your cloud server.

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