SAP Business One in the cloud or on premise: how to choose your hosting

Choosing SAP Business One cloud or an on-site installation is not an IT detail. It decides who looks after the servers, how fast you receive updates, how much freedom you have to adapt the system and where your accounting, payroll and customer records physically sit. For a UK small or mid-sized company, it also touches Making Tax Digital readiness, payroll deadlines and your obligations under UK GDPR.

SAP presents Business One as a product with a large installed base: more than 83,000 customers and 1.2 million users, delivered through 850 partners, in more than 170 countries. That partner model is the key to understanding hosting. Most of the time, the company that implements your system is also the company that hosts it, or at least arranges the hosting.

This page explains the main ways to host the software, what really changes between them, and how to decide. For the wider picture of the product, start with the SAP Business One overview.

SAP Business One hosting: the main options

In plain terms, there are three ways to run the software. The terms are used loosely in the market, so always ask a supplier to describe precisely what it means.

Partner-hosted SAP Business One cloud

This is the model most buyers mean when they search for SAP Business One SaaS. In SAP's partner programme, the partner orders SAP Business One Cloud subscriptions per end user from SAP, hosts them in a data centre and offers the subscription service in its own name, at its own risk and at its own prices. In other words, the commercial relationship, the service levels and the price are largely set by your integrator, not by SAP.

That has practical consequences. Two partners can offer the same software at different monthly prices with very different support, backup and security arrangements. You compare the service, not just the licence.

Note that the published terms we rely on come from SAP's regional partner agreements and are dated. Treat them as an illustration of the model, and ask your UK integrator to show you the terms that apply to your contract today.

On-premise SAP Business One

With SAP Business One on premise, you install the software on servers you own or rent, and your team or your IT supplier keeps them running. You manage the operating system, the database, the backups, the security patches and the upgrades, in agreement with your integrator.

The attraction is control. You decide when to upgrade, how the network is segmented, which tools connect to the database and where the backups go. The cost is responsibility: hardware renewal, resilience, remote access for staff working from home, and the skills to run all of it.

Your own environment on a public cloud

A third route sits between the two. SAP documents that Business One can be deployed in the Amazon AWS, Microsoft Azure and Google Cloud accounts of a partner, a customer or a developer through the SAP Cloud Appliance Library, without a separate subscription bought on the SAP Store. Be careful here: SAP describes this for tests, evaluations, development and demonstrations. It is a way to try the product, not a production hosting contract.

The same documentation lists regions such as Paris for France, Zurich for Switzerland and Frankfurt for Germany. These are examples of how the library is offered, not UK commitments, so do not assume a UK region for a given tool. For production, your integrator will design a proper environment and tell you where it runs.

Two database versions, whatever the hosting

Whatever you choose, SAP Business One comes in two versions according to the database: one on Microsoft SQL Server and one for SAP HANA. SAP publishes its localised demonstration databases for both platforms. This matters for hosting because the database drives sizing, licensing and the expertise needed. Settle it during scoping, alongside the hosting question. The versions and editions page goes deeper.

What changes between cloud and on premise

Updates and upgrades

In a partner-hosted service, the partner usually schedules upgrades, which suits firms without an IT team. The trade-off is that your upgrade date may follow the partner's calendar rather than your own. A finance director closing a quarter or running a VAT return does not want a surprise change that week, so ask how upgrade windows are agreed.

On premise, you choose the date, but you must test your add-ons and integrations before you move.

Customisation and add-ons

This is where hosting can limit you. SAP's Run Business One Cloud conditions state that the partner must not grant end users any configuration or development rights. In practice, your integrator makes the changes, which can be perfectly fine if the process is quick and documented. If your business relies on frequent adjustments, custom reports or specialist add-ons, discuss it before signing. The ecosystem is wide, with more than 500 industry and country extensions according to SAP, but each one must be supported in the hosted environment you choose. See customising SAP Business One for the options.

Integrations

Connections to your bank feed, e-commerce platform, courier systems or payroll provider behave differently when the ERP is not on your network. A hosted system needs secure, supported connection methods, while an on-site system may allow direct database-level links that a partner would refuse to open. Review each interface with your integrator, starting from the integrations page.

Cost

Cloud shifts spending from capital to running costs: a recurring subscription replaces servers, licences for the underlying software and part of the IT time. On premise means buying or renting infrastructure and paying for the skills to run it. Neither is cheaper in every case. Compare the total over the period you expect to keep the system, including backups, disaster recovery, remote access, support and the cost of future upgrades. Our pricing guide lists the elements to include, and the general ERP cost guide shows how to build a fair comparison.

Data location and UK data protection

When a partner hosts your ERP, it processes personal data on your behalf: employee records, payroll details, customer contacts. Under UK GDPR and the Data Protection Act 2018, you remain responsible as the controller, and the hosting partner acts as a processor. That has concrete implications for your contract.

• Data centre location. SAP's partner cloud conditions require the hosted Business One system to be physically stored and used in one data centre, and that the data centre is neither owned nor operated by the end user. Ask which data centre it is, in which country, and who operates it.
• Transfers outside the UK. If the service, its support team or a sub-processor sits outside the UK, ask how the transfer is lawfully covered.
• Processor terms. Your agreement should set out what the host may do with the data, how incidents are reported and what happens when the contract ends.
• Exit. Make sure you can retrieve a full copy of your company database in a usable format, with a clear timetable and cost.

Your accountant and your data protection lead should read these clauses with you. If you operate in several UK nations, the same rules apply across England, Scotland, Wales and Northern Ireland, although your integrator's nearest team may differ; the regions pages can help you find local coverage.

Backups, security and continuity

Hosting is only as good as its recovery. Ask for the answers in writing, not in a sales call.

1. How often is the company database backed up, and where are the copies stored?
2. Is at least one copy kept separate from the primary data centre?
3. Has a restore ever been tested with a real company database, and when?
4. Who has administrator access, and how is it logged?
5. What happens during an outage: who tells you, and what do you receive in compensation?

With an on-site system, these questions are yours to answer, and many smaller firms discover during an incident that their backups were never tested. With a partner, the questions belong in the service agreement and in the support and maintenance arrangements.

Finance teams should also think about statutory deadlines. Month-end, VAT returns under Making Tax Digital and payroll submissions to HMRC all depend on the system being available and on the right data being in it. Read our guide to Making Tax Digital and your ERP and the note on payroll and RTI before you decide how much downtime you can tolerate.

Trial first, then decide

If you are still evaluating, SAP allows a trial company to be created without installing a licence file since version 8.8. It can be used for 31 consecutive days only, so prepare your test scenarios in advance: a sales order to invoice, a purchase to goods receipt, a month-end close. A short, well-planned trial tells you more than a long, unfocused one. Your integrator will usually run a demonstration on its own environment as well.

How to choose

Rather than asking which option is best, ask which constraints matter most to your business.

• Choose a partner-hosted cloud service if you have no in-house IT team, many users who work remotely, and a preference for predictable running costs.
• Choose on premise if you already manage a secure server estate, need tight control over upgrade timing or have integrations that require direct access to the database.
• Reconsider your plan if your main reason for choosing a model is a headline price. Check support hours, backup tests, exit terms and customisation rights first.

A few questions help in every case:

Where hosting fits in the project

Hosting should be decided at the start of the project, not at go-live. It affects the plan, the data migration approach, the training environment and the way you test. Read about SAP Business One implementation to see where it fits, and about choosing a partner to prepare your questions. If your company runs another system today, the migration page explains how data is brought across.

ERP Integrator is a free service that puts you in touch with a certified integrator suited to your project. We do not host or implement anything ourselves: you describe your needs, including your preference for cloud or on-site hosting, and the integrators you meet explain what they can offer. How it works sets out the steps.

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