Decision Framework
Comparison
Licensing
Architecture
Extension Decision Framework
A practical guide for choosing the right extension pattern — comparing On-Premise, Private Cloud, and Public Cloud extensibility models, with a complete licensing matrix for extension-related BTP services.
Extension Decision Flowchart
Extension Method Decision Flow
Rendering diagram…
Executive Summary
Choosing the wrong extension pattern is the most common mistake in S/4HANA projects. Tier 2 extensions (in-system) are faster to implement for simple requirements but add system complexity. Tier 3 extensions (side-by-side on BTP) are more decoupled but require BTP infrastructure costs and team skills. The decision framework above provides a structured approach to make the right choice every time.
On-Premise vs Private Cloud vs Public Cloud
| Dimension | On-Premise | PCE (RISE) | Public Cloud |
|---|---|---|---|
| ABAP developer access | ✅ Full | ✅ ABAP Cloud only | ❌ Not available |
| Key User tools | ✅ | ✅ | ✅ |
| Custom BAdI implementation | ✅ | ✅ ABAP Cloud only | ⚠️ Limited via Key User |
| RAP custom BOs | ✅ | ✅ | ❌ Use standard CBOs |
| SAP modifications | ⚠️ Possible (strongly discouraged) | ❌ Forbidden | ❌ Not possible |
| Clean Core mandatory | ⚠️ Recommended | ✅ Contractual | ✅ Enforced |
| Upgrade cadence | ~2 years (customer managed) | Annual (SAP-managed) | Quarterly (automatic) |
| Upgrade effort (clean) | 4-8 weeks | 2-4 weeks | Near-zero |
| BTP connectivity | Cloud Connector | Private Link (recommended) | Communication Arrangement |
| Cloud ALM | Optional (recommended) | Mandatory | Mandatory |
| Side-by-side CAP | ✅ | ✅ | ✅ |
| SAP Build Apps | ✅ | ✅ | ✅ |
| Integration Suite | ✅ | ✅ | ✅ |
| Data sovereignty | Full customer control | Customer region on hyperscaler | SAP-defined regions |
| UAE data residency | ✅ Customer DC in UAE | ✅ AWS ae1 possible | ⚠️ Limited |
| Infra managed by | Customer | SAP | SAP |
| License model | Perpetual + maintenance | RISE subscription | RISE subscription |
| Cost model | CapEx + OpEx | OpEx (subscription) | OpEx (subscription, lower entry) |
Extension Licensing Matrix — BTP Services
| Service | Required For | PAYG | CPEA | Subscription | Typical Cost |
|---|---|---|---|---|---|
| Cloud Foundry Runtime | CAP side-by-side (OP/PCE) | ✅ | ✅ | — | CPEA-included |
| Kyma Runtime | Container-based extensions | ✅ | ✅ | — | CPEA credits |
| SAP HANA Cloud | CAP extension data storage | ✅ | ✅ | — | ~$1K/month/30GB |
| Connectivity Service | On-premise via Cloud Connector | ✅ (free) | ✅ (free) | — | Free |
| Destination Service | Connection config | ✅ (free) | ✅ (free) | — | Free |
| Private Link | PCE Private Link connectivity | ✅ | ✅ | — | ~$200/month |
| XSUAA | App authentication | ✅ (free) | ✅ (free) | — | Free |
| SAP Build Apps | Low-code front-ends | ✅ trial | ✅ | ✅ per user | ~$50/user/month |
| Build Process Automation | Workflow extensions | ✅ | ✅ | — | CPEA credits |
| Integration Suite | A2A / B2B integrations | — | ✅ | ✅ enterprise | ~$50K/year enterprise |
| SAP BAS | ABAP Cloud + CAP development | ✅ (free tier) | ✅ | — | Free tier sufficient |
| Cloud ALM | Change management (mandatory RISE) | — | — | ✅ included | Included with RISE |
Extension Pattern Quick-Reference
| Business Requirement | Recommended Pattern | Tier | Deployment |
|---|---|---|---|
| Add a field to a standard document | Custom Field (F1481) | Tier 2 | S/4HANA |
| Validate field values on save | Custom Field → Logic tab | Tier 2 | S/4HANA |
| Route approval based on amount | Business Rule | Tier 2 | S/4HANA |
| Create a new simple transactional object | Custom Business Object (F1731) | Tier 2 | S/4HANA |
| Inject pricing logic | Released BAdI (SD_COND_ACCESS) | Tier 2 | S/4HANA |
| Build new OData V4 service | RAP Business Object | Tier 2 | S/4HANA |
| Complex app with own database | CAP + HANA Cloud | Tier 3 | BTP |
| Low-code mobile/web front-end | SAP Build Apps | Tier 3 | BTP |
| Process workflow with approvals | Build Process Automation | Tier 3 | BTP |
| Integration with external system | Integration Suite iFlow | Tier 3 | BTP |
| AI-powered feature | CAP + AI Core + Gen AI Hub | Tier 3 | BTP |
| Multi-system mashup (S4+Ariba+SF) | CAP + Integration Suite | Tier 3 | BTP |
Red Flags — When NOT to Build
Stop Before You Start
Before any extension design, validate that the requirement is actually an extension and not a configuration task, a standard SAP process, or a retired legacy need.If the requirement exists in standard SAP — it is a configuration task, not an extension
If it requires modifying SAP standard code — escalate to SAP Product Management for a standard enhancement request
If it can be solved by SAP Build Apps in 2 days — do not build a full CAP application
If the requirement is "replicate this legacy Z-program from ECC" — re-evaluate whether the program is still needed at all
Enterprise Example — DEWA Extension Decision Register (June 2025)
- Extension decisions made (YTD)
- 47
- Resolved by Key User tools
- 19 (Custom Fields, CBOs, Rules)
- Resolved by released BAdIs
- 14
- Resolved by CAP side-by-side (BTP)
- 11
- Rejected — standard SAP covers this
- 3
- SAP standard modifications
- 0
Best Practices
Run the framework before every extension design review
The decision framework should be a mandatory agenda item in every extension design review meeting — not an afterthought.
Document every decision in Cloud ALM
Record the chosen tier and justification in Cloud ALM for every extension. Creates an auditable extension register.
Involve a Clean Core architect in all Tier 3 decisions
Tier 3 BTP extensions carry infrastructure costs and architectural complexity. Senior oversight prevents over-engineering.
Re-evaluate Tier 3 extensions annually
SAP continuously adds standard functionality. An extension built 18 months ago may now be replaceable with a standard feature.
Benchmark: >60% Tier 3 means training gap
If more than 60% of your extensions are Tier 3 (BTP), investigate whether Key User training is the real investment needed.
Common Pitfalls
Tier 3 for requirements that fit a Key User tool
Over-engineering is the most common mistake. A Custom Field + Business Rule solves 40% of typical extension requirements with zero BTP cost.
Tier 2 BAdI when the requirement needs own database
Under-engineering is the opposite problem. If the extension needs persistent data outside S/4HANA's tables, Tier 3 (CAP + HANA Cloud) is the right choice.
Not considering BTP service costs in design
HANA Cloud at ~$1K/month per 30GB adds up across many extensions. Cost modelling should happen at design time, not at budget review.
Extension decisions without a Clean Core architect
Junior teams default to "CAP for everything." Without senior oversight, 80% of extensions end up as Tier 3 regardless of complexity.
Security Considerations
Tier Determines Security Model
Extension tier has direct security implications. Tier 2 inherits S/4HANA's authorisation model. Tier 3 (BTP) requires independent XSUAA security design.Document security model for each extension in the Extension Decision Register
Conduct security review for all Tier 3 extensions before production go-live
Tier 2 BAdI implementations must respect existing AUTHORITY-CHECK logic — never bypass
References
SAP Clean Core Extensibility Guide
Core concepts and extensibility principles for ABAP Cloud and clean core
Extension Decision Support
SAP's clean core product page with extension decision guidance
BTP Pricing — Discovery Center
Full BTP service catalog with pricing for all extension-related services
SAP Developer Center — Clean Core
Tutorials, missions, and hands-on content for clean core development