What are cloud-native extensions in the context of SAP BTP?

Cloud-native extensions are custom applications built specifically to run on BTP's cloud infrastructure — designed from the outset for elastic scaling, containerized/microservice deployment, and integration via APIs and events, rather than being built as monolithic add-ons tightly coupled to a specific on-premise system's internal architecture.

flowchart LR
    A[Cloud-native extension] --> B[Scales independently of the core system]
    A --> C[Deployed as containers/microservices on Kyma/Cloud Foundry]
    A --> D[Integrates via APIs/events, not direct database access]

The architectural payoff is that these extensions can be updated, scaled, and even replaced independently of the S/4HANA core's own release cycle — a genuine decoupling that lets extension development move at its own pace rather than being constrained by the core system's upgrade schedule, which is a significant shift from the classical model where custom code lived inside the same system and shared its lifecycle entirely.