Knowledge@Wharton has an interview with Henning Kagermann, CEO of SAP:
Knowledge@Wharton: For many years your products were primarily based on a three-tier client/server architecture. Now you are moving into Web Services. But various Web Services architectures have different goals. There is the ability to make software applications more modular, more easily configurable by the customer and more flexible for you to develop. But there’s also this notion of “on demand,” hosted “software as a service,” where the customer uses only a web browser. Are you doing both of those? Is one more important than the other?
Kagermann: They both are interconnected, but the first one is more important — that you have an architecture which is modular enough to “plug and play,” to use existing services to compose different innovative business processes. It means that you can innovate your process and be quicker than your competitor. Or you can better integrate into the process of your customer. That is the number 1 priority, because it gives us a competitive advantage.
The second one is more about how you deploy software and how you buy software. And, yes, with this architecture we will have different deployment options for having software “on-premise,” like today, but also in a hosted, on-demand mode. But we have one difference to traditional on-demand models. The traditional approach to “software as a service” is an ASP [application service provider] “hosted” model. So it’s one size fits all.