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In search of new markets and customers, SAP AG is developing a new breed of hosted, on-demand products and looking at ways to make its complex business software easier to use.

Vishal Sikka, SAP's chief software architect, talked about one of the company's first on-demand offerings, its software-as-a-service philosophy, search functionalities in enterprise software, Web service standards and more in an interview.

The interview comes on the eve the Cebit trade show next week, where customers will have an opportunity to see a brief 15-minute demonstration of SAP's planned new suite of hosted, on-demand midmarket applications, known internally as A1S. The Walldorf, Germany, vendor hopes to launch the product later this year.

IDGNS: What is so different about designing an on-demand product, such as your new CRM offering?

Sikka: There are a few things that are fundamentally interesting. One is the better economics you can offer by hosting. This is more a function of how much you can leverage the underlying stack technologies -- the different hardware -- below the application layer. Another aspect is the time to get up and running. This a matter of how closely you can get the software to reflect the way customers do their business. A CRM on-demand solution for an insurance company in the U.S. is very different from a CRM on-demand solution for a company in Thailand.

IDGNS: What specifically is so different in the design of an on-demand product? The level of prefiguration, number of functions, ease of use?

Sikka: Exactly. What you see in our CRM on-demand offering is a significantly easier product to use through ways such as preconfiguration, fewer functions and taking massive advantage of underlying infrastructure. You'll see us do things that go far beyond Salesforce.com. You'll see us starting to work with some of the "cloud" platforms like Amazon and Google. We haven't yet announced any relationships but you'll start to see us doing things of this sort.

IDGNS: What role will the software-as-service model play in SAP software across the board?

Sikka: We look at it as another deployment option. When you look at SAP, the breadth of functionalities that we offer across our customers, industries and nationalities is very vast. One size doesn't fit all. We're using a wide variety of deployment options. For a certain class of processes, it is advantageous to offer that software as a service. For other processes, it may be better to offer our software as an on-premise model.

IDGNS: Are there any limitations in designing software-as-a-service products?

Sikka: You have to look at the trade-off between the ability to customize and share data.

IDGNS: Will your vertical applications disappear as you move toward intelligent xApps?

Sikka: No. Our xApps augment vertical applications. They give companies the ability to build the last mile; they're more narrowly defined applications that tend to leverage existing applications.

IDGNS: What about your proprietary programming language ABAP? Will it fade away soon?

Sikka: I want to take this opportunity to demystify something. In the age of the enterprise service-oriented architecture, the whole programming-language debate is a very big red herring. Programming languages are an area of constant innovation. Interestingly, what we find in our world is that applications live a lot longer than programming languages do. For instance, Sabre, the application used for airline reservations, is still written in Cobol, even though the last compiler was written over 20 years ago.

IDGNS: So ABAP is here to stay?

Sikka: You won't see ABAP going away anytime soon. Why? Because a lot of the application code that our customers use is in ABAP. It has a very, very reliable, high-performance underlying platform that is far better than anything we have seen in the market. You'll see ABAP for a long time, but you'll also see more Java because certain applications are best written in Java. And you'll see us using other languages. We do a lot of work in Microsoft programming models. Our approach toward programming languages is to make the programming language distinction irrelevant.

IDGNS: How about enterprise search? Do you have any new developments in the pipeline?

Sikka: This is an ongoing development. What you have seen from us so far is early thinking in this area. A lot more is to come. You will see enterprise search evolving around different fronts, such as contextual searching. We own the application so we know who the user is, what the user's role is and what the user is authorized to see.

IDGNS: What about the cooperation between Microsoft and SAP? What are next steps with Duet and what are the challenges?

Sikka: The challenges are always there when you bring two big companies together, like Microsoft and SAP. We have different development philosophies. Microsoft is much more volume oriented and more consumer focused. But we have a great relationship with them. The Duet product is an example. Over time, you'll see Duet expanding in many interesting ways to cover a much wider set of scenarios. You'll see us bringing it closer to our xApp composition platform, so it will be much easier for customers to add on to it. You'll see us working even more closely with Microsoft moving ahead.

IDGNS: What about Muse. Any new developments on the user interface front?

Sikka: This is an ongoing effort toward rethinking our UI approach. To understand the overall user experience and direction, you have to step back and look at the context in which customers use SAP applications. This is very broad. There are people who are on the factory floor. There are truck drivers, mobile phone users, notebook users and desktop users. We're reaching out to end-users in whatever context they're in. Duet is example. A lot of work happens inside Microsoft Office. Of course, a big area where SAP users -- whether a payroll clerk or an accounting manager -- spend a lot of time is in front of a SAP screen. We want to expose those users to a rich client. This is what Muse is.

IDGNS: How are your efforts moving ahead to create a developer community as passionate as the one driving the development of open-source software?

Sikka: Having a passionate developer community is something we're extremely interested in. The SAP ecosystem has been around for a long time. Thousands of companies have developed add-ons and we're encouraging this. Beyond that, we're extremely interested in developing efficiencies. We have distributed labs across the world. We have done a lot of thinking in how to optimize the benefits you get from a distributed, decentralized development network like the one we have.

IDGNS: Do different regions bring different expertise to the picture?

Sikka: Yes, across the board. We see a lot of Linux expertise in China, a lot of mobile expertise in India and Windows expertise in Israel. I don't want to stereotype areas but you see a natural coalescing of skills in different areas. It makes sense to have development in those areas.