SAP May Need More Data Centers

SAP's move into the SaaS market will likely mean additional data center infrastrucutre for the giant German software company.

SAP, the giant German company known for its ERP software, has been preparing a new software-as-a-service (SaaS) offering, which will likely be available sometime next year. Nicholas Carr notes that the new product, known as A1S, will have infrastructure implications:

The shift toward providing software over the Net poses some big challenges for the German giant. First, it's going to have to get into the data center business - and that will mean substantial new capital investments. As Business Week reports: "The investment will shave its expected 2007 operating margin by 1% to 2%, to around 27% of sales. That's slightly lower than in 2006. 'You have a lot of costs up front,' says (SAP CEO Henning) Kagermann. 'It's a different model.'"

Read more of Nick's thoughts at Rough Type and broader coverage at Google News.