SAP this week set aggressive goals for its long-anticipated hosted ERP service for small and midsize businesses, goals that some analysts called unrealistic.

At an event held in New York on Wednesday, SAP Chairman and CEO Henning Kagermann said he expects 10,000 customers will sign up for the SAP Business ByDesign service by 2010. It won't be available until 2008, he said.

How SAP will reach that goal is unclear, said Henry Morris, an analyst at Framingham, Mass.-based IDC.

"They need to have some kind of focus on what type of [small business] they are targeting," he said, noting that SAP is not aiming the service at departments within large companies. "You wonder where all these [customers] are going to come from."

"SAP put out some very aggressive statements that may be tough to reach," added Dan Sholler, an analyst at Gartner in Stamford, Conn.

Potential rivals include Microsoft, Salesforce.com and NetSuite.

The service, code-named A1S, will offer access to SAP's manufacturing, purchasing, accounting, sales and marketing, and human resources applications.

Peter Novack, CEO of SunFlower, a Longmont, Colo., maker of lighting fixtures, said he had been searching unsuccessfully for a hosted service offering integrated applications for small businesses.

SunFlower is one of 20 U.S. and German companies now testing the service, which Novack said is so far meeting his needs.

"There isn't an [on-demand] solution today that does what I'm looking for." he said. "It's intimidating for a small company."