The customers Pandesic did have called for more features in the software. But unlike traditional outsourcing companies that manage individual application portfolios for individual customers—and can charge a pretty penny to each customer for any changes in those portfolios—Pandesic couldn’t charge for its time. Instead, its developers were left with the Sisyphean task of winnowing out a list of enhancements that would satisfy as many customers as possible while not bloating the software and bringing the company’s hosting infrastructure to its knees. For example, Oshkosh, Wis.-based children’s clothes maker OshKosh B’Gosh was one of a number of companies that wanted Pandesic to upgrade its software so that it would be possible to offer Web customers a free shipping option. "We wanted it in two weeks; they said six months," says OshKosh B’Gosh Vice President of MIS and CIO Jon Dell’Antonia. To its credit, Pandesic responded and built the new functionality well within the six month time frame it had promised Dell’Antonia and other customers.

But such responsiveness does not come without a cost. The proof is in the software itself: After just three years, Pandesic was on the fourth version of its software—as many incarnations as SAP has offered in the seven years since it first wrote R/3. Indeed, SAP gave up trying to make its core R/3 program all things to all people years ago and formed specialized task forces to customize the software to the specific needs of the oil, apparel, chemical and education markets, among others.

When Startups Stall

Three years ago, Pandesic could at least count on a steady stream of startup dotcoms that were prepared to forego a few bells and whistles to get up and running quickly. But lately, even that well has dried up. "Just try getting venture capital money for a pure-play Internet retailing dotcom startup today and you won’t get 3 feet," declares Christopher Terry, president and CTO of Boca Raton, Fla.-based ASP HostLogic, which serves the business-to-business market.

In a world of hype that heats up and cools down like a cheap toaster oven, the B2B market is now as hot as the B2C market is not. Pandesic never tried to rejigger its e-commerce engine to adapt to the needs of B2B commerce, which generally requires more feature-rich, specialized software highly adapted to the needs of a particular industry. "Our system was built to handle high volumes of low-cost transactions," says Stout. "For companies doing less than 100 transactions a day, it just wouldn’t make sense." To adapt the engine for B2B would have required a major rewrite, she adds.