IDG News Service — SAP's on-demand ERP (enterprise resource planning) suite Business ByDesign "is not a fantasy," CEO Jim Hagemann Snabe said during a press conference Monday at the vendor's Sapphire conference, which is ongoing in Frankfurt, Germany, and Orlando. "It's a real product. We wanted to perfect the infrastructure. You only get one chance."

Snabe spoke as SAP gets ready to make Business ByDesign more broadly available in July in Germany, the U.S., the U.K., France, China and India.

SAP originally hoped to have 10,000 customers and US$1 billion in revenue for the application in 2010. But in 2008, SAP realized it couldn't run Business ByDesign at scale in a cost-effective manner and slowed down the product roll out while figuring out a fix. To date, only about 100 early customers are using the application.

But now SAP says the necessary plumbing and rewiring work is complete. The upcoming Business ByDesign version 2.5 introduces an option for multitenancy, a key factor in making the software profitable. With multitenancy, a number of customers share the same instance of an application, with their data kept separate. This cuts down on overhead for equipment and simplifies system management for the vendor, particularly upgrades, which can be delivered to many users at once.

A single-tenant option will remain available, but at a higher cost. Pricing information was not disclosed.

The update, which is set for release early in the third quarter, also includes in-memory analytics that can be tapped via Microsoft (MSFT) Excel; mobile device support; a user interface built with Microsoft's Silverlight technology; and a development toolkit that will enable partners to build extensions. SAP said it intends to build a robust partner ecosystem around Business ByDesign.

Beyond building out a channel, one of SAP's biggest challenges for Business ByDesign is positioning: How can it attract customers without cannibalizing its own ample SMB-installed base for the on-premises applications Business One and Business All-in-One?

This is the official story: Business One is aimed at companies with 10 to 100 employees, said Rainer Zinow, senior vice president of SME strategic solution management. "These companies are at a size where they need a certain level of business processes, such as order entry, but don't need advanced planning and scheduling algorithms." Business One provides a "simple, server-based solution in-house, with support from a local partner."

Business All-in-One is essentially a packaged subset of SAP's high-end Business Suite, and is meant for companies with 1,000 to 2,500 workers, Zinow said. "They are at the same level of business process literacy as most large companies."

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