SAP is cutting investment in Business ByDesign, its hosted offering for small businesses. The company has said that it aims to make it easier to use in an attempt to reach its target of US$1 billion in revenue and 10,000 customers.

SAP is in no rush to deploy the product more widely until it is sure it can deliver it profitably, said co-CEO Henning Kagermann.

"We have to work out how expensive it will be for SAP if we run this product in a hosted environment. We have to make sure we make enough money with the product," he said.

To do that, SAP will take more time to optimise the end-to-end process of selling, delivering and running Business ByDesign, he said.

"We have too many manual steps in our hosting environment. We have to improve that," Kagermann said.

SAP reported signing up more than 1,570 small and medium-size businesses (SMBs) as new customers in the first quarter, excluding those brought by Business Objects, but few of those are using ByDesign. SAP expects to engage with fewer than 1,000 Business ByDesign customers in total this year, it said, and will concentrate its sales efforts on just six countries where the most productive early customers are based.

The company plans to maximise the return on its investment to date in Business ByDesign by reusing its innovations and technologies in existing products, a move it expects will contribute significantly to revenue in 2010. Nevertheless, the company said it maintains its full confidence in the Business ByDesign and the associated business model.