When SAP formally introduced its new Business ByDesign on-demand software last September, company officials described it as a "first edition" product.

Nine months later, Business ByDesign is clearly in its second printing. Just several days before its annual Sapphire user conference was to convene in Orlando, FL, in early May, the software giant said it would "modify the rollout strategy" for the product. This modification included rethinking BBD's functionality, the company's investment levels in the product this year, and the cost equation for customers.

As a result, SAP said it would take 12 months to 18 months longer to reach $1 billion in revenue with BBD, the original target for which was 2010. The company also had anticipated 1,000 BBD customers this year. At Sapphire, SAP reported that it has 150 "customer engagements" with the product.

From the beginning, SAP officials have described the on-demand BBD and the market it targets - organizations with 100 to 500 employees - as fundamentally different from what SAP has been used to serving, particularly with its conventional All-in-One and Business One software products for the small and medium-sized markets. As SAP CEO Henning Kagermann said at a Sapphire press conference, "This is the first time in 35 years that we've shipped a completely new product. Our learning is a lot."

And one of the things SAP has learned in the process of bringing BBD to market is the need to improve the "cost ratio" involved in operating the on-demand offering, says Hans-Peter Klaey, president of global small and medium enterprise operations at SAP.

"We want to get it right," Klaey said during a Sapphire presentation. Specifically, he said, SAP decided it needed to reduce its costs involved in upgrading BBD on-demand software.

In addition, SAP officials said, the company needs time to respond to BBD customers' requests for additional functionality and performance. For example, said Jeff Stiles, SME marketing team senior vice president, manufacturing customers have been asking for more support within the BBD suite for RFID integration.

And certain BBD transactions need to run faster, Stiles said in an interview with Managing Automation. Currently, he said, 85% of BBD transactions run in under a second. But some are taking 2 seconds or longer.

Also, SAP needs time to adjust its BBD marketing plan, Stiles said. Initially, SAP expected most BBD customers to use a wide range of modules right away. Instead, many are exhibiting what Stiles calls "incremental deployment behavior."

"That means we need to change our marketing approach so that we can continue to connect with customers," Stiles said. "But we need to do so cost-effectively."