It took the United States just 45 months to defeat the combined forces of Germany, Japan, and Italy. It has taken SAP 48 months to get Business ByDesign, its SaaS (software as a service) play for the SMB market, off the ground. And it still isn't ready for prime time. Oracle, meanwhile, doesn't even pretend to care about smaller businesses; CEO Larry Ellison has repeatedly said that it costs too much to go after It took the United States just 45 months to defeat the combined forces of Germany, Japan, and Italy. It has taken SAP 48 months to get Business ByDesign, its SaaS (software as a service) play for the SMB market, off the ground. And it still isn’t ready for prime time. Oracle, meanwhile, doesn’t even pretend to care about smaller businesses; CEO Larry Ellison has repeatedly said that it costs too much to go after a relatively low-margin market. And Microsoft? It has a tentative SaaS offering, and just for CRM at that.So small businesses’ on-demand ERP options are limited to offerings from small providers such as Intacct and RightNow Technologies. The real problem here is that the major enterprise software players are structured to deliver massive, on-premise business applications like SAP R/3, Oracle E-Business Suite, and Microsoft Dynamics. Doing anything else requires not just technological change but cultural change — as well as a willingness to accept a new business model. And there’s no better example than SAP. NetWeaver sinks Business ByDesign Last week, the German software giant put the brakes on Business ByDesign, just days before the opening of its annual Sapphire conference in Orlando, Fla. “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,” said co-CEO Henning Kagermann. The company is now projecting “substantially less” than the originally targeted 1,000 customers in fiscal 2008 and is pushing back by as much as 18 months the previously stated targets of 10,000 customers and $1 billion in revenue by 2010. Not only is the company pessimistic about BBD’s rate of growth, it’s cutting back spending on the program by some $160 million this year, notes Sanford Bernstein analyst Charles Di Bona. Digging a little deeper, it appears that a large part of the messy economics of BBD is (big surprise) Netweaver 7.1, SAP’s latest iteration of the big honking platform that nobody likes. In an interview at Sapphire with a group of industry watchers called the Enterprise Irregulars, Kagermann spilled the beans, saying, “We know we can have TCO, but need NetWeaver enhancements. There’s a very close link between the TCO of Business ByDesign and NetWeaver.” SAP set a price of $149 per user and tried to work backward to a cost structure that allowed for a reasonable profit, but hasn’t been able to do it. Kagermann deserves credit for frankness, but that’s about all. SAP has talked about the SMB market for years, but has yet to get the program off the ground. Jeremiah Stone, a solution manager for Business ByDesign, says BBD has been cooking for four years, including two years of application development. Think about that: four years of development without serious thought to the business model. And now, it’s cutting spending on a program it once called critical to the success of the company. Astonishing. Makes me glad I’m not a shareholder. Henning, meet Marc If SAP were really serious about succeeding in the SMB market, it would have to make a very serious move. My idea: Buy Salesforce.com. It’s no secret that Salesforce.com founder Marc Benioff has toyed with the idea of selling his company, and SAP could certainly afford it. Salesforce.com has long since solved the technological problems that caused a spate of embarrassing outages a few years ago, and it has a large and loyal SMB customer base. I don’t expect that to happen; it would be an admission that SAP — a well-known sufferer of the “not invented here” syndrome — has failed a crucial test. And in a larger sense, that failure speaks to the larger failure of enterprise software to meet the needs of smaller businesses. The wave of consolidation that has swept the enterprise software world since Oracle bought PeopleSoft has been accompanied by a drive on the part of the largest survivors to build and sell complete software stacks. Although there are reasons that the stack strategy offers benefits to the enterprise customer, it clearly doesn’t serve the interests of the little guy. Luckily there is a wealth of smaller companies busily adopting open standards and moving toward the SaaS model. If you’re responsible for IT in the SMB world, that’s the place to look. I welcome your comments, tips and suggestions. Reach me at bill_snyder@infoworld.com. Technology Industry