SAP said it would invest 175-225 million euros this year in its new Web-delivered software for smaller firms, Business ByDesign, after spending 125 million on it last year. SAP considers this area a "greenfield" opportunity.

The company believes Business ByDesign will help it compete with on-demand software pioneers such as Salesforce.com and aims to have 1,000 customers -- some paying and some trialing the service -- by the end of 2008, up from 150 now.

At the other, top end of the market, SAP is betting that new products it is rolling out incorporating Business Objects software will help it win business from decision-makers who need to mine masses of data to extract useful intelligence.

Business Objects separately reported a fall in fourth-quarter profit amid a rise in tax reserves on Wednesday, although revenue rose 20 percent. The results were broadly in line with market expectations.

By extending its reach into new segments, SAP aims to double its addressable market to around $75 billion by 2010. Half its orders by then should come from products not yet on the market.

SAP, which will include Business Objects results in its own reports from next quarter, will hold a conference for analysts at 1300 GMT in Frankfurt.

(Editing by Louise Ireland)

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