Executives of German business software maker SAP remain committed to a first-quarter 2008 launch of the company's hosted midmarket application despite acknowledging problems with product development.

Henning Kagermann, CEO of SAP, referred to development issues with the new software, code-named A1S, as "normal."

"As long as the product is not volume-ready, we'll have problems every day," Kagermann said Monday at a news conference during the Sapphire customer event in Vienna.

Rumors have abounded in the market that SAP may have to push the launch of A1S to a later date due to unforeseen challenges in developing -- and supporting -- the new on-demand offering.

A1S will target midmarket customers who seek an inexpensive, easy-to-deploy, low-risk suite of business applications including ERP (enterprise resource planning), CRM (customer relationship management) and SCM (supply chain management). The hosted application, to be available as a monthly subscription, will give smaller, cost-sensitive companies the flexibility to set up and test the software on their own before deciding to make a purchase, using a "try, run and adapt" model.

A1S is a "very important event" for SAP, said board member and president of global field operations Leó Apotheker. "It's not just a new project," he said, but "a whole new business model."

A number of select customers have already tested the product and more will join the testing over the months ahead, according to Apotheker.

The company is still "testing, refining and adjusting" on the product development side and "doing all the things we need to do on the business model side" to have the product ready for a commercial launch in the first quarter of next year, he said.

Separately, Kagermann refuted a report in the German business magazine WirtschaftsWoche that claimed SAP co-founder and supervisory board chairman Hasso Plattner will become more involved in product development following the departure of Shai Agassi, the former president of the product and technology group.

"Nothing has changed," Kagermann said. Plattner has had -- and will continue to have -- a powerful say in product development in his role as the company's chief software architect and chairman of the supervisory board's technology committee, he said.

Sapphire runs through Wednesday.