It's tough for small players in the enterprise software space. Customers naturally worry that these vendors won't have the resources to service their accounts. Though I-many (NASDAQ:IMNY) faces that exact situation, the company continues to invest aggressively to pump up growth.

I-many develops software that helps manage the creation, tracking, compliance, and reporting of contracts. The company focuses on the health-care industry, with clients including GlaxoSmithKline (NYSE:GSK), Eli Lilly (NYSE:LLY), AstraZeneca (NYSE:AZN), and Novartis (NYSE:NVS).

On Monday, I-many reported that Q1 revenues rose 10% to $8.4 million, while subscription revenues increased 72% to $944,000. The company has been shifting its business to subscriptions to make its revenue stream more recurring. As seen at successful companies such as Salesforce.com (NYSE:CRM) and NetSuite, this is increasingly becoming the accepted business model for enterprise software.

I-many's net loss for Q1 was nearly 50% higher year over year, at $4.5 million or $0.09 per share. The main culprit: aggressive spending on R&D, which amounted to $4.3 million in the quarter. Over the next year, the company expects to launch several next-generation offerings.

I-many says it will "significantly" lower its R&D expenditures for the second half of 2007. While this will help with profitability, the company still needs to increase its sales and marketing resources, and its sales cycles can easily take a year to show progress. For patient I-many investors, that unfortunately means a lot more waiting.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 1,915 out of 28,291 in CAPS. Glaxo and Lilly are Motley Fool Income Investor picks. The Fool has a disclosure policy.