SAP seals Microsoft deal to fight Oracle

SAP has sealed an alliance with Microsoft to co-develop products in a move which industry analysts have interpreted as a thinly disguised attack on Oracle.

The deal to develop a product set codenamed Mendocino, that will extend SAP business processes into Microsoft's Office applications, was made public at the Sapphire user conference in Copenhagen yesterday.

The joint development is due to be available through both Microsoft and SAP in the fourth quarter of 2005.

David Bradshaw, principal analyst and practice leader for CRM at Ovum, said: "There were two shots here at Oracle, which is not only SAP's arch competitor in business applications but which, ironically, is the most popular database for running SAP.

"The SAP Analytics offering expands SAP's business intelligence capability, a major forthcoming battleground between the two companies, and SAP [and IBM] will be hoping that the increased DB2 capability will persuade companies to run SAP less often on Oracle."

Bradshaw added that it was surprising that SAP had taken such a long time to come up with a Microsoft Office integration strategy.

"The main puzzle here is why it's taken SAP so long to offer one of its own, especially since Microsoft and SAP have a close working relationship," he said.

Jeff Raikes, group vice president for information worker products (including Office) at Microsoft, demoed a mock-up of the product integration at the conference, using Outlook to access a SAP human resources system.

Outlook objects such as appointments and emails were integrated into the SAP application so that, for example, holidays could be scheduled simultaneously in an Outlook calendar and in the main HR system.

At what Bradshaw pointed out was "SAP's first big European user conference for some years", the firm also unveiled a global alliance with Siemens and the integration of Macromedia developer technology into SAP.

Together with IBM the company also unveiled a version of the DB2 database optimised for SAP.