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SAP Teams up with Microsoft for Enterprise Applications
(6/15/2004) Ascet Volume 6
By Mark Smith, Ventana Research
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Summary

June 1, 2005 - SAP announced a strategic partnership with Microsoft to jointly develop and market Microsoft Office-centric enterprise applications that integrate with SAP NetWeaver. The joint effort, code-named Project Mendocino provides Microsoft Office the user interface for interaction with SAP's enterprise applications. It will require an upgrade to the latest versions of Microsoft Office, SAP NetWeaver and SAP ERP however to enjoy the benefits of utilizing Microsoft Office as a place for interactions with enterprise application from SAP. The teaming of these two software giants puts more pressure on Oracle and Siebel -- both must deliver new innovation and both must improve financial performance and enable greater customer success within their application businesses. Ventana Research sees this SAP announcement as an evolutionary shift in providing enterprise applications, but also as an initiative which will be inhibited by significant cost of upgrading technology infrastructure and by the immaturity of these Microsoft Office extended applications.


This strategic partnership by SAP with Microsoft puts even more pressure on Oracle and Siebel. Both those suppliers have been challenged to continue new license revenue growth in their respective ERP and Microsoft Office areas. The largest barrier for Microsoft and SAP is their current and potential customers’ ability to justify the investments required to upgrade their technology infrastructure to include Microsoft Office 2003, SAP NetWeaver and SAP ERP and additional human capital and opportunity costs to balance.


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