SAP Allies with Oracles Competitors

Updated: Enterprise applications customers reap the benefits of SAP's competition with Oracle; meanwhile, the software company announces partnerships with IBM, Siemens, Microsoft and Macromedia.

SAP is emitting a dizzying flow of news from its Sapphire users conference in Copenhagen this week as it partners with giants in the tech world: IBM, Siemens, Microsoft and Macromedia. At this rate, analysts say, Oracle better learn how to partner like its arch rival, lest it wind up the wallflower at the enterprise applications dance.

To wit: On Tuesday, SAP AG announced that it will jointly develop software with Microsoft Corp., combining SAPs business applications and Microsofts Office desktop applications.

SAP capabilities such as time management, budget monitoring, organizational management, and travel and expense management will hook directly into immensely popular desktop applications such as Excel, Outlook and Word—a combination that analysts say will set the bar for Oracle Corp., whose productivity tools have to compete with the popular Office software, and IBM, which could stand to integrate its various software offerings better.

The German company also announced on Tuesday a version of IBMs DB2 database optimized for SAP applications—the first time IBM has ever streamlined its database for a particular applications vendor.

/zimages/2/28571.gifRead more here about IBMs new DB2 database tailored for use with SAP applications.

IBMs director of DB2 Marketing, Bernie Spang, told Ziff Davis Internet that this move started to ramp up about two years ago—in other words, very close to the time Oracle announced it would attempt to acquire PeopleSoft. Its a move that IBM framed as a direct assault on the 60 percent of SAP customers who run their applications on Oracle databases—in other words, an impressive 44,000 enterprises.

And there was an assault on a third front: SAP is pushing forward to expand its already strong presence in vertical industries, announcing on Tuesday that it is partnering with Siemens AG to offer integrated health care technology and consulting services to improve patient safety and process workflow at health care organizations.

Finally, if all that werent enough, SAP announced on Tuesday that it is extending SAP NetWeaver with the Macromedia Flex application framework—a pairing one analyst called "very, very, very important" when it comes to competing with Microsoft on integrated content, collaboration and communications.

The take-away from all this partnering? SAP has figured out that its got a lot more to gain from cooperating with its enemys enemies than it does from competing with them.

"Here are two companies, ostensibly [SAPs] biggest competitors, and what SAP is doing is saying the value of cooperation is bigger than the value of competition," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif.

"Exact numbers are hard to come by, but its pretty obvious to me that the amount of business Microsoft and SAP do together far exceeds the total revenue of Microsoft Business Solutions. And over in IBM, the amount of joint business between IBM and SAP exceeds the value of Websphere … as well.

"So what you really have is competition thats not on the same scale as cooperation," Greenbaum said. "I think these two agreements are a recognition that by working together, rather than fighting together, well, the enemy of my enemy is my friend. I wouldnt say its a deliberate attempt to isolate Oracle per se, but it really shows how isolated Oracle could become if they dont start to build up their partnership model as well."

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