Microsoft, SAP is a Deal to Watch

The efforts between Microsoft and SAP to make their desktop, server and Web apps mesh smoothly could affect your budget.

Autumn Bayles, chief information officer for Tasty Baking Co., expects the May 11 Web services alliance between SAP and Microsoft to make it easier for the $250-million-a-year Philadelphia snack cake company to become more efficient.

"Its definitely good for the future," says Bayles, whose widely dispersed users operate SAP software, using Windows computers on their desktop—as do two-thirds of SAPs customers. "I expect there will be some future benefit."

Along with other customers of the two companies, Bayles is watching SAPs tango with Microsoft. Under the agreement announced last month, the two companies said they would work together to "deeply integrate" their software for creating enterprise applications that run over the Web. That includes Microsoft s Web services platform, called .Net, and SAPs NetWeaver integration framework.

The alliance promises to make it easier for developers who use Microsoft tools such as Visual Studio .Net to create programs that run on Windows machines and access SAP data and functions over the Web. SAP applications and the Microsoft Office suite will also be able to work together more easily.

/zimages/2/28571.gifDuring the course of the DOJ-Oracle trial, Microsoft admitted that it looked into merging with SAP. Click here to read more.

Which raises some potentially strategic questions: Who will get the better of the partnership? Will Microsoft use the ability of its developers to access SAP applications and data to woo large corporations? Will SAP get stronger because its applications will be easier for Windows computer users to operate? Could these two titans even merge—assuming antitrust regulators would allow it?

There are no quick answers. How this partnership plays out is worth watching because one of these important suppliers—or both—may wind up with more of your budget dollars.

According to Microsoft Chairman Bill Gates, the alliance will give mutual customers "a key competitive edge."

/zimages/2/28571.gifColumnist John Pallatto says that the Microsoft-SAP agreement shows SAPs growing market strength. Click here to read more.

For instance, corporate customers could mix and match portal products and development tools from the two software giants. A customer could use Visual Studio .Net to create portal components that run on SAPs enterprise software. Products that integrate services available through Microsoft .Net and SAP NetWeaver are expected to arrive in August and stretch into 2005.

Next page: Pact could enable Microsoft to sell servers to large enterprises.