The Walldorf, Germany-based company will use Microsoft's SQL Server 7.0 for as many as 150 internal development and production systems within SAP.
The duo also said they will work together to make the Windows 2000 operating system the platform of choice for customers installing mySAP.com applications. MySAP.com is the German software giant's Internet strategy, through which it intends to sell Web-based applications to customers who want to connect their businesses to their partners and customers on the Web.
As the database market leader, Redwood City, Calif.-based Oracle has historically been a close partner of companies it also competes against, such as SAP and Siebel. Those relationships have recently shifted, however, as software makers have moved into new markets and competition has escalated.
Last week, SAP announced it is forging a tighter relationship with IBM on other operating system "platforms," again distancing itself from Oracle. Big Blue will be the database of choice for internal development of SAP's R/3 business application software on key operating systems including Sun Solaris, multiple systems from IBM and the increasingly popular Linux.
Steve Jenkins, head of SAP operations at Redmond, Wash.-based Microsoft, said he views SAP's move as "a very straightforward strategy considering where SAP is trying to take their business." Jenkins said the two companies will work to make Microsoft's applications work with SAP's business management applications and on future joint Web ventures.
Despite concerns that Oracle has raised about being shut out by SAP--mainly that its customers will suffer--SAP executive Ingo Hoffmann said the company "clearly supports Oracle as a database option."
"This doesn't change anything," he said in an interview. "We still want customers to have the choice of what platform or what database they're running on."
Jeremy Burton, vice president of Internet platform marketing at Oracle, said SAP, to his knowledge, has 420 internal development systems, 400 which are running SAP applications on top of Oracle's database.
"What they're saying (with these Microsoft and IBM deals) is that they're going to change that," he said. "But you don't swap out your database like your version of PowerPoint or Word." To do so would throw off development by three or four months, he argued.
Burton said he believes SAP's announcements with Microsoft and IBM are about about marketing rather than reality--considering 75 percent of SAP customers use Oracle's database.
"SAP wants to say that they're not dependent on Oracle," Burton said. "If SAP could have one wish for the millennium it would be that their applications didn't run on Oracle."