SAP and Microsoft tune up for Duet

A year ago, SAP and Microsoft announced "Project Mendocino," software to enable customers to interact with SAP applications through Microsoft Office. Now renamed Duet, the software will be available, as planned, in June, the companies said.

Microsoft and SAP intend to jointly market, sell and support the program this year, an effort that will include customer briefing events starting next month. The companies also launched a Duet.com informational Web site.

Customers have been testing the applications linkup since December, for tasks such as using Microsoft's Outlook e-mail client to view detailed budget data drawn from an SAP back-office system.

The two companies will expand the testing program to about 100 customers and partners this week, Shai Agassi, president of SAP's product and technology group and an executive board member, said in a press conference call on Tuesday.

In the second half of this year, the companies intend to enable the handling of SAP functions and data through Office applications with the release of two "value packs."

They include links between Office and SAP's customer relationship management and its supply chain management applications for five processes, or tasks, including analytics and recruiting.

The Duet add-ons are designed for the 2007 release of Microsoft Office and the next release of MySAP ERP. The integration between the applications is done using XAML, an XML-based user interface design language, Agassi said.

SAP will likely sell Duet primarily into its installed base of customers, said Joshua Greenbaum, the principal analyst at Enterprise Applications Consulting.

But the tight integration with Office could sharpen the rivalry between SAP and Microsoft's Dynamics application division, which will be fighting more fiercly for smaller companies and divisions within large companies, he said.

"This is not necessarily the best thing that's ever happened to Microsoft Dynamics," Greenbaum said, noting that Microsoft has focused on close Office integration as well.

"(Duet) does undercut Dynamics in SAP's customer base," he said.

Jeff Raikes, president of Microsoft's business division, acknowledged that the two companies compete in certain areas, but said that Microsoft is fully committed to Duet.

"We're two different companies. We compete in some areas but what Shai (Agassi) and I were able to do is form effective partnerships," Raikes said. "This was really an ambitious undertaking."

Agassi said the potential financial impact from Duet to SAP is "huge." In most SAP customer accounts, almost all end users work with Office, but far fewer use SAP applications directly, he said.

"We have the potential ability to grow fourfold by looking at the number of employees in a corporation versus the number of users that are professional users of SAP," Agassi said.

He said that the Microsoft Office partnership is part of SAP's strategy to develop different user interfaces, such as Adobe PDF documents or mobile clients, to access back-end SAP data.