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Microsoft, SAP strengthen alliance

Companies plan to jointly develop and sell software that more closely links their business productivity suites.

Microsoft and Germany's SAP are joining forces to develop and market software to link SAP's business management systems more closely with Microsoft's Office suite, according to an SAP representative.

The companies plan to discuss the joint effort--code-named Mendocino--on Tuesday at an SAP convention in Copenhagen. Although the companies are longtime partners, the Mendocino project represents the first time the software giants have created a new product together, SAP spokesman Bill Wohl said.

The relationship between SAP and Microsoft has grown cozier amid the recent upheaval in the business software industry caused by acquisitions and flat demand. The companies briefly contemplated a merger last year--a fact that emerged during an antitrust trial over Oracle's acquisition of PeopleSoft.

Now, instead of buying SAP, Microsoft is collaborating with the company. The new program will enable Office workers to enter data into an SAP system via Microsoft's popular Outlook calendar and e-mail programs and via Excel spreadsheet. The companies plan to deliver Mendocino later this year, and both will sell it, Wohl said.

The program is designed to spare workers from redundant entry of data and keep the companies' systems in sync. For instance a business consultant could schedule a meeting with a client in his or her Outlook calendar program and it would automatically show up in SAP's project management application for budgeting and billing.

The companies have not announced pricing.