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SAP offers first peek at Mendocino in action

Software maker shows off some of the functions it plans to deliver via its tech tie-up with Microsoft, and customers like what they see.

BOSTON--Enterprise software maker SAP displayed the first examples of the business applications being developed through its technology integration partnership with Microsoft here on Thursday.

Presenting at the business software specialist's Sapphire customer conference, Shai Agassi, a member of SAP's executive board and one of its chief technologists, offered a peek at some of the benefits the enterprise applications giant will derive through its effort with Microsoft, a tie-up that has been code-named Mendocino.

"This is a great example of a technology deployment to the masses."
--John Cirone
CIO, Interpublic Group

The first glimpse of the jointly developed technology came in the form of a customized version of Microsoft's dominant Outlook e-mail software that has been linked with SAP's enterprise resource planning, or ERP, applications. Agassi showed how customers using the new system can access information in SAP's applications, such as its project management system or human resources software, directly from Outlook.

As an example, the executive showed how an individual could enter information about his or her working hours into Outlook's calendar system and have that information fed directly into SAP's business project tracking applications. Based on the demonstration by Agassi, the Mendocino effort essentially creates a new SAP task bar in Outlook for customers using both of the company's products. In another instance, the executive displayed how someone working in the Mendocino-tailored version of the e-mail software could access data produced by SAP's analytical software without ever leaving the Outlook interface.

Tools built through the partnership will become generally available in SAP's products in the second half of next year and early customer trials will start at the end of 2005, executives from Microsoft and SAP said.

Ballmer weighs in
"We think this is something that can fundamentally make SAP applications easier to use, and we've been waiting to do this for a long time," Agassi said. "We believe that this can affect every SAP user in a very positive way."

In a taped segment shown during the demonstration, Microsoft CEO Steve Ballmer said the joint work with SAP would "revolutionize" the way people access and interact with business applications. At the same time, Microsoft was busy showing off some of the new features it will offer in the next generation of its Office business package, in which Outlook is a central element.

Microsoft and SAP said their joint development effort involves hundreds of developers, and reported that each company will be able to sell the products produced through the partnership. Mendocino-bred tools will be an add-on to SAP ERP 2004, the latest version of SAP's back-end business suite, as well as Microsoft's Office System 2003. The companies will initially release five applications with Mendocino for tasks including creating reports, and expect to release more programs over time.

Using Mendocino, SAP is trying to drive more "seats," or end user licenses of its applications. For Microsoft, the closer integration with SAP fits the company's strategy to drive upgrades of Office by marrying documents created in its software with business data, such as sales transactions.

"This changes the perception of Office. Now it's really critical," said Lewis Levin, vice president of Office business applications at Microsoft.

Industry analysts and SAP customers who watched Agassi's demonstration seemed impressed by the fruits of the two software giants' labor. Bruce Richardson, senior vice president with market watcher AMR Research called the Mendocino tools a significant step forward for both companies.

He noted that at an average SAP customer, only 20 to 25 percent of employees have a SAP license, "so if you can extend that so people who would never use (SAP's software) before are allowed to use it in the way they already prefer to work, using Office, that's a big deal," Richardson said.

The analyst pointed out that by attracting more workers to use SAP via Office applications, both companies should be able to sell many more licenses for their respective products. SAP will add new users by giving workers additional ways to access its software, and Microsoft will encourage customers to upgrade to the latest version of Office, he said.

"When you look at a typical company, almost every person in that organization works with Microsoft Office and Outlook already," Richardson said. "There's huge resistance to SAP outside of financial and some other business areas because people don't want to learn a new system, but if you know how to use Office you can do this, and that will encourage more people to use SAP."

SAP customers said they've been waiting to see the sort of integration offered by Mendocino for almost as long as they've worked with the company's enterprise software. John Cirone, chief information officer at marketing and advertising conglomerate Interpublic Group, said Mendocino should indeed encourage more workers to use SAP.

"This is a great example of a technology deployment to the masses, which is always the greatest challenge with (enterprise) systems," Cirone said. "The entire employee base becomes a casual user of SAP, and there are some huge benefits you can imagine with that."