The Duet software will provide access to SAP business processes from Microsoft Office, creating a direct link between enterprise and personal productivity applications. They also represent a major joint venture between two software giants that have said they had briefly thought about a merger last year.

The applications will open up new sales opportunities for both companies. For Microsoft, they could provide a major driver for Office 2003 sales, rejuventating what has become a slow-moving market, and attract new types of users. They will also further its ambitions to become the enterprise software client provider, acting as the front end to enterprise applications.

SAP will also gain new business opportunities by providing a new set of users with direct access to its applications. The combination of the types of processes supported and the familiarity of the Office interface makes SAP applications more relevant to a wider range of users and reduces the need for training.

SAP is in the process of changing the make-up of its business and within 10 years believes that over 50% of its revenue will come from new-generation technologies and applications such as Duet. Duet applications are packaged business application mash-ups.

Despite the opportunities the Duet applications open up, Microsoft appears to be giving away one of its major competitive advantages, bearing in mind that it competes with SAP in the enterprise application mid-market where it is increasingly pushing its ability to provide access from Office to its own business applications.

The decision may have been influenced by political issues stemming from Microsoft’s frequent and acrimonius tussles with the EU over antitrust. If Microsoft builds Office-based access into its enterprise applications, it may be hauled up by the EU commissions yet again and accused of taking advantage of its market position to the detriment of other vendors. By working with SAP, it may be hoping that it cannot be accused of anti-competitive behavior. The fact that SAP is a major European company could also work in its favor.

With very specific, process-based access, the license fee will be lower than that of a typical SAP fee. Microsoft and SAP will charge for the Duet applications, which will be jointly marketed, but neither has yet revealed a pricing structure.

The first batch of applications are useful but fairly mundane and are restricted to employee and manager self-service type functions. They include budget-monitoring, time-management, leave-management, and organization and HR-related task-management. They have been tested by 100 partners and customers since the end of 2005.

The vendors have announced a second batch of applications, slated for the second half of 2006, which will take them into more the valuable area of operational business.

This set of applications will address five additional business scenarios, providing access to SAP CRM and SRM processes from Microsoft Office, and cover recruitment-management, travel-management, analytics, purchasing-management, and sales activity-management. They will be designed for compatibility with the next release of mySAP ERP and the 2007 release of Microsoft Office System.