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Microsoft and SAP said they had "initiated preliminary discussionsÉ to explore the possibility of a potential merger between the two companies".
Although it failed to buy SAP, Microsoft has been busy in the past few months signing strategic alliances with enterprise software companies in a bid to increase adoption of its .net web services architecture.
Deals with Oracle, Siebel and SAP have bolstered the viability of .net as an alternative architecture to Java on which to base an enterprise infrastructure. But experts have warned that choosing .net as the basis to run enterprise applications and databases could prove restrictive, as the .net platform is only available on Windows.
Last month Oracle announced an agreement to more tightly integrate its 10g database and the Microsoft Visual Studio .net development environment. Oracle plans to offer a download for integration with Visual Studio .net 2003 from the Oracle Technology Network website later this year.
SAP and Siebel are also planning to support .net within their products. Microsoft's strategy is to offer .net on Windows as a viable alternative to Java 2.0 Enterprise Edition (J2EE), which is commonly used in enterprise software implementations.
In Siebel version 7.7, which was released in April, Siebel and Microsoft collaborated on the development of a .net version of Siebel's Universal Application Network middleware product.
At its annual Sapphire user conference in May, SAP stated its ongoing commitment to the .net platform.
Ashim Pal, vice-president at analyst firm Meta Group, said, "Microsoft is trying to push more [enterprise] workload onto Windows."
However, unlike code based on J2EE application servers, which should be able to run on any supported platform - Windows, Unix or Linux - .net is a Windows-only architecture. Users could face a costly rewrite if they outgrow their .net environment due to this lack of interoperability, according to Jyoti Banerjee, director of analyst company MyBusiness.Net.
Banerjee said, "In terms of web services theory, it should not matter whether an organisation uses .net or Java as the foundation for its ERP implementation. In practice, we are a long way away from that at this point. If somebody wants to switch platforms from, say, .net to Java, I think they will have to put up with a significant amount of re-implementation."
Banerjee urged users to keep putting pressure on suppliers to extend their adoption of standardised protocols to overcome interoperability problems between ERP applications on different platforms.
David Bradshaw, principal analyst at Ovum, said, "Moving from one operating environment to another involves a major rewrite." As with any rewrite, users may also face problems recoding undocumented business processes when they switch platforms, he added.
Users can minimise this work by implementing enterprise software using a three-tier architecture, where an application server is deployed to separate business-specific customisation from the enterprise system.
However, if a user decides to move from a .net architecture to a Java-based application server, the portion of the enterprise system implemented on the application server would need recoding, Bradshaw said.
Microsoft said, "Ultimately, all interoperability will be achieved through the use of web services." But the company admitted that until web services standards mature, enterprise software will continue to be implemented using existing APIs and frameworks.