Microsoft-SAP Battle writes about the war for the IT infrastructure for small businesses between the two former partners:

When it entered the software niche known as enterprise resource planning (ERP) two years ago through a series of acquisitions, Microsoft made a pledge that it would steer clear of longtime partners SAP, PeopleSoft and Siebel Systems. The giant said that instead of selling its wares to the world’s largest corporations as SAP and its traditional rivals do, it would target a largely untapped market: millions of small and medium-size businesses.

But with Microsoft expanding the scope of its applications and SAP looking to challenge Microsoft for small, high-volume contracts, the gloves are about to come off.

Microsoft insists it’s competing largely with a collection of several thousand software makers around the world that cater to small businesses. Unlike the high end of the market, the segment Microsoft is chasing is populated by many tiny competitors “below the radar screen of people on Wall Street,” said Doug Burgum, senior vice president of Microsoft Business Solutions Group, the unit that develops and markets Microsoft’s ERP software. “Our biggest competition is really ‘other’, not SAP,” Burgum said.

Likewise, SAP says Microsoft poses no major threat. “The market for software applications, even in this challenging business environment, is big enough for all of us,” SAP representative Herbert Heitmann said.

In a sure sign that the company’s moves are aimed squarely at Microsoft, SAP has stealthily sought to recruit Microsoft Business Solutions software dealers to sell its new competing product line. One major advantage Microsoft has in the small-business segment is its network of 4,500 software distributors. SAP typically sells directly to customers, and the lack of such a network has proved to be a stumbling block in previous attempts to reach smaller businesses.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.