The Microsoft and SAP merger – Is or is not to happen?

May 26, 2009 - PRLog -- Microsoft’s effort to facilitate further penetration in the ERM market and SAP’s lurk to enter new markets is now off to bin. The so called Microsoft - SAP merger in air would have been a well fitted deal if there weren’t any cultural and legal boundaries. But sadly it’s on hold, at least for the time being. It will still be interesting to know the underlying motives that bought Microsoft to SAP’s doorstep and SAP being happy to welcome.  

As we are all aware, SAP is a biggie in the enterprise software market catering fortune 1000 companies. This German company is sort after for its image of complex and expensive software products serving high end market. While on the other hand Microsoft’s enterprise softwares are more supplying to smaller customer base. So basically with this merger Microsoft was looking for a more posh identity for its line of business softwares aiming upscale customer base. Before its rival IBM could take a step, this was the hit by Microsoft to offset slowing growth in its conventional domain of operating systems and desktop software.

“What’s in it for SAP”; lies in diminishing ERP sales, forcing the leading enterprise software companies to look for new markets or consider mergers and acquisitions in order to grow. Furthermore SAP has no prior experience of strategizing for the low end market to jump in by itself. According to Kagermann, co- CEO Sap, “a priority for SAP this year is to grow its revenue and customer base. A deal with Microsoft could have benefited existing SAP customers, through better integration between the companies' products, and would have given SAP access to smaller customers.” Thus where German giant SAP is in the need of new markets, Microsoft is taking up a chore above its maturing product line.
 
The merger sure holds a great value for the end users as well but the question is whether it is to happen or not. Well the bad news is not. Why so? It is said to be a complicated affair mostly because of the regulation issues. Additionally, since SAP is a German company, its way of operating and business ethos are a lot different from that of Microsoft (an American company). Even after the fact that many SAP customers are also Microsoft, EU is highly against the thought.

So for time being SAP would be SAP and Microsoft would be Microsoft. But this does not mean that there will be no possible synergies between the two. We can at least look for alliance if not merger.

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