Microsoft is working with SAP to serve the customers, because SAP is the leader on its own area. Working with SAP for Microsoft means getting more customers, increasing market share, and so on. The same thing also for SAP.

Microsoft is the competitor of SAP in recent years with its Dynamics ERP products, but in only SMB markets. Microsoft can’t compete with SAP in Enterprise markets yet. Maybe Microsoft’s goal is to be a big competitor in Enterprise Market like Oracle, but not yet.

The question is: Why does the #1 software makers use SAP?

Microsoft is the #1 software maker in all over the world. It has very big business operations and business. They had to use a software to manage their those operations. Since they are #1 software makers, should they have produced their own software internally for this purpose. Maybe. But is is not a good strategy. So Microsoft chose SAP to manage their internal operations in 1995. They could choose Oracle, PeopleSoft, JD Edwards and even Baan in 1995. But they did not choose other. They chose the SAP, because SAP is the #1 software makers on Enterprise Applications. I think SAP also uses lots of Microsoft products internally.

Look at this article: SAP Announces Implementation of SAP’s Human Resources Solution. They explained why they chose SAP.

Microsoft originally selected R/3 in 1995 to support its worldwide financial and procurement operations. The ability of R/3’s client/server architecture to run on Microsoft technology, as well as the breadth of its global business functionality, led to Microsoft’s decision. Because of the integration with financial data, extending the system to include employee data provides additional business value as well as a base from which to continue functional expansion, such as activity-tracking related to costs.

With the successful implementation of R/3 for its financial and procurement operations, Microsoft has a stable system infrastructure to build on. Worldwide users connect to the central R/3 database running on Microsoft SQL Server 6.5. This central database is located on the Microsoft campus in Redmond, Wash. Remote sites communicate with the system in Redmond using Microsoft’s worldwide wide area network. The current R/3 System supports 2,000 users - 400 concurrent - and has simplified the worldwide financial systems considerably.

The benefits of implementing an enterprise solution with R/3 for Microsoft’s human resources business are significant. The human resource implementation replaces a dozen HR systems and 18 separate personnel tracking databases around the world. It centralizes support while providing a localized solution for each site. Microsoft continues to assess other functional areas of the business that could fit into its SAP solution.