The Mendocino Project: A Brilliant Strategy by Microsoft and SAP to Sidestep Anti-Trust Legislation?

Earlier this month I wrote a commentary regarding Microsoft’s purported plans to acquire SAP (December 5th, 2007).  While the main focus of my thinking was on the direct (or indirect) impact such an action would have at the client “operational” level, one response viewed the situation through the lens of anti-trust legislation.  Specifically, that “anti-trust regulation at both sides of the ocean will put these rumors to rest.  If MS + SAP is not a monopoly then what is.”

On the surface this appears to be a reasonable train of thought, however a Microsoft acquisition of SAP would for all intents and purposes merely formalize the foundational aspects of a pre-existing monopoly.

The Three Elements of a Monopoly

In reality, there are three core elements of a monopoly; business (some would refer to this as financial), political and operational.  Of the three, the most important is operational. In fact, the absence of an operational element renders both business and political considerations somewhat moot.  Allow me to explain.

Given the ubiquity of Microsoft’s market position and the evolution of the Mendocino Project (now branded Duet), a monopoly in effect already exists in terms of market influence.  (Note: here is one of many links to information regarding Duet, http://www.erpgenie.com/interfaces/mendocino.htm)

Think about it, one of the main barriers to ERP/e-procurement initiative adoption (and success) has been the significant reliance on a compliance or change management strategy – a methodology which has contributed to the high rate of project failures.

While Duet may not provide the total answer, it is nonetheless a step in the right direction as both Microsoft and SAP can potentially leverage the advantage of almost every computer having a Microsoft application running on its hard drive.  This of course reduces to a degree the level of required “change” by enabling users to operate in an environment with which they are most familiar and comfortable.  (Note: I would be remiss if I did not emphasize the fact that the key to the success of Duet is ultimately tied to the “true” degree of integration and real-time accessibility it provides to the end-user relative to their specific job function.)

From a Microsoft and to a lesser degree SAP perspective, I would feel like a baseball player on a torrent hitting streak.  Every pitch that is thrown at me would look like a big beach ball.  Move over Hank Aaron and Roger Maris!

With this as a backdrop, all anti-trust legislation will do is push the relationship into other “operational” channels.  The only question is the extent to which market influence and ultimate control would realistically be affected by government intervention.

Since most government-led action focuses on the business or political consequences of this type of acquisition, legislator efforts will be tantamount to their trying to catch the wind in their hands, or closing the door to the barn after the horse has escaped.  And while I am not suggesting that government action should not take place, what I am saying is that the realistic understanding of the operational landscape may make the exercise more relevant and meaningful.

2008 Conference Season kicks off in January with engagements in Ottawa, Vancouver and Houston

To obtain information on dates and locations as well as to inquire about ticket availability, contact Jennifer Cameron with “Conference” in the subject line.  Be sure to include your contact coordinates.