German business software giant SAP AG is moving ahead with a project designed to analyse its core enterprise products and, if necessary, tweak or even overhaul one or more in a move to reduce development costs at its end and integration costs for customers.

The project, known internally as "Vienna," consists of a group of software developers put in charge of optimising product development and defining future technology, according to Laurie Doyle-Kelly, a company spokeswoman. The team has been working together for more than a year but their work remains highly confidential.

A key focus of the group is integrating SAP's Enterprise Services Architecture, which is the company's architectural vision to support the fusion of business processes, using its NetWeaver technology as the integration and application platform, according to Doyle-Kelly. "Vienna is about using new elements of NetWeaver and Enterprise Service Architecture to reduce costs and increase efficiency for us and our customers," she said.

Doyle-Kelly declined to say when and what the team would provide in the way of results and how high the cost savings could be, saying only that the project "is an ongoing effort."

The high-level product analysis and development project continues as SAP faces greater pressure from rivals, such as Oracle, PeopleSoft and increasingly Microsoft.

It also comes amid growing demands from enterprises for lower IT integration costs. "Integration costs are the number one item in IT budgets," said Charles Homs, an analyst with Forrester Research Inc. "Even if SAP has done a good job at integrating its products, few companies will want to buy SAP wall-to-wall. There is still a huge world of other vendors and home-grown solutions out there. Nor is SAP, or any other vendor for that matter, able to cater to all the different groups worldwide."

Homs views SAP's Enterprise Services Architecture and NetWeaver initiatives as a start in the right direction - and also a move for the company to strengthen its position in the enterprise market. "I would think that the overall objective of Vienna is to set (de facto) technology standards for enterprise solutions, in much the same way as Microsoft has done for desktop solutions and servers to a degree," Homs said.

That, however, could prove a tall order, considering that SAP and Microsoft are already beginning to butt heads in the market for enterprise software targeting medium-size enterprises.

"The mid-market is one where ease of use, maintenance and integration and cost reduction are far more critical than in huge companies with greater know-how and manpower," Homs said. "Microsoft has made its desktop software pretty easy to use, install and maintain, so it brings this expertise to the mid-market for enterprise software."