How it works - the next Microsoft Office

One usage scenario is a sales organisation where the reps in the field must input lots of disparate information as part of a sales trip, such as customers visited, client feedback or travelling expenses. Rather than use multiple tools to input the data, a salesperson "could create a hyperdocument or form to input that information once and take that XML [and use it] as the business defines," said Scott Bishop, Office product manager.

XDocs is designed to harness XML features that will be available with Office 11. Microsoft plans to make XML the main data format for Office 11 applications.

XDocs supports any XML-enabled database, such as those from Microsoft and Oracle. The new application can be used to input XML data or retrieve it from a database.

Microsoft is "building XDocs from the ground up with industry-standard XML," Bishop said. "XDocs is a hybrid tool that gives users the benefits of a traditional world processing program along with a lot of the data capture functionality of a forms package."

If successful, XDocs would increase the value of Office as an information-generating tool, something more and more businesses are interested in as they increasingly need to wring more productivity out of employees through collaboration and information sharing.

"The notion of compound documents - documents made up of other documents - has been around for a long time, and Microsoft has had this in its products for a long time," said Directions on Microsoft analyst Paul DeGroot. He pointed to an earlier Microsoft technology, called Object Linking and Embedding (OLE), that allows linking to one document from with another within Windows applications.

"What's new about this isn't the notion of embedding one document within another but they're coming up with a workable XML solution," DeGroot said. "There's a strong need for desktop tools that work very well with XML."

DeGroot sees the XDocs as potentially important "for encouraging XML adoption. In that sense, it's a necessary product."

Microsoft also hopes to overcome some of the limitations of web-based data entry and retrieval systems. That, say analysts, is something that not coincidentally could restore importance Office lost to thin clients during the dot-com boom. Companies cannot always pull out the real-time information they need using web forms and often hours of work is wasted when a dropped server connection stops data entry midstream. Web-based systems also are typically slower accessing data.

"In a traditional Office-type application, all of that information can be stored on the user's desktop," Bishop said. "There are some distinct advantages to moving things back to the desktop. This lets users actively participate in web services, which until now primarily are server to server."

Without question, Microsoft "is trying to bring a lot of power into the Office applications to increase its value," said Meta Group analyst David Yockelson.

It's uncertain when customers will get to evaluate XDocs. Microsoft would not say when the first XDocs beta, or testing version, will be available. But the company is now signing up beta testers for Office 11.

"We don't have any decisions at this point," on whether XDocs will be sold separately as some other Office products, such as Visio, or will be bundled into the productivity suite, Bishop said.

Analysts and Microsoft executives said there is no single product on the market that competes with XDocs. Some forms capabilities are similar to those found in Adobe's portable document file (PDF) format, while other aspects encompass data-retrieval and management features similar to those found in IBM's Lotus Notes and Domino web server.

Bishop doesn't see XDocs so much as a replacement for existing products, but for "custom solutions [that] enterprises are currently leveraging". During this process, companies deal with complicated data entry and management mechanisms, either "inputting data into the process or disaggregating it and putting it in multiple backend systems".

As a single product, XDocs' appeal is limited, Yockelson said. But combined with SharePoint Portal Server, BizTalk Server and some other Microsoft server software, the company could create a collaborative information gathering and sharing system.

"If you take this and SPS, BizTalk and cobble things together in the right way, you would have an environment where you could glean a lot of information from," he said. "That gives you a lot of power." This could be especially important as Microsoft advances into the CRM and ERP markets, he added.

Microsoft is betting companies will find XDoc's XML capabilities useful, since it can eliminate the errors of multiple data entry and properly validate the code at the point of entry.

For the first half of this article, see - http://www.silicon.com/a55886.

Joe Wilcox writes for CNET News.com.