The cozy relationship between software giants SAP AG and Microsoft Corp. continues to get cozier. Earlier this month, SAP announced that it would make its flagship R/3 software available on Microsoft's latest version of its database software, SQL Server 7.0. SAP also will distribute the database directly to its customers. The announcement provoked little surprise in the software community. After all, SAP sold 55% of its R/3 volume to Windows NT customers last year, according to a recent report by AMR Research, an information technology research firm in Boston. And although Oracle Corp.'s database continues to be the predominant database for current R/3 users, the fact that SQL Server 7.0 costs a lot less no doubt will sway many future technology purchase decisions in Microsoft's favor. Analysts say SQL Server 7.0 is especially attractive to small- and medium-size companies. "While Oracle Corp. maintains its position as the leading database company from a performance perspective, Microsoft has closed the gap and will be a formidable competitor in the small and midsize markets that SAP is now targeting," reports AMR Research. In other words, the battle between SAP and Oracle, whose own enterprise software applications won't run on SQL Server 7.0, can only intensify.