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my client wants the legal department to do all the mailing reports for this system. I want to use Crystal for the reports instead of the clients idea of developing a reports package from scratch. The hangup with crystal is their legal department wants to do the editing of the reports in Word and have a glorified mail merge generate the PDF files that goes off for printing.

Ive played with it for a while, is there a way that i can get Crystal to take in a word document as a template and basically replicate Word's mail merge but on Crystal Server so i have the report history?

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Word can not natively act as a template for a RPT file. You could write an application that parses the DOC and applies it a pre-built report using the CR SDK.

I've used Word's mail-merge functionality in the past--it's fairly reliable.

You might also consider JangoMail too. Their email-merge functionality is pretty sophisticated.