To extract:
file.exe /t:
You can also apply updates to existing applications. Firstly extract the msp file as above.
To patch:
msiexec /a msifile.msi /p mspfile.msp
N.B. In the case of a number of applications (such as office) you first need to create an administrative installation point by running setup with the '/a' switch.
In the case of office further customization can be performed by using the office resource kit, available at link.