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By Heather McLean, 7 May 2002 15:15

NEWS Microsoft has paid $1.3bn for Denmark's Navision in a bid to move in on the European customer relationship management (CRM) market. The Danish company is focused on CRM, financial and supply chain software for small and medium sized enterprises (SMEs). Navision gives Microsoft a European SME channel to balance its purchase of US-based CRM company Great Plains last year. It too targets the SME market. Andy Kellet, senior research analyst at Butler Group, said: "Navision is broader on its strategies than Great Plains, which is just a CRM company. I'd say a starting point for Microsoft would be CRM. We'll have to see where it goes from there." A spokesman for financial software firm Coda said the deal will not affect the European market. "Microsoft's acquisition of Great Plains has not turned out as it hoped," he said. "Microsoft implied Great Plains would give it a global CRM reach, yet we've seen very little evidence of an impact on the European market. Navision's purchase is Microsoft filling in the gaps." He added: "Microsoft's forays into the business applications market have not been graced with economic success. It has to realise it can't just pump out a standard product for SMEs without a strong understanding of the market." Commentators have said the deal could mean the end of Newcastle-based financial software company, Sage. It has traditionally dominated the area. However, Butler's Kellet said: "In the short term this deal won't affect Sage badly as the company has got a pretty well established customer base and has been doing OK for the last 12 months, despite the difficult market conditions. "We will have to keep an eye on what Microsoft decides to do with Navision to determine Sage's medium to long term future."