UK-based software provider Sage has announced that it will be partnering with Microsoft to develop its ERP solutions on the Windows Azure platform in a bid to target the SMB cloud market.

Sage will initially focus on Europe with Sage 200, a finance, CRM and business intelligence package, being developed in the UK and Spain.

The solutions will be compatible with Microsoft Office 365 and be rolled out to pilot sites in the coming months. The products will hit the market for general release in 2013.

“This is great news for our SMB customers who want both the best of on-premise applications and the benefits of the web. It is also very important for Sage because it shows momentum in the delivery of our web strategy and our commitment to a consistent technology and platform strategy,” said Antoine Henry, Sage Europe’s SMB market segment leader.

“A diverse eco-system requires more standards and the alliance provides this plus a direct way to engage with a whole range of Microsoft products. A fully featured platform as a service (PaaS) approach allows us to speed up development of domain specific customer applications, boost productivity, accelerate time to market and reduce duplication.”

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However, the deal has been criticised by Angela Eager, research director at analyst firm TechMarketView, who believes that the move still does not highlight a strong commitment by Sage to deliver a wide array of cloud products in the future.

“Sage, always a cautious mover shall we say, has been on the brink of making an out and out commitment to the cloud for several years now but never seems to pluck up the courage to take the plunge,” said Eager.

“It is paying the price - UK growth over the last few years has been laboured, something in the three percent to five percent range – and we can’t see that changing without a dramatic shift in its strategy.”

She added: “The alliance will move Sage’s cloud developments forward but movement is slow and the approach is piecemeal. Sage makes a selection of its applications available via the cloud and Azure will add another, separate delivery platform. Sage’s commitment to the cloud still looks half-hearted and it lacks a coherent strategy.”