I can still remember what it was like to install software in the 1980's and early 1990's, back when I was a student in high school and long before I started my own business. Floppy disks were the rage and many programs in fact fit on one or two disks. During the later 90's through today, software has come installed on CDs and DVDs as they hold much more data than other media. But throughout this evolution of software nothing much has changed.

As business people, we still have to install buggy software on slow computers and worry about the software we're installing making another buggy program we rely on unstable. Installing software takes time as we click through message after message mostly displaying "next." If you have more than one office or employees working out of the office, ensuring that they are using the latest software is not an easy task with traditionally installed software. Maybe you have a particular program that you want to roll out to all your employees and offices for better collaboration and communication. This task is NOT easy via a traditional server.

A strong, reliable, and easy alternative involves using these applications as a hosted application or via the Internet. When an application is served over the Internet, all that employees need to do to access the application is open up their Web browser and point to the Web address of the application -- no questions, no installation, no hassle, and no conflicts with other programs.

This is why, with the urgency of popping popcorn in a hot microwave, more and more companies are serving software to small businesses via Web.

The hosted application business is not new. Many of us have been taking advantage of the free e-mail services of Yahoo, Microsoft, and Google for years. Companies like NetSuite, Salesforce.com, and Intranets.com (now WebExOne) have been around, selling their applications as hosted applications paid for by the month instead of upfront like traditional software.

However, what is new is that more "mainstream" applications or office suites such as spreadsheets, word processing, and databases are also being sold as hosted Web applications. Microsoft is the established leader in selling office suites for traditional installation on a PC. However, Google and other companies are aggressively challenging this dominance by offering their own office suites as hosted applications. Google and Intuit, which makes accounting software, announced in September that they are partnering to offer small business online advertising solutions (initially) within QuickBooks, software used mainly by small businesses. This is seen as a move towards migrating more small businesses towards hosted office applications.

Another very hot market is e-mail hosting. E-mail hosting has been available to businesses for many years and several companies such as Blue Tie, MI8, and Singlefin have built up a loyal client base. However, with Google's entry into the market, more companies have begun to consider using Web applications for one's entire traditional software infrastructure.

Sounds cool but what are the real benefits?

Having software installed on your local computer or servers means that you (or a consultant or your IT person) have to maintain the software and the computer it's on to ensure optimal performance. Software served via the Internet gives you the flexibility and freedom of not worrying about maintaining anything -- because the company that now hosts the application maintains performance. If you want to save money and concentrate on your business while someone else concentrates on your technology, consider hosted applications.

Of course, there are drawbacks. If you can't access the Internet or the rare case that the company hosting your application goes down, you won't be able access your information. And what about security? It's true, information that is not hosted in-house is potentially less safe. So you'll still need to follow some of the basic steps to protect your proprietary information: Make sure that your data is always backed up; and as you communicate via the Internet, take precautions to ensure that your connection is secure from hackers.

As we move away from software installed on our business computers into the brave new world of Web applications, think of this move as the small business version of IT outsourcing. You get the IT expertise, but hopefully not the headaches.

Ramon Ray is an author, speaker, technology writer and former small business technology consultant. He publishes Smallbiztechnology.com, a website that helps small and medium-sized businesses strategically use technology as a tool to grow their businesses.