A few weeks ago, I did a technology experiment. I used a Web-hosted software application to collaborate on a document with two colleagues of mine. Now, I admit to being a total geek. As for my colleagues, let's just say they are more uncomfortable with using new tools. But after I convinced them to give Google Docs a try, we were all able to quickly and easily edit the document, track changes, and work together to produce a better product. In the past, we would have had to e-mail the document back and forth and use track changes. It would have been time-consuming and, frankly, a pain.

The success of the experiment only served to embolden me to consider new delivery systems for my other business software applications. As a business owner, you, too, should be investigating the benefits and drawbacks of new Web-hosted applications. I'm seriously considering moving to a hosted solution for e-mail, for example.

The market for Web applications directed at the small business market is exploding. Over the past few weeks, Google has been aggressively launching online applications for business users. These services include document collaboration, corporate e-mail and website hosting, and more. Although Google has only recently launched business applications, other companies such as BlueTie, HyperOffice, and WebExOne (formerly Intranets.com), among others, have been in the market for a longer time. Google's biggest competitor, Microsoft, also launched a full suite of online applications from beta Nov. 15, Office Live 2007. Baris Cetinok, director of project management and marketing for Office Live explained to me that there are three things MSOL helps small businesses do:

  • Establish a Web presence (many smaller businesses still have none)
  • Find more customers
  • Manage the business (from anywhere)
  • Add company branded e-mail accounts
  • Allow you to chat online via text, voice or mobile phone with employees, customers or colleagues using your company domain name with Windows Live Messenger.

What this means for your business

Traditionally, you have purchased software and it was delivered via CD (or some other media) or downloaded via the Internet. The software was then installed on individual computers for everyone in the office to use. If you only have three computers, it's not very difficult or time consuming to get the software loaded. But if your growing business has 30 computers, it takes a lot of time (and money if you are paying a consultant) to install the software on all those machines.

Sometimes installing the software is only one part of the problem. When the software is installed it might conflict with previously installed software. The benefit of hosted applications is that the hosted application is online, therefore there is no installation on your part and you and your entire team can access the software and data anytime and from anywhere.

Software that resides on your local computer (or server) means that you can't easily access it when you are traveling, unless you setup a remote access solution (which means more time and money) to do so. If you have two sales representatives in Maine, three in Maryland, and a main office in Michigan, you have to ensure the computers in all three locations have the same software (that equals even more time and money -- are you getting the picture?).

When you buy traditional software you are encumbered by license agreements and their associated costs. Using a hosted application you pay a monthly fee per user which can be an ease on your cash flow.

Traditional software vendors often update their software annually, or release patches throughout the year. Using a hosted application, the service provider continuously updates the software and each time you login you have the most recent version.

One of the side benefits of a hosted application is that your data is always backed up. If you lose your notebook, your data is not lost as it resides on the servers of your service providers.

Before switching to a hosted application, be it a collaboration tool, e-mail, database, or one of the hundreds of other solutions on the market, carefully consider the pros and cons. The risks include that if you don't have Internet access for some reason, such as your Internet provider going down, what do you do? There is also the risk that something will happen to bring down the system of your hosted application provider. Again, this is something that is out of your control, but would have a potential impact on your business. Weigh your options and choose the solution that's best for your business.

For me, I have decided to look for a hosted e-mail solution that is both local and hosted, providing me with the convenience of a hosted application but the security of having the data also housed locally. Fortunately, there are dozens and dozens of great e-mail hosting services provided by such companies as Webmail.us, MI8, Blue Tie, and Microsoft's Office Live.

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.