Technology is one of the fundamental reasons why today’s small businesses can break through with innovative products, compete head to head with large corporations, and even change the very rules of the game. The modern paradigm of entrepreneurship -- fueled by inexpensive and available technology -- emphasizes flexibility, responsiveness, and cost effectiveness, enabling small businesses to contend for market position in a way that was not even thinkable just a few years ago.

Software provided as a service via the Web -- or in the "cloud" -- is the quintessence of what small businesses need for their information workers: cost effective, flexible tools that free them from physical dependency and allow for location independent operation and wide scale collaboration.

The most common tasks performed by small business employees are definitely related to basic office communications and productivity. Such tasks can now be performed through and incredible array of choices that leverage the software in the cloud model and take advantage of the inherent collaborative nature of the Internet for very low cost, or even for free, offering strong alternatives to traditional desktop computing.

E-mail, communications, and personal information management

Web mail has been available for many years, but in the recent past has become a complete alternative to traditional e-mail clients such as Outlook, Eudora, or Thunderbird. Web 2.0 technologies have allowed in fact for such tools to offer very rich and complete user experience.

Gmail is an appealing solution with its widespread adoption among consumers, more storage than you’ll ever need, full integration with traditional clients, and the unbeatable price -- it's free. Its true power though becomes evident when used in conjunction with the other Google applications, such as calendaring, contacts management, instant messaging, Google Docs and Google Sites. A premium, paid option called Google Apps integrates all these applications around your own domain name and allows for true workgroup functionality, plus extensive customer support for $50/year per user.

Microsoft’s Hotmail has been around for as long as I can remember, but in the last few years it has turned into a communication platform actually usable by a small business with success. Now part of Office Live Small Business, it integrates with services such as online storage and your own website. Starts for free and you can add services for tiered fees.

The best e-mail based tools though are the ones that allow you to get the best of all worlds: Web mail and client-side e-mail download and fully synchronized, together with online and offline calendars, contacts, tasks, and workgroup-level collaboration.  In this domain, Yahoo!’s Zimbra and Microsoft Exchange can now be purchased as online services with absolutely no technical knowledge required for setup. They're both fantastic tools, but outsourced MS Exchange services are definitely the most mature and available. The domestic leader in the Exchange as a service offer for small businesses is Intermedia with robust and reliable hosting, full customer support starting at about $10/month per user. Less expensive, but more consumer oriented providers include 1&1 and mail2web that include a free Web-only service with no workgroup features.

Office productivity suites

In the past few years a new breed of online applications that perform most of the tasks that we are accustomed to perform with Microsoft Office have reached business maturity and are getting ready for prime time.

The one that I find to be the most reliable and well featured online alternative to Office is ThinkFree. It has been around for many years now and it offers both a Web-based office application and an identical companion for the desktop that requires no connectivity. The Web offerings are rounded by documents storage services, great workspace collaboration, and smartphones integration. Basic service is free; premium services and products can be added for modest fees.

Google Docs is clearly becoming a strong contender. Free, well integrated with its other services, it provides extremely simple interface with native collaborative features: multiple users can concurrently work on the same documents with no chance for confusion. Don’t expect too many bells and whistles though. It's a solid, collaborative office suite at no cost with essential features.

A recent entry in the Web productivity market that has made very good inroads is Zoho. While its services go well beyond the basic productivity suite and extend into teleconferencing, project management, e-mail, and customer relationship management (CRM) and are accessible mostly for free, their products are not exactly ready for robust applications yet, but they are certainly moving in the right direction. Definitely worth take a look.  

A number of other Web-based applications designed to make small business more collaborative and flexible are finally reaching maturity. Some examples include file transfer (YouSendIt), intranets and collaboration (HyperOffice, Web Office), and project collaboration and management (Central Desktop and Basecamp.)

With the emergence of more and more applications leveraging the low development and distribution costs afforded by the software-as-a-service model (SaaS), small businesses are going to see a growing number of offerings tailored to their needs and responding to their functional requirements much better than what is available today on desktop software.

In my next column,, we will explore options for Web-based accounting and financial management. Stay tuned.

Andrea Peiro is the Small Business Market Expert at the Palo Alto Research Center (PARC). Founder of the Small Business Technology Magazine, a recognized authority, author, analyst and speaker on high-tech marketing and use of information technology in small and mid-sized businesses, he has been frequently interviewed and featured in such media outlets as The New York Times, The Wall Street Journal, and Inc. You can reach him at