3 Reasons Online Services Save Money
by Heather Clancy
reprinted with permission from the Microsoft Small Business Center

It is almost unthinkable to run any business successfully without e-mail. Or, for that matter, without conference calls or instant messaging services that allow employees to share information more efficiently.

The good news is that small-business owners can now opt for many of the same communications and collaboration tools much bigger companies have at their disposal-without having to shell out the on-premise technology investment once necessary for these applications. How? By subscribing to online versions of these apps; that is, by joining the ranks of companies which have opted for software as a service.

Microsoft offers one example. A Standard subscription to its Business Productivity Online Suite (BPOS) provides a small company with Exchange e-mail, SharePoint site hosting, Communications Server instant messaging and presence applications (which tell people
within your network when you're online), and LiveMeeting Web conferencing service. The Dedicated BPOS option layers additional security and archiving features on top of these basic applications.

Market research firm IDC estimates that most United States companies will be using these business applications and shifting more of their technology budgets to support this model.

It's easy to see why. For one, small-business owners can forego large capital expenditures that might negatively affect cash flow by opting for a monthly, quarterly or annual subscription fee. They'll be able to get new employees up-and-running on applications in a matter of hours rather than days. Over time, they can save substantially on the traditional costs associated with supporting and maintaining aging hardware and software.

There's another big plus, especially in this age of telecommuting, mobility and increasingly ubiquitous high-speed Internet access. Hosted applications can be securely accessed from virtually anywhere at anytime with many different devices, including computers, smart phones and other personal digital assistants with connectivity features. This is an especially important consideration for small-business owner Kelly Faris, co-founder and president of Toronto-based company Remote Stylist.

Reason 1: Virtual teams need a virtual infrastructure .
That's because Remote Stylist, a team of home design experts who provide advice to clients via the Internet, is virtual. So Faris turned to hosted services to build out a virtual workspace for about 40 people-all work remotely. The company relies on a secure, online suite of applications to handle scheduling, document and file sharing, e-mail and live chat across several different countries-from Canada and Barbados to Australia.

Hosted applications also support her own travel schedule: Faris is often on the road four days a week.

"From a cash flow perspective, going with hosted versions just made sense. Some of the applications I was considering required a huge upfront cost," Faris says. Instead, Remote Stylist now pays a monthly subscription, which lets her meter out her technology investment. She allows employees to use the desktop applications of their choice for word processing or spreadsheets, but when it comes to communicating across the company, she wanted to ensure consistency.

Another factor that positively affected Faris' decision to opt for these hosted applications was the ease with which Remote Stylist could add more users as it expanded its workforce, simply by requesting another account.

Reason 2: Online apps offer rapid deployment, scalability .
Avi Bitterman, principal of Insite Computer Group, a Toronto-based consultant that sells hosted Microsoft applications, says online productivity tools let small businesses grow at their own pace without requiring them to place technology bets three or four years into the future. "Small businesses evolve much quicker than larger companies," Bitterman says. "They need to change more quickly. But at the same time, they don't want to put forth a technology budget that commits them to a five-year plan."

Insite was able to help one start-up company with an aggressive rollout request. It set up the company with hosted Microsoft Office and hosted Microsoft Exchange capabilities within two hours of a phone request, proving its ability to handle the deployment, Bitterman says.

But online hosting experts urge small businesses to tread carefully. Many service providers promise similar almost-instant-on access to their applications, so it's important that small-business owners study the fine print of their service agreements carefully before committing, says Paul West, principal of another hosted applications consulting firm, SharePoint360, based in San Diego, Calif. Make sure to ask about quality of service issues, such as promised availability and past up-time performance, as well as the average time it takes to provision a new user with an account, West advises.

"Scalability is a big issue," he says. "Will the service provider help you grow?"

While many application hosting companies say they can support the needs of smaller company of one to 50 users, quality of service could suffer as they take on additional users, West notes. That's why it's important to look carefully at your service provider's client list: Does it work with companies roughly your size or substantially bigger? Or, are its services tailored more for consumer or personal applications?

Another consideration is the data storage that is associated with a monthly subscription. Your monthly subscription fee may seem cheap until you realize there are limits to how much space your company will get to store documents, archived e-mail messages and other vital business information. Deals that seem too good to be true are too often just that, West says.

It's also important that small businesses understand the extent to which they can manage account settings and features, and make sure that applications behave in ways that their employees expect.

This is especially important when it comes to online collaboration, since each company's workflow preferences will be unique, says SharePoint360's West. "Collaboration solutions aren't something that you can turn on and go with. You need to make it look and feel like your company," he said.

Reason 3: Let someone else manage your technology .
By opting for an online edition of a business application, a small business often gains access to new features and modifications more quickly than if it were managing its own technology, says Bitterman.

That's because service providers hosting these applications can apply best practices for their customers. For example, a security update can be applied quickly. Or a new feature can be supported with little or no interruption of service. Either way, small-business owners don't need to worry about service upgrades.

"It's easier for me to manage 1,000 servers in one place than it is for me to host 1,000 servers in as many different place," Bitterman says. "The best service providers can give way more to their customers than they could achieve individually, at a less expensive price."