Are Hosted Software Applications Good for Small Businesses?

A few months ago I wrote an article at Associated Content on whether a small business should consider a hosted software application.  At the time I identified a number of factors that a small business should consider before deciding to rely on a hosted software application.  Some of the factors I discussed included reliability of the provider, cost analysis of ongoing fees versus an outright purchase, ownership and control over your data and the stability of your business’s connection to the Internet.  Since that time, a number of things seem to be making hosted applications more attractive for small companies.  There are now a wide variety of free hosted software applications and broadband access continues to be more widely available for small companies at ever reduced cost.

Web based applications are definitely becoming popular.  One issue I see is that there are a lot of small hosted applications that offer some pieces of functionality for free.  I think there’s a temptation for small companies to try to take advantage of these free applications to replace traditional software applications. The problem is that you may end up with the same data being entered into multiple applications.  This makes keeping your data updated difficult.  Making sure changes migrate across multiple hosted applications becomes an extremely manual and tedious process.

Another thing to consider is whether you want to run your small business using an ad supported software package.  There are numerous “free” hosted applications that deliver ads to monetize the application.  Some of them offer some impressive features and are quite usable but are the ads too distracting?  While many will not object to seeing ads in their application there are those of us that would rather not deal with ads, even if it means we can’t get something for free.

The real benefit of a hosted software application is, of course, the ability to work anywhere.  This is one feature I make particular use of.  I travel frequently or decide to work out on the deck or at the local coffee shop.  Web enabled applications and hosted applications in particular make it easy for me to do so.  Having said that, the choice of subscribing to a hosted application or hosting one yourself (there are numerous great open source projects that you can host yourself — Sugar CRM, SQL Ledger, etc), is largely personal.  It will depend on the infrastructure you have available, cost and your ability to support the hosted application.  That much hasn’t really changed.

The real difference between now and when I first wrote this article several months ago is that there are now a large number of free applications aviailable.  In today’s world, a small business could conceivably (If they didn’t mind ads, etc) run all their software as free hosted applications.  I think this speaks to an overall trend of software becoming a commodity and the Internet making hosted applicationa ubiquitous.  I hope this is a trend that continues and that the quality of such hosted applications also continues to improve.

Tags: hosted software applications, small business, web