SaaS gives small business powerful tools

SEATTLE, WA – Most small-business owners don’t realize this yet, but a mother lode of technology that can free precious cash and manpower is available to them as in no other time in history.

Small firms typically buy basic clerical and accounting software in shrink-wrap boxes and run them on a company computer. The owner, or a harried employee, invariably gets pressed into service as resident tech expert.

But today, they can tap into a swelling portfolio of business applications residing in far-off computer servers. These programs come down from the Internet cloud, sent by a growing army of software companies eager to deliver powerful tools to Web browsers in laptops, netbooks and smartphones. Users pay as they use.

So-called software-as-a-service, or SaaS, has long been available to big companies. Now that computing power has become dirt cheap and Internet usage ubiquitous, software developers are racing to put cutting-edge business apps into the hands of small firms in ways that could give a lift to the economic recovery.

“We’re entering an entirely new paradigm,” says Marc Benioff, CEO of, a San Francisco-based supplier of programs that manage customer relations. “It’s fantastic for small business, because software-as-a-service gives them a whole new level of capabilities.”

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Services such as Speakeasy, Concur Breeze and Avalara have cropped up to manage Internet phone systems, do expense and travel accounting, and handle complex sales-tax payments for small firms. For modest fees, these suppliers assume the burden of keeping programs updated, secure and readily accessible. “This technology allows you to do more with less,” says Bruce Chatterley, CEO of Speakeasy, a Seattle-based supplier of Internet phone systems. “Small business can now go toe-to-toe with big business.”

The trend has grabbed the attention of the tech giants. Microsoft and IBM have begun hustling to prepare a new generation of hosted services, tuned for small businesses and neatly tying into their legacy products. “Big Blue is definitely going small!” declares Sean Poulley, IBM’s vice president of cloud collaboration.

And Google recently has become hyper-focused on this emerging market. The search giant is stepping up efforts to position its Web-delivered e-mail and clerical applications as the hub of some of the hottest new tools crafted specifically to help small firms.

“There is big money in this,” says Christopher Vander Mey, senior product manager for Google’s business line of products. “We want to give business a choice, and we strongly believe many will choose us.”

Growth in spending on cloud services by U.S. companies with 100 or fewer employees is projected to grow from $2.4 billion this year to $4.1 billion in 2013, according to research firm IDC. But that could turn out to be conservative if awareness spreads. “We’re at an acceleration point,” says Benioff. “We’re seeing real innovation and real growth, and it’s all coming from cloud computing.”

Sleeping better

Testimonials from early adopters bear out the benefit claims made by SaaS proponents. Take Glen Smith, CEO of Commercial Retrofitters & Recyclers, an energy auditing and recycling company in Upper Marlboro, Md. Smith knows firsthand how hosted services can minimize disruptions, should a company computer get lost or stolen.

In early 2009, Smith moved all his customer and banking records into online systems supplied by, and Intuit’s QuickBooks Online. That allowed him to shed the Windows PC server he kept on the premises to store this invaluable data.

One weekend last month, thieves broke in and stole eight desktop PCs used by his office staff, along with a truckload of recycled tech equipment. Smith was unruffled. “On Monday, we went out and bought new computers, plugged them in, and we were back up and running by noon,” he says. “We didn’t have to re-create anything.”

At Executive Envelope, a Rancho Cucamonga, Calif.-based manufacturer of brochures and placards, office manager Claudia Brake was in dire need of a more efficient, accurate way to keep track of continually morphing sales-tax rates and rules imposed by the half-dozen states where Executive Envelope sells its products. The company accountant simply could not keep up. Errors — and audits — resulted.

By turning that tedious, detailed task over to Avalara’s specialized systems, the company saves eight to 10 employee hours a week, or $36,000 annually. More important, its exposure to audits has been reduced, allowing Brake to sleep better. “It not only makes my life easier, it allows me to focus on more valuable areas of our business,” she says.

Similarly, New Age Industrial, a Norton, Kan., aluminum equipment maker, recently turned to Concur Breeze to handle its business expense reports. Employees attending a recent tradeshow used their laptops to access the Concur Breeze website and make entries to expense reports while on the road. Back in Norton, accounting controller Missy Amlong could instantly review those entries.

“We went from seeing expense detail once a month to seeing detail in nearly real time,” Amlong says. She now spends 30% to 40% less time processing expenses.

Blended services

At Google, the proliferation of such services played into the hands of the team behind Google Apps Premier Edition, the suite of Web-based e-mail, calendar and clerical programs the company sells to businesses for $50 a year per employee.

On March 9, the search giant rolled out Google Apps Marketplace. Businesses can choose from more than 90 hosted services that tie into Google Apps. To appear in the marketplace, software companies pay a $100 registration fee and agree to route access to their service through Google Apps. They also pay Google a 20% cut of any revenue generated through the marketplace. More than 1 million Google Apps users are now using services supplied by Google’s marketplace partners.

“The idea was simple,” says Matt Glotzbach, product management director for Google business software. “Every day, there was a new vendor offering unique services in the cloud. We wanted to give small business a centralized point where they could see offerings, read reviews and install the offerings.”

Tom Hippensteel, vice president of LiquidConcrete, a Seattle-based maker of coatings for concrete and steel structures, has come to rely on Google Apps and its marketplace partner, SmartSheet, a supplier of project management software. Hippensteel often collaborates on new coating formulas and customer contracts with multiple employees in the field. Members of a work group might be simultaneously working in one or both of the cloud programs using Apple Macs, Windows PCs or Apple iPhones.

“When we’re done, we can hit save, and everybody has the current version,” says Hippensteel. “That solves the problem of multiple versions of a file flying around in e-mail attachments.”

IBM is making a similar bet that small firms will gravitate to a mix of basic and specialized hosted services seamlessly blended by a tech giant doing the behind-the-scenes heavy lifting. This spring, it announced partnerships with UPS, Skype, and Silanis, an e-signature authentication maker. Subscribers to LotusLive, IBM’s hosted e-mail and document-sharing service, can now ship packages, make phone calls, manage customer records and authenticate documents directly from LotusLive. IBM intends to add more partners.

“This cloud-delivery model allows IBM to serve a whole new class of customers that we’ve not been able to reach easily before,” says IBM’s Poulley. “Now more than ever, you’re going to see us adapting to the needs of small business.”

‘Save to Web’

Microsoft, meanwhile, is attempting to ease its small-business patrons into the Internet cloud. It plans to roll out Office 2010, the latest iteration of the world’s most widely used suite of clerical programs, sometime in June.

A small-business owner will be able to buy Office 2010 for $199 embedded in a new Windows PC, or $279 in a shrink-wrapped box. A key new function: When closing a Word document, Excel spreadsheet or PowerPoint slide presentation, the user will be able to navigate to “Save & Send,” then “Save to Web.”

The file will then sail off to SkyDrive, a free file-storage service residing on Microsoft’s cloud servers. SkyDrive is available to anyone who signs up for a free Windows Live or Hotmail account. Later, the user can access the SkyDrive file and work on it from any Web browser on any computing device.

To do this, you must log onto Windows Live and use Office Web Apps, a lightweight, browser-enabled version of Office that Microsoft is preparing to make free to everyone; it plans to roll out Office Web Apps at the same time as, or slightly before, Office 2010.

“They want to sell Office 2010, but they also want to respond to the fact that people want to do stuff online,” says Matt Rosoff, senior analyst at research firm Directions on Microsoft.

Unlike Google and IBM, Microsoft is not letting any partners tie their apps directly into its breadwinner product. But, in the brave new world of cloud computing, that hasn’t stopped Central Desktop, a Pasadena, Calif.-based start-up, from hosting a service that enables users of Office 2003 and Office 2007 to collaborate in the Internet cloud.

For $25 per month, per user, Central Desktop lets you save older Office files on its servers, where multiple users can simultaneously access the same file. There’s no need to pay for Office 2010, or make the switch to Google Apps, says Central’s co-founder and CEO Isaac Garcia.

“We know small business wants to consume product via software-as-a-service,” he says. “It’s affordable, flexible and you pay as you go, instead of paying a large up-front licensing fee.”