By Sharla Sikes

Software applications that can be accessed via the Internet are growing in popularity, and it’s not hard to see why. With the applications available on a pay-per-use basis or even free, businesses—especially small and medium businesses—can find a cost solution that fits.

Businesses can take advantage of the provider’s secure server and avoid buying software and installing it on company servers.

“Already, more tools and applications, such as office software, e-mail and customer relationship management are being served from such centres, and we can expect the range of applications and services available to grow,” says David Mitchell Smith, vice-president and fellow at Gartner Research.

The market may grow to nearly $19 billion globally in just three years, according to Gartner. The company estimates that 25 percent of all new software will be software-as-a-service, though some applications may stay in-house.

E-mail is one of the applications most likely to become hosted increasingly on a service provider’s server, driven by storage requirements as much as the boom in telecommuting.

Gartner predicts that by 2012, “at least a third” of business software will move toward software-as-a-service rather than in-house applications, and Oracle, SAP and Microsoft are positioning their businesses and products to cater to this shift.

Many providers already offer full-service online software applications, including Microsoft with its Office Live Workspace which offers a free, hosted, online file sharing service that allows users to store, access and share documents. Google Apps features Gmail, Google Talk, Google Calendar, Google Docs and Google Sites. Google’s applications are available as a free, basic version or a fee-supported version with more features and functions.

LucidEra, NetSuite, Callidus Software, Ketera Technologies, RightNow, Salesforce.com and Coghead are just a few of the companies offering online solutions for analytics, sales, marketing, finance, ERP, CRM, e-commerce, sales performance management, electronic procurement and more.

These online offerings give smaller businesses the ability to “play with the big boys,” by having access to applications and functions that would be too costly to buy and run on in-house servers. Fees can range from $5 per month up to $200, depending on the complexity and features needed. These fees often include upgrades, maintenance and customer support, but users are advised to check for “hidden fees.” These charges most often relate to storage capacity or customer support.

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