Not long ago, Google CEO Eric Schmidt made some startling observations about small businesses and Web-based applications. During a speech at the TechCrunch Disrupt Conference, he said:

“Twenty years ago when you were setting up a small business, you had to go and buy a personal computer or a small server … and you had to have an IT professional and you had to run it in-house.

The right thing for a small business to do now is to not have any computers except the things which are on people’s desktops and on their smartphones … and do everything in the cloud. … The components would be an email system, a calendar system, a sales force automation system, and then the stuff that’s vertical for whatever their business is.”

These comments capture the fundamental change that small businesses are going through, within the past decade. Increasingly, we small businesses are transitioning our computing needs to a “cloud computing” model. While I don’t think it’s possible for all small businesses to eliminate local servers and use software that is completely in the cloud as Schmidt suggests, one thing is clear: gradually, year by year, we are headed in that direction.

Today you not only can get email and calendar applications “in the cloud,” but you can find any number of other business applications:

• Document creation, Spreadsheet and Presentation
• HR and payroll applications
• Inventory Management
• Accounting
• Invoicing and Payment Applications
• Email Marketing Services
• Project Management Apps
• CRM software
• Helpdesk
• And much more

In fact, The Small Business Web lists 26 different categories of Web-based software applications in its directory of nearly 200 apps for small businesses.

Advantages of Cloud Computing

The growth of cloud computing is a definite positive for small businesses, because of key money-saving advantages.

Usually there is no large up-front expense in the form of a hefty software license. Instead you pay a much smaller monthly service fee. This allows you to spread out your costs, and eases your cash flow.

You also are relieved of the complexity and expense of loading and maintaining software on your own computers. All you need are computers for end users to access the application with an Internet connection and a Web browser. And since you don’t have to maintain the software internally, you can get by with a smaller IT staff (or perhaps get by with no in-house IT).

What to Consider When Choosing a Cloud App

But as more software moves to the cloud, certain considerations take on greater significance. Here are 3 things to consider when choosing Web-based software applications:

1. Does the software app integrate with other software or apps we have? – Most apps tend to do a narrow set of functions. If you’re trying to automate your entire business or automate a process end-to-end, you will probably have to piece together multiple software apps from different providers. If the online software services do not interoperate with one another, you and your staff could end up doing manual work to move data from one system to another via spreadsheets or by keying in the same information into multiple systems. Or, you’ll have to go through the expense of paying for software development to make different packages interoperate. The Small Business Web helps with some of this issue. In its directory, it indicates which software apps integrate with other software apps. It also indicates whether there’s a published API — that way, if you do have to code some software in order to move data from one app to another or make two software packages integrate, the task will be easier, cheaper and faster.

2. How secure is our data going to be? – With Web-based software services, your data used in the applications will be sitting on a server somewhere “in the cloud.” In other words, your data will be in the hands of another company. Inquire of the company what they do to keep data secure and private. It’s an important question to ask, but hard to get answers you can verify. One way to satisfy yourself is to search in Google to see if there have been public reports of security breaches involving the company. Also, consider the size of the software provider. Large companies tend to have audit and insurance requirements that force them to assess their processes and put in place safeguards against data breaches. Small providers and startups may have looser (or nonexistent) policies and procedures for handling your data.

3. Will the vendor be around for the long haul, and continue supporting and enhancing the app? This is important to ask for any software, but it takes on new meaning when a company has your confidential data. You need to have some assurance of continuity with the software, so that you don’t experience disruption in your business. Look at the vendor’s track record. How long has the vendor been around? If there’s a product forum or customer forums, are there a lot of unresolved complaints? Is there evidence of continuous enhancements? Investigate before you make a commitment, as it may be harder to switch later on.

Please comment below to share your thoughts on how your business has uses web apps.