relationship management) SAAS market. Several smaller vendors have strong offerings, including Zoho and Zimbra.

Then there is Microsoft, whose inability
or unwillingness to come out with a hosted
suite comparable to Google Apps many find
befuddling. Microsoft Office is the dominant
productivity suite in the packaged software.

That may be the problem. Many wonder if Microsoft is struggling with how to develop a hosted version of Office without cannibalizing the suite’s packaged software business.

“A challenge for Microsoft is to figure out how to get people to buy the next version of Office if there is also an on-demand version,” says Rebecca Wettemann, an analyst with Nucleus Research.

Another reason for Microsoft’s perceived deer-in-the-headlights reaction:“They’re not innovating the way they were 10 years ago,” Wettemann says.

However, it’s widely assumed Microsoft will respond at some point and have a significant effect on the market.

“I think Microsoft needs to worry about it now because it takes a while to get it right,” Creese says.“In hosted office suites, it’s going to take a while for companies to figure out how they want the thing to work.”

In its defense, Microsoft officials have said that Office has steadily gained hosted service components for years, and that combining core PC software with SAAS capabilities is the right approach.

With Office Live, Microsoft offers a set of hosted services for small businesses, like Web site creation and hosting, while Office Online offers Office online resources.

Microsoft announced a unified installer to help users download updates for its family of Windows Live hosted services. Yet, those who have been waiting for Microsoft to make a power move in the hosted office space found the announcement underwhelming and dismissed it as cosmetic.

While Microsoft mulls its move, rivals like Google continue boosting their offerings.

Google and Capgemini announced that the large IT services provider has become a

partner for the workplace version of Google Apps. Capgemini now provides training, support, integration and other services to large organizations that implement Google Apps Premier.

“I’d expect more and more IT services companies will offer that kind of help desk and support around the Google Apps Premier environment,” Wettemann says.

While many organizations ponder SAAS productivity suites, thousands of others have already implemented them, lured by their benefits.

For Adison & Partners’s DiPietropolo, the discovery of a SAAS office suite followed a disaster.

Three months after launching his company, his laptop’s hard drive, loaded with critical documents, imploded. Recovering the

together,” says DiPietropolo, who founded the company about two and a half years ago.

WebOffice also lets the staff nimbly respond to client requests from anywhere, by tapping remotely into databases and getting information on the fly.

“From a business development standpoint, this has been a differentiator for us,” he says. “This ability to instantaneously respond [to queries] really impresses clients.”

Because the suite is hosted by WebEx, he doesn’t have to worry about tuning its hardware and upgrading its software.

Like DiPietropolo, many IT buyers find that hosted suites let them save on hardware and software installation and maintenance, while making it easy for employees to share and collaborate on documents, for a fraction of the cost it would take to implement an

 

“A challenge for Microsoft is to figure out how to get people to buy the
next version of Office if there is also an on-demand version,” says Rebecca
Wettemann,

data cost DiPietropolo dearly. He resolved to prevent a similar disaster.

He knew larger companies had server-based back-up systems managed by IT professionals. He assumed the cost of a modest set up would break his budget.

Then the entrepreneur found WebEx’s WebOffice, a Web-hosted office suite which, for a monthly fee he finds affordable, gave him what he was looking for.

“It was a revelation to me that a small business owner could afford something like this,” he says.

The six employees in New Jersey -- two others work in Albany, New York -- have been office-less and working from home for the past several months, because the completion of Adison & Partners’ new digs is delayed.

Having documents and calendars stored centrally in WebOffice servers“ties everyone

in-house messaging and collaboration system such as Microsoft’s Exchange and Sharepoint or IBM’s Lotus Domino/Notes.

Disadvantages include security concerns over hosting sensitive data with a third party beyond the corporate firewall, as well as downtime incidents that leave the organization without access to the hosted applications.

Upon close inspection, existing SAAS suites reveal themselves as strong in certain areas and less so in others. In a recently published and widely discussed 55-page report, Creese took a microscope to Google Apps Premier, dissecting its pros and cons in detail.

For example, Creese found the suite lacking in archiving features, such as records management and electronic discovery, as well as in analytics capabilities, such as