Have you seen that television commercial? The one in which hundreds of bankers in suits jostle at your doorstep for the privilege of servicing your mortgage? It could very well be used for the hosted applications and services.
Not long ago, the software industry treated small businesses like step-children. Business software was basically made for the big boys. It was usually too expensive for small businesses, and offered features that were too complex for their needs. Now, all of a sudden, software makers are vying to patronize small businesses by offering them all kinds of hosted applications and services — FREE. That’s right. Free software AND free service. And they are trying to trump one another by offering more features or more free stuff than others. Technology wise, these are good times for little guys.
But don’t throw out your desktop applications yet. Before you jump on the hosted applications bandwagon, whether free or otherwise, you must understand that free stuff is seldom totally free. Unless vendors are in the business of philanthropy, they have to make money somewhere in order to provide you a free service. They do it in several ways. The site, application, or service…
- …may carry advertisements. For example, a free web hosting service may expect your site to carry their banners. Naturally, you would not like to put someone else’s banner on your site. So, of late, there is a new twist: you will see, and have to live with, advertisements in the management interface and the e-mail web client, but your audience will not see advertisements. Or if the vendor provides e-mail service, the outgoing messages may carry a little advertisement in the footer.
- …may have usage restrictions. For example, a collaboration suite may be free for three users but you may have to cough up a monthly fee for additional users. The vendors hope that one day you will outgrow the free user limit.
- …may have storage restrictions. For example, you may be able to store 5 MB of data free of charge, but you may have to pay for additional storage. The vendors in this case, hope that your data will outgrow the free storage limit.
- …may have functionality restrictions. For example, an invoicing application will allow you to make invoices in the free version but you will have to upgrade to a paid version if you want to export that data to your accounting software. Again, the vendor hopes that once you are hooked on to its application, you would not mind spending a few extra bucks for the convenience of data export.
- …may have entity restrictions. For example, a CRM application may allow you to manage ten accounts in the free version, but for additional accounts, you may be expected to pay.
The Second thing you should be aware of — even if you are a paying customer — is that once you commit to a hosted application or service, it is not always easy to back out and move over to another application or service. There are several reasons for this:
- Very few hosted applications allow you to export all your data. That means if you choose to stop using the application, you have to deal with the problem of what to do about the data you have already entered in that application. You either have to forget about it and start afresh in your new application, or you have to manually, painfully copy the data from the old application to the new one. Besides, the new application may have a completely different data model that may make the move extremely difficult, if not impossible.
- The vendor may make it difficult for you to make a move. For example, you may be expected to transfer your domain to a registrar of the vendor’s choice, but that registrar may not give you the option of updating your domain information yourself. Or the application might expect you to use an e-mail address provided by the vendor — you may be reluctant to switch over to another service if many of your clients and prospects have that e-mail address.
- If your application or service involves collaborating with several people, it may be a nightmare to get everyone to switch over to a new application, which may have a totally different paradigm and user interface.
- Free services may only be eligible for e-mail support, or even worse, no support at all. This may introduce a significant down-time during your your move — something you may not be prepared to put up with.
Lastly, you should remember that the present state of hosted application and service providers is very similar to the hosting providers during the Internet bubble. You can never be sure that the upstarts among vendors won’t go belly up or get gobbled up by bigger competitors. If that happens, god forbid, your data will vanish overnight and you will be left on the lurch.
Despite these considerations, there are several hosted applications and services out there that can be very useful to small businesses. Specifically, very small businesses — businesses that are run by a single person or by very few people — will find that the usage, storage, and entity restrictions may not be of much significance for them because of their tiny size.
Since I too am a small-business owner, I have tried out quite a few of these applications and services myself. I have embraced some wholeheartedly and have been disappointed with others. All too frequently, the limitations and gotchas are apparent only after signing up for the service, which can be extremely infuriating. In the coming weeks, I will take a look at some of the applications and services I have tried out, with an emphasis on the gotchas I have discussed above.
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