Adison & Partners is a small yet emblematic part of a major shift in how office software is sold and used. No, it isn't a Web 2.0 Silicon Valley startup. It's an eight-person executive recruitment company in New Jersey. Its founder and managing partner, Jim DiPietropolo, doesn't know what a "wiki" is.
This he knows: choosing a Webhosted suite of communication and collaboration applications has greatly benefitted his business. Like Adison & Partners, thousands of organisations, large and small, are researching and implementing hosted office suites as alternatives to pricier, traditional options, like Microsoft Office, designed to live in PC hard drives.
Sure, IT buyers, whether chief information officers at large companies, small business owners or self-employed individuals, must study the options carefully and ask hard questions about these software-as-a-service (SAAS), on-demand suites.
But while "fools rush in" mistakes are bad, an even worse decision regarding the SAAS model is ignoring it. That's particularly true for large organisations.
"Now is the time to have advanced technology folks and strategy people, to look at this stuff and stay abreast of it, even if the time isn't yet right to purchase," Burton Group analyst, Guy Creese, said. "A huge mistake would be to look at the offerings today, say they're immature and then not pay any attention."
The offerings are uneven, with some suites strong in web mail, while others focus on productivity applications like word processing and spreadsheets. Many key architecture, business and technology questions await answers. But the SAAS model for these office suites is here to stay. Many big vendors are either openly embracing or likely to enter this market.
Google is committed with its Google Apps suite, as is Cisco Systems with the WebEx WebOffi ce product. Salesforce.com certainly could stake out a strong position quickly, applying its experience in the CRM 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 fi nd 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 cannibalising 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," Nucleus Research analyst, Rebecca Wettemann, said. "They're not innovating the way they were 10 years ago."
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 said. "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 defence, Microsoft officials have said Office has steadily gained hosted service components for years, and that combining core PC software with SAAS capabilities was the right approach. With Office Live, Microsoft offers a set of hosted services for small businesses, such as website creation and hosting, while Office Online offers Office online resources.
Recently, 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 continue boosting their offerings. Google and Capgemini have 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 organisations that implement Google Apps Premier.
"I'd expect more IT services companies will offer that kind of helpdesk and support around the Google Apps Premier environment," Wettemann said. While many organisations 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 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 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 said.
Having documents and calendars stored centrally in WebOffice servers "ties everyone together," according to DiPietropolo.
WebOffice also lets the staff nimbly respond to client requests from anywhere, by tapping remotely into databases and getting information on the fl y. "From a business development standpoint, this has been a differentiator for us," he said. "This ability to instantaneously respond [to queries] really impresses clients." Because it 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 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 organisation 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 lacked archiving features, such as records management and electronic discovery, as well as in analytics capabilities, such as analysis of content creation patterns. Most analysts, users and vendors generally agree that hosted suites and packaged software suites, each with its advantages, work best in tandem, complementing each other.
"We'll see more and more organizations that look to a tiered strategy for the way they deliver desktop applications," Wettemann said. "So rather than have a standard desktop, I may give Office to the folks in finance who really need Excel, while the folks in marketing may be fine within the Google environment."