05/22/2013 01:05 pm ET Updated Jul 22, 2013

The Small Business Software Revolution

A few days ago, tech giant Microsoft made news by saying packaged software will soon be a thing of the past. Just how soon? According to spokesperson Clint Patterson, "within a decade, we think everyone will choose to subscribe" to Microsoft Office 365, the online version of the company's flagship office productivity suite.

Microsoft's comments came on the heels of Adobe System's recent announcement that it is moving its popular Creative Suite entirely online. The software, a mainstay of graphic designers, video editors, and web developers, will now only be available by subscription in Adobe's web-based "Creative Cloud."

Microsoft is taking things more slowly than Adobe--the company Bill Gates built will still offer its software on disk for the foreseeable future--but the writing is on the wall: CD-ROMs will soon join floppies as museum pieces. Big deal, you might say, technology comes and goes. That's true, but moving software to the cloud means big changes, especially for small businesses.

Cloud-based business applications, also called Software-as-a-Service (SaaS), are leveling the playing field for small companies worldwide. Instead of buying servers and other infrastructure, and hiring an IT team to run it, small business owners can simply subscribe to powerful apps that can help them save time and lower costs on everything from accounting, to customer service, to marketing, and beyond.

It may seem strange or even a little scary to use the cloud to do something you've always done on your trusty desktop. However, if you're a small business owner, there's a good chance you're already using at least one cloud-based application. A recent Microsoft study found that up to 65 percent of SMBs already use cloud-based email or will soon, while almost half use web-based backup solutions.

Despite the excitement--or perhaps because of it--it can be difficult to find cloud applications that meet your needs. There are hundreds, if not thousands of apps to choose from, and no one wants to waste money on sub par products, even if they are based in the cloud. Here are three tips to help you find the best web-based software for your company.

  1. Apps are not one size fits all. Even though cloud-based apps can pack a lot of punch, small businesses may not need all of the functionalities that many big-name apps offer. Instead of trying to find one app to meet all of your business needs, identify your exact pain points and find software to address them. Multi-function applications--for example, invoicing software that also handles accounting and sales forecasting--can be complicated and expensive. Consider a less-costly app that solves your main problem: invoicing.
  2. Educate your employees and contractors. Cloud applications are well-known for their simplicity, but that doesn't mean that your employees and partners can figure out how to use them on their own, or understand what purpose they serve. When you select an app, make sure you take time to demo the software to your staff and any contractors you may work with. If your new accounting app isn't compatible with QuickBooks, that's a problem, but it's an even bigger problem if your CPA has no idea how to use it.
  3. Choosing apps isn't a popularity contest. Just because an app is popular doesn't mean it's a good fit for your business. Spend some time researching your options before you buy. If the app seems difficult to set up or requires complicated integrations, find out what kind of assistance the vendor provides. If it's a choice between two similar apps at a similar price point, go with the one that offers better customer support. That way, you'll have greater peace of mind that any technology issues that crop up won't affect your business and won't harm your bottom line.

With these tips in mind, you'll be more prepared to start ditching the disks and join the small business software revolution.