Benefits of Hosted Software For Start-up and Small Businesses


According to research carried out by UK Online, a business broadband supplier, two thirds of small businesses defined as those with 1-10 employees and clearly this includes start-ups, do not yet have an internet connection at all. Further analysis shows that of those that do just over half do not have a company website, almost 20% are using a slow dial up network and 20% do not take basic security precautions such as using anti virus software. With this group representing something like 3.5million businesses in the UK the scope for growth and increased opportunities for these businesses by increased use of IT and the internet is enormous. We need to ask ourselves why so many people are shy of using the internet for business when something in the region of 61% of households have internet access according to the 2007 Office of National Statistics report?

Some answers can be found in the complexity of the business requirement, faster speeds, greater bandwidth etc., which in turn leads to cost implications. In addition the purchase and maintenance of complex business software such as databases is a challenge for small business. Finally many small business intranet owners in this category have little understanding of computers, the internet and the benefits that can accrue from this technology. In a small business start up, many owners give little thought to the IT and software requirements they need going forward except perhaps for a simple PC or laptop and some standard office software. Anything more complex is too expensive and because of lack of knowledge they have little idea of the benefits it could provide for the future. However the solution to this conundrum is at hand in the form of hosted systems.

Hosted systems

To outline what a hosted system is, we need to understand how most companies operate their standard IT systems. For very small companies any IT system they have is likely to comprise a laptop and some standard office software on which it would reside. For larger companies they will have a server which provides additional facilities for the PCs connected to it, may have software resident on it in addition to local software that may reside on individual PCs. A hosted system on the other hand has what ever software the company is supplying, often bespoke for a particular function, on servers many miles distant, access being achieved by way of an internet connection. Why is this beneficial? Well typically payment for this type of system is on a monthly rental model based on the number of people who use it. This means that the initial cost of using this software is substantially lower than otherwise would be the case. There are many more benefits of using hosted systems. These include:


  • Automatic (and usually) free upgrades keeping you up to date
  • Scalability – so you do not need to buy additional software licences
  • Low cost
  • Secure – most companies use the very latest spam filters, firewalls and antivirus software to protect you and your data
  • Back up – the majority of businesses are at great risk as they do not back up their data on a regular and consistent basis. Hosted systems automatically provide back up.
  • Redundancy – Hosted system suppliers usually have multiple servers, in multiple locations with multiple communications to ensure availability better than most systems in an office.
  • Reliability – Part of the service these companies provide is an IT support function that only large companies can normally afford.
  • Availability – Being internet based your data and applications are available to you at anytime (not just office hours) and in any part of the world – very useful if you are travelling.


So what sorts of applications are available from hosted systems? The typical office software such as spreadsheets, word processors and presentation software are now all available for use free from Google from its Google Labs web site. Google have committed a great deal of resources into the hosted software market and we are sure to see more coming from them in the not too distant future. Highly featured CRM (contact relationship management) systems are also available and these systems are essential for any business wishing to develop prospects and customers in the medium term. Intranets have tended in the past to be for large companies and are usually bespoke and in house costing large amounts of cash. Yet increasingly these are being used by small companies with remote workers or partners. Other applications are websites and in particular e-commerce websites. Typically these have been extremely expensive to design, set up, maintain and regularly update the range of products sold, which is probably why many small businesses have not fully embraced the technology. Now however there are hosted systems available which reduces this cost to a small monthly amount. (Further details of these last two applications are in the next section).

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