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Web-Based Software Offers Cheap Option

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                   SoHo NEWS & TIPS
Helping You Make the Most of Your Small Office/Home Office
        SoHoTIPS.com
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Greetings,

Today's article poses the question of whether or not your 
company should switch to online alternatives to Microsoft's 
widely used software. Find out if your organization would be
better suited for one of these less expensive options. 

Best,
Mandi

Be sure to visit the SoHo News and Tips blog!
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- Time announces it will cease production of Teen 
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- BetOnSports announces it has fired its CEO, 
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- Rumor has it Genisys Financial filed for bank-
ruptcy and locked its doors Monday...

- Wal-Mart Stores in Germany said that it would 
sell its 85 stores to a German retailer, the Metro 
Group...

- Inco Ltd. conceded defeat in the batttle for 
Falconbridge Ltd., giving up on its offer after it 
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- Google has had its proposed $90m settlement in a 
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Web-Based Software Offers Cheap Option 
By ROBERT A. GUTH
Staff Reporter of The Wall Street Journal. 

For years, software makers and Web boosters have 
been forecasting that the Internet would break 
Microsoft Corp.'s stranglehold over business soft-
ware. Instead of buying a copy of, say, Microsoft 
Word and installing it on your computer, you would 
travel to a Web site, type and edit your document 
there and store it online. The fee would be tiny 
compared with the cost of buying Microsoft's soft-
ware, and you wouldn't have to pay anyone to 
troubleshoot the program or update it.

Now a host of small software companies -- and some 
Internet giants like Google -- are bringing that 
vision closer to reality. A quick search online 
will yield a host of inexpensive -- or free -- 
online alternatives to Microsoft's widely used 
software. With names like Writely, ThinkFree and 
AjaxWrite, these offerings cover the gamut of 
standard desktop applications -- from word process-
ors to spreadsheets to email.

But that raises a big question. Should your 
business make the switch?

The answer: It depends on the size of your 
organization, and your needs.

The appeal of these programs is simple. They're 
much less expensive than Microsoft's offerings, 
and since they're based online, you can  use them 
anywhere you can access the Web. In addition, 
since you're storing your data online, it's much 
easier to share with colleagues, customers and 
suppliers. People can simply travel to a central 
Web page and see the information they need.

But those benefits come at a price. These programs 
are basically stripped-down copies of Microsoft's 
offerings. The interfaces look and feel similar 
in some instances, but the programs often have 
very skimpy features. The online word processors 
can do basic functions such as cut and paste and 
spell check, but forget about things like the 
fancy formatting tools you'll find in Word.

If you can live with that, these programs are 
worth checking out. The early adopters of online 
software are mostly small companies that want 
simpler, less-costly applications than they can 
get from Microsoft. Many are start-ups with limit-
ed budgets, while others are divisions or branch 
offices of larger companies that don't want all 
the functions packed into Microsoft's Office 
suite. They are also willing to overlook some of 
the shortcomings of the online programs -- such 
as a lack of full compatibility with Office -- 
and trust that the service providers are securing 
their sensitive data.

"Our current desktop tools have become almost too 
powerful for the average desktop users," says 
Melissa Webster, an analyst at research firm IDC. 
"There's a point where the online tools get good 
enough for some significant percentage of users."

For instance, Ted Hughes spent about two months 
last year trying to use a Microsoft program called 
Access to create a database for his industrial-
supply company, SoluChem LLC of Austin, Texas. But 
he found the complex program daunting to use. And 
he knew that when he was done with the database, 
he would face another challenge -- figuring out 
how to let his suppliers and co-workers tap into 
the information over the Web.

Then Mr. Hughes discovered Zoho Creator. This free
Web-based software handled the job -- but without 
the bells and whistles of Access that had baffled 
him. And since the program stored his data on the 
Web, his colleagues could tap into it easily with 
a browser. "To me it was like a godsend," says Mr. 
Hughes, operations manager at SoluChem. "It did 
everything I wanted without the learning process."

But this software may not work for larger 
organizations. Businesses already running Office 
on thousands of PCs probably need the benefits of 
a mature product like Office and a big backer like 
Microsoft. For their money -- which can be $400 
per user -- Office customers get support, bug 
fixes and peace of mind that their supplier will 
be around for years to come. The software giant 
also has deep resources to invest in new functions 
for its products, such as forthcoming additions 
that let workers manage phone calls and instant 
messages from Office applications.

Jeff Raikes, president of Microsoft's Business 
Division, downplays the knockoffs as narrowly 
focused and "simpler in form" than Office. "Most 
companies want one set of office tools that can 
meet the broad range of needs in the organization,"
Mr. Raikes says. "It's simpler, easier to use and 
manage, and everybody can share their content."

At this point, it's unclear what effect these new 
programs will have on Microsoft's commanding 
position in business software. Even if lots of 
small businesses migrate to these online offerings 
-- which is no sure thing -- Microsoft will likely 
hold on to big corporate customers for some time. 
Large businesses generally need more feature-full 
software than small ones, such as the advanced 
number-crunching options that Excel offers. And 
many large businesses, for security and competitive 
reasons, are loath to entrust their computer 
systems to other companies and so likely won't move
to applications hosted by a third party anytime 
soon.

Still, some businesses say they'd be prepared to 
abandon Microsoft if and when the alternatives 
grow sophisticated enough. That's the view at 
Interim HealthCare Inc., a home health-care 
provider with tens of thousands of PCs spread 
across the U.S. Satish Movva, Interim's chief 
information officer, says his company has tested 
many Office alternatives over the years but has 
yet to find a solid replacement. The alternatives 
still can't handle documents created in Office 
well enough for his needs and aren't as "polished" 
as Office, he says.

But moving from Office to a cheaper alternative 
remains a goal. "Realistically, we want that day
to come," Mr. Movva says. If another program can 
let Interim open a huge Excel spreadsheet without 
a hitch, "I think I can make a business case for 
moving to it," Mr. Movva says.

There are signs that Microsoft is watching its
back. The software giant is taking a page from its 
online competitors and rolling out its own Web 
applications under a service it calls Office Live.
Now being tested by about 100,000 people -- mostly 
in small businesses -- the service is designed to 
coexist with Microsoft's Office software. One 
selling point: Users will be able to collaborate 
over the Web more easily and access their documents 
anywhere.

Here's a look at the state of play in online soft-
ware -- some of the best offerings out there, and 
what users have to say about them.

Suites

In the 1990s, Microsoft bundled a host of programs 
into one suite of software called Office -- a 
tactic that won a commanding share of the market. 
But over the years, Office has drawn lots of fire. 
Beyond the price, businesses grumble about the 
pressure to upgrade. The next update, expected 
early in 2007, will feature radical changes to the 
product's interface that could make it easier to 
use but will force users to relearn many of its 
features.

Now businesses can choose from a host of Office 
knockoffs that combine word processors, spread-
sheets and other software. One of the most full-
featured offerings comes from ThinkFree Corp., of 
San Jose, Calif. The company originally sold the 
suite as conventional desktop software, but it 
didn't catch on. So, in April, ThinkFree recast 
it as an online offering that includes the 
ThinkFree Write word processor, ThinkFree Calc 
spreadsheet and ThinkFree Show presentation soft-
ware. The suite is currently free, but ThinkFree 
is prepping another version that will carry a 
subscription charge. The company hasn't set a 
price.

The big knock on ThinkFree's suite was compatibil-
ity: Users complained that the software had 
problems handling Office documents. Since so many 
businesses use the Microsoft suite, a company 
using an alternative is sure to receive Office 
files from other companies. Any alternative 
program must be able to, for instance, open a Word 
file without disturbing the document's formatting.

Jonathan Crow, ThinkFree's director of marketing, 
acknowledges that the suite doesn't support some 
features in Office, such as macros, which are 
shortcuts for automating frequently done tasks. 
But he says that the company has addressed many 
of the compatibility concerns, and that about 85% 
of Office users shouldn't have any problems open-
ing their documents with ThinkFree.

One of ThinkFree's big competitors is AdventNet's 
Zoho line, which SoluChem's Mr. Hughes tapped. The 
programs, including Zoho Writer and Zoho Sheet, 
are available free on AdventNet's Web site. In 
addition to the Zoho line, the company makes a 
range of software for businesses.

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Tim Lauer, principal of Meriwether Lewis Element-
ary School, in Portland, Ore., uses the Zoho suite. 
He uses Zoho Creator, for instance, to make a form 
on the Web to collect student information from his 
teachers. On the plus side, he says, Zoho is online 
and as such it allows him and his staff to share 
documents more easily. But the software's Web 
interface is also a drawback, he says. There may 
be times, such as while traveling, that his staff 
wants to work on the spreadsheet but doesn't have 
an Internet connection.

Spreadsheets

Over the years, Microsoft's Excel has grown into a 
powerful piece of software, able to handle high-
level data analysis for Wall Street firms and other 
numbers-intensive businesses. For some companies, 
however, the program has become too complex for 
their needs. Now a host of upstarts are offering 
simpler spreadsheets, with names like WikiCalc, 
Num Sum and iRows. Though few can handle the heavy 
load of number crunching that Excel can, some of 
these new offerings are exploiting the strengths 
of being online services, such as making it easier 
for multiple employees to share their work in a 
single spreadsheet. Others are more specialized 
spreadsheets and online databases that command 
higher annual subscriptions.

Healthways Inc., a health-care support provider in 
Nashville, Tenn., used to merge Excel spreadsheets 
from across the company during the annual budgeting 
period. Financial analysts had the unenviable task 
of combining 100 different Excel files, says Ian 
Miller, senior director at the company. One problem, 
he says, was that a change in one spreadsheet 
wouldn't automatically "cascade" into others, mean-
ing that an analyst would have to manually enter 
the change into different spreadsheets.

So, last year, Healthways signed up for an $800-
per-user annual subscription to an online budget-
ing spreadsheet from Adaptive Planning Inc., of 
Mountain View, Calif. Each Healthways unit can 
enter its data directly into a central service 
that runs remotely on Adaptive Planning's computers,
eliminating the need to merge the different units' 
data after the fact.

The service is far pricier than Excel, but Mr. 
Miller says it's worth it because Healthways' 
analysts now spend more time on their jobs -- 
analyzing information. "We focus less on data 
entry than on analysis," Mr. Miller says.

Still, Healthways isn't done with Excel entirely. 
The company still uses the program as a "supple-
mental tool" for tasks such as creating a quick 
report before a management meeting, Mr. Miller 
says.

Word Processing

Google Inc. in March raised awareness of online
word processors when it bought Upstartle LLC, 
maker of Writely.com. The program has a simple 
editor and spell checker for creating and altering 
documents. At Meriwether Lewis Elementary School,
Mr. Lauer says his teaching staff uses Writely to 
share meeting notes. It's free and the school 
doesn't have to worry about installing upgrades on 
all its PCs, he says. As with other Web applications, 
features and improvements are added incrementally 
over the Web. Others in the same field are AjaxWrite, 
a free service from Ajax 13 Inc., a San Diego-based 
company building an online suite, and gOffice from 
Silveroffice Inc. of San Francisco.

Still, the offerings are "nothing like a full-
featured text editor," says Bruce Byfield, a 
reviewer for NewsForge, a Web site that tracks 
open-source software. One problem is that while 
many office workers use only, say, 10% of the 
features of an Office application such as Word, 
"not everyone uses the same 10%." So, many users 
are likely to find their favorite feature stripped 
out of an online word processor.

The larger question is whether Google will add 
Writely to its hosted services, a package of
services that it sells by subscription to business-
es. Expanding on those services would put Google 
more directly on Microsoft's turf. Along with 
Google Spreadsheets, the company has Gmail and a 
calendar program that could be combined into a 
suite of hosted offerings. "When we feel like we 
have a product that is appealing to the end user, 
then we take it into the business world," says 
Google General Manager Dave Girouard.

Email

Consumers in recent years have flocked to Google's 
Gmail, Microsoft's Hotmail, Yahoo! Mail and other 
Web-based email services. The approach is now 
catching on at small businesses, schools and branch 
offices of larger companies that don't have the 
money or expertise to run their own email systems. 
Yahoo Inc. is offering email as part of a package 
of online offerings that starts at about $9 a month 
and includes a customized email address and tools 
to set up a Web site. Many of its customers are 
small e-commerce sites. Yahoo's latest version of 
the software looks a lot like Outlook and has many 
of the same features, such as a calendar and 
functions like spell-checking.

Late last year, San Jose City College, a community 
college in Silicon Valley, didn't have an email 
system for its students nor the money to set one 
up itself. In December it cut a deal with Google 
for a hosted version of Gmail. In February, the 
school turned on the email system for its 11,000 
students, giving each two gigabytes of storage and 
an address with the ending "@jaguar.sjcc.edu." 
Michael John Renzi, director of finance and 
administration at the college, wouldn't disclose 
the financial arrangements with Google.

The goal was to provide a service to students in 
the most cost-effective way, Mr. Renzi says. "This 
email service does that," he says. "I've been 
getting calls from around the world interested in 
this solution."


So what did you think about this issue? Drop me a line and let 
me know at mailto:mandi@gophercentral.com 

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