In July 2007, Gartner released a report naming the top 10 IT trends for 2008, pointing to Web 2.0, Software as a Service (SaaS) and wireless internet as three buzz topics set to move mainstream. The three trends are closely linked and stem from a fundamental change in the way people are using the internet.

SaaS, also known as ‘hosted' software, is a delivery model where a vendor develops business applications and hosts them on the internet for customers. Unlike traditional software that a customer buys and installs directly on to a PC, with SaaS customers do not pay to own the software itself but rather for using it.

It may seem complicated, but most people are already familiar with the SaaS model and just don't know it. Everything from Yahoo! Mail to instant messaging programmes like MSN Messenger are hosted software products.

The benefits of SaaS to a small business centre on cost savings, flexibility and management, by:

• Avoiding upfront cost barriers that can obstruct businesses from obtaining the benefits of more sophisticated software packages;

• Enabling services to be accessed from almost anywhere, centralising information access and overcoming the information silos that can limit organizations;

• Removing the need for having in-house IT skills.

Some applications are more likely to be accessed as services than others. Salespeople, for example, can benefit from SaaS because having an application over the internet reduces the need to be in the office and centralises data so it isn't trapped on a laptop where it can't be shared with others. Financial applications provide benefits in terms of centralisation of data but some organisations may find the risk too great to outsource such critical information to a third party and put it at risk of a communication disruption.

Such concerns around security and potential risks with placing important financial and business data online has led some companies to offer a ‘hybrid' software plus services (S&S) model as an alternative to a restrictive SaaS model. The S&S model provides the best of both worlds by enabling some information to be kept locally on hard drives and other information to be hosted on the Internet.

Apple iTunes is an example of this: the iTunes player is installed on a user's PC, but new music is downloaded through the internet. Mamut Business Platform (MBP), launching in late December, is also built on the S&S model. MBP will offer users access to complete enterprise solutions to manage financial, logistical, CRM and sales force information at anytime, anywhere and on any compatible device.

Whether the software is installed or delivered over the internet is really just a choice of how we want to access information. In fact, we need both methods combined into a seamless user experience.

How the software industry develops will continue to be tied to other developments such as the devices that are available and their influence on working practices. In some cases this will be done by using installed software, in others by using software as a service and in many cases by using a combination of the two.

For more information see www.mamut.com

Dawn Baker, head of marketing (small business division), Sage UK
Deciding what software to buy for a new business can be difficult as there is a lot out there to choose from and the market is changing.

We know from listening to our customers that more businesses of all sizes are requesting software applications that work together to help them manage their businesses as efficiently as possible. Practically, this could mean that a company's accounting software shares customer details with its customer relationship management tool, links in with its payroll software or allows it to take customer payment directly from within the accounts software.

This ‘integrated software' saves businesses time and money as it removes the need to re-key data into various pieces of software. They can now spend this time doing what they do best: running their business.

Another factor affecting the software market for small businesses is the increase in legislation in the UK. A recent Sage Heartbeat survey showed that a staggering 42% of businesses cite red tape as the reason they would not start up in business again. With this in mind, small businesses are requesting software to help them manage the burden of this legislation, such as accounts software to help them manage their VAT or HR software to help them to manage staff records.

Changing attitudes towards technology have also influenced the way in which people starting up in business are using software. More people than ever have grown up using computers and factors such as increased bandwidth mean that businesses now have the choice and flexibility to use software exactly how they want to, whether it's provided over the internet or as traditional desktop software.

For more information on Sage's range of business management software, please visit www.sage.co.uk

Around half of small businesses in the UK use software to manage their accounts and business, leaving the rest to struggle with outdated spreadsheets or, worse, paper-based ledgers, leading to fears of a ‘two-speed Britain'.

Education on how dedicated software can contribute positively to a small business' overall success and profitability is still needed. But we are pleased to see this message finally getting through with a sharp increase in the adoption of business software predicted for next year.

Other more noticeable trends include the increase in the number of small businesses now buying software within the first three months of their business life; an essential factor in bedding down good practice and getting the visibility easily before it becomes even more critical.

And now size and geography are no longer such issues for small business, to even the competitive landscape further, they are demanding more and more functionality. But affordability and training is the big issue.

The outlook is challenging for British small business owners. The statistics depict an ambitious small business owner who is bravely taking on the increasing challenges of a modern business environment. The financial burden is reaching a tipping point and is affecting the profitability and performance of many small businesses.

With compliance and tax issues growing in volume and complexity, small businesses must implement more rigorous financial management systems and techniques to release the valuable time they spend on administrative tasks and invest in more profitable activities. Typically a small business spends up to half a day managing their finances each week.

So small businesses must find providers offering increased functionality, simplicity of use, with knowledgeable support services and affordable easy payment options to really benefit from the time and cost savings promised.

For more information see www.myob.co.uk

The growth in the use of business management applications will continue in 2008 as companies and individuals look for greater efficiencies in the workplace. The following will represent some of the key developments and trends:

More emphasis on ease-of-use
As software developers reach a point where products become mature, their emphasis will shift from cramming in more features to focusing on improving the user experience so that the product is as easy to use as possible. Customers increasingly value their time so if a product is not intuitive they will not bother spending time learning how to use it. Think iPod, think simplicity.

Growth in web-based applications
The growth in the number of broadband connections in the UK and the decline in retail sales of software has supported the growth in online applications over CD based ones. A growing number of Web 2.0 applications from the likes of Google and 37 Signals mean that users can now work online without the need for specific paid for software programmes. This trend will continue as users want remote access to their applications.

Continued shift towards SaaS
It is likely that users will consider renting their software in greater numbers. When the software is consumed as a service there is no upfront outlay required by the customer and they are guaranteed the latest version.

Niche applications
As companies recognise the need to operate efficiently across their entire operation they will increasingly consider niche software solutions. Why compose a business plan from scratch in Microsoft Word when for only £79.99 you can buy Business Plan Pro 2007? Why pay studio recording fees when you can download a free application from Audacity?

More emphasis on design
With both Windows Vista and Apple iWork focusing on the design elements, it is likely that business management software designers will also focus on the design side ensuring their application looks great onscreen alongside the functions that it actually performs.

Software design for multiple platforms
The continued popularity of mobile devices ranging from BlackBerrys to iPods to iPhones means that software developers will look to design their applications to take account of the increasingly mobile user. However, with a more limited screen size on mobile applications, not all business management software applications will transfer seemlessly.

For more information see www.paloalto.com