What Microsoft Azure means to SMBs: not much, yet

Small and medium-sized businesses have more important things to worry about than Microsoft's new Azure, a cloud-resident platform for building applications served to users online.

SMBs are more likely to have applications built atop Azure offered to them as software-as-a-service (SaaS) products than to do the development themselves. Large enterprises may, however, find Azure interesting right from the start.

That's not to say Azure isn't important to smaller companies, but it's important in the same way that Google's Chrome OS is important. Both are demonstrations of what's happening tomorrow rather than a bandwagon for SMBs to immediately jump onto.

In fact, the Azure operating system won't even have an end-user interface of its own, just a way to serve applications for its customers. It is also not a way for you or me to store files on the Internet. Think Amazon EC2 or even Google Docs for that.

The take-home from the Azure announcements are that we can expect a larger number of SaaS applications to come to market and, eventually, small and medium businesses may choose to develop these applications themselves.

Software-as-a-Service is very real and here to stay.

Right now, I think small businesses should be much more interested in signing up for SaaS applications than developing them. One of the big advantages of SaaS is getting a number of customers to share the same, or even customized, application hosted online.

The SaaS developer becomes the IT department for all its users, updating the software, solving problems, handling tech support, and so forth. There is supposed to be an economy of scale here that can be passed onto the customer in the form of a less-expensive solution compared to doing the work in-house.

At the very least, SaaS takes a burden off the customer's IT department and provides a scalable solution--up or down--that meets the customer's current needs.

The subscription business model that goes with SaaS providers, the best known being Salesforce.com, seems very friendly to some potential customers. Others, however, look at the monthly bill and decide it's cheaper to purchase a traditional CRM application for their company.

In fact, Salesforce.com may be Azure's most immediate competitor. The company offers its own cloud-based development platform, called Force.com, which is gaining traction with developers. What happens once Azure goes commercial in November (it's free until then) should be an interesting battle. I'd call it David-and-Goliath, though it's hard for me to think of Salesforce.com as a huge underdog here.

I don't see a lot of reason for developers used to Microsoft's tools not to deploy their apps using the Azure platform, especially when Microsoft can make it very easy to do so. This is potentially a hugely lucrative business, however, so competition may be fierce and there is a more than reasonable chance that Microsoft will get things wrong on the way to getting them right.

Bottom line: SMBs should be evaluating whether and which SaaS applications make sense for their users and needs. Azure could be a big push toward increasing the number of SaaS apps that are available and also, perhaps, in driving down their cost.

Industry veteran David Coursey likes SaaS as a customer-friendly business model. He tweets as @techinciter and can be contacted via his Web site.