More start-ups offer online software and services for a fee

— -- A year ago, Roy Thompson had no use for software salespeople.

"We make money fixing your car," says the owner of Thompson's S&S Collision Repair in Sacramento. "I'm not one of these tech junkie guys."

Yet, last March Thompson accepted a 30-day free trial offer from ClaimTools Solutions. The Nanaimo, British Columbia-based software firm sent him five rugged digital cameras configured to send photos over the Internet to ClaimTools' computer servers for archiving and processing.

Repairmen began using the cameras to document every step of each repair job. Within a week, Thompson signed up for a three-year, $300-a-month, subscription. The rented technology has boosted the body shop's revenue by $3,000 a month.

"If you can document it, the insurance companies will pay for it," says Thompson. "We found out we were doing a lot of things for nothing."

Getting businesses to rent "software as a service" over the Internet has long been a Holy Grail for technology suppliers, who covet the steady cash flow from monthly payments. But small-business owners were skeptical of the benefits.

The global economic meltdown changed that. Scarce credit and soft consumer spending are compelling small-business owners to look more closely at using the Internet to improve the bottom line. AMI-Partners' survey of 3,600 small and midsize business in 11 countries found 44% of U.S. firms were interested in renting software as a service in the second quarter of 2009, double a year earlier.

An awakening

Accounting and customer relationship programs delivered via the Internet are nothing new. Salesforce.com, NetSuite and SAP have sold such services to larger companies for years. But now start-ups are swarming in. Some, such as Box.net, YouSendIt, FolderMaestro and MuseWorx, lease online file storage and related programs that allow small firms to collaborate internally, as well as externally with key partners.

"This wave of technology brings a wealth of options to solve problems," says Stephen Barrett, CFO of MuseWorx.