Software as a Service is rapidly changing the way business use/license software.

There are definite advantages to a hosted solution, you don't have to worry about upgrades/updates, you don't have to install anything, you don't have to maintain anything and you don't have to pay a huge up-front license acquisition fee.

There are some drawbacks as well, if it's a purely hosted solution and the hosted application is critical to your organizations operation, what happens when the internet goes down, what happens if the service provider goes down, what happens if the hosting company goes out of business; all major drawbacks.

Typically services that are not used on the front end of your business serve well to be hosted. Keeping this in mind, Google recently acquired Postini and started offering Google message filtering services for $3/user/year! This service provides Postini powered spam filtering and virus filtering.

It may not make sense for companies to use Google apps, as you can't have your internet go down and all of sudden find out you cannot type a document or open the spreadsheet you need to update, Google has a fix for circumstances like this with Google Gears; an API that allows access to applications while you're offline.

A good example of a hosted application that works very well is the Premiersurvey.com hosted service. This service allows you to not only send surveys via email but has a built in mass email module to send out product/service announcements. You can even have a popup for your website requesting users to take surveys.