The Software as a Service (SaaS) model has changed the way small businesses are going to work and led to the creation of thousands of start-ups offering web applications for every imaginable aspect of running a business.

Then Google Docs came along and even created SaaS offerings for the last bastion of the desktop software model – the word processor, spreadsheet, presentation and contact tools – otherwise known as Microsoft Office to most.

I do think many started questioning the viability of Microsoft’s desktop software hold. The conventional wisdom is/was that Microsoft should just cave in and put it all up in the cloud and become the SaaS that they know they should be. But then, let’s not forget the millions upon millions of individuals who aren’t computing in the cloud too much, sort of don’t trust the cloud too much, and may never really want everything there.

Microsoft’s model seems to be making more and more sense and so does their moniker – Software + Service – the notion of enhancing the desktop suite you know and sometimes love to hate with web applications that extend the functionality and reach. Look, I like Microsoft, they’ve been great to work with, but I’m also painfully aware the rudder can seem stuck when it comes to the ever changing needs of the small business, but I think they actually may be getting around to getting this right.

I caught up with Michael Schultz, head of marketing for Office Live at a recent conference and he shared his views on the changing model

Just recently they added Office Live Workspace the Office Live product and now you can:
* Access your documents from almost anywhere
* Save over 1,000 Microsoft Office documents in one online place
* Open and save directly from Word, Excel, and Powerpoint
* Control who sees and edits files; password-protected sharing

And now they are inching towards the launch of something they are calling Office Web applications. This will live inside of Office Live and give users the ability to create online documents, presentations, and spreadsheets, much like Google docs, but with the seamless ability to use those same files offline inside the Office desktop applications.

Office Web screenshot – application not available just yet

Personally, I think this will have broad appeal to many Office users who don’t want to be tethered at all times to the web, but do realize the power of online sharing and collaboration. Now, could this have been launched two years ago, probably, but the game is still evolving and this looks right, right now.

Your bonus for reading this far: I have two full copies of Office Small Business 2007 ($450 retail) that I am going to send free of charge to the best two audio answers given to this statement: The Best Referral I’ve Ever Received was . . . Call this number and leave your answer (214) 615-6505 ext 6998 – it works like voice mail so just listen to the prompts. Make sure you add why it was such a great referral and feel free to tell us your name, business and web address. I will pick the two winners and post the audios here so you can also get some nice exposure for your business. (Send me an email with your shipping address too! john [at] ducttapemarketing.com)