Now customers that have used Concentric to host their Web sites, such as Sales Motivational Services in St. Louis, can access providers of other services. "What I know about technology, you could place on the head of a pin," says Tom Reilley, president of the sales training firm. "Through Concentric, I hope to focus on making that transition to E-commerce as soon as possible."

In November, Cable & Wireless plc and Compaq struck a deal to offer what they call end-to-end business solutions for small businesses. The $500 million deal spans five years, and includes Web hosting, hosted business applications, and services for E-commerce, sales-force automation, supply procurement, and remote management of local and wide area networks. Compaq also offers its NonStop eBusiness consulting and professional services, which include 24-hour help-desk support for applications, systems, and networks. The services are available through Compaq's site for small and midsize businesses.

Hewlett-Packard last month enhanced its Internet Center portal, which is accessed by a browser embedded on all its HP Brio PCs for small and midsize businesses. The site has broadened beyond access to providers of business resources and application services, to include links to HotOffice, which hosts online collaboration of business groups. Through a partnership with Web-services vendor Trellix Corp., users have access to affiliate-marketing services.

A new breed of hosted procurement applications that provides access to business-to-business marketplaces for small and midsize businesses will be a hot commodity, analysts say. Vendors such as startup @vantage let small companies aggregate orders to suppliers, so that they can get better deals on goods and services from suppliers. By midyear, @vantage plans to market online applications that will let small businesses analyze their spending habits. "This type of service will help them plan their buying better and save them money," says Gary Shkedy, president and CEO of @vantage.

Through a partnership with Qwest Communications International Inc., @vantage also provides its users with links to ISPs, ASPs, and vendors that offer a combination of services.

Going forward, analysts see growth in the demand for online services and apps that target vertical markets. "Vendors are starting to focus on vertical markets, so they can tailor applications for specific types of companies," Klein says. "This is very important, because different companies have different IT needs."

He also sees growth in the area of online "utility" applications for small to midsize businesses. These apps help small companies rapidly create Web sites, set up E-commerce functions and online collaboration for business groups, and automate travel and expense reports. "We see companies like Zland, eAlity, Agillion, and HotOffice taking this market by a storm," Klein says.

But what about the risk of transmitting important business information over the Net? Klein says concerns about the security of online services and software seem to be dying down as users become more confident in the technology and as these services become more widely used. Nearly all small and midsize companies eventually will outsource their core business apps, he says.

"For these companies, the ability to access applications that usually require a lot of maintenance," Klein says. "Yearly updates can alleviate a lot of unnecessary, time-consuming IT work."

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Photo of Reilley by Michael DeFilippo