Content management vendor Xythos Software recently introduced an online version of its software aimed primarily at small and midsize businesses that lack the resources to install their own document and file management systems.

Xythos became the latest of several companies to offer content management via a software-as-a-service model, joining IBM, Ricoh, Xerox and others, says Tom Eid, a Gartner research analyst.

Xythos launched its software-as-a-service content management tool after polling officials at small businesses, who wanted a better tool than e-mail for sharing files, according to James Till, chief marketing officer for Xythos in San Francisco. Hosted e-mail services typically restrict the size of e-mail attachments, and small companies often don't have the IT staff or budget to operate their own servers, Till says.

"E-mail is becoming a failure point," Till says. "Being able to access and store and manage and share their documents over the Web in some method that doesn't rely on e-mail is becoming a lot more attractive ... That's the fundamental reason we've introduced Xythos On Demand."

Xythos' pre-existing software products have about 2.5 million users, and about 100 companies have begun using the new online service, paying monthly fees based on the number of users and storage capacity. For example, a person can buy 5GB worth of storage space for US$9.95 a month, while a company with 25 users can buy 25GB for US$119.95 a month. The most expensive plan costs US$499.95 a month and covers 100 users and 200GB.

Xythos keeps data secure by using encryption while content is transported from a company's computers to the Xythos On Demand servers, Till says. Once the data is on the Xythos servers, a variety of access controls prevent unauthorized users from getting the data.

"We've been serving the United States Senate, the Department of Defense," Till says. "We're pretty familiar with what some of the stricter requirements are for data protection."

Xythos On Demand generally has the same features as the software packages Xythos sells to large organizations such asthe Senate and Department of Defense, Till says.

Employees at a company that uses Xythos On Demand can access documents and files using a Web browser or their desktop file manager. The service also allows a company to share files with people inside and outside its organization, and lets a company keep track of changes to documents and the identities of people who view them.

But the differences between Xythos and its software-as-a-servicecompetitors are minor, Gartner's Eid says. The main question companies must answer is whether to purchase software and manage it in-house or pay someone else to manage it for them, he says.

"There can be subtle differences across the products," says Eid, who had not been briefed by Xythos on its new product. "The real big question is: Do I want to take this in-house or do I want to treat it as software as a service?"

Generally, it makes sense for large enterprises to own the storage capacity, rather than outsource the service, says Andrew Reichman of Forrester Research, an analyst whom Xythos briefed about its new service.

"For a bank, it's more cost-effective for them to build it out ... because the volumes they're talking about are so high," Reichman says. "For the smaller companies where their volumes are lower, they end up on the software-as-a-service spectrum."

Korban Associates, Limited, an executive search firm in Pennsylvania and Oregon, recently used Xythos On Demand to help eliminate its physical office space and become a "virtual office," in which employees can work from any location and access files via the Web.

Using a cable Internet connection, Korban moved nearly 12,000 documents and files from old servers to the Xythos On Demand data center within two days, according to a case study provided by Xythos. Korban employees can now upload new client resumes to Xythos On Demand, and safely share resumes with potential employers, according to Xythos.

An increase in telecommuting is contributing to the trend of companies using online services for content management and storage, Reichman says.

"From a storage perspective," he says, "more and more companies need to provide good content management and a wide availability of data to an increasingly mobile workforce."