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Google and Microsoft are the major players in so-called "cloud" suites designed for a mobile, always-online workforce. The flexibility, portability, and low maintenance of their services appeal to a growing number of small businesses. In a best-case scenario, either Google Apps for Business or Microsoft Office 365 can improve productivity and reduce such costs as software licenses and paid IT help. Both packages include e-mail, calendars, live chat, word processing, spreadsheets, presentations, collaborative editing, and much more.

Google Apps for Business is a paid suite--an expansion of the lineup found in the free Google Apps for consumers. Office 365, by contrast, builds on Microsoft's Business Online Professional Services (BPOS). But it also has a desktop component in the Office 2010 suite. Office 365 opened for public beta testing in April, with a final release set for later this year, while the full Google Apps is available now. Here's a comparison of the features and pricing of Google Apps for Business and Microsoft Office 365.

Some 3 million businesses use Google Apps--which includes "millions" of Apps for Business paid users. Google doesn't share a breakdown about how many customers are smaller companies. Microsoft counts "millions" of BPOS customers and hundreds of millions of desktop Office users.

Companies that use Google Apps enjoy more than a 300 percent return on investment (ROI), at least according to a November Forrester report sponsored by Google. And productivity gains enabled by features such as swift e-mail searches lead to even greater savings. Microsoft Office 365 also promises impressive ROI for small companies.

Although Google appears to be ahead in this strictly online race so far, the competition is just heating up, and there's no clear winner; businesses can choose the option that best fits their needs. However, in the small-business case study below, Google Apps was the right choice for moving away from a mix of Microsoft Office and other tools.

Serious considerations remain before your company abandons local apps and physical serversfor the cloud. But for many organizations, Web services win out for convenience and mobility.