The days of maintaining software and services in-house may be over for some small businesses.

Companies offering software services over the Internet are reporting a boon thanks in large part to small to medium sized businesses, who are taking advantage of this and similar services (platform, hardware) to save money and insure technical stability for their companies.

While many large companies have been hesitant to use the new services, small and medium-size businesses are flocking to them. About 31% of medium-size companies (defined as those with 100 to 999 employees) currently use these software services, double the uptake in 2004, according to a March 2008 report from consulting firm Access Markets International Partners (AMI-Partners). That popularity stems from a need for IT solutions that are easy to use and maintain by companies that have limited infrastructure and budgets.

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“More than 50% of our processes are now in some type of software as a service or cloud environment,” says Menefee. Schumacher Group, with 750 full-time employees, relies heavily on Salesforce.com (CRM), a customer-relationship management service, to keep tabs on 2,500 independently contracted emergency room physicians. About 70% of hospitals outsource the staffing and management of emergency room physicians, partially because there’s a shortage of ER doctors and the recruiting is highly specialized. Salesforce.com helps the company keep track of individual contracts, pay rates, and the hospitals where each doctor can work.

 BusinessWeek covers the ins and outs, pluses and minuses of this emerging business solutions segment.