IMAGINE YOU could take your whole office with you wherever you went and access it whenever you want. And imagine that you are a small business owner who can do that - and not pay anything for it.

After years of speculation, rumour and many false starts, the much vaunted vision of a world where the way we run companies depends on who we are and not where we are is finally coming true.

Powered by the launch of Google's new online applications suite, the internet dream of total access to your business and round-the-clock availability is fast becoming reality and, even as that happens, it is calling into question the fundamentals of IT as we know it.

Do you really need to pay good money for the de facto standard software packages to run a modern business? Do you need powerful computers to run the packages on?

If the answer to this is no, then what happens to the high-tech companies such as Microsoft, which grew from nothing to become the biggest company in the world?

And should leaders of small businesses choose an option where they do not actually own any software but instead go online to acccess what they need?

DJ Collins of Google UK said: "The internet is about innovation, speed and utility; it is about constantly redefining the way we approach things and delivering what the end user wants and needs. Everything we do is driven by that, and it's with that spirit that we launched Google Apps.

"We believe that today's businesses don't want to be constrained by physical location, they want to work wherever and whenever they are, so we've given them that choice."

Although the project's various components have been around in a beta version for several months, the freshly repackaged and officially launched Google Apps product has given the world of business some food for serious thought.

Colloquially known as Google Office, the suite of online applications gives users all the basic office functionality we have come to expect, combining word processing, spreadsheets, calendar, contacts, email management and a variety of collaboration tools that can be accessed from a single start page using any internet terminal.

All of the applications can also be accessed via a BlackBerry or mobile phone, come equipped with the necessary virus filters, and require virtually no technical expertise to begin.

For an individually branded service mapped to a user's own domain, they come at an attractive price point too. Premium Edition customers pay just $50 a year per user, while individual users can sign up for a free Standard Edition supported by advertising - though they will incur a $10 annual charge to register their own domain.

Coming in at a fraction of the price firms are accustomed to paying for such functionality, it certainly seems a compelling offering. With any number of users able to log in to a central web-based starting point that links them to every aspect of their business - from financial reports to shared documents - Google Apps removes many of the technical and financial challenges facing businesses struggling to come to terms with the 21st century, and it is no surprise that the market is sitting up and taking notice.

"Google has certainly put the cat amongst the pigeons. It's an extremely innovative company and what it has done here will force a lot of major players to look to their laurels. I certainly won't deny that they're a serious competitor," says Raymond O'Hare, Microsoft's Scottish director.

"Basic applications are just a starting point, however. The crucial thing is how to develop solutions that link this functionality in a manner that's specific to your business. That's what drives real value from IT, and I'm glad to say that we've got a serious head start on them."

As you would expect, Microsoft is keen to point out that, while at first glance the Google deal seems to offer much the same as the Redmond-based giant's own applications suite, once you get down to brass tacks Google Apps offers only the most basic functionality.

The company has also hinted that the coming months will see serious development of its Office Live service, possibly delivering some of the online functionality that will attract many to the Google alternative.

You would not really expect Bill Gates's people to say anything else, but deep down there must be an element of concern. After Google Apps, it is hard to see why home users would consider paying for such software?

Many commentators believe that at a point in time when many commercial concerns are mulling over whether to shell out for the revamped Office 2007 suite, the new kid on the block demands serious thought.

"Google has developed a very compelling offering - a free or low cost web-based alternative to traditional, expensive desktop productivity applications. And they host and maintain them for you too. Any new business would be well-advised to give them a look and make sure they really need more functionality and can handle the burden and complexity of managing them before purchasing standard desktop tools like MS Office," said Craig Sullivan, vice president of online business applications expert NetSuite.

"A key advantage of web-based applications is their ability to connect workers in different locations and ensure they are able to communicate and collaborate effectively. This has really changed the playing field for SMEs that can now function as global operations much more efficiently than they have ever been able to do before, without incurring the immense costs associated with things like wide-area networks and virtual private networks - all of which require greater expense and introduce complexity into business operations."

According to Sullivan, we are in the midst of a cultural shift that is gently shoving businesses away from the tyranny of the desktop and pushing them towards online service. Broadband penetration is high and speeds are increasing, and the end result of this is that individuals are used to and happy with using net-based software from email services, such as Hotmail, to online banking and more. Over the last eight years Sullivan has seen a dramatic shift in the preparedness of businesses to engage with web services, and believes that SMEs in particular should be looking at things like Google Apps as a serious alternative.

For any business considering the Google approach, the best advice is to suck it and see. Sign up for an Google account, try out the applications and see if what is on offer matches your requirements. It is a fair bet that many will find the service supplies all the functionality they need, but the issues to consider don't end there. This is mission critical stuff after all, and there are plenty of commentators out there who would counsel against hurling your organisation head-first into such a future.

Clem Chambers, CEO of the leading stocks and shares website ADVFN, says: "The security issues of using the network computing model for applications and associated data files are huge. Do you want to have your business plan on another for-profit corporation's computer? Do you want your confidential presentation stored where potentially hundreds of interested or bored engineers at the server-end might be reading it? Where are the concrete guarantees of confidentiality or privacy?

"If the government offered you this service for free, would you take them up on it and put all your personal files on their computers? No? So why trust Google?"

It is a big question, and one that everyone must answer one way or the other for themselves. Google, however, points out that in addition to the fact that businesses and individuals entrust private information to a wide range of organisations and suppliers on a regular basis, few weeks pass without reports emerging of some corporate security breach or other.

"We can't force anyone to trust us and won't try to, but do businesses really enter every contract assuming that the firms they are working with will try to cheat them? We take data privacy extremely seriously and employ every possible measure to ensure that our customers' information is safe. Google's reputation depends on this kind of issue, and it simply wouldn't be in our interests to take any other stance," said Collins.

Cynics might think that is an easy thing to say, but it is a fair argument, and most industry observers are loathe to accuse Google of sharp practices, instead focusing their concerns on the question of price. They point out that while on the surface its Premier Edition is incredibly cheap, there are no guarantees that it will remain so indefinitely. They worry that once an organisation has migrated its systems, it might have no choice but to meet any invoice it is presented with.

"Ultimately people might not like paying Microsoft for software, but you know what you get from them and as soon as you've signed the cheque your debt to them is paid," says Dan Scarfe, chief executive of Dot Net Solutions. "With Google you owe an ongoing and never-ending debt to them and it will be up to them how they choose to take payment."

Then, of course, there is the question of availability. When you buy Microsoft Office, it is there on your computer and can be accessed - barring broken hardware or extreme virus problems - irrespective of whether or not you are connected to the internet. Google's Premier alternative carries a service level guarantee of 99.9% uptime, but none of that will do you any good if your net connection goes AWOL.

No company is going to rush into this one, because it requires careful thought and many checks and balances. Google will not release customer figures, but claims that the initial reaction has been extremely encouraging, however.

About 90% of online applications activity last year took place around the test version of the internet darling's documents software, and a host of bluechip customers including Procter & Gamble, GE and L'Oreal have already signed on as customers.

All are attracted by the prospect of total employee accessibility to defined company resources. The potentially money-saving prospect of only having to issue staff with dumb internet terminals instead of memory-hungry hardware is equally intriguing to them, but it seems unlikely that major enterprises will be switching exclusively to the platform any time soon.

A major part of the Google Apps sales pitch is the ease with which it may be integrated with existing back office systems, and it seems likely that while smaller and start-up operations may embrace the concept wholesale, the big boys will instead seek to harness the advantages of a dual approach.

"Google is a remarkable company, and it has kick-started something that could ultimately change the way that many businesses structure and run themselves," says Alan Moody, UK boss of SME software specialist Mamut.

"Microsoft is already addressing the online services issue, but I think it is causing a great deal of concern for others like Oracle and SAP.

"However, this doesn't have to be a question of either or. Smart companies are going to grab the best of both worlds, holding on to the existing systems they are happy with and deploying the web-functionality of developments like Google Apps to create a new generation of hybrid business tools."