The biggest difference between the two products, Google Apps for Business and Microsoft Office 365, is that Google Apps for Business is totally cloud based, and Microsoft Office 365 isn’t necessarily a total cloud solution. Instead, Microsoft Office 365 can (and usually does) work as a hybrid solution, partly in the cloud and partly on your Windows-based computer.

There are, of course, advantages to a totally cloud based solution. You can theoretically use Google Apps for Business from any machine, anywhere. This means that you have access to your company e-mail anywhere you have a connection to the internet. There is no software that resides on your local computer, there’s little need for on-board storage, and you don’t need to buy an application. The downside is that without an internet connection, you have nothing. You cannot, for example, work in a remote area, on an airplane or in any of the thousands of office buildings with poor WiFi and no cell coverage.

Microsoft Office 365 can be a pure cloud offering, but you get more functionality if you also have Microsoft Office installed on your computer. Office 365 can include a subscription version of Office Professional that you can download if you don’t have Office 2007 or 2010 already. The cloud-only version of office is limited to what you can do with a browser, but it’s designed to provide a faithful image of your document regardless of the browser or computer you’re using.

Because of its hybrid design, you can also work on documents while you’re not connected to the Internet. This could be an advantage if you need to work while you travel. The hybrid design also has a distinct performance advantage since the applications are locally based, and aren’t subject to the unpredictable latency of the Internet.

With either product you can share and collaborate on your Microsoft Office documents. Both allow multiple simultaneous collaboration sessions, and both allow you to store your work documents in the cloud. Both products are also fairly easy to integrate into your business, although Google Apps for Business requires you to convert your company’s e-mail system to Gmail. Microsoft Office 365 offers a cloud-based version of Exchange, but you’re not required to use it. This gives you more flexibility if you’re in the process of a change over, and it allows you to continue using a hosted e-mail provider if that’s what you’re already doing. Microsoft also allows you to operate your cloud-based e-mail in tandem with whatever you’re already doing, and simply set up Outlook to work with both of them.

The bottom line is that Google Apps for Business is slightly less expensive than Microsoft Office 365, but it may require you to make changes to how you do business. Microsoft Office 365 is less likely to require a change in your business, but it’s slightly more expensive. Both will integrate with Microsoft Office, so the real decision is the impact on your business from behind the scenes.