Sorting out which providers offer which technologies is difficult, in part, because the terms "on demand," "software-as-a-service" and "service-oriented architecture" are unfamiliar to many HR professionals and the definitions for each can vary among vendors.
According to Jason Averbook, CEO of Knowledge Infusion in Minneapolis, and James Holincheck, vice president of research for Stamford, Conn.-based Gartner, the following are some definitions to keep in mind:
Service-oriented architecture: SOA refers to a way of building software in which functionality is built into objects that are connected together to perform tasks.
Unlike traditional applications, which are written as large, hard-coded structures, SOA-based applications consist of small, modular components that can be assembled and reassembled to work together and that talk to one another using nearly universally standard software languages such as XML.
SOA applications are highly flexible and allow organizations to mix and match pieces of functionality based on their needs. They are also highly compatible with other standards-based applications and are simple to upgrade because small pieces of an application can be swapped without altering the entire thing.
Web services: These are small programs used to perform a relatively simple task over the Internet or an intranet. Non-SOA software providers sometimes use Web-service-based interfaces to allow their legacy systems to "talk" to other applications in a way that mimics SOA. For the sake of use, this setup is often sufficient, but because these systems are still hard-coded at their roots, maintenance still requires IT resources and upgrades are not as simple as with a true SOA.
Software-as-a-Service: Gartner's definition of SaaS requires that it be owned, managed and delivered off-site, be licensed on a pay-per-use subscription basis, and be based on a single set of code and data definitions that are used in a "one-to-many" way by all customers at any time.
This way, upgrades to the software can be delivered to customers all at once, rather than to one customer at a time. Any service labeled "on-demand" will fit the first two criteria but may not meet the third. Many so-called "on-demand" solutions would better be termed "hosted" solutions because each customer has its own code and data (one-to-one).
On-demand: This refers to off-site subscription models that offer most of the financial advantages and freedom from IT headaches that SaaS offers, but do not meet the one-to-many Gartner requirement for true SaaS.
The fact that these solutions are one-to-one means the provider must update each client's software during an upgrade and troubleshoot many machines, thus decreasing the economies of scale true SaaS can offer. Nevertheless, the terms "SaaS" and "on-demand" are often used interchangeably by vendors and potential clients should remember to differentiate between the two.