Zetlin points out that the term ‘ASP’ became discredited in some people’s eyes by its much-hyped associations with the dot.com boom. ‘Software-as-a-Service’ (SaaS), ‘on-demand’ or ‘hosted’ software have been touted as alternatives, and are often used interchangeably, but, according to one of Zetlin’s quoted experts (Marcus Sachs of SRI Computer Science Laboratory), there are subtle differences between them.
- "‘Software as a Service’ is a technique for delivering customized software to a client….The software company has a contract with the client to provide updates, support, and maintenance of the code.
- "‘On-demand software’ is a subscription service where you download the latest build of a software application when you need it. The version you get this afternoon might be a slight improvement over the version you got this morning. This option is good for small or medium-sized businesses but not for large enterprises. Software as a service might be a better choice due to the customization they might need."
- "Hosted" software could refer to either model.
- "ASP" .. .is sometimes associated with an older, and generally abandoned business model, in which ASPs merely offered hosted versions of traditional IT applications rather than today’s net-native applications. In a sense, those ASPs of old were simply an extension of the client-server model, in which software ran on a central server and users’ desktops merely functioned as terminals. … For many of today’s companies, the term Software as a Service allows them to differentiate from that old model.
I don’t think Sachs makes a valid distinction between Saas and on-demand. The only difference, he suggests, lies in the ability of the vendor to customise the software for a customer. Yet, some providers very consciously employ a multi-tenant model with a single version of the software serving multiple customers; apparent ‘customisation’ is achieved through configuration of the software (not customisation of the code) so that customers get an application that is very specific to their organisation, people and processes.
What alternatives might exist? Well, at the hugely influential Salesforce.com, executives generally refer to what the company does as "on-demand" software, but do not shy away from the term "ASP". On the other hand, they know that picking the right word for something can sometimes influence how it plays out. Thus, they’re encouraging use of a new term to describe some of the services the company provides: "the business Web."