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If you have used iTunes or Napster, have downloaded photos from Flickr, uploaded video to YouTube or simply have a web-mail account with MSN, Google or Yahoo!, then you have used an on-demand internet service. In fact the internet itself is an on-demand service; there when you want it 24 hours a day (if you have a reliable internet service provider).
It was tempting to say “familiar with” rather than “used”, but that would miss the point. Familiarity and usage do not always amount to the same thing. For the majority of internet users it does not enter their head that they are using an on-demand service; they are simply doing something functional—sending an email, sharing a photo, updating their MP3 player with some new music. The means of doing this, especially amongst the young, is taken for granted, but most have no familiarity with the mechanics.
That is how an on-demand service should be—working away reliably in the background enriching the experience of the user wherever they happen to be. It is easy to forget that 15 years ago on-demand services were the exception rather than the rule: media outlets taking news feeds from Reuters or Prestel, the exotic home worker with a CompuServe account or payroll bureaus are examples. However, today, using a computer off-line feels lifeless, unable to refresh its lifeblood, which is data in the form of email, music, news, pictures etc.
Most early on-demand services were sold to businesses that could afford such things and businesses have continued to exploit them with varying degrees of success since the internet went mainstream in the mid 1990s. There was a hiatus in the late 1990s when a number of vendors, branding themselves application service providers (ASP), provided applications running on discrete servers for each client in secure data centers. The ASP model faltered during the dotcom crash, due to over-investment and because many of the implementations did not drive home the potential financial advantages of on-demand services that can be achieved though economies of scale.
For the ASP model, just as for the internet itself, the dotcom crash was what really made it. A chance to rebuild expectations around better business models and lots a cheap infrastructure that had been paid for by the investors who lost out in 2001. This was not just an incredible abundance of bandwidth built into the internet backbones but also lots of unfilled data centre space looking for customers.
Enter a new breed of suppliers of on-demand services to businesses; implement them better and give it a new name and “software as a service” (SaaS) was born. The services that have grown up under this banner—WebEx, Microsoft Live Meeting, salesforce.com, NetSuite, RightNow, Postini, MessageLabs, Qualys and so on—have been mainly profitable and have proved invaluable to most of the business they serve.
Just as with the users of iTunes, Napster, Flickr and YouTube, many of the business users of these on-demand services will often be unaware of the label given to them. The fact that spam does not turn up in an email inbox is pleasing but not attributed to an on-demand email filtering service. Taking part in an online conference is increasingly familiar, few stop to worry about how it is achieved.
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