SaaS and SOA

I have heard intense debates on SaaS and SOA with no winners at the end. Some argue that SaaS and SOA are the same and some try to convince others that SaaS is different from SOA. I am one of the guilty parties who participated in the above debates one time or the other. The intention of this post is to outline some differences between the two concepts. Before we jump into the differences directly, we will look types of services that an IT shop might buy from a provider:

 Application Services

These services provide processing logic that is hosted off-premises and made available over the internet. The software that empowers this kind of services can  be created by the consuming enterprise from ground up but may decide not to do it for economic reasons. Also, these services are not key differentiators to the enterprise and are commodity in nature. Examples of such services:

·         Email

·         Accounting

·         Tax

·         HR & Benefits

·         Payrolls

·         Sales force automation

The focus of these services is to provide commoditized processes at very economic scales. The data that flows through the above services is created and owned by the consuming company through the course of its operations. Being commodity services, a consumer can find abundant supply of providers in this space. A supplier of these services will have a huge competition in the market place and have to strive to optimize the sourcing and operations through metadata driven and multi-tenant architectures.  These services generally qualify to be SaaS services.

Information Services

The focus of the information services is to enable the supply of a company’s intellectual property and owned data to the relevant consumers through standard interfaces.   The information that flows through these services is the property of the provider but licensed under specific terms of usage. Following are a few examples of the information services:

·         Netcraft

·         MediaMetrix

·         Nielson’s ratings

·         Dun and Bradstreet

·         UPS (shipping status)

·         FedEx (shipping status)

·         Reuters

·         Associated Press

·         Gartner

·         Forrester

Based on the business needs of a consuming company it may decide to subscribe one or more information services. Difference between the information service and the application service is the niche nature of the information flows through these services.  For example, it is not very economical or wise to build a service from ground up if a company needs web research information. It is very easy and smart to buy it from Netcraft or MediaMetrix. Same is true if a company needs media research information, they can subscribe it to Nielson or some other provider.

As mentioned in the beginning, focus of the application service is to automate commodity business process through hosted software where as the goal of information service is to provision intellectual property.  A hosted application service capable of multi-tenancy (for economy of scale) can be called a SaaS service.

Can we compare SaaS with SOA?

SOA is an architecture style that helps speedy construction of new software systems through the composition of the existing capabilities and services. SOA can be applied for the construction of both the application services and information services.  So, SOA and SaaS have no semantic equivalence to compare in my opinion. SaaS is also a business model while SOA is a architecture strategy. One does not need apply SOA to deliver application service through SaaS however SOA may optimize the construction and operation of SaaS services.

Deciding to deliver tax capabilities over the web is SaaS while enabling the tax application to integrate with IRS for e-filing and internal return verification amounts to the application of SOA.


Comments (4)

  1. Tom Hodges says:

    What kind of companies supply SOA and SaaS ? I have only come accross Microsoft and SAP

  2. hanuk says:

    Well, I can speak for Microsoft —

    Microsoft has to primary business areas in the context of SaaS:

    1. A platform provider. Our OS, database, dev tools, operational management capabilities enable the construction of SaaS services. These are the capabilities ISVs and our own Live team uses in building services. Any companies competing in this space are players of the SaaS platform ecosystem.

    2. A service provider through Live (  strategy. Leveraging the platform capabilities, Live team builds services aimed at consumers and small businesses to reach out the "The Long Tail".

    In the long run, I feel that "Software + Services" is the organically viable ecosystem than the pure cloud based SaaS services.

  3. The differences between SaaS and SOA are elementary; it’s like the difference between raisins and cake.  Raisins don’t have to go into a cake but you’ll very often find them there.  SaaS is the raisins, SOA is the cake, the overall picture, the architecture.

    There are several posts on my blog discussing these sort of points at:

    There have been a few interesting developments with SaaS and SOA lately, mainly in the world of browsers and operating systems.  How this all affects Microsoft’s business model will be genuinely intriguing.

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