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What makes on demand better

Here are six distinct characteristics of on-demand applications that make them superior to conventional packaged software.

What is it that makes on-demand applications not just different, but better than conventional software? Last week, I wrote that it revolves around a focus on helping customers' businesses run better. But what does that mean in practice? Here are six distinct characteristics of on-demand applications that make them superior to conventional packaged software:

Ready to run. On-demand applications are already installed,Six distinct characteristics that make on demand superior already optimized for their hardware and software platform, already tuned to perform at any scale of operation. All the customer has to do is set up their users and have them log in.

Pay as you go. Customers pay for live user accounts. If users aren't able to go live, or stop using the application, customers won't pay (even if they've signed a two-year contract, the terms relate to usage). This creates a powerful incentive for vendors to make sure users go live as quickly as possible and then continue to actively use the account.

Short learning curve. Users need minimal training to get started with an on-demand application. Of course if there are new skills involved then some training is required. But as the previous point makes clear, it's in the vendor's interest for users to get productive with the application as quickly as possible. On-demand vendors go out of their way to make the user interface as intuitive and self-evident as they can.

Codeless customization. On-demand applications are based on a multitenant architecture that brings economies of scale by sharing the same application code across many different customers. This forces vendors to provide for customization of the application by declaring options and policies within each customer account rather than by modifying the underlying software code — with the happy side-effect that customization doesn't require programming skills. (Another great side-effect is that customizations don't have to be rewritten each time there's an upgrade to the underlying software). The upshot is that customization is more accessible and less cumbersome than with conventional packaged software, so customers find it much easier to adapt the application to the changing needs of their business.

Loosely coupled integration. In the same way that the multitenant architecture must serve many different customers' customization preferences, it must also serve many different integration requirements. Therefore on-demand vendors have adopted a loosely coupled, service-oriented approach to integration that links to many different external systems without being tied to any of them. This allows customers to link on-demand applications to their existing systems without compromising functionality and flexibility. In the emerging world of the 'enterprise mashup', it also opens up a whole world of on-the-fly customization capabilities by linking to additional on-demand services.

Constant monitoring and feedback. With all their customers running on a single data center infrastructure, on-demand vendors can easily collect and analyze data about how customers use their applications. This not only shortcuts the support process, it also helps direct product development. And because customers don't have to grapple with the technical implementation of the software (it's ready-to-run, remember), their dialog with the vendor can focus on how best to improve the business functionality of the application rather than the underlying software infrastructure.

There are other characteristics (especially in relation to the infrastructure of on-demand), but these six are the ones that I believe are the most crucial in terms of the customer experience.