What’s the link between Software as a Service (SaaS) and Service-Oriented Architecture (SOA)? After all, they both seem to be all about “service,” right?

I’ve been engaged in an interesting debate in the blogosphere around the whole SaaS-SOA relationship, and I thought I’d surface it here.

In my initial post over at ZDNet on this topic, “Is SOA Software as a Service, Delivered Internally?“, I posited that SOA is, for all intents and purposes, a form of SaaS delivered inside the corporate walls. For starters, it’s a great elevator speech to help line-of-business managers grasp the SOA concept, but there’s much more value beyond that.Rather than building, maintaining, or delivering their own services, business units subscribe to services from a publisher somewhere else in the enterprise (SOA), or outside the enterprise (SaaS built to SOA specs). Someone else worries about upgrades, maintenance and testing; you consume the service, and pay on some pay-as-you use arrangement. That’s SOA; that’s also Software as a Service.

Ian Thomas picked up on this post, and agreed that SaaS pushes the right buttons in terms of reuse, economies of scale, standardization and cost transparency — providing a frame of reference for SOA.However, for the most part, Ian disagrees with the idea that SOA is actually SaaS embedded within the enterprise, and, therefore, he says, the answer to the question “Is SOA SaaS, Delivered Internally?” is “no.” SOA is weighted down by heavy internal enterprise infrastructures, while SaaS offers far nimbler and cost-effective third-party service options, he says.

Dale Churchward also joined in on the discussion, observing that while SOA is not likely capability of functioning as an internal SaaS, SOA can, in many respects, pave the way for SaaS. “Since many applications now support XML based messages, for example, integration becomes a much easier task. SOA also focuses on business processes. This encourages businesses to break off individual capabilities that need to evolve rapidly to support changing business drivers. This is where SaaS comes in.”

As the SOA-SaaS interplay gains critical mass, Ian predicts that the outside services — which have greater economies of scale and value propositions — will overtake internally delivered services. “As organizations increasingly grasp the concepts of service provision – driven by SOA, ITIL and SaaS – they will need to grapple with the idea that as a service provider they will need to deliver services quickly, cheaply and reliably with inclusive service management, reporting, billing etc. in order to be competitive. As a result, organizations will unlikely be able to sustain expensive, bespoke and plodding enterprise infrastructures and will start to look at external utility computing platforms.”

Looking further into the future, Ian predicts that ultimately, enterprises will be subscribing to “Business as a Service” (BaaS) propositions, in which they “construct an overall value chain rather than just buy software.” I agree, and have posted some thoughts on the emerging “Loosely Coupled Enterprise” that SOA-SaaS is making possible.I responded to Ian’s thoughts with a follow-up that I believe most organizations will end up being both consumers and publishers of services, thereby blurring the line between SOA and SaaS.

Ian responded with a clarification that he believes “all organizations are going to be providers of some services, but my contention is that they will become forced to specialize in order to survive.” In addition, he adds that it will be “increasingly difficult to sustain the ability to implement these with internal IT capabilities.” Effective SaaS that the market will support must be built on “highly scalable platforms that support specific architectures along with the other capabilities needed to monetize service provision (e.g. billing, service management, reporting etc).”

Ian’s point: Internal infrastructures, no matter how SOA-ized they are, may not have the agility to compete with market-driven SaaS offerings. Food for thought.

Members of the Fastforward E2.0 community: Do you see organizations developing their own internal SaaS sites using SOA (and potentially offering them to outside consumers), or is SaaS inherently a market for third-party providers?