On-Demand Software is a marketing term covering how a software is distributed, priced, operated and built.
On-Demand Software can typically be bought on the Internet without needing a human interaction prior to gaining access to the software: the client signs up and can use the software.
On Demand Software is typically priced with limited commitment options (month by month) though significant discounts can be gotten with annual payments or commitment.
In terms of operations and architecture, on demand software is typically based on a multi-tenant architecture with low cost for new user provisioning: a single version of the application, with a single configuration (hardware, network, operating system), is used for all customers (“tenants”). To support scalability, the application is installed on multiple machines (called horizontal scaling). Adding a user meant to be a fully automated and low-cost process.