SaaS Rises in the East
Significant growth in awareness and adoption of software-as-a-service (SaaS) across the Asia-Pacific region (excluding Japan) caused the market to grow 92.5 percent in 2006, to reach a market size of $154 million, according to a report by Springboard Research. Springboard forecasts that the Asian market outside of Japan for SaaS will reach $1.16 billion by 2010, with a compound annual growth rate of 66 percent. By that point, Springboard predicts, SaaS will comprise 15 percent of the overall enterprise software application market.
The SaaS concept is increasingly making inroads in the mindspace of Asian decision-makers. Awareness among the 385 organizations surveyed increased from 41 percent in 2006 to 75 percent this year, according to Springbaord. That jump contributed to a rise in adoption, with 46 percent of surveyed enterprises replying that they were using some form of SaaS in their organizations, compared to 29 percent last year. Springboard also observed that the primary reason for adoption shifted from price to other factors that included ease of use, ease of implementation, and lower maintenance.
Although CRM remains the largest SaaS application segment by revenue in Asia (representing 45 percent of total SaaS revenue in 2006), Springboard's data shows that organizations use many other types of on-demand applications as well. "SaaS is definitely going beyond CRM, which is the area it has been associated with in the past," said Ravi Shekhar Pandey, research manager for Springboard Research, in a written statement. "With all segments of SaaS growing, we are seeing applications across the board being adopted by enterprises in the region," he wrote. "More importantly, we are seeing enterprises being very happy with the SaaS applications they are using. This bodes well for the market, not only the small-to-medium businesses that have been the mainstay for SaaS vendors, but also those large enterprises looking at SaaS for non-critical applications."
The size of the companies opting for SaaS isn't the only thing changing in Asia-Pacific; the competitive landscape is beginning to change as well, according to Springboard's numbers. Regionally, the top five SaaS vendors remain, in desecending order, Salesforce.com, WebEx (now a subsidiary of Cisco Systems), RightNow Technologies, Oracle Corp., and NetSuite. But while the SaaS market is still dominated by those vendors--all of them headquartered in the U.S.--local players are making their presences felt in the region as well. Australia-based Saasu (accounting applications) amd Aussiepay (payroll application), Singapore-based JustLogin (collaboration), China-based 800CRM (CRM on-demand), and India-based Adrenalin eSystems (payroll/employee management) are some of the regional natives gaining popularity in the local markets.
"We saw significant increases across the board for SaaS through our research, which proves that SaaS has market momentum for the long run," said Dane Anderson, CEO and executive vice president for research at Springboard, in a written statement. "It is a very dynamic time for SaaS in Asia, with pure-play vendors like Salesforce.com, NetSuite, and WebEx gaining increased traction in Asia, together with smaller SaaS firms making moves into the region. Round that out with the large players in the industry like SAP, Oracle, and Microsoft becoming more aggressive with SaaS, and the market for the rest of 2007 and 2008 is going to be very interesting."
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