Japan's SMBs Will Demand More
Japanese SMBs will up their investments in software as a service (SaaS), spurred primarily by their interest in CRM delivered through the model, according to two recent studies from AMI-Partners. "2005-2006 Japan Small Business Market Overview and Comprehensive Market Opportunity Assessment," and "2005-2006 Medium Business Market Overview and Comprehensive Market Opportunity Assessment" reveal that total spending on hosted applications among SMBs in Japan will grow to $138 million in 2006. This represents a 23 percent upsurge from $112 million in 2005. AMI-Partners defines small businesses as companies with one employee to 99 employees, while medium businesses are classified as those with 100 employees to 999 employees.
Several U.S.-headquartered CRM firms have a presence in Japan. For example, NetSuite has a Japanese subsidiary called NetSuite K.K. and RightNow Technologies has an office in Japan. A portion of Oracle's Japanese footprint includes Oracle Information Systems Japan, formerly PeopleSoft Japan, while Salesforce.com's presence in the Japanese market includes Salesforce.com Japan. "CRM in general is catching on more quickly than other SaaS [capabilities] around the world," says Laurie McCabe, vice president for SMB insights and business solutions at AMI-Partners.
ERP and all other application-services spending is forecasted to increase by 18 percent and 21 percent respectively, CRM service spending will grow by 29 percent this year, according to AMI-Partners. However, Japanese SMBs' expected growth rate of SaaS outlay (23 percent) is actually higher--albeit just four percentage points--than North American SMBs (19 percent). This, according to Yuki Uehara, research analyst at AMI-Partners, is based on contributing factors like better broadband infrastructure, lower software application penetration, and greater legal requirements for security management.
AMI-Partners contends that broadband usage among Japan SMBs will hit 85 percent, 7 percentage points higher than U.S. SMBs, and notes that while DSL, T1, and cable modems are the leading data lines among the US SMBs, fiber optics is gaining traction with Japanese SMBs.
On the software-app front, Japanese SMBs are adopting enterprise-software applications at a lower rate than U.S. SMBs. CRM adoption among Japanese SMBs is 0.6 percent, roughly a quarter of the rate of their US counterparts, while the adoption of ERP apps among Japanese SMBs is 1.3 times lower than U.S. SMBs, according to AMI-Partners.
Additionally, legal mandates like Japan's Personal Information Protection Act, effective April 1, 2005, which require organizations to safeguard personal information from security gaffes, will likely drive higher demand among Japan SMBs particularly for CRM systems, according to AMI-Partners.
Expected uptake in SaaS is also clearly evident on a more global front: The SaaS market will experience a 28 percent five-year CAGR and grow from $2.3 billion worldwide in 2003 to $8 billion by 2007, according to IDC's "Top 10 Predictions for 2006: Software as a Service."
CRM World News Reel(ing)
SaaS Will Increase Serving Size
Japanese SMBs: IT Security and Storage Opportunities