Business users in the Asia-Pacific region have emerged as key influencers in SaaS (Software as a service) purchase decisions, according to a servey by Springboard Research. According to Springboard's report, titled "Software-as-a-Service in APAC: The Momentum Continues", the SaaS market in APAC (excluding Japan) in 2007 was an estimated US$274 million (NZ$405 million). That market is expected to register a compounded annual growth rate of 59% during 2007-2011, reaching an estimated US$1.8 billion by 2011.
Based on a survey of 530 CIOs and IT managers in India, the ASEAN (Association of South-East Asian nations) countries, China, Australia and New Zealand, the study found that awareness and familiarity of SaaS across the region has reached an all time high. However, the report cautions that the APAC SaaS market is rather immature, as customers are still grappling with issues such as finding the right application and ensuring reliable connectivity. Concerns about data reliability and security are also impacting the growth of the market.
Balaka Baruah Aggarwal, senior manager of emerging software for Springboard, says: "Although Saas awareness has reached a peak, deployments in the region demonstrate that the market is still in its early stages as most customers have deployed SaaS applications in isolation and have not integrated these with other enterprise applications.
"Vendors must therefore continue to invest further in educating customers on the best ways to derive the benefits of SaaS, especially in China, ASEAN and India," Aggarwal says.
The report also reveals that in terms of penetration, the technology, manufacturing and financial services industries have emerged as the leading verticals in the region to adopt SaaS applications. Respondents point to investments in existing on-premise applications as the biggest impediment to SaaS adoption.
"SaaS' traditional value-propositions of low upfront investment and ease of use and management are no longer enough to lure existing customers with on-premise applications", says Michael Barnes, vice president of software research at Springboard.
"Vendors will have to offer applications and functionality that existing on-premise applications do not offer, and they also need to greatly expand local partner channels and delivery capabilities to appeal to these customers," Barnes says.
Australia remains the largest and the most mature SaaS market in the region, while SaaS momentum has demonstrated strong growth in many parts of India and China as vendors have started focusing and investing more in these markets.
In terms of revenue generation, CRM continues to dominate Asia's SaaS application market with a 42% market share, followed by on-demand collaboration tools and core enterprise applications like ERP and Supply Chain Management (SCM). In terms of other SaaS applications, on-demand email, desktop applications, security/compliance, payroll, accounting tools, and e-procurement platforms have all made rapid inroads during the previous year.
"There are opportunities for SaaS across many applications, but Springboard believes that on-demand collaboration will emerge as the most pervasive SaaS application as more and more enterprises seek to both leverage and empower an increasingly distributed workforce," Aggarwal says.
The report notes that Salesforce.com continues to dominate the SaaS market in the region, while other key players include Cisco Webex, RightNow, Netsuite and Citrix Online, as well as traditional software vendors including Microsoft and Oracle.