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Adoption level of SaaS higher among Asian SMBs

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CIOL Bureau
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LYON, FRANCE: Software as a Service (SaaS) has been one of the IT industry’s hottest buzzwords over the past several years, and for good reason. The success of firms such as Salesforce.com, Web Ex and RightNow Technologies has shown the power of the on-demand software delivery model. Cost benefits, ease of implementation and management, and better coordination across branch offices have been key drivers for the early success of SaaS vendors. Although some high-level research has been conducted at the global level, very little information exists on the Asia Pacific SaaS marketplace.

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Reportlinker.com announces that a new market research report related to the Asian software industry is now available to its catalogue. The report addresses the lack of coverage by examining the key trends in the Asia Pacific Enterprise SaaS market. A key focus area of this executive overview is in providing some top line market data including market size and growth forecasts for key application segments of the enterprise SaaS market in Asia Pacific excluding Japan.

A survey of 210 CIOs and IT decision-makers at small and medium enterprises in Australia, China, India, Korea, Malaysia, the Philippines and Singapore helps to contribute to this executive overview. The publisher additionally has a more extensive report available that will provide country level detail, the full results of the survey, along with detailed market sizing of specific application segments.

Executive summary

The review of the Asian SaaS market revealed a particularly dynamic, promising and exciting corner of the IT market. Many segments of the market are doubling in size every year, and the pace of strategic experimentation is astounding. Most vendors are approaching the market in a different way, viewing it through a lens that can help them benefit from this new market dynamic to the largest extent possible.

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Young SaaS-founded companies are moving at a fast and furious pace to stake their claim, as traditional IT firms delve into the SaaS landscape more cautiously. Regardless of the approach, all vendors the publisher encountered have a healthy dose of respect for the power and force of the SaaS dynamic, and its ability to reshape their fortunes in the long term.

The findings from this research study states that the ‘SaaS market is here to stay’. Unlike many hot IT industry buzzwords that come and go, all evidence gathered points to the long term staying power of the SaaS model. The publisher does not believe SaaS will replace the traditional software license model any time soon and the publisher envisions an environment where both models coexist; however, SaaS will eat into the share of the traditional model and the traditional software license approach will need to adapt.

The study also states that SaaS is not Just for Asia’s SMBs. Although adoption levels for SaaS will be greater in the SMB market sector, vendors indicated there is activity in the large enterprise sector as well, and that upper mid-market and large businesses represent some of their largest and most important clients.

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The other prominent study results are:

- The Asia Pacific SaaS enterprise applications market amounted to US$80 million in 2005, and generated 82 percent revenue growth over the previous year. The market is projected to grow at a CAGR of 84 percent from 2005 to 2008.

- CRM is the largest SaaS application segment in the region, representing 50 percent of total SaaS revenue in 2005.

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- Based on a survey of Asian Small and Medium-sized enterprises, 41 percent were aware of the SaaS concept. Only 29 percent of SMEs surveyed had reported adopting SaaS; however, many likely did not fall into the publisher’s official SaaS definition, which would lower this figure.

- The primary factor driving SMEs to adopt SaaS applications is cost benefit (33 percent), followed by ease of use and business benefits.

- Of the surveyed SMEs that had adopted SaaS, they reported savings ranging from 5-55 percetn compared to the traditional licensed model, with the majority (58 percent) reporting estimated savings of between 20-30 percent.

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- The primary factor preventing SMEs from adopting SaaS is the perception that it is more expensive than licensed software. The next most important inhibitors are a lack of SaaS understanding and security concerns.

- Among SMEs that had not adopted SaaS, 25 percent indicated plans to do so within the next 12 months. The primary application being planned is CRM, followed by web collaboration, security and HR applications.

CIOL Bureau