SaaS market in APAC grow at 46% through 2012: Springboard Research

New Delhi: Enterprise spending on Software-as-a-Service (SaaS) in Asia Pacific (excluding Japan) region is expected to grow at 46 percent between 2008 and 2012, pushing the market to US$2.25 billion by 2012, says the latest report from Springboard Research.

Springboard's report, “Software-as-a-Service in APEJ 2009/2010”, revealed that more than 50 percent of SaaS adopters had evaluated an on-premise application before ultimately choosing a SaaS solution, indicating that SaaS applications have begun to eat into the on-premise applications market across APEJ. Nearly a third of adopters claimed to have had a SaaS application replace an on-premise one. Report findings are based on Springboard's survey of 530 technology and business leaders from large, medium and small enterprises in ASEAN, the People's Republic of China (PRC), India, Australia and New Zealand, as well as extensive secondary research and interviews with leading SaaS providers in the market.

“The ongoing economic slowdown and interest in Cloud Computing have emerged as the primary factors driving increased interest in subscription-based SaaS solutions throughout the region,” said Balaka Baruah Aggarwal, Senior Research Manager-Emerging Software, Springboard Research. “Going forward, SaaS-related services and consulting revenues will grow substantially over the next 18-24 months as more partners enter the ecosystem,” added Aggarwal.

Large enterprises report higher adoption

Springboard's survey found that the highest SaaS penetration in Asia Pacific (excluding Japan) is amongst large enterprises (more than 1,000 employees). This runs contrary to the popular belief that SaaS primarily appeals to the SMB sector. In terms of verticals, SaaS penetration is strongest in the telecom sector, and then evenly spread across other major sectors, including education, infrastructure and construction, professional services and retail.

“Large enterprises are typically more experienced and IT savvy and are hence better prepared to leverage innovative technologies or approaches like SaaS to reduce costs,” said Michael Barnes, VP-Software Research, Springboard Research. “On the other hand, we are witnessing a growing penetration of SaaS solutions among a new segment of users, most of whom previously could not afford expensive, on-premise software applications,” Barnes added.

Springboard also said that while Australia continues to be the most mature SaaS market in the region, India and China are upcoming hotbeds of SaaS activity. However, the Chinese market is encumbered by the language and localization challenges for global SaaS vendors, even as it holds potential similar to India. The report also notes that despite a very strong current demand, the growth rate of SaaS market will naturally flatten somewhat as the market matures.

“The widespread presence of on-premise applications will force SaaS vendors to compete more fiercely to justify replacing these previously deployed solutions with SaaS-based offerings,” Barnes said.

CRM and Salesforce.com are market leaders

Based on the number of adopters surveyed by Springboard, CRM continues to be the most widely deployed SaaS application, followed by security/compliance and collaboration tools. However, in 2009, Content and Collaboration surpassed CRM in terms of overall market size in Asia Pacific (excluding Japan). Salesforce.com continues to dominate the SaaS market with other leading players including Citrix Online, Cisco Webex, Microsoft, Netsuite, Oracle, and RightNow.