SaaS : Asia Pacific v America’s v Europe March 1, 2008
Posted by stephenpech in SaaS Channels, SaaS Industry, SaaS in Asia Pacific.Tags: alibaba, Alisoft, Asia Pacific, BlueArc, Cynapse, Enovation, In-Stat, Just Login, Morph, new-lease, NexGen, Paul Budde, point topic, Sassu, springboard, ThinkFree, Xero
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I have recently read an article by Saugatuck, On the Road in Europe: SaaS Demand Grows both extremely exciting news for the industry world-wide, and a great point of comparison for The Asia Pacific region. Just what is happening in Asia Pacific SaaS? Is it following the growth pattern of Europe and the US? What are the differences in the market? What movements should ISV’s make and when?
Statistics
First let’s look at the statistics. These are from 2H 2007 and I believe highlight the enormous APac SaaS opportunity as compared to Europe and the America’s
| APAC | Americas | EU | |
| Population | 3712.5m | 891m | 809.6m |
| Internet Penetration | 11.3% | 38.4% | 39.8% |
| Internet Growth | 265.7% | 171% | 206.2% |
| GDP | 18,077bn | 18,500bn | 13,111bn |
| GDP Growth 2007 | ~8% | ~2.5% | ~1.5% |
| SaaS CAGR 2008 | ~35% | ~70% | ~80% |
* Have a look at the great flash animation on the NexGen homepage for a great interactive demonstration of this
The statistics say it all. The Asian market will grow at a faster CAGR, using faster Internet growth supply a faster growing economy, of more people and soon to be bigger economy than both the US and the EU.
One thing we do share with our European cousins is our interest in using WiMAX broadband to reach the Asian growing SaaS user base. According to Paul Budde Communications based on Point Topic data “WiMAX will make up 60% of the wireless broadband market by 2008…. With Asia and Central and Eastern Europe the two hottest markets”, however the Asian region will lead even Europe. In-Stat forecast that the Asia-Pacific market will account for “45% of the world’s total WiMAX user base by 2009, reaching 3.8 million.”
Key differences between markets
- SaaS penetration in Asia is currently 18-24 months behind North America, and approximately 6-12 months behind EMEA.
- Less sunk cost in legacy business systems means quicker penetration gains than both EMEA and North America (but similar to Eastern Europe).
- Less sunk cost in legacy infrastructure is means quicker penetration gains than both EMEA and North America, (but similar to Eastern Europe)
- Accounting practices in regards to depreciation of intangible assets can make SaaS more attractive in some countries.
Customer Segments
Is there a difference between specific market segment’s? Large companies are taking on SaaS in much the same way as their European and US counterparts, albeit slightly behind time-wise. Asia is special however, in that it’s small businesses are the drivers of it’s new booming economy, entrepreneurialism is ‘built-in’ to many cultures here, and all of these SME’s need will need to take the next step in processes soon. Government organisations know this too and some, like the Singaporean Government, are actively looking towards SaaS as a smart next step for their countries SME’s. The industry is better set to take advantage of this process investment than in any other market.
Geos & Applications
CRM & Web conferencing were approx. 80% of Asia Pacific SaaS revenues in 2005, and were still probably 60% in 2007. In 2005 over 1/3 of this was derived from the Australian market were less than 1% of people in the region live. China, Korea, India and Singapore are the other leading markets in the region, however I believe that Thailand, Vietnam, Malaysia & Indonesia will outstrip growth in these regions in the next couple of years.
The Alibaba group , and their SaaS line Alisoft are a great example of China’s own direction (Alibaba run Yahoo’s presence in China) and representative of other parts of Asia like India. Indo China is caught in the middle of these and US/European services whilst Australia does now, and will continue to lean as normal towards US and European offerings, at least initially.
The Ecosystem
A SaaS ecosystem is definitely developing in the region, but it is still fledgling and not yet understood or accepted either by customers or the IT industry. Those that can last out the winter could have a great summer. Perception and mainstream acceptance are still the biggest retarder to the uptake.
Asia Pacific has already bred it’s own SaaS platforms (Morph ), Business Exchanges (Alibaba ), Channels (NewLease and BlueArc ) and of course start-up ISV’s, (thinkfree which has strong Korean roots, AliSoft in China, Just login & Cynapse in SE Asia, and Enovation, SaaSu and Xero in Australasia)
Much of the SaaS revenue in the Region is being derived from North American based ISV’s but the market is still only at early stages of maturity, is diversity, and has unique requirements such that local and international firm who position themselves and adjust to the market still have a good chance of being amongst the big winners. Like for Europe, language is a barrier to expansion of Asian ISV’s.
Crossing the Chasm
Software as a Service in Asia will outstrip even the US and Europe for growth, and potentially eventually as a market. All of the feedback I get puts SaaS as a ‘when’ not an ‘if’, however perception and mainstream acceptance are still the biggest retarder to the uptake.
How I gather this information
I read and contribute to the SaaS-AsiaPacific.com website which is a commity for the SaaS industry, users and commentators in the Asia PAcific Region. As a director at NexGen, an Asia Pacific SaaS enabler and ‘hub’, I travel to many Asian and world-wide conferences and speak to many enterprise interested in working in thismarket. I suggest Springboard research an excellent source of APac SaaS Information.
* I also post versions of relevant AsiaPacific articles from this this blog on the SaaS Asia Pacific Community site.
Force.com goes with Air/Flex February 27, 2008
Posted by stephenpech in SaaS Application Improvement, SaaS Applications, SaaS in Asia Pacific.Tags: Adobe, adobe AIR, Adobe FLEX, AIR/FLEX, AppExchange, Asia Pacific, force.com, salesfore.com
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Yesterday Salesforce.com’s SaaS platform play, Force.com, announced it was going to support applications made with Adobe’s FLEX and AIR technologies on their platform.
This is a very good move by Salesforce. It means they are allowing AIR/FLEX to be the presentation layer and also taking advantage of the offline functionality that AIR/FLEX will bring. It means that they are leveraging the impact and drive that Adobe has brought to the web already with flash, shockwave et al., along with the extra it will be bringing to the web application space with AIR and FLEX. It also means that strategically they are really opening themselves up to other technologies other than their own processes and user interface components which, although useful were never going to be able to keep up with the pace of change in the wider SaaS / web application community.This hook-up also means that the offline functionality that AIR and FLEX are developing immediately steps salesforce.com into the forefront of the drive to take SaaS apps offline. The ability for applications to work effectively in both a connected and an unconnected mode is essential to effectively supporting business processes and our increasingly mobile work habits.
It will also allow the applications developed to be listed on their AppExchange, which on top of the technology based criteria for choosing the force.com platform, also provides a marketing and sales incentive by providing a built in route to the customer and marketing avenue.
Force.com’s saleforce.com based customer interface layer was always going to be the Achilles heel of their platform. It works well for sales management and database driven applications but not well enough for the wider array of web applications. Adding AIR and FLEX is like selling a car with the option to snap the body off of the chassis and exchange it for one with a different look, feel and interior.
This really gives Force.com the opportunity to become the defacto standard web platform that Salesforce.com wants it to be.
Interestingly today also brought a big AIR/FLEX update in my neck of the woods, the Asia Pacific. Australia’s biggest bank, the CBA, has chosen AIR/FLEX for the customer facing component of it’s home loans (Mortgage) processing system. This will mean that the same user interface is available when offline or online and that mortgage data captured offline will be synchronised when the computer is next online. A great example of what this technology can be used for.
A SaaS Introduction February 27, 2008
Posted by stephenpech in General SaaS.Tags: Asia Pacific, ASP, NexGen, SaaS Definition, SaaS introduction
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Despite the enormous buzz around SaaS I am still regularly asked for an overview of what it is, what it means to the user, and how it is different from the ASP model. Because Software as a Service is a community idea, with many different takes on ideology and implementation it is not always easy to define, but one point I always try to relate is that is that SaaS is the next step in the continuing maturity of both information technology and business services, not a deviation away from it. In this article I a trying to give a quick entree into SaaS for the business men and women as yet unaffected by it.
What it is
Software-as-a-Service (SaaS) is a software application delivery model where a software vendor develops a remote access capable software application and hosts and operates the application for use by its customers, who pay not for a license, but for use or benefit derived (taken from the NexGen website). Also see Wikipedia SaaS entry . For a technical definition I find this list of characteristics very useful:
- Remote web or network-based access
- Multi-tenant architecture to permit multiple clients to access the same system
- Payment flexibility and advantages over the traditional software model
- External and centrally controlled hosting and management by the service provider
What it means to the user
It means no local installation, operation outside the firewall, no maintenance, no upgrade costs, no CapEx, less technical resource issues, a single point of responsibility for each process area, and quick relevant product iterations.
The buzz
SaaS is not just the future anymore, it’s now. Gartner predicts that Software as a Service will be 25% of total new software revenue in 2011, it has crossed the chasm of acceptance and is now mainstream, and 80% of US CIO’s have it on their implementation list for 2008. Dell and Microsoft are buying SaaS companies all over the place.
SaaS and ASP
The Software as a Service model is the mature realistic version of the old ASP model with the addition of web and platform technology which caught up allowing the interface to be usable and quick, and the platform to be multi-tenanted (multiple customers on the same system) which means more efficient cheaper operation. SaaS also has generally moved the system hosting and management responsibility over to the software developer, and away from the local provider who generally managed it in the ASP model. It will always be that a product consumer will want to do as little as possible more than their core competency, and Software as a Service is one step closer to that.
The customers perception of the difference between ASP and SaaS is simple
- The technology has improved
- People’s perceptions of Web security has improved
- Web access is nearly ubiquitous
- Multi-tenancy technology means more efficient and lower costs (this is important as many users can use the one system just with data and access privileges divided).
The industry
Originally chartered by companies extending the business outsourcing model such as ADP, SaaS has spread into all sectors of business process, including verticals (a department such as HR), horizontals (a single solution for all users such as email) and niche areas (email especially for HR). Now that SaaS has proven itself and “crossed the chasm” (at least in U.S. it has – here in Asia Pacific we’re beginning our run up to make the jump), the Platform wars are beginning – the Web has been chosen as the user interface but the back end for the applications to run on is still an open race.
SaaS in Asia and the Pacific
Though currently behind in terms of Software as a Service adoption, our Asia Pacific region is likely to be a future SaaS driver. Developing economies mean new companies with no legacy systems and a desire to catch up quickly with the best technology. They also mean new public infrastructure such as internet access via technologies like WiMAX producing a leap frog effect. Also the explosive growth in the region and some local accounting practices that encourage software to be treated as OpEx rather than CapEx add to the expectations in the region.
Summary
Software as a Service has an enormous amount of buzz because of the benefits to user organisations such as cost efficiency, increased mobility, payment flexibility, and superior externally managed systems. For an in depth look at the forces behind Forces behind SaaS see the article on SaaS as a maturation of business processes.
* I also post versions of relevant AsiaPacific articles from this this blog on the SaaS Asia Pacific Community site.
