On Demand Blogging by Stephen Pech

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

* 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

1. SaaS penetration in Asia is currently 18-24 months behind North America, and approximately 6-12 months behind EMEA.
2. Less sunk cost in legacy business systems means quicker penetration gains than both EMEA and North America (but similar to Eastern Europe).
3. Less sunk cost in legacy infrastructure is means quicker penetration gains than both EMEA and North America, (but similar to Eastern Europe)
4. 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.

The Software as a Service (SaaS) business strategy promises to take organisation infrastructure and processes to the next level of modularity, management and financial flexibility – but how well does it deliver on its promise today?  An enterprise that utilises only SaaS offerings for its IT&T systems is called an All SaaS Enterprise (ASE).  Can a company run purely on this model? 

At my company, NexGen, SaaS’s biggest Asia Pacific cheerleader, we have always endeavoured to ‘eat our own dog food’, and run an ASE. We succeed - almost.

As a start-up our requirements were clear.  We needed solutions that were quick to rollout, easily managed; offered flexible access, low upfront costs, and the ability to scale with our growth.  Software as a Service solutions offered each of these.  We deliberately went out to be as realistic as posible, building up our platform as if we were a normal non SaaS aligned start-up and based only on our internal requirements.  We did this to better understand the end customer and the industry.

The first step was finding suitable applications.  Part of our vision at NexGen is to evangelise Software as a Service in and for the Asia Pacific region so we are in a good position to know the offerings available but for someone outside of the industry it is still too much of an effort to find and test all the applications we required.  The SaaS community, including NexGen in the Asia Pacific region and the new channels that are emerging hope to improve this soon.  We utilised sources like Tanooma, SaaS Showplace, IBM’s SaaSpace and Neobinaries

We built our infrastructure carefully starting with the essentials, Office Productivity (MS Office), Networking (Linked In ), EmailSales Management (SalesForce), Document Management (Local storage), Telephony (desk Mobiles/Cells), Faxing (a fax machine), and basic website hosting (local web host).
Then in came the manual replacements - advanced Telephony (Alianza), advanced Banking (upgraded banking service), Fax Management (efax ); and more functionality advanced Document Management (Xythos On Demand), advanced web hosting, advanced Email and Calendaring (Hosted Exchange), Blog + Wiki (Hosted SharePoint) and Web Meetings (GoToMeeting ).
Finally we implemented Systems Management (TriActive ), Email Marketing (iContact), collaborative office productivity (Google Apps & Buzzword – see my article SaaS in the Office ), and mind mapping (bubbl.us).
Still to come are Business Intelligence (Enovation – see SaaS Business Intelligence), Billing (Aria ), advanced Business Networking (Xeequa ), and a Knowledge Base (Hosted SharePoint).  To give a simple user experience all applications are brought together in our Intranet (Hosted SharePoint). (local web host),

Is Internet access a problem? No, there is MORE access than the in-office alternative. I have access to our SaaS platform in our offices, as well as hotels, airports, and cafes, and I don’t require a VPN nor suffer from the slower access you normally experience with one.  It will get even easier with the rollout of services like WiMAX in Asia and the Pacific .

 What about support?  Believe it or not but we have LESS user incidents on our All SaaS platform than on an equivalent internal platform, due mainly to the focus on usable user interfaces and on applications doing one thing and doing it well.  Of the incidents we have had, most of the problems have been able to be solved very simply by either internal technical team members or even by the user themselves, mainly because of a high availability and relevance of self support options such as FAQ’s, training video’s, online manuals and built in hints and tips.  The main area of inconvenience has been in the few incidents that have required support by the vendor.  Though we have found SaaS support to be generally of a high standard, multiple vendors mean multiple support teams rather than one internal IT team, absence of advice in the context of our company, and a slower pace to action.   This suggests that there is space in the SaaS Ecosystem for outsourcers, MSP’s and aggregators to pull together multiple offerings and provide company contextual support and advice.

Is there a SaaS solution for everything?  We found suitable solutions for everything except Accounting and offline office productivity .  Being based in Singapore brings many advantages but it also brings specific accounting rules and a small market that has not yet been reached by a product focussed at small businesses – hopefully soon.
Also desktop based Office Productivity and email/calendaring are required when offline, however the offline web via Firefox 3, Adobe AIR, and Google gears will soon fill this gap (refer to my article “SaaS in the Office – Web based Office Productivity ”)

What is the overall experience? We have been running most of our All SaaS platform for the better part of a year and our experience has been almost unanimously good.  Of most importance to our business is that we have more functions available more often, and kept to a higher standard of availability than if we had in-sourced our infrastructure.  Our COO is effectively our entire IT department, but we still have hundreds of on-call systems experts to help us.  And most importantly of all, process implementation and change is more business driven, not technology driven.  See a full list of benefits in the accompanying All SaaS Enterprise (ASE) - the Applications and Analysis article.

 What would I do differently next time?  We are very happy with our infrastructure but if ‘next time’ the Web based Office Productivity area is solved, and there are Software as a Service Aggregators who can provide support in the context of our company, then we would take advantage of these.

See a full list of the SaaS offerings, benefits, hassles, worries see the accompanying All SaaS Enterprise (ASE) - the Applications and Analysis.

* I also post versions of relevant AsiaPacific articles from this this blog on the SaaS Asia Pacific Community site.

At my company NexGen , we routinely evaluate and analyse SaaS solutions and we have been ruining an All SaaS Enterprise (ASE) for the better part of the last year (see the All SaaS Enterprise Business Case sibling article ).  How well do the solutions fare?  What are the benefits? What are the hassles?  What is the jury still out on?

SaaS offerings 

We chose applications based on our requirements, not SaaS ideology.  The decisions we made are by category of application are :

Accounting – QuickBooks

Try as we might we have not yet found a suitable SaaS accounting solution that suits our company – a Singapore based start-up with a QuickBooks experienced accounting team - Quickbooks have a SaaS application but it is only availabale for the US.  There are many good solutions out there, including some Asia Pacific SaaS solutions (SaaSu , Xero , and myworkspace), just none right for our situation.

Banking – CitiBank

Our executive team uses our banks SaaS account management application which utilises a dongle to create, approve and enquire on transactions amongst other things.  One of the best examples of SaaS, it is easy to use and enormously valuable in that it enables even the most mobile executive to keep financial control all over the world at any time of the day.

Billing – Aria
Aria provides full customer billing lifecycle management.

Blog – WordPress , and managed Sharepoint
Both offerings provide a good quality blog as part of wider function sets.

Business Performance management / Business Intelligence – Enovation
Enovation provides an excellent easy to use and quick to value SaaS BPM offering.

Document Management – Xythos On Demand, Local storage, and Local Backup
Xythos provides a full document management solution, including online storage and access control, version control etc.  We utilise the solution only to half of its full extent but it still one of the most valuable for our very mobile organisation.  It ha a web absed file amanger interface but also require a local client for synchronisation of files onto a PC.

Email and Calendaring - Hosted Microsoft Exchange
We looked at Zimbra, Google apps and other solutions but a Hosted Exchange solution won for three reasons – it had the breadth of functionality we required, our users were comfortable and experienced in using it, and we could not find suitable Zimbra hosters in region.  This is an area we will continue to review as there are many exciting things happening here.

Email Marketing – iContact
Email marketing is an important function for us to keep in touch with our networks.  iContact does the job cleanly and well with an easy to use interface. We also looked at ConstantContact which was also a good quality product.

Fax Management - efax & physical fax machines
Despite the prevalence of email, faxes are still an important communication method.  With a mobile workforce a single location specific solution was not tenable for quick communication.  E-Fax allows us to receive and send faxes as if we were in the office when we are anywhere in the world.  We still have physical fax  machines but these are rarely used.

Intranet – Hosted Microsoft SharePoint
Sharepoint is not without its issues but it is still a good intranet solution.  The hosted model and it’s availability in combination with hosted exchange made this the best intranet choice for our business.

Mind Mapping - bubbl.us
Mind Mapping is an excellent tool – I encourage everyone to add it to their office communications practices.  It is not as fully featured as some of its on computer rivals but it is good enough and makes sharing and collaborating on mind maps extremely easy.

Networking - Xeequa & Linked-in
Networking is an essential function for a SaaS hub like NexGen.  Linked-In is a staple personal networking and relationship management solution.  Xeequa is for both individuals and their companies.  It adds company to company relationships and some advanced ways to interact.

Office Productivity – MS Office (locally installed), Google Apps , Wiki, Buzzword
Unfortunately I can’t say we are all SaaS here.  We use a mixture of solutions to match the requirement of the situation.  For one internal project we use only Google Apps, we communicate collaborative group information via a wiki, and we use Buzzword where it makes sense, but the main product of use is MS office.  This is mainly because this way of working is accepted by our staff and always accessible.  There are however many areas in Office productivity that SaaS can improve on – see my SaaS Office Productivity article for my thoughts here.

Sales Management – SalesForce
Being a SaaS hub keeping track of our relationships and opportunities is core to our business so this was one of the most important pieces of our infrastructure solution.  We also looked at entellium and hosted Suger CRM.

Systems Management – TriActive
A mobile workforce means, until our SaaS infrastructure is completely clientless, mobile computers and the requirement to manage them.  With some Systems Management experience of my own I really appreciate the value a SaaS model brings to this area.  Systems Management was formally a heavy lifting area with full time staff needed to install and maintain a local system.  With TriActive you get all the functionality you need with none of this hassle.

Unified Communications / Telephony – Alianza
Our team is very mobile in both the Asia Pacific region and in the U.S. which can mean expensive phone bills.  It also means that they could be hard to get hold of.  When I first heard of VoIP as a SaaS product it took me a while to appreciate that business telephony does not have to be a special case and can be viewed as another business system like the rest of our platform.  Amongst many other benefits, our SaaS based VoIP and IP-PBX solution from Alianza means that we have the same number wherever we are via either deskphone or softphone, and that our team can all change their call forwarding via an easy web interface

Web Meetings – GoToMeeting
Web meetings save us an enormous amount of time and money and can also be our partners preference in many situations.  This is an essential piece of infrastructure and GoToMeeting is the one we rate to be the most intuitive solution by a good margin.

Website – Externally Hosted
This is a no brainer but it is important to note that it is still SaaS in a broad sense, and one of the earliest forms.  You could host your website internally if you wanted to but unless there are some big reasons to do that why would you?

Wiki – Xythos , Hosted Microsoft SharePoint
Both offerings provide a good quality blog as part of wider function sets.

Benefits, Hassles and still to be decided

From our experience we have been able to compile a list of benefits of our All SaaS platform, they are :

• Interface is business focussed, not geek focussed - easy setup
• Up and running straight away
• Supports and enables an independent workforce
• Lower costs
• Less hassle
• Less downtime
• More uptime – best quality backups for quicker recovery (we have not lost one byte of data yet)
• More access (when in the office, travelling with laptop and using a foreign device)
• Running better apps than we could by ourselves (some examples are systems management, business intelligence, location independent VoIP, billing)
• Enormous upfront cost reduction
• Change is a business decision, not a technology decision
• No sleepless nights worrying about backup and stability
• New features with no upgrade pain
• Consistent cost - our systems are listed under business infrastructure on our P&L
• We know the cost of doing business every month right in front of me
• Single access point for all applications in security enabled internet accessible intranet
• Also gives independent end users control - SaaS apps are generally accessible and usable
• No application conflict worries

We also have been able to put together a list of hassles

• Dealing with many different vendors rather than one it team
• Support
  • Though mostly good, is unable to advise in the context of our company
  • For one product in particular remote support has been an issue, as opposed to having internal it dept.  For other apps it has been fine to have email alone.
  • Support is slower Finding suitable SaaS solutions for our business

And what else should be considered for your organisation :

• Internal technical resources bring product knowledge with them
• Options to suit all organisation types (i.e. we couldn’t get an adequate accounting package for a Singapore small business)
• SaaS doesn’t solve everything – solution introduction still requires co-ordination, but for user experience, not installation
• The effect of other support & training Mechanisms - On line scalable customer care - FAQ’s, Discussion boards, online support desk, pre recorded video’s, built-in helpdesks.
• How does the offering facilitate switching providers?
• Am I choosing the best product?

Are any services are deviceclient dependent?

Two applications (Offline Office Productivity, and Accounting) require local installs. Six applications require a local client installed on the users device for full functionality.  Only one is very specific device dependant (Unified Communications).

 The options available to run an All SaaS Enterprise are both varied and rich but there are some small holes in our ability to find the right business software solutions for every requirement.  There is a long list of benefits that far outweigh the hassles.  Though there are still some questions to be answered the SaaS industry is hard at work on them.  Best of all we have found both an excellent solution for our business, and all the better that it is SaaS.

Also have a look at another companies All SaaS Enterprise enterprise experience.

* I also post versions of relevant AsiaPacific articles from this this blog on the SaaS Asia Pacific Community site.

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.

I have started this Blog to note the ideas, thoughts, experiences, advice, and drives that are created as part of my entrepreneurial and business life. I have a passion for making things better and that is brought to the fore in my positions as a founder and director of NexGen, and founder and moderator of the new SaaS-Asia Pacific community website, a company who’s vision is to improve business life through Software as a Service - a better way of delivering applications to improve support business processes.

You can expect to see posts about my entrepreneurial experiences, prophesies about the SaaS industry, my ideas on better SaaS applications, and better ways of managing and creating SaaS sales channels.

 Also see about Stephen Pech