Gartner Survey Finds 75 Percent of Asia Pacific Organizations Will Increase SaaS Investments in 2010
Analysts to Discuss Promises and Uncertainties of SaaS at the upcoming Gartner SOA, Applications & Cloud Computing Conference in Sydney 28-29 July 2010
Sydney, Australia - By the end of 2010, 75 percent of organizations in Asia Pacific will increase their software as a service (SaaS) investments, according to a survey conducted by Gartner, Inc. Of the organizations surveyed*, 80 percent were currently using SaaS for enterprise applications such as ERP and CRM, with the remaining 20 percent planning to use it in the next 12 months.
According to Gartner analysts, SaaS has become more widely accepted in the Asia Pacific region in the past two years, with initial concerns about security, performance and availability gradually diminishing as SaaS business and computing models become more mature. The top five most commonly used SaaS enterprise applications, in order, are: financials (accounting); e-mail; sales; expense management; and customer service and support.
However, acceptance of SaaS remains uneven throughout the region, with a large variation in adoption patterns in different countries and industries. Respondents in Malaysia, Hong Kong and Singapore have used SaaS the longest. Australia has the lowest number of users with the longest period of SaaS use, however, there was healthy growth in the number of new SaaS users in the last 2 years. SaaS uptake in India is newer, with more than 80 percent of respondents using SaaS starting to use it in the past two or three years. Contrary to the belief that China is the least mature market, about 50 percent of China-based respondents have been using SaaS for four years or more.
“SaaS has high potential in Asia Pacific; however, it is still at the emerging stage. Both SaaS providers and users are still on the learning curve,” said Twiggy Lo, principal research analyst at Gartner. “A lot of fine-tuning is required, for technical issues, pricing and engagement models that comply with legal requirements in Asia Pacific countries. Providers must be more transparent in meeting user expectations.”
According to Ms. Lo, many companies in Asia Pacific are looking for enterprise applications that can keep up with their rapidly expanding businesses, requiring a smaller upfront investment and incurring lower ongoing expenses. The biggest drivers to adopt SaaS are the perceptions that it is more cost-effective than an on-premises solution from a total cost of ownership standpoint, and that SaaS is easier or faster to deploy than an on-premises solution. Organizations in China and Malaysia consider limited capital expense as another big driver, and those in South Korea, Hong Kong and Singapore consider SaaS as having higher user acceptance than an on-premises solution.
However, since SaaS is relatively new, Asia Pacific organizations are still skeptical about the costs that can actually be saved versus using on-premises solutions with low labour rates in many Asia Pacific countries. In addition, the definition of SaaS is not well understood by many Asia Pacific organizations. As a result some vendors are providing hosted software services — which is easier for the customers to understand, and offers more flexibility to customise the software — instead of SaaS.
“Software vendors that are embarking on the SaaS journey will need to change their business model and mind-set to make SaaS attractive to their channel partners and become a profitable business,” said Yanna Dharmastira, research director at Gartner. “Crafting a detailed SaaS channel partner strategy is essential to succeed in SaaS.”
The main inhibitors to SaaS adoption in Asia Pacific include limited integration with existing systems, instability in the network, limited flexibility, difficulty of customization, and lack of vendor support capability. Despite this, Asia Pacific organizations are fairly satisfied, with more than 60 percent experiencing no issues with their SaaS implementation. Australia appears to have the most number of issues raised, and South Korea with the least. In China, some organizations, such as banks and government bodies, require data be kept at servers located in China, which adds to another challenge for SaaS providers that currently do not have servers in China.
Additional information from the survey is available in the Gartner report "Q&A: Top 10 Things You Need to Know About SaaS in Asia/Pacific” at http://www.gartner.com/resId=1368629.
Gartner analysts will discuss SaaS and other software trends during the Gartner SOA & Application Development and Integration Summit, 28-29 July 2010 at the Sydney Convention Centre. The Summit gives a complete view of service oriented architecture (SOA), application development, application integration, and the future of software including trends such as cloud computing and agile development. Additional details are available at www.gartner.com/ap/soa. Members of the media can register by contacting Susan Moore at firstname.lastname@example.org
* The survey was conducted with 213 respondents who were planning to use or are currently using SaaS for enterprise applications, such as ERP and CRM, from seven countries in Asia Pacific: Australia, China, Hong Kong, India, Malaysia, Singapore and South Korea.
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner deliver the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to approximately 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has approximately 4,300 associates, including approximately 1,200 research analysts and consultants serving clients in 80 countries. For more information, visit www.gartner.com.
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