China’s Software as a Service (SaaS) market is expected to grow at 56% next year to reach US$171 million in revenues by the end of 2010, says the latest report from Springboard Research. Springboard’s report revealed that demand for SaaS will increase in the next 2-3 years, and the growth rate will far exceed that of the traditional IT industry, including the on-premise software market.
Springboard’s survey of Chinese enterprises indicated that three out of four respondents interviewed are already subscribing to SaaS solutions, while out of the remaining, more than half are likely to subscribe to SaaS in the next 12 months. Also, almost 100% of respondents in China reported being ‘aware’ of the SaaS concept, against only 52% last year. In terms of vertical industries, SMBs in retail, logistics, manufacturing, services and circulation report higher SaaS adoption.
“The appeal and growth of SaaS in China are based on the advantages of SaaS applications compared to traditional software such as lower upfront costs, easier maintenance and quick roll-outs,” said Devin Wang, Business Analyst for Emerging Software at Springboard Research. “We see aggressive demand for SaaS in China in the coming months, as corporate IT budgets continue to be under tighter scrutiny and enterprises look to hire fewer technical staff,” Mr. Wang added.
Springboard also noted that on-demand applications in security and compliance have the highest penetration among the SaaS adopters in China, owing primarily to the large number of on-demand security applications available for free. Web conferencing/collaboration, CRM and Email were the other SaaS applications with high penetration in the country.
“On-demand security applications have a high penetration, but they account for only a small percentage of total SaaS revenue in China. The majority of SaaS revenue is driven by CRM, email and collaboration applications,” said Balaka Baruah Aggarwal, Senior Research Manager for Emerging Software at Springboard Research.
The survey results indicate that the majority of SaaS applications in China are deployed in isolation. Chinese organizations are also behind the regional (Asia Pacific) average in terms of integrating SaaS solutions with enterprise applications. Further, the largest percentage of SaaS purchases are made during face to face interactions, while only 22% of purchases were made online through SaaS vendor websites.
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