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Enterprises cling to SaaS to ward off crisis

(Source - NetworkworldAsia) :More and more enterprises in the Asia-Pacific (AP) region are clinging to Software-as-a-Service (SaaS) as their way of fending off the effects of today's economic downturn as the SaaS market is predicted to grow six times more this year, according to IT research firm IDC.

"Companies in the region are more keen with the SaaS subscription model as they cope with the increasing IT budget constraints," said Sheila Lam, senior market analyst of IDC's AP Enterprise Applications Research team. "Enterprises are considering to shift the hardware and software maintenance expenses towards SaaS, which appears to be a cost-efficient alternative by merging the license, hosting and management fees into a single subscription fee."

Despite a challenging year for the region's IT market, IDC expects the SaaS market to take off significantly in AP in 2009 excluding Japan. The SaaS market is expected to reach US$298 million in 2009, which is an increase of 18% from 2008, or six times higher than the overall packaged software market growth of 3% this year.

Lam said with a low upfront investment cost, SaaS continues to serve as a good testing ground for enterprises in trying out new applications before making heavy investment and enterprise-wide implementation. In the emerging markets, companies are also likely to embrace SaaS with open arms, because they have less prior IT investment and legacy issues.

In terms of market size, Australia is expected to contribute 45% to the overall SaaS market, followed by the PRC, where the country contributed 29% to the market, IDC said. The active local vendors in China are driving awareness and adoption of SaaS, accelerating growth over the next five years in the market at a CAGR of 25%. India will be another fast-growing market that is expected to grow at a CAGR of 42% within the next five years.

The report also shares insights into the different applications that are more likely to be delivered via SaaS. As a result of aggressive marketing initiatives over the past few years, CRM applications are expected to lead in the APeJ SaaS market in 2009, capturing 31% of the overall SaaS market in the region.

IDC also noted more companies are finding the subscription of human capital management and financial applications via SaaS as a very feasible and attractive proposition. Pervasively available software such as collaborative and security software is also expected to increase in significance as far as SaaS delivery model is concerned.