ERP Software-as-a-Service (SaaS) Facts
While Software-as-a-Service (SaaS) enterprise resource planning systems and customer relationship management applications get plenty of media attention and industry press, it always helpful to review the industry metrics and research released by recognized analysts and research firms.
Asia SaaS Market
In a 2009 Springboard Research report, Customer Relationship Management (CRM) on-demand software solutions made up 48% of the growing CRM software market in the Asia Pacific region.
Springboard's latest research report, titled "SaaS CRM in Asia-Pacific: Strong Growth Despite Market Concerns" measured the SaaS CRM software market at US$183 million (Bt6.28 billion) at the end of 2008 and forecasts that it will reach $570 million by 2012. This year's annual report extends the prior year research report which indicated that the Asian SaaS CRM market, excluding Japan, is forecasted grow at a compound annual rate of 61% between 2006 and 2010. Springboard benchmarked the Asian SaaS CRM software market at just under $70 million in 2006, and forecast a growth it to just over $460 million by 2010.
The Springboard Asia-Pacific regional survey also confirmed that CRM was a top IT priority, with 40% of potential buyer responders declaring a preference to procure hosted CRM in the next 12 months. The demand for software as a service CRM is highest in Australia and New Zealand, with 61% of responders citing purchase plans in the next 12 months, followed by India and the Southeast Asia region.
According to Springboard Research analyst, Balaka Baruah Aggarwal, "As organisations seek to better manage and ultimately reduce up front IT related capital expenditure, we expect SaaS spending to become a far larger percentage of total software spending, thereby ensuring strong ongoing growth."
The research report also states that CRM software is now the most frequently used on-demand business software application after email - with 29% of survey respondents using on demand CRM systems in their companies. The vast majority of hosted CRM software sales are performed directly by software publishers and manufacturers with online purchases being the second most popular selling channel. 25% of survey respondees indicated using on-demand CRM software systems hosted by local SaaS providers.
"Vendor strategy in the region has focused primarily on reaching out to customers directly. Existing supplier resource constraints, combined with the size and complexity of the Asia Pacific region, excluding the Japan market, make it imperative for SaaS CRM vendors to use indirect channel partners who will not only be able to tap a wider customer base, but also play a significant role in ongoing customer support," wrote Springboard's VP, Michael Barnes.
Multiple years of Asia-Pacific research show that Singapore, Hong Kong, Korea, India, China and Australia are the most predominant CRM SaaS markets in the region. Australia continues to show the highest SaaS adoption, accounting for 35% of all CRM SaaS sales generated in the region. “SaaS has gained acceptance in Asia’s business mainstream and the coming year will see higher adoption rates as larger enterprises opt for SaaS CRM,” said Balaka Baruah Aggarwal, Senior Manager for Emerging Software for Springboard Research. “At the same time, the market is set to achieve even higher growth in the SME sector as a spate of new initiatives by vendors such as SAP, Microsoft, Oracle and Aplicor increase their marketing activities and release both new on-demand CRM and on-demand ERP systems in the coming year.
Springboard estimates that SaaS CRM represents the largest segment of SaaS application investments in Asia at about 45%, followed by collaboration, ERP (and Supply Chain Management) applications, and human resource (HR) applications. “Springboard Research believes that a significant portion of the growth in Asia Pacific’s SaaS business software market will come from the SME segment. We expect SMEs in Asia Pacific to go for simpler software as a service solutions that are not too complex,” said Aggarwal.
Global SaaS Industry
In 2006 the SaaS market reached $3.7 billion and is forecast to grow at a cumulative rate of 32 percent per year through 2011, reaching total revenues of $21 billion, according to a market forecast from technology research firm IDC.
According to 2008 published research by In-Stat, demand for SaaS business applications will double within four years, growing from $8 billion to $12 billion by 2012.
Analyst firm Gartner Inc. predicts that by 2011, 25 percent of all new business software will be delivered by the SaaS model.
Analyst firm Gartner also predicts that the SaaS market will achieve $5.1 billion in total revenues in 2007, representing a 21 percent increase from 2006, and will further grow to $11.5 billion in revenues by 2011. Gartner's research suggests that CRM SaaS will grow about 25% annually through 2011 and that the CRM SaaS growth will vary for by software category (marketing, SFA and customer support) but will hover in the range of 7% to 18% of the total CRM software market. In 2006, SaaS CRM solutions grew from 8% in 2005 to about 12% of total CRM software market.
The June 2008 Saugatuck Research worldwide survey on SaaS adoption and deployment results show a continued pattern with other SaaS adoption research (e.g. continued aggressive SMB adoption and a significant increased interest and adoption by the enterprise market). The research and analyst firm predicts that by 2010, at least 65% of global businesses with more than 100 users will have at least one SaaS software solution in place, with the U.S. adoption rate exceeding 75%. Other salient highlights from the research report included the following points:
- Among ‘large enterprises’ (5,000+ staff), only 4% were not planning on deploying SaaS solutions; this overwhelming statistic concretely continues the upward trend of SaaS adoption by large enterprises.
- SMB companies (100 to 499 staff) reported a 95% customer satisfaction rating with their SaaS solutions - Saugatuck commented they could not recall ever seeing a number that high for anything, let alone anything associated with software.
- The customer satisfaction scores, along with several other comments and observations, provided additional substantiation on the market drivers fueling aggressive middle market SaaS adoption. Common criteria among SaaS deployment patterns of midmarket companies are characterized by:
- Greater focus - the survey results demonstrated that midsized organizations tend to be more focused and disciplined on where they deploy SaaS business software applications.
- Fewer expectations - midsized companies overwhelmingly liked SaaS for the core value proposition, including lower total costs, faster implementation and lower management overhead. SMB companies commented more frequently than midsize and enterprise companies on achieving focus on ‘core business competencies’ with SaaS solutions.
- Higher satisfaction - not surprisingly, greater focus with lower expectations translates to high mid-market customer s satisfaction, which continues the drive of increased adoption at rates that are exceed the SMB and enterprise segments.
SaaS ERP Software Solutions
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