On Sandhill Chris Perrine, the vice president of business development at Springboard Research, has written about his latest survey of the Software as a Service (SaaS) market in Asia. He tells us that this is an exciting corner of the IT market, with rapid growth rates and strategic experimentation that he describes as astounding. The survey shows how the SaaS vendors are approaching the market in a different way, but I think his findings are a good reflection on the development of the SaaS model in other territories too.
His survey dispels some of the myths of the SaaS topic that I and others have written about before. SaaS isn’t going to completely replace the traditional, on-premise software model in the next few years as some predict, but it is here to stay for the long term and will be a significant option for many applications and many types and size of enterprise. The survey also points to the way the SaaS approach is changing the competitive framework. Chris says:
The SaaS Market is Here to Stay: Unlike many hot IT industry buzzwords that come and go, all evidence we gathered points to the long term staying power of the SaaS model. Early adopters report significant savings and high satisfaction, vendors are investing heavily, and ecosystems to support SaaS growth are taking shape quickly. We do not believe SaaS will replace the traditional software license model any time soon and we envision an environment where both models coexist; however, SaaS will eat into the share of the traditional model and the traditional software license approach will need to adapt.SaaS is not Just for Asia’s Small and Medium-sized Businesses: Although adoption levels for SaaS will be greater in the SMB market sector, vendors indicated there is activity in the large enterprise sector as well, and that upper mid-market and large businesses represent some of their largest and most important clients. Large enterprises are far less likely to leverage the SaaS model for core applications such as ERP, but for applications deemed less mission-critical and those on the edge of their infrastructures, SaaS is receiving considerable interest.Competitive Frameworks in the Enterprise Application Industry will be Reshaped by SaaS: Traditional enterprise application vendors are already adjusting their offerings to address the SaaS dynamic, and new formidable competitors are emerging at a rapid pace. In many ways, SaaS - enabled by its ease of implementation, maintenance and support - levels the playing field and allows vendors to compete more effectively across borders based on the merit and ease of use of their applications.SaaS is in the Process of Branching out of the Core CRM Segment to other Application Markets: CRM has been the pioneer and largest segment of the SaaS market, but a myriad of other markets are now gearing up for a SaaS push. Two segments in particular that we believe are on the threshold of strong SaaS advances over the next several years are Security and Collaboration; however, the spread of the SaaS dynamic can be expected far and wide in the years to come.A SaaS Channel and Ecosystem is Emerging in Asia Rapidly, but it is Marked by Experimentation and Fear: The race is on as traditional software firms and SaaS vendors are working hard to develop extended regional networks of resellers, system integrators (Sis) and developers. Experimentation has been common with several tie-ups between software vendors and telecommunication firms and the rollout of innovative referral models. However, traditional Sis are weary of embracing the models too firmly out of fear that it could cannibalize their existing sources of profit.
I see all of these themes in the market here in the UK and Europe. The last one is particularly difficult from the SaaS vendor’s point of view as they try to make partnerships that work, or experiment with new, more consumer oriented marketing initiatives.
However, the keys to the success of the SaaS model have much in common with the Web 2.0 topic as a whole. If you go back to Tim O’Reilly’s core competencies of Web 2.0 companies, he defined them as:- Services, not packaged software, with cost-effective scalability
- Control over unique, hard-to-recreate data sources that get richer as more people use them
- Trusting users as co-developers
- Harnessing collective intelligence
- Leveraging the long tail through customer self-service
- Software above the level of a single device
- Lightweight user interfaces, development models, AND business models
The strength of the SaaS vendor’s proposition comes from capitalising on the 1 to many deployment model to deliver a more cost effective, function rich application using the economies of scale for both hardware, software and the development cycle. But the deployment model is a two way connection, and so the vendor has a much more direct link to their customer base, has the opportunity trust their users as co-developers and harness their collective intelligence in ways that the traditional software companies can’t hope to compete with. The more successful SaaS vendors will make sure they use that resource wisely to their competitive advantage.
Powered By Qumana
