U.S. leads SaaS parade as emerging markets wary, says report

Summary:Cultural issues and immature infrastructure hamper the SaaS potential in emerging markets globally, according to Siemer & Associates.

The United States accounts for 60 percent of the software as a service market and emerging markets in Asia and Latin America are lagging due to concerns about security, third party control and lack of bandwidth, according to a report from Siemer & Associates.

Siemer's report, which will be released Thursday, highlighted the global disparity in cloud adoption. Asia and Latin America are showing strong growth from a small base, but are just a smidge above the U.S. rate. Siemer & Associates advises on merger and acquisitions and raising capital. The firm also has a venture capital unit.

The different states of SaaS adoption show how it can be tricky for cloud providers to expand globally. Salesforce.com is strong in Japan and broadening its footprint in Europe. Other SaaS players are chugging along internationally, but aren't standouts.

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Europe's biggest SaaS adoption is in developed markets of Western Europe, but many local vendors are on scene. Eastern Europe, the Middle East and Africa need better infrastructure to adopt SaaS.

In Asia Pacific, multiple languages hamper SaaS adoption along with tech barriers.

Among other key findings from Siemer:

  • Valuations are down for SaaS players in niches beyond CRM, HR and ERP.
  • SaaS is a capital intensive business.
  • No license software companies are being funded by venture capitalists.
  • Mobile applications that need to tap corporate data from tablets and smartphones will drive SaaS demand.

Topics: Cloud, Enterprise Software

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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