It's tough being a software startup in Europe. Each individual country market is small compared to the US, and expanding into other countries means overcoming a series of linguistic, cultural and adminstrative barriers. No wonder then that the only SaaS vendors known throughout Europe are US-based companies. But that doesn't mean there isn't a significant crop of indigenous European SaaS leaders. It simply means their names are not well-known — something I'd like to help put right, as I'll explain below.
More than a third of European businesses [will adopt] SaaS by the end of the yearIt's no coincidence that the first major SaaS conference in Europe is taking place in Amsterdam next week (even though it's not an indigenous effort, being an offshoot of the SIIA's On Demand Summit, first held in San Jose last November). On Demand Europe, which I'll be attending and speaking at, is being held at a time when SaaS adoption is beginning to surge across the continent.
A briefing published today by market analyst Saugatuck Technology emphasizes how timely the event is. SaaS Adoption in Europe: A Closer Look at Rapid Growth suggests that 2007 will be a boom year for SaaS companies in Europe (and most that I've spoken to have indeed confirmed their sales momentum has really taken off this year). According to Saugatuck's research:
"SaaS adoption (of one or more SaaS applications) in W Europe will double — from 16.9 percent in 2006 to 33.8 percent in 2007. Over the same period, North American adoption is increasing from 35.3 percent to 46 percent."
Put that another way, the finding is that growth in Western Europe this year will be virtually double the rate pertaining in North America, with more than a third of European businesses adopting SaaS by the end of the year. What's more, based on its previous research, Saugatuck believes actual adoption will exceed stated intentions.
There are still differences in emphasis between Europe and North America. Saugatuck's research is particularly useful in identifying the different stages of adoption — Europe tends to be around 18 months behind the US in its cultural acceptance of new technologies, and that means that European buyers, although they're embracing SaaS, are doing so in a manner that's reminiscent of the US market in late 2005. They aren't yet worred about some of the integration-related issues that North American buyers are currently getting to grips with.
"We believe the climate is right for the rapid SaaS growth our survey respondents have forecast, not just in the early adopter countries such as UK, Ireland, and the Benelux and Scandinavian countries, but also across France, Germany, Spain and Italy — and to a somewhat lesser extent in Eastern Europe. Europe is poised for the same pattern of explosive growth in SaaS as North America experienced over the past eighteen months."
Who will benefit from that explosion? Obviously the better-known US vendors who've established their presence in Europe, including Salesforce.com, NetSuite, RightNow, WebEx, Citrix Online and others [see disclosure page for details of my current or past relationships with these vendors]. But also a surprisingly large community of indigenous players. I'm aiming to publish a list of the top SaaS vendors in Europe next week but for now I'd like to highlight a few of the most notable names:
- 24SevenOffice (Norway): CRM, collaboration, accounting; > 5,000 users, $3m (2006) revenues
- ContactOffice (Belgium): Email and collaboration suite; 350,000 users including private-label versions
- MessageLabs (UK): Email/messaging security and management; 5m users in 13,000 businesses, $99m annual revenues (FY2006)
- Projectplace (Sweden): Project management and collaboration;60,000 users, $9m (2006) revenues
- SolveDirect (Austria): IT service management; Over 150 enterprise customers
- Twinfield (Netherlands): Midmarket financials; 22,000 users serving > 50,000 companies
- WebExpenses (UK): Expense management; substantial customer and user base
Who else should be on this list? Please add your comments in TalkBack or email me directly at the email address zdnet at philwainewright dot com.