US, UK dominate world's SaaS spending

US, UK dominate world's SaaS spending

Summary: The US and UK account for 67 percent of global spending on software-as-a-service, while privacy and local regulations are holding back adoption elsewhere across Europe

SHARE:

The US and UK continue to dominate the adoption of software-as-a-service.

While the US only accounts for 36 percent of the global software market, it accounts for 60 percent of the market for SaaS. Similarly, the UK makes up around seven percent of the world demand for Saas, but only five percent of the global software market overall, according to figures from European research house Pierre Audoin Consultants (PAC).

Given most of the companies developing SaaS products are in the US, it is inevitable they will try to sell in their home market first, according to Philip Carnelley, PAC research director. "They've got a homogenous market two or three times the size of any other so they can grow more rapidly and more easily," he added.

However, because many SaaS products were initially developed for the US market, their adoption in other countries can be slow — where for example, legislation or accounting standards are different.

The next biggest spenders on SaaS behind the US and UK are Germany, Japan, Canada and France.

"Germany has been very reluctant to go software-as-a-service because it is very cautious about the privacy implications about putting information in the cloud relating to people," Carnelley said.

The rest of Europe has been waiting for SaaS companies to set up datacentres within the EU before they are going to commit to it — and that has held back adoption, he added.

"That is changing now: for the big companies they can do that, but for the small companies they have to be going a few years before they feel the need to put a datacentre in Europe, so that holds back adoption," Carnelley said.

Elsewhere, the BRIC countries of Brazil, Russia, India and China collectively represent just two percent of the worldwide market for SaaS.

Saas (and cloud computing in general) remains a small, though rapidly growing, element of overall IT spending. According to PAC, SaaS accounts for around five percent of the total software market, but will grow to around 20 percent by 2020.

Topics: Cloud, Enterprise Software, EU

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

0 comments
Log in or register to start the discussion