SaaS ERP market poised for strong growth

Market for software-as-a-service-based enterprise resource planning in Asia-Pacific excluding Japan is expected to reach US$193 million by 2012, says Springboard.
Written by Konrad Foo, Contributor

The market for enterprise resource planning (ERP) applications delivered through the software-as-a-service (SaaS) model is set to grow to US$193 million by 2012 in the Asia-Pacific excluding Japan region, according to a new study.

A Springboard Research survey of SaaS users across the region revealed that 35 percent of potential SaaS buyers were interested in procuring SaaS-based ERP in the next 12 months. According to the survey's findings released Friday, 20 percent of SaaS users across the region were already using SaaS ERP.

Springboard expects the SaaS ERP market to grow from US$35 million in 2008 to US$193 million by 2012. The market, which includes supply chain management (SCM) and product lifecycle management (PLM) applications, contributes 7 percent of the total SaaS market in the region.

Balaka Baruah Aggarwal, senior market analyst, emerging software at Springboard, said: "We expect this market to experience faster growth, given the relatively low current level of on-premise ERP application penetration in the region, particularly in the growth markets of China and India."

The increasing availability and reliability of broadband and the overall dynamism of the emerging markets across the region will fuel the demand for such applications, said Aggarwal in a press statement announcing the survey's findings.

SaaS ERP's penetration has been the most in the manufacturing segment, with China showing the highest SaaS ERP adoption level in the region.

Michael Barnes, vice president of software research at Springboard, said so far, SaaS ERP has been less popular in part because the SaaS mode does not allow much flexibility for customization.

However, "as vendors continue improve the customization capabilities of their products, they have the opportunity to improve adoption, especially with organizations implementing ERP for the first time," Barnes said in the press statement.

Springboard also highlighted that the SaaS ERP market is constrained by the lack of large, well-established vendors in Asia and robust and mature offerings catering to the specific needs of the market.

Netsuite is the only SaaS ERP provider with a region-wide footprint and an ongoing expansion in high growth markets such as India. Other ERP providers are more country focused, like Ramco in India and Kingdee in China, it said.

U.S.-based SaaS ERP providers are exploring the potential in the Asia-Pacific market, but Springboard reports seeing more leadership coming from local players in terms of other SaaS applications.

Springboard polled 530 CIOs and IT decision makers at large enterprises and small and medium businesses (SMB) across the Asia-Pacific region for the survey.

Based in Singapore, Konrad Foo is an intern with ZDNet Asia.

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