SaaS to hit $298M in Asia-Pacific

The region's need to lower IT costs, coupled with the search for a testbed to try out new applications, will boost software-as-a-service (SaaS) into a market that is worth US$298 million, said IDC.

In a report released Wednesday, the research firm said SaaS deployment in the Asia-Pacific region, excluding Japan, will expand 18 percent to hit US$298 million this year over 2008, growing six-times faster than the overall software market. Conducted earlier this year, the study covered five markets: Australia, China, India, Korea and Singapore.

Sheila Lam, IDC's Asia-Pacific senior market analyst for enterprise applications research, said more companies in the region are looking toward the SaaS subscription model in a bid to cope with their IT budget constraints.

Lam said: "Enterprises are considering shifting their hardware and software maintenance expenses toward SaaS, which appears to be a cost-efficient alternative by merging the license, hosting and management fees into a single subscription fee."

In addition, as it requires low upfront investment, SaaS serves as an ideal platform for businesses to test new applications before deciding to go ahead with a heavier investment and enterprise-wide deployment, IDC said.

The analyst added that companies in the region's emerging markets are also likely to adopt SaaS because these organizations are tied to fewer IT legacy issues and previous investments.

Australia is forecast to contribute 45 percent of the region's overall market, followed by China at 29 percent. In fact, China's active domestic vendor community is helping to drive awareness and adoption of SaaS at an average growth rate of 25 percent over the next five years.

India's SaaS market is expected to see a five-year average growth of 42 percent, according to IDC.

The research house expects customer relationship management (CRM) applications to take the lead in 2009, accounting for 31 percent of the Asia-Pacific SaaS market. Other software that are increasingly available on the SaaS delivery model include collaborative and security applications, IDC said.