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June 14, 2010

Asia Pacific organisations to increase SaaS investments in 2010: Gartner

Concerns about security, performance and availability gradually diminish

By CBR Staff Writer

Around 75% of organisations in Asia Pacific are expected to increase their software as a service (SaaS) investments by the end of 2010, according to a new survey by IT research and advisory firm Gartner.

The firm said that 80% of organisations surveyed currently use SaaS for enterprise applications such as ERP and CRM, with the remaining 20% planing to use it in the next 12 months.

According to Gartner analysts, the adoption of SaaS in the Asia Pacific region has been on the rise over the past two years, with initial concerns about security, performance and availability gradually diminishing as SaaS business and computing models become more mature. The top five most commonly used SaaS enterprise applications include, financials (accounting), e-mail, sales, expense management. and customer service and support.

However, acceptance of SaaS remains uneven throughout the region, with a large variation in adoption patterns in different countries and industries. Respondents in Malaysia, Hong Kong and Singapore have used SaaS the longest, while SaaS uptake in India is newer, with more than 80% of respondents using SaaS, started to use it in the past two or three years. China is the least mature market with about 50% of China-based respondents using SaaS for four years or more.

Twiggy Lo, principal research analyst at Gartner, said that the biggest drivers for SaaS adoption are the perceptions that it is more cost-effective than an on-premises offering from a total cost of ownership standpoint, and that SaaS is easier or faster to deploy than an on-premises offering. 

Gartner said that Asia Pacific organisations are still in doubt about the costs that can actually be saved through SaaS when compared to on-premises offerings with low labour rates in many Asia Pacific countries.

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More than 60% of Asia Pacific organisations experience no issues with their SaaS implementation, despite inhibitors such as, limited integration with existing systems, instability in the network, limited flexibility, difficulty of customisation, and lack of vendor support capability, the firm said.

Yanna Dharmastira, research director at Gartner, said: "Software vendors that are embarking on the SaaS journey will need to change their business model and mind-set to make SaaS attractive to their channel partners and become a profitable business. Crafting a detailed SaaS channel partner strategy is essential to succeed in SaaS."

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