Awareness and familiarity with Software-as-a-service (SaaS) across the Asia-Pacific region has reached an all time high, according to Springboard Research.

Their finding is based on a survey of 530 CIOs and IT managers in India, ASEAN, China, and Australia and New Zealand.

Springboard's report, entitled 'Software-as-a-Service in APAC: The Momentum Continues' into the SaaS Market in APAC (excluding Japan) found that revenue from SaaS will register a compounded annual growth rate of 59 per cent during 2007-2011, reaching an estimated US$1.8 billion by 2011.

In terms of revenue generation, CRM continues to dominate Asia's SaaS application market with a 42 per cent market share, followed by on-demand collaboration tools and core enterprise applications like ERP and Supply Chain Management (SCM). In terms of other SaaS applications, on-demand email, desktop applications, security/compliance, HR payroll, accounting tools, and e-procurement platforms have all made rapid inroads during the previous year.

The report also revealed that in terms of penetration, the technology, manufacturing and financial services industries have emerged as the leading verticals in the region to adopt SaaS applications. The survey respondents point to their investments in existing on-premise applications as the biggest impediment to SaaS adoption.

Reliable connectivity issue

However, the report cautions that the APAC SaaS market is rather immature as customers are still grappling with issues like finding the right application and ensuring reliable connectivity. Concerns about data reliability and security are also impacting the growth of the market.

"Although SaaS awareness has reached a peak, deployments in the region demonstrate that the market is still in its early stages as most customers have deployed SaaS applications in isolation and have not integrated these with other enterprise applications,"said Balaka Baruah Aggarwal, Senior Manager of Emerging Software for Springboard Research. "Vendors must therefore continue to invest further in educating customers on the best ways to derive the benefits of SaaS, especially in China, ASEAN and India.

"There are opportunities for SaaS across many applications, but Springboard believes that on-demand collaboration will emerge as the most pervasive SaaS application as more and more enterprises seek to both leverage and empower an increasingly distributed workforce."

Key SaaS players

The report notes that Salesforce.com continues to dominate the AP SaaS market, while other key players include pure play SaaS providers like Cisco Webex, RightNow, Netsuite and Citrix Online plus traditional software vendors including Microsoft and Oracle.

Michael Barnes, Springboard's Vice President of Software Research. Said that SaaS' traditional value-propositions, of low upfront investment and ease of use and management, were no longer enough to lure existing customers with on-premise applications.

"Vendors will have to offer applications and functionality that existing on-premise applications do not offer, and they also need to greatly expand local partner channels and delivery capabilities to appeal to these customers," Barnes said.