SaaS's eastern promise...

1st Sep 2008

Software as a service (SaaS) is set to see a 25% global growth to hit $19.3 billion by 2011, according to research from consulting firm Celent – with the US outstripping that figure to grow by 33% to hit $3.8 billion.

But there are still inhibitors to the adoption of SaaS, says Hua Zhang, Celent analyst, which counter the presumed
advantages of SaaS over traditional software models, such as lower construction costs, maintenance costs, application thresholds and application risks. “Some factors hinder users from buying SaaS services: security considerations, a lack of evidence regarding its advantages over commercial software, reliability, and service availability,” Zhang said.

Celent identifies China as a major player in the adoption of SaaS globally. According to Celent, there were about 42 million SMBs in China in 2007, contributing about 60% of the gross domestic product. Of those, more than 72% had IT needs. Over the next five years, the number of SMBs will grow at a rate of up to 8%, the firm predicts, meaning there will be 50 million by 2012. “In such a context, China’s SaaS market reached $899 million in 2006 and $1.3 billion in 2007, representing a (cumulative annual growth rate) of 33 percent,” said Zhang. “It is expected that China’s SaaS market will expand to $3.8 billion by 2011.”

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