Software as a service (SaaS) has been successfully applied to a number of fields and represents the next 10 years of software development. The global SaaS market is expected to reach US$19.3 billion by the year 2011, a 25% annual growth rate. In China, the SaaS market will expand to US$3.8 billion, a 33% annual growth rate, according to a new report, SaaS and Financial Application in China from Celent, a Boston-based financial research and consulting firm.
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Software as a service (SaaS) has been successfully applied to a number of fields and represents the next 10 years of software development. The global SaaS market is expected to reach US$19.3 billion by the year 2011, a 25% annual growth rate. In China, the SaaS market will expand to US$3.8 billion, a 33% annual growth rate, according to a new report, SaaS and Financial Application in China from Celent, a Boston-based financial research and consulting firm.
Key findings of the report include:
The current application of SaaS in the United States foretells the near future of SaaS in China. It is foreseeable that 26% of the enterprises in China will use at least one SaaS product. In 2007, there were about 42 million SMEs in China , contributing 60% of GDP. Of these, more than 72% had IT needs. It is expected that the number of SMEs will grow at a 7% to 8% rate in the next five years and exceed 50 million by 2012. This large potential client pool is, on the one hand, bothered by limited IT budgets and lack of IT professionals and technicians and, on the other hand, in urgent need of professional services to improve work efficiency and management quality.
China's SaaS market reached US$899 million in 2006 and US$1.3 billion in 2007, representing a CAGR of 33%. It is expected that China's SaaS market will expand to US$3.8 billion by 2011. Comparatively, China 's software market reached US$3.7 billion in 2006, representing an annual growth rate of 18.7%. This means that, in the future, domestic software enterprises will fully engage in the SaaS market, and the market will be increasingly competitive during the period 2006-2011.
SaaS providers in China are categorized into five types: telecommunication companies; software providers such as Kingdee, UF, SAP, and Oracle; SaaS platform providers typified by Google, Salesforce, and Ali software; SaaS service providers including Salesforce, 800CRM, and Xtools; and desktop platform providers.
For end users, SaaS has four major advantages over traditional software: lower construction costs, lower maintenance costs, lower application threshold, and lower application risk. For end users, SaaS is easy to deploy and manage and flexible in accommodating changing client demands. SaaS also boasts lower foreseeable software costs and easy alteration of user numbers. Meanwhile, some factors hinder the user from buying SaaS services: security considerations, benefits that are not always evident, reliability, and service availability.
SaaS has not yet been put into extensive use in the finance sector, although this is changing. Salesforce provides human resources SaaS to Merrill Lynch, which has attracted 25,000 subscribers. In addition to Salesforce, many providers render SaaS services to financial institutions; Wells Fargo is the first financial institution to offer SaaS document services to consumers, and there are many other financial enterprises providing financial analysis instruments based on the SaaS model.
For more information, please find the press release below or at:
http://www.celent.com/PressReleases/20080828/SaaSChina.asp
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Dana Lautin
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Beijing, China
28 August 2008
SaaS and Financial Application in China
Report Published by Celent
Software as a service (SaaS) has been successfully applied to a number of fields and represents the next 10 years of software development. The global SaaS market is expected to reach US$19.3 billion by the year 2011, a 25% annual growth rate. In China, the SaaS market will expand to US$3.8 billion: annual growth of 33%.
Over the past five to 10 years, SaaS vendors invested a lot of capital to grow the market. In the next decade, SaaS providers will start a new gold rush and encounter fierce competition in the process. In a new report from Celent, SaaS and Financial Application in China, the SaaS landscape is categorized into five types of providers: telecommunication companies; software providers; platform providers; service providers; and desktop platform providers.
Notably, SaaS has not been put into extensive use in financial services, but this is changing. Salesforce provides human resources SaaS to Merrill Lynch and has attracted 25,000 users; Wells Fargo is the first financial institution to offer SaaS document services to consumers; and many other financial institutions are providing financial analysis instruments based on the SaaS model.
"For end users, SaaS boasts four major advantages over traditional software models: lower construction costs, lower maintenance costs, lower application thresholds, and lower application risks," says Hua Zhang , Celent analyst and author of the report. "However, some factors hinder users from buying SaaS services: security considerations, a lack of evidence regarding its advantages over commercial software, reliability, and service availability."
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About Celent
Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally experienced analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis.
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