Springboard Research has come up with its survey report on the Indian as well as the Asia-Pacific SaaS market. In a chat with Biztech2.0, Balaka Baruah Aggarwal, Senior Market Analyst, Springboard Research, elaborates on the findings.

What are the drivers behind SaaS adoption in India?

SaaS in India has been driven by the presence of many global companies that typically bring in best practices. The legitimacy of the Internet economy in terms of bandwidth availability, Internet penetration, increasing usage of the online medium for transactional function convinces fence-sitters that the model can work.

Our survey finds that satisfaction rate among adopters stood at a high of 7.5 on a 10-point scale, where 10 is the highest and 1 is the lowest. Satisfaction emanates from lower cost, and ease of use and maintenance. The plug-and-play nature of the delivery model cuts costs and eliminates lengthy implementation cycles. Also, less manpower is required to look after these systems, since upgrades and maintenance issues are taken care of by the vendor.

Globalisation moves by Indian companies is a big trigger for SaaS. This is much easier to roll out for a company that's in expansion mode rather than do costly roll-outs at each location and then integrate them into a single system. Finally, it is the most suitable medium to reach out to the untapped SMB segment that cannot afford expensive software. The rise of many niche applications like derivatives management, risk management, highly customised industry applications etc. have done surprisingly well in the Indian market.

What is the total market size of SaaS in India? What are the key trends in the SMBs adopting SaaS in India?

Springboard Research estimates that the SaaS market in India stood at $27 million in 2007 and is expected to grow at a 77% CAGR till 2010, when the market will touch $165 million. The key trends of SaaS adoption among SMBs in India include a surge in awareness and interest about the benefits involved. SaaS is the most suitable medium to reach the untapped SMB segment. SME has been the holy grail for software vendors who earlier did not know how to tap this segment. The most important trend is that SaaS has enabled SMBs to deploy software applications for the first time who could not afford expensive applications earlier because of high upfront costs, costly upgrades and maintenance.

What are the benefits of SaaS adoption over legacy-based environment for enterprises?

The chief benefit of SaaS, as opposed to on-premises software, is lower upfront cost, which effectively lowers the entry barriers of customers who wish to acquire software applications. Customers buying applications on the SaaS mode do not have to worry about maintenance and upgrades as these are taken care of by the vendor. This potentially frees the internal IT department to focus on business processes and cut down on expensive manpower. Another appeal of SaaS lies in its plug-and-play nature, which enables enterprises to cut down on the cycle time of deployment – a nightmare in the case of traditional software that often overrun deployment schedules and budgets.

What are the challenges pertaining to SaaS adoption in India?

The challenges include low awareness among SMBs about the benefits of SaaS and lack of Internet penetration and robust infrastructure in secondary towns and cities. There are also concerns related to security and confidentiality as software is hosted in a shared environment.

What is your advice for CIOs who are planning to go for SaaS?

CIOs should scout the landscape for appropriate applications. Ask for vendor help to fully understand the utility and functionality of on-demand applications. Make sure there is adequate support after you sign the deal, as you could require considerable hand-handling once the deal is done to integrate the application internally as well as to fully exploit the functionality and utility on offer.

Springboard Research recently published a report on the Asia-Pacific SaaS market. Could you share some of key findings of this report?

Some of the key findings of the report include:

• SaaS growth and momentum in the APAC region will last in the long run. Springboard Research estimates the SaaS market in the region will experience a CAGR of 66% year-on-year growth between 2006 and 2010, and account for 15% of the enterprise applications software market by 2010.
• Business managers are emerging as key drivers of SaaS applications in the region. The ease of use and manageability and the simplicity in deployment have encouraged business users to procure SaaS applications directly without the involvement of the IT department.
• CRM is one of the many SaaS applications available in the region. There are many other niche applications available, especially vertical-specific ERP applications that have found favorable acceptance in the target market.
• SaaS has encouraged entrepreneurship in the region with many ISVs offering their applications in the on-demand mode. There is a huge base of ISVs in the region for whom the on-demand mode has potentially opened the entire world as its marketplace.
• Most SaaS sales in the region take place directly through the vendor without the intervention or support of channels. This is not entirely a happy scenario as post-sales support is important to hand-hold the customer to overcome integration issues and to exploit the functionalities offered by the application. Also, SaaS vendors will definitely need to leverage channels to be able to scale to the next level of growth.