Local ISVs and smaller global vendors offering Software-as-a-Service solutions captured an estimated 54% of the market in the Asia Pacific region during 2006-07, according to the latest research update by Springboard Research. The rest of the market is dominated by established SaaS vendors, with Salesforce.com and WebEx taking the biggest market share.

Springboard added that local ISVs are expected to emerge as an important force in the Asia Pacific SaaS market as the presence of these vendors will trigger adoption of SaaS among SMBs. These players are expected to play a key role in the region's competitive landscape as many of them offer compelling niche solutions.

"The SaaS model has had a democratising effect on local software vendors and ISVs, putting them at par with larger vendors in terms of reach and access to customers," said Balaka Baruah Aggarwal, Senior Manager for Emerging Software for Springboard Research. "Riding on the wave of increased Internet usage, small software providers with niche applications have not only tapped the local markets, but have started expanding beyond national boundaries," added Aggarwal.

CRM and collaboration are the largest SaaS application segments by revenue in the Asia Pacific market. However, the proliferation of new SaaS applications – other than CRM – has been one of the most noticeable trends in the Asia Pacific market.

"Our data shows that Asian organisations are aware of and are using many different types of SaaS applications. The widely used ones include office applications (word processing, spreadsheet programs), e-mail, security/compliance applications and HR & payroll/workforce management solutions," said Aggarwal.

Although the Asia Pacific region is peppered with many promising local SaaS vendors and ISVs. "Asia will see a few upstart software vendors emerge in the SaaS market as there is no dearth of developer talent in countries like India and China," explained Aggarwal. "SaaS has caught the imagination of small vendors and developers and that will continue to fuel the SaaS market in Asia Pacific even further."