Over the past few years, the Software as a Service (SaaS) delivery model has been steadily gaining awareness and momentum in Hong Kong. Springboard Research estimates the size of Hong Kong’s SaaS market at US$37 million in 2009, and forecasts it to almost triple to US$93 million by 2012. The pursuit of information technology (IT) cost savings in response to the global economic crisis is the key factor believed to be driving the impressive growth of SaaS. U.S. SaaS vendors in Hong Kong enjoy a competitive advantage over suppliers from other countries for their perceived superior technology and brand recognition.
A “SaaS in Hong Kong” survey conducted by IDC (International Data Corporation) in August 2009 revealed that Hong Kong’s small and medium-size businesses are more receptive to SaaS than the rest of Asia, with 26% of respondents in Hong Kong either currently using or exploring the use of SaaS compared to only 8% for the rest of the region. According to a recent report by Springboard Research, enterprise spending on SaaS in Hong Kong is expected to grow annually at a rate of 41% between 2008 and 2012, pushing the market to US$93 million by 2012.
The world economic downturn is driving businesses to find new ways to reduce costs and improve productivity, and Software-as-a-Service is becoming an increasingly attractive option. Local industry observers cited low upfront investment cost as the primary driver for local SaaS adoption. SaaS enables enterprises to try out new applications before making a major investment in purchasing and implementing a new system enterprise-wide. An additional benefit of SaaS is its relatively short deployment lead time, which enables enterprises to respond quickly and dynamically to the fast-changing business environment.
Even though Hong Kong is relatively receptive to SaaS, local industry experts believe that SaaS adoption in Hong Kong is still in its early stages because local deployment of SaaS applications has been mainly for isolated applications such as email, Web conferencing, and collaboration software, instead of for integrated enterprise solutions. The adoption of isolated applications rather than integrated enterprise solutions reflects users’ concerns about SaaS’s data reliability and security. Given these concerns, U.S. vendors seeking to develop their business in Hong Kong should include in their business development plans resources to address client concerns and educate them about the best ways to derive the full benefits of SaaS.
By Fanny Chau