HK leads region in SaaS adoption

According to a recent IDC survey, Hong Kong small and medium businesses are more keen on software as a service than the rest of Asia with 26 percent of participants in Hong Kong either currently using or exploring the use of SaaS compared to almost 8 percent for the rest of the region.

The recent study of Hong Kong enterprises was conducted by IDC and sponsored by Microsoft Hong Kong. The findings were compared with another study for the Asia Pacific region which forecasted the SaaS market to grow at 18% in 2009 compared to 2008. This is six times greater the traditional packaged software market which is projected to grow only 3 percent.

The Hong Kong study was confined to companies of 500 employees or less as this sector has been identified as the market with greatest potential for SaaS offerings according to IDC. Interestingly the highest adoption rate was among larger firms with 250-499 employees but over time it is expected that firms with 25 employees or less will have the greatest potential for SaaS uptake. This contrast is likely down to the larger firms having the confidence and resources to move to a SaaS model early while the smallest firms will look to follow but will move quickly once they are confident in the maturity of the services.

According to Sheila Lam, senior market analyst for Enterprise Applications research at IDC, Hong Kong is a relatively mature market in the region and the level of understanding around SaaS is good compared to the rest of the region, though not as advanced as Australia. “Plus Hong Kong's large numbers of SMEs make it a market with high adoption potential for SaaS,” she said.

Of the applications being adopted, tools such as e-mail, web conferencing and collaboration software seem to have the highest pick-up so far. Within the current SaaS users surveyed, 26 percent had adopted e-mail on a SaaS model, with web conferencing closely behind. Looking ahead this trend is expected to continue with a further 25 percent and 26 percent of users planning to adopt email and web conferencing on a hosted model in the near future.

David Hooper, the lead of Microsoft's Information Worker Business Group noted the study showed how businesses in Hong Kong were highly drawn to SaaS offerings which fell into the collaboration set of tools which included team collaboration software and instant messaging in addition to e-mail and conferencing. This set accounted for 56 percent of SaaS services adopted versus 17 percent for business applications such ass CRM and ERP.

Lam noted that businesses are typically starting small and with simpler applications which require less customization and are less critical in terms of performance expectations.

Such tools are also easier to create a business case for SaaS and have greater potential for quick return and value, she added.

Microsoft is working with an extensive list of partners to deliver more SaaS offerings to Hong Kong with tools like its Business Productivity Suite due next year. One of Microsoft's partners is data center and hosting provider, Rackspace Hosting. Jim Fagan, Rackspace's managing director for Asia Pacific observed that many businesses in Hong Kong had a good awareness of the SaaS model but had yet to reconcile how it would fit into their business. “Applying it to their own business and making it work for them is the challenge for many,” he said.

Hooper agreed and his dealings with firms in Hong Kong so far showed how companies were seeing e-mail as an obvious choice but were also attracted to other areas. These included conferencing and tools like Sharepoint but users clearly needed greater consideration on how best to get the value from these offerings on a SaaS model, added Hooper.