Asia/Pacific. Yanna Dharmasthira

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1 Trends and Directions of SaaSS in Asia/Pacific Yanna Dharmasthira October 2013 Notes accompany this presentation. Please select Notes Page view. These materials can be reproduced only with written approval from Gartner. Such approvals must be requested via Gartner is a registered trademark of Gartner, Inc. or its affiliates.

2 Key Issues Current Trends and Outlook of SaaS Reasons to Adopt and Challenges What buyer Usage Patterns are Shaping Adoption of SaaS? Summary / Recommendation

3 SaaS : the Elements Service-Based Consumer concerned with service levels, reliability and abstracted service interfaces Gartner defines SaaS as Scalable Services scale on demand, to add or remove "Software users as needed d delivered remotely and Shared managed by a Services share a pool of resources to build economies of scale third party as a one-to-many Subscription-Based service through subscription or Services are subscribed to on a contract basis Pay for Use Consumers pay for what they use pay for use."

4 Fragmented Adoption ; Variation of Years of Adoption Majority less than 2 years Variation by countries: India young market China the most fragmented Australia/S. Korea : healthy portion of new users Source: Gartner s survey. Countries: Australia, S. Korea, China, India CAGR of SaaS for 5 yrs India: 36% China: 33% Australia:25% S.Korea: 27%

5 Why use SaaS? Top Reasons Key Reasons APAC Fewer than 100 * * China India Australia S. Korea All Organization sizes Considered cost-effective from TCO standpoint than on-premise 46% 41% 44% 54% 56% 31% 44% Easier /faster to deploy 40% 31% 44% 48% 42% 35% 35% Regional Deployment 40% 22% 35% 54% 50% 29% 27% Perceived higher user acceptance 33% 18% 32% 41% 35% 29% 25% Limited Capital expense 28% 31% 26% 23% 35% 37% 19% Lack IT resources to implement 28% 27% 15% 21% 25% 29% 37% Temporary Solution Not enough data center capacity 23% 10% 24% 39% 19% 18% 13% 18% 4% 17% 25% 12% 16% 21% Number of Employees Source: Gartner s survey. Countries: Australia, S. Korea, China, India

6 Examples of Applications Being Used Now.. < 100 ERP Financial Acct (25%) Financial Acct (44%) Expense Mgmt (16%) Expense Mgmt (36%) Employee Perf Mgmt Employee Perf Mgmt Employee Self service Learning Mgmt Compensation planning Compensation. Travel booking Others Vertical specific BI Teaming platforms Social software DCC, etc, etc Office Suites < (20%) (30%) Employee Self service Compensation planning. Source: Gartner s survey. Countries: Australia, S. Korea, China, India CRM < Sales Sales Customer Svc Customer Svc Marketing automation Marketing ECM (35%), not many for less than 100 Very y Small Organizations : more sporadic choices Upper SMBs: clearer patterns Core functions are favorites: Financial, Sales, Customer Service SCM Sourcing e- < 100 procurement (30%) Warehouse mgmt (22%) SCP (16%) Others Warehouse (29%) Transportation, SCP, others

7 SaaS Applications: Top 20 for Current Usage in Selected A/P 1 Financials (Accounting) 11 Social software suites 2 Sales 12 Marketing Automation 3 Customer Service and support 13 Transportation Management 4 Expense Management 14 Learning Management 5 Employee Performance Mgmt 15 Recruitment 6 Warehouse Management 16 SCP 7 Office Suites 17 Employee Self-Service 8 ECM 18 Teaming Platforms 9 Web Conferencing 19 Compensation Planning 10 Sourcing and e-procurement 20 Project and Portfolio Management Source: Gartner s survey. Countries: Australia, S. Korea, China, India 6

8 Percentage of SaaS within Software Forecasts BI 3% 4% 5% 6% 7% 8% 10% 11% CRM 27% 32% 35% 39% 42% 44% 46% 48% Digital Content Creation 2% 3% 6% 7% 9% 11% 15% 17% ECM 4% 5% 6% 8% 10% 11% 11% 12% ERP 6% 7% 8% 10% 12% 14% 15% 17% Office Suites 1% 1% 2% 3% 3% 4% 5% 6% PPM 6% 12% 17% 20% 26% 29% 31% 32% SCM 13% 15% 16% 18% 21% 23% 26% 28% Web Conferencingetal et 70% 70% 70% 69% 69% 68% 67% 65% Other Applications 6% 6% 7% 8% 9% 10% 11% 13% Total 9% 10% 12% 13% 15% 17% 18% 20% BI =Business Intelligence Applications, CRM = Customer Relationship Management, ECM = Enterprise Content Management, ERP = Enterprise Resource Planning, PPM = Project & Portfolio Management, SCM = Supply Chain Management, Web Conferencing et al = Web Conferencing, Teaming Platforms and Social Software Suites Note: Dark green equals high level of SaaS adoption, and dark red equals low level of SaaS adoption. Worldwide Figures; APAC Figures are about half of the above variations by applications. Source: SaaS's Varied Levels of Cannibalization to On-Premises Applications

9 SaaS Market Size and Forecast 60.0% 50.0% 40.0% 30.0% 20.0% Emerging Asia/Pacific Greater China Mature Asia/Pacific 10.0% 0.0% Growth Growth Growth Growth Growth Growth Growth Year CAGR Australia : 25% China: 33% India: 36% South Korea: 27% SaaS Year 2013 = US$ 1,931 Mill Emerging Asia/Pacific 15% Greater China 16% Mature Asia/Pacific 69% (Including Japan) Source: Forecast: Public Cloud Services, Worldwide, , 2Q13 Update

10 How is Business Leveraging g SaaS APAC SMBs Source: Gartner s survey. Countries: Australia, S. Korea, China, India

11 Do You Experience Any issues? Do You Renegotiate? Have issues No issues Majority: no issues but if YES, top 5 issues are: Limited flexibility of customization Issues with data security Limited ROI Network instability Limited integration with existing systems Renegotiating before the end of contract terms? 42% did Greater functionality Financial terms improved More users Source: Gartner s survey. Countries: Australia, S. Korea, China, India

12 Why are you transitioning from on Premise to SaaS APAC SMB Reason for Switching to SaaS Fewer than 1000* Fewer than 100* * Performance Expectations not met Integrations requirements became too significant Total Cost of Ownership (TCO) became too high Change in sourcing strategy Applications did not scale well Insufficient user adoption 38% 37% 39% 38% 37% 39% 38% 47% 32% 24% 26% 23% 26% 21% 30% 32% 33% 32% Multiple Responses Allowed * Number of employees Source: Gartner s survey. Countries: Australia, S. Korea, China, India

13 Who Makes the Purchase Decisions? No single role Executive dominates Role of IT is stronger in emerging countries ti Expect Provider to provide business case Source: Gartner s survey. Countries: Australia, S. Korea, China, India

14 Companies Increasingly Institute Policies Governing Evaluation and Use of SaaS Business IT Relationship Configuration change management ownership New release validation Technical integration ti Budgeting allocation System administration SaaS RFP Template Data center operations Architecture Security and privacy Disaster recovery capabilities and more and more SaaS S Contract t Vendor Management Communication protocols Internal contract ownership Risk mitigation strategy for vendor going out of business Many vendors are getting acquired and acquiring, SOP? and more About half of buyers have a governance policy Requirements Uptime and reliability clauses Data ownership provisions Security and privacy assurances Disaster recovery guarantees Renewal price caps and more

15 Best Practice: Define What You Want From Cloud Computing First Agility Cost Reduce Complexity Focus Leverage Innovation How can we use the cloud to make change easier, quicker or more effective without the time, cost and risk associated with capital expenditures? How can we reduce operating/startup costs, spend more effectively and shift from a Client/Server to Cloud (Hybrid) model? How can we reduce complexity and shift work off our shoulders? How can we focus more on what we need to do and not on what we don't? How can we leverage the knowledge and skills of others, who do we partner with going forward? How can we do things that were hard or impossible to do before?

16 Cloud Service Business Impact Analysis: Understand Your Potential Risks/Costs Security Transparency Assurance Lock-In Integration Financial How can we ensure that our processes and client s data are protected, and ensure regulatory and legal compliance? How can we ensure that we have visibility into how the provider delivers our value? How can we be confident that the technology and the services will work continuously and effectively? How can we prevent ourselves and our clients from being locked into a provider with no ability to migrate? How can we make services from independent providers work with each other and with us? How can we ensure that the financial model is effective over time? Is the business model really elastic?

17 Thank You

18 Recommended Reading User Survey Analysis: Gaining SaaS Revenue in Emerging Versus Mature Markets, Asia/Pacific, Market Trends: SaaS's Varied Levels of Cannibalization to On-Premises Applications User Survey Analysis: s Cloud and CRM Nexus Will Drive Enterprise Software Spending in 2013 and 2014 Survey Analysis: Buyers Tell Us About SaaS and Cloud Adoption Through 2014

19 Cloud Forecast Segmentation Public Cloud Services Business Process Services Application Services Application Infrastructure Services System Infrastructure Services Management and Security Services Cloud Advertising Customer Management E-Commerce Enablement Finance and Accounting Human Resources Industry Operations Cloud Payments Supply Management SaaS Application Development Application Infrastructure and Middleware Business Intelligence Platform Database Management Systems IT Operations Management Security Storage Management Business Intelligence Applications Customer Relationship Management Digital Content Creation Enterprise Resource Planning Office Suites Project and Portfolio Management Supply Chain Management Web Conferencing, Teaming Platforms and Social Software Suites Other Application Software Compute Print Storage

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