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SCMP Reporter

SaaS company  confident of rising demand despite the global downturn
The growing adoption of online subscription-based business applications on the mainland is encouraging major software-as-a-service (SaaS) players to push forward their expansion plans in the country, despite the global economic crisis and its impact on corporate technology spending.
United States-based Salesforce. com, the leading global SaaS provider, is looking to build up its presence on the mainland 'slowly but surely', with a  focus on educating the market and enlisting domestic partners, according to Jim Steele, the company's president of worldwide sales.
'If  we're going to make China a huge part of our business, we're going to have to invest heavily in resources there,' said Mr Steele, without providing details of any financial commitment. 'Ultimately, to be successful, we have to partner with Chinese companies.'
Salesforce, which supplies on-demand customer relationship management (CRM) software through the internet to more than 47,700 firms and 1.1 million total subscribers worldwide, is currently ahead of SaaS rival NetSuite in obtaining significant market share on the mainland.
In September, US-based NetSuite opened its Asia-Pacific office in Hong Kong to help launch its service on the mainland next year.
Both companies see  growing opportunities on the mainland,  despite a softening of information technology investment caused by the economic crunch.
'In these uncertain times, people need solutions that isolate them from risk. And we offer the type of solution that does that,' said Marc Benioff, the chairman and chief executive of Salesforce.
'We haven't made changes to our [expansion] plans.'
Mr Benioff said the company was opening its first data centre in Singapore  to address the requirements of the Asia-Pacific market, covering both large and small companies in the region.
The market opportunity, according to research company Celent, is huge. 'While the global SaaS market is expanding at an annual rate of 25 per cent a year, China's SaaS market is growing at a rate of 33 per cent every year,' Celent said in a report.
It estimated the SaaS market on the mainland would reach US$3.8 billion by 2011, up from about US$1.8 billion last year. The worldwide SaaS market is projected to hit US$19.3 billion by 2011.
Celent  said the advantages of the SaaS model over  traditional licensed packaged software  included lower capital expenditure, lower maintenance cost, more rapid implementation and lower application risk.
According to  Analysys International in Beijing, Salesforce already had a 10.8 per cent market share on the mainland in the second quarter of this year. That  makes the company  the fourth-leading vendor in the country's nascent SaaS management software market segment.
Market leader Alisoft.com, a unit of Hangzhou-based  Alibaba Group,  had a 30.7 per cent share in  the second quarter, according to Analysys.
Alisoft provides CRM, inventory management, sales force management and marketing information management software through online subscription to  small and medium-sized firms on the mainland.
Tianjin-based MainOne.com had an 18.4 per cent share, while eAbax. com controlled 17.4 per cent. Other prominent SaaS management software suppliers  include Youshang. com and Xtools (each with a 3.7 per cent share), 800CRM (2.7 per cent) and ZYDSoft.com (0.9 per cent).
Analysys estimated the domestic SaaS management software market segment  was worth 35.81 million yuan (HK$40.65 million)  in the second quarter.
'I know we're going to be very successful in China,' Mr Steele said. 'It's just a matter of knowing how long it's going to take before we see that big bump [in customer adoption].'
He said the company's strategy was to cater to the demands of large multinational corporations while educating  smaller firms.
In Greater China, Salesforce's  customers include electronics companies Acer and HTC in Taiwan, Maxim's and Xinhua Finance in Hong Kong, and training firm EnglishTown.com and Shanghai Anji Automobile Club on the mainland.
Mr Steele said the company's biggest  clients operating on the mainland included top  firms such as networking equipment giant Cisco Systems and Dell, the world's No2 personal computer supplier and No3 vendor on the mainland.
Balaka Baruah Aggarwal, a senior manager of emerging software at Singapore-based Springboard Research, said Salesforce continued to dominate the Asia-Pacific SaaS market,  followed by  NetSuite and RightNow Technologies and  traditional  vendors with SaaS operations, such as Microsoft and Oracle.
In terms of demand, CRM continues to dominate Asia's SaaS application market, with a 42 per cent market share, followed by on-demand collaboration tools and core business applications such as enterprise resource planning and supply chain management systems, according to Springboard.



Salesforce.com makes  China  push