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All SaaS-ed Up

By Jenalyn Rubio
Computerworld Philippines

The computing world has seen various technology buzzwords come and go; while some gained prevalence and wide adoption, others eventually died somewhat silent deaths. A few years back, we began to hear about one such buzzword—software as a service (SaaS, which also sometimes went by the term cloud computing, causing confusion for some) and, at that time, the concept of on-demand, subscription-based software may have seemed “strange” or “uncomfortable” to some.

Today, however, SaaS may have slowly but surely penetrated the IT world, as it appears to have surpassed the buzzword stage and is gradually becoming a mainstream concept. According to Springboard Research, the SaaS market in APAC is experiencing “tremendous growth” and, in fact, is expected to grow to approximately $1.16 billion by 2010, at a compound annual growth rate of 66%.

For its part, Gartner last year predicted that SaaS would become 25% of the overall software market by 2011. The research firm forecasts worldwide enterprise application SaaS revenue to reach $11.5 billion by 2011 and, while the CAGR varied between different types of services, the overall CAGR is touted at 26.5%.

NOT A FAD
Salesforce.com defines SaaS as cloud computing—essentially as the next generation of applications. One of the SaaS pioneers, Salesforce.com believes the shift to cloud computing is happening right now and is gaining speed. “Companies want solutions that are low cost, low risk, and that work and given the economy, this cloud computing trend couldn’t have come at a better time,” says the SaaS provider.

“Cloud computing is not a fad, but is a permanent change in the model that people expect of how they’ll use the power of computing and collaboration. Growing bandwidth, rising technology complexity, and higher expectations for business performance are trends that will never reverse—and these are the enablers and the drivers of the mass migration into the cloud,” says Salesforce.com.

Also a SaaS provider, IT giant HP sees SaaS emerging as a “strategic option” for enterprises as it allows businesses to channel its resources to take on more strategic initiatives that provide value to the business and leave the IT operations to the experienced vendors. “SaaS is definitely changing the software business landscape, large enterprises and SMBs alike are embracing SaaS across the region for its ability to make organizations more competitive and agile. The promising adoption and growth certainly attest to the fact that SaaS is beyond trend and is integral and strategic to the growth of the business,” says Vinita Ananth, director, software-as-a-service, HP software and solutions, Asia Pacific & Japan.

Filipino-owned open-source, platform as a service (PaaS) provider Morph Labs, says SaaS is gaining significant popularity among enterprises, as well as software vendors. According to Morph Labs executive chairman Winston Damarillo, market demand continues to accelerate especially during this global economic crisis as SaaS “frees companies from making capital investments, turning them into more manageable operational expenses.”

Salesforce.com agrees, believing the economic disruption makes it especially difficult for companies to make a commitment of capital to build new capability. Likewise, market conditions demand increased attention to keeping the customers one already has, and finding ways to strengthen those relationships. “This combination is clearly compelling many companies to move vigorously forward with cloud computing and SaaS initiatives,” the firm says.

In Asia-Pacific, the adoption of SaaS is not uniform due to the diversity and economic complexity, according to HP’s Ananth. “Interestingly, we are seeing a growing interest and adoption of SaaS in the emerging markets including the Philippines as companies are seeing value in buying subscription-based software services for its ease of deployment and lower total cost of ownership,” the official adds.

Local IT firm, Impart Solutions Inc., which offers ERP solutions distributed through this on-demand model, describes SaaS as “key” for organizations to do well amid the ongoing global economic crisis.

According to Greg Martin III, president of Impart Solutions, using SaaS is 40% less expensive compared to traditional enterprise level service providers. “The technology would not only help companies to save on costs in these times of crisis but would also help them to streamline their operations and focus on their core competencies.”

GETTING SaaSY
Morph Labs’ Damarillo believes Philippine companies are beginning to understand the value of the software as a service model. “When we started talking about SaaS back in 2007, nobody seemed to truly grasp its meaning. Now, we see a lot more enterprises—small and large— identifying with the on-demand approach.”

Damarillo explains that SaaS is akin to the Filipino concept of “tingi” and as such, SaaS adoption in the country will continue to grow and eventually pervade in the everyday business landscape. Philippine businesses that shy away from investments will grab SaaS with both hands as they begin to realize its value over the traditional model, he says.

Meanwhile, HP sees the adoption of SaaS happening across all major verticals, saying that it is especially getting significant interest from security-conscious sectors like the public sector, along with verticals like telecommunication and financial service institutions.

On the other hand, one area that Salesforce.com is quite keen on has been the contact center industry. “We are very excited about the fact that 75% of customer service centers will use cloud computing applications and we firmly believe that the Philippines will not be far behind as the service cloud brings the next generation of customer service to companies of all sizes, without the expense and maintenance of traditional software,” says the giant firm.

Customer service indeed seems to be a key focus of companies going into SaaS. One such SaaS adopter in the country is Columbian Autocar Corp., the official sales partner and parts distributor of Kia Motors in the country. Columbian Autocar Corp. has three main business divisions: sales, service, and parts.

“Our business is largely built around service, particularly after-sales service, and that’s why we needed a system that would help us in providing customer satisfaction without of course having to spend too much,” says Reynaldo Santos, national parts manager at Columbian Autocar Corp.

In 2002, the company deployed a traditional enterprise resource planning (ERP) system across its three divisions, hoping to increase efficiency in its business processes. “Before, we used to do things manually and this demanded too much manpower and time, which then rendered our processes slow.”

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