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The State of the SaaS Supply Chain Growth in Asia By Chris Beukenkamp Managing Director, Asia of SPS Commerce
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here’s no doubt that Software-as-a-Service (SaaS) or on-demand software has become a driving force within the software industry. Over the past few years, there has been a surge of interest and investment in SaaS solutions from retailers and their trading partners looking to optimize their supply chains. Multi-tenant SaaS has become a robust contender for slices of the IT budget. On-demand solutions are now available across a wide range of supply chain functions in North America, such as sourcing, procurement, CRM, manufacturing, warehousing, logistics, forecasting and planning. Where does the Asia Pacific region fit into the SaaS picture? The appeal of SaaS is growing rapidly in Asia Pacific, due to a host of factors – primarily a significantly increased awareness of the SaaS concept and a proliferation of new SaaS applications. In fact, Springboard Research predicts that the SaaS market in Asia Pacific will grow to $2.25 billion by 2012. Many organizations are deploying SaaS to meet their key IT needs and overcome challenges posed by the rising cost of deploying 62 MARCH/APRIL 2011
and managing traditional software systems. In addition, SaaS is creating a new breed of first-time software users, mostly among small and medium enterprises. However, research shows Asia as a whole is still tracking behind North America in terms of SaaS adoption. There are several reasons for this. Many of the traditional software providers such as large ERP vendors have failed to promote their supply chain solutions to enterprises in the region. This has created a gap in the market, and many best-ofbreed vendors have taken advantage of this by selling an array of supply chain solutions. While many Asian companies are tempted by SaaS and have options to choose from, they’re still concerned about the maturity of these solutions, losing control of their data and applications, the financial stability of the vendors providing them and an uncertainty as to how to integrate SaaS into their legacy systems. The market for B2B EDI solutions is particularly confusing. Countries such as Australia are underserved by providers, where a key few own the majority market share. Other countries, such as Japan, have technical
and relationship hurdles that slow EDI adoption. And still others, like China, are served by every vendor you can think of, while still lacking a dominant player. Retailer advice and systems are useful, but a third party solution would be more effective long term. Many small, agile vendors provide high quality solutions, but users worry that they won’t be able to grow with their business and be with them long term. The biggest hindrance to SaaS supply chain adoption in Asia, in my opinion, is the unnecessary complexity that is embedded in educating the market. Talk to any software provider and you will hear the following verbiage: VAN, fees, annual contracts, maintenance renewal, software updates, map maintenance, resends, transmission monitoring, kilo-character charges, etc. You don’t know what a kilo-character is? Join the group. This is like asking your mother how large her email file is, or if she knows the location of the EML file on Yahoo’s servers. The problem is that factories popping up every day in Asia do not drive their business this way and do not speak like this. They simply want to receive a purchase order and send an