Indian Software as a Service (SaaS) adoption is expected to reach USD 352 million levels in 2012 from 105 million USD in 2009, as per recent studies conducted by IT research firm Springboard Research. Enterprise spending on SaaS in India is expected to grow at 60%, as compared to 46% in Asia Pacific between 2008 and 2012.
According to Balaka Baruah Aggarwal, Springboard's senior research manager for emerging software, it is a myth that SaaS appeals only to small and medium businesses. Aggarwal observes that SaaS uptake has been very broad-based, and large players are also equally interested in SaaS adoption.
During the Springboard study, 75% of Indian respondents reported interest in SaaS adoption over the next 12 months. According to the study, Indian telecom players are significantly interested in becoming a part of the SaaS ecosystem. These companies are partnering with SaaS providers to offer carrier- and other SaaS-related services to end consumers. Although SaaS adoption is not specific to any particular vertical, IT, manufacturing and financial service providers are keener on this front.
Customer relationship management (CRM) is undisputedly the most widely adopted SaaS application. Collaboration tools, on-demand contact centers, and enterprise resource planning (ERP) are among the other popular SaaS applications. In India, Salesforce.com offers the most popular CRM applications, whereas collaboration tools from Cisco Webex, Microsoft, IBM and Citrix are becoming popular.
RAMCO, Microsoft, Netsuite and other local providers are also pushing on-demand ERP solutions in the market. Major IT vendors and service providers will also start offering on-demand versions of their on-premise applications.
Issues that plague SaaS adoption in India
According to Springboard's study, lack of connectivity and low broadband penetration are major challenges that act as setbacks for SaaS adoption in India. Aggarwal feels that the SaaS ecosystem is not yet sufficiently developed in India, which has affected SaaS adoption. Besides, the Indian market currently lacks a variety in options when it comes to application providers. In addition, low-cost SaaS providers who offer such services are not able to adequately advertise their services. As a result, enterprises are not aware about such offerings.
Security concerns regarding SaaS are still grave, according to Aggarwal. The Indian enterprise's mindset is gradually changing, but it still seems hesitant about putting its information in vendor data centers. Insecurity in the IT department is another factor that has affected the pace of SaaS adoption. IT teams are afraid that the shift to a SaaS model will diminish their significance in the enterprise. IT vendors have also not been successful when it comes to effectively addressing various SaaS-related concerns.
Although CRM is currently more popular, collaboration will assume more significance in the future. SaaS services such as email and email security related services will be more prominent on this front. The growing interest in cloud computing will also provide a further push to the SaaS market, concludes Aggarwal.