Some time back we had a post on the Indian SaaS market, Now time to look east to Japan, AMI Parner had a report on the same some time back, below are some excerpts from the same:

Software-as-a-service (SaaS) is gaining ground among small businesses (SB:1-99 employees) and medium businesses (MB:100-999 employees) in Japan. Total spending on the hosted applications among Japan SMBs will increase from $112 million in 2005 to $138 million in 2006, up by 23%. On the adoption base, Japan SMBs using at least one type of application via SaaS model will grow by 20%, from 13% of PC SMBs to 15%.

overall enterprise software applications adoption among Japan SMBs are lower than their US counterparts. For example, the adoption of CRM among Japan SMBs is 0.6%, roughly a fourth of the rate of their US counterparts. ERP penetration among U.S. SMBs is 1.3 times higher than their Japanese counterparts. High cost and risk are barriers for SMBs to deploy such applications. However, SaaS encourages SMBs to deploy new applications at lower cost than in-house deployment and lessens risk of developing inappropriate systems which end up unused.

expected growth rate of SaaS spending among Japan SMBs (23%) is higher than their counterparts in the North America (19%). "Better broadband infrastructure, lower software application penetration and greater legal requirements for security management are contributing factors behind the higher SaaS spending growth among Japan SMBs," says Yuki Uehara, New York-based research analyst at AMI-Partners.

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Prashanth Rai