Australian enterprise embrace the SaaS business model

No licensing, installation or upgrades

More than 1000 companies in Australia have adopted the Software as a Service (SaaS) business model ditching installed software for a subscription service via a Web browser.

Celebrating its 1000th subscriber to its CRM application suite, Salesforce.com claims demand isn't limited to the small to medium sized business (SMB) sector, but there is growing interest from the enterprise.

Local enterprise customers include Amcor Limited, BlueScope Buildings, Challenger Financial Services, Flight Centre, Lend Lease and Smorgon Steel who have all signed up in the last 12 months.

The company's CEO, Marc Benioff, said the on-demand momentum in Australia is reaching new heights as customers realise the 'No Software' vision.

Salesforce.com was founded in San Francisco in 1999 and established its Australian operations in June 2003.

The company has pioneered the SaaS phenomenon which allows organisations to abandon traditional software delivery models and embrace enterprise class applications via a Web browser and subscription payment model.

This means no software to license, install and upgrade.

Frost & Sullivan predicts the Australian SaaS market will experience a 40 percent compound annual growth rate (CAGR) through 2009.

The company has only been in Australia for three years but according to Andrew Milroy, consulting director at Frost & Sullivan, "controlled approximately 50 percent of the market in 2006."

According to ACA Research, a market research firm and author of The Australian SaaS Market Index[1], up to 85 percent of Australian companies are likely to consider SaaS over on-premise solutions.

ACA Research director, Catriona Wallace, said 58 percent of respondents using SaaS recorded significant gains in operational efficiency while 40 percent have experienced increases in revenue.

In contrast, respondents reported they are struggling with on-premise software maintenance.

"More than 40 percent of respondents spent over a quarter of their IT budget on in-house software maintenance [excluding staff costs]. Respondents also indicated they were struggling with software upgrades and staff shortages," Wallace said.

Western Bulldogs general manager of business development and strategy, Bruce Kaider, adopted the SaaS model because of its low up-front costs and minimal infrastructure.

"It can quickly and easily scale as our business grows and integrates seamlessly with our existing applications," Kaider said.

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