IDC: SaaS makes up lion’s share of Aussie cloud service revenue

Public cloud services vendor revenue grew by 30.6% year-on-year (YoY) in 2018 and revenue reached $4.01 billion, according to IDC Australia's public cloud services tracker.

Software-as-a-service (SaaS) revenue continued to capture the lion's share of Australian public cloud services revenue in 2018.

SaaS revenue accounted for 65.8% of the total Australian public cloud services revenue in 2018.

"Australian organisations are seeking solutions to remain competitive in today's digital economy," IDC ANZ IT services market analyst Chayse Gorton says.

"The high percentage of SaaS revenue reflects that SaaS solutions fit the bill."

For example, adopting a SaaS solution can provide organisations access to the latest technologies and reduce internal resources required as the applications maintenance and the infrastructure on which it runs is managed by the solution provider.

In Australia, approximately 58% of organisations have implemented a SaaS solution.

Data security, along with brand trust, stand out as being among the most critical attributes that SaaS buyers seek.

However, approximately 13% of Australian organisations are not currently interested in deploying a SaaS solution.

This relates to the investment that Australian organisations have poured into legacy applications.

"Rather than making a jump to SaaS, Australian organisations often wait until existing applications come to the end of their life," Gorton adds.

Organisations are also aware that deployed SaaS solutions can become sticky.

SaaS applications often require complex integrations with on-premise software to avoid information silos across the cloud and on-premise.

This means the organisation cannot quickly or cheaply switch even if a more innovative SaaS application appears.

IDC expects that over time organisations will utilise SaaS to replace custom applications. SaaS providers must consider how to attain a favourable market position.

It recommends that providers communicate how adopting their SaaS solution will help to increase market competitiveness while maintaining a strong posture on data security.

Conversely, IDC recently pointed out that across Australia and New Zealand (ANZ), while over 70% of organisations are allocating more than 10% of their spending on technology associated with innovation and workspace modernisation, only 17% of ANZ organisations say that they are better than their peers when it comes to attracting and retaining talent and developing digital skills.

This demonstrates that most businesses are struggling to distinguish themselves. What makes matters worse, only a quarter are in the process of transforming work culture and workspace in order to attract and retain talent, with 38% of ANZ businesses planning workspace transformation in the next few years.