Cloud infrastructure spending in China increased from about USD $107 billion in 2019 to $142 billion in 2020, surging more than 32% in the last quarter of the year. Software-as-a-service (SaaS) in China is one of the fastest-growing industries in the world, and with the sector poised to double over the next few years.
The cloud migration effect
China’s accelerating cloud migration is driven by long-term structural trends in the digitalization of the country’s economy plus increased business acceptance of cloud and SaaS solutions, all indicative of massive sector growth. These drivers, among others, are propelling the market higher as ever more companies shift to cloud-based infrastructure to reduce costs and increase revenue as well as enhance customer service and satisfaction.
The process is also spawning a fusion of SaaS and customer-engagement actions from passive traditional efforts to proactive artificial intelligence (AI)-powered SaaS solutions. This is exactly the type of sea-change coveted by smart money. However, the country’s SaaS market is extremely fragmented; the top 10 vendors account for only about 35% of the total market share.
What is SaaS?
SaaS that basically refers to software in the cloud is owned, delivered, managed remotely by one or more providers. As it uses web delivery applications, there is no need to install and run applications on individual computers.
In SaaS, as the level of integrated security is relatively high, consumers cannot control and manage the underlying cloud infrastructure including network, servers, storage, and operating systems. Availability via web browser, on-demand availability, payment terms based on usage, minimal IT demands are some of the essentials of SaaS. Web-based email like Gmail is an example of SaaS provided by Google.