1Q08 Enterprise Application Software
Revenues Leap To 1.6 Billion Yuan In China
May 29, 2008
In 1Q 2008, China's enterprise
application software revenues reached 1.631 billion Yuan, up by 17.8% YOY.
The growth was driven by Chinese enterprises' cost savings needs and
upgrading of existing applications. Growth by category has been primarily in
CRM, HRM, and SCM. Below is the current 1Q08 revenue share by software
Revenue Share (%)
Source: CCID Consulting, April 2008
Increasing costs drive
need for enterprise software.
Human resource and raw
material costs are going up in China. Enterprises are focusing on how to
optimize their existing assets, and enterprise software enables them to
better manage such assets. The Chinese enterprise is also getting smarter
about IT. That means more projects optimizing, integrating, and upgrading of
existing software implementations. As a result, we see the overall
enterprise software growth slowing.
A shift in emphasis from
product to services.
For large Chinese
enterprises, their software implementations are getting larger and more
complex as their needs become more sophisticated. More customization of
software is needed. As a result, services have become critical. More
customers are willing to buy professional services, with a services
lifecycle model of consulting, implementation, and then maintenance.
Product vendors respond by
shifting from software license sales to more and more services and
maintenance. There will be more professional services firms and systems
integrators vendors to also fill the services need.
SaaS continues to unlock
Small and medium
enterprises (SMEs) are turning to the SaaS model because of its relatively
quick deployment, plug and play features, and cash flow advantages (no hefty
license fees up front). This trend will continue.
enterprise software vendors shift to services and solutions.
In the early 2008 domestic
software providers release new development strategies based on the rising
demand on services.
In January 2008, Ufida
announced a shift to a new direction, from product-focused of old, to the
new "customer-centricity". Its new release of U9 is more industry-specific,
and the company plans to further execute its customer-centric model by
acquiring needed solutions and services firms.
Kingdee also announced a
similar initiative of transitioning from a software to a solutions and
services provider. Products will span a more complete solution set, from
enterprise software to middleware, and the company launched its SaaS
offering, www.youshang.com. Moreover, Kingdee invested in a new software
park in Beijing, with the goal of attracting high-end software talent.
Multinational vendors go
even more local in China.
By late 2007, Oracle
extends its China presence from China's more urban regions by establishing
offices in Chongqing, Shenyang, Jinan, Hangzhou, and Xi'an. In March 2008,
Oracle in Beijing changed its Chinese company name from "Beijing Oracle
Software System" to "Oracle (China) Software Systems".
In March, 2008, SAP
continues to execute its "Raising the Core" initiative in Tianjin, to
further penetration into China's more regional markets. The goal is to guide
enterprise software deployments by industry and region, and highlight
specific customer success stories.
For more information
contact us for these and
other China-related data, information and products.
Unless otherwise specified,
all information provided is sourced from CCID Consulting.