This article originally appeared on The Next Web
Pieter Walraven is the co-founder of Pie, a Singapore-based startup building messaging for work.
What do you get when you combine Asia’s fast-growing economies and the latest trends in enterprise software? A rare blue ocean opportunity.
A population of over 3.5 billion people, unprecedented growth in GDP, and a huge SME sector, mixed with lightweight freemium SaaS adoption models is fueling a new market that’s hard to miss.
But unlike the more developed US where enterprise IT has attracted a record $5.4 billion of capital in the first 6 months of 2014, Asia-based VCs have been slow to jump on the opportunity.
The majority of investors in the region have a traditional developing economy related background like manufacturing, shipping, or offline retail. Shying away from scalable, more technology-driven enterprise IT opportunities, the main focus has been on areas closer to their comfort-zone such as e-commerce, fashion, and online retail.
Stimulated by an exploding enterprise software market and inspired by the more forward-thinking investment strategy of venture investors in the US this is about to change.
Here’s 7 trends why it’s worth keeping an eye on mobile SaaS companies in Asia:
1. Cloud + Asia = ♥
It’s almost as cloud and emerging economies were made for each other. The ability to quickly scale capacity and pay-for-what-you-use as you expand is exactly what companies in fast-growing Asian economies with large populations need.
Taking the high upfront set-up costs out of the equation also makes the cloud a logical choice to run operations as well as launch new initiatives and services on the back of it.
2. Bottom-up adoption
For the past 50 years adoption of software for companies has been top-down, the CIO and IT department determined what software the rest of us had to use. This is rapidly changing to a bottom-up adoption model as people bring their own device to work and decide for themselves what they want to use.
The shift in purchase decision maker mostly applies to SMEs that contribute up to 59 percent of total GDP in some large Asian countries. But larger enterprises are following suit.
For example, Shell was quite early to acknowledge the movement. Its 135,000 employees can bring their own device to work and use to the tools they want.
3. Consumer-level experience
The bring-your-own-device (BYOD) trend has resulted in an increased presence of consumer focused solutions in the workplace. Knowledge workers choose nicely designed services like DropBox, Wunderlist, Evernote, WeChat and WhatsApp over their legacy – and often clunky – enterprise counterparts.
In Asia this trend is more extreme because of the lower median age of the population. In countries like Indonesia and India a growing part of the workforce is not familiar with old-fashioned desktop solutions. Instead of having to get used to legacy tools people rather stick to the apps they know to get stuff done.
For most teams enterprise focused features such as security and integrations are not enough to switch solutions. The real opportunity lies in the ability to offer enterprise features as well as the equal high level of polished design, reliability and speed of consumer apps.
Enterprise software startups that can offer an experience that is on-par with high quality consumer apps have a huge leg up on the competition.
4. Self-serve payment
With a self-serve payment model software startups can start scaling sales faster and at a much earlier stage compared to establishing a sales team first. Without spending time to hire salespeople companies can focus on their product value while serving a global customer base from day one.
Self-serve paves the way for new, bottom-up software purchase decision makers as now every head of department can easily buy and expense their own tools. The low barrier to get going is perfect for young and fast-moving SMEs that don’t require support with LDAP, Sharepoint, or other legacy system integrations.
Enterprise software businesses that offer an intuitive consumerized experience have a double advantage as they don’t have to spend as much time on customer support as their more traditional and complicated counterparts.
With stellar growth in mobile broadband adoption of almost 50 percent a year, in Asia millions of people are first and mainly accessing the internet on their mobile. Google’s Asia Pacific Blog reports:
“Asia has gone mobile-first. This is no longer a future trend, on some dim and distant horizon—it’s already happened in the past year,”
For example in China, 75 percent of all Internet users access the Internet with their mobile device, exceeding the proportion of users accessing the Internet with a fixed connection. Most of the uptake in mobile broadband users is taken up by low (~US$150) and ultra low-end ( Android devices.
Paula Bronstein/Getty Images
The mobile first trend is contributing to the sharp decline in the PC market as it allows workers to leapfrog the PC-era. It transforms the way people work and what tools they use to raise productivity.
Enterprise software companies in Asia can capitalize on this opportunity by offering mobile workflow solutions with lower-end Android device compatibility.
6. Freemium: land and expand
McKinsey has calculated that SMEs that spend more than 30 percent of their budget on web technologies grow their revenue nine times as fast as SMEs spending less than 10 percent.
Despite proven benefits many SMEs in developing Asian markets are skeptical about the return on investment of software solutions as they’re first time buyers. The freemium model allows them to experience the value before having to whip out the wallet. This way the risk of waste – paying for tools no one ends up using – is taken out of the equation.
Companies like Yammer, Evernote, and Dropbox have proven this model with great success. They enable teams to freely adopt their solution bottom-up and widely spread in organizations. Only after validating demand will they engage in converting companies to paying users with freemium features.
7. No handicap of a head start
For companies in developed economies previous investment in legacy software can delay them from moving to the cloud. Younger businesses in developing economies don’t have this handicap of a head start. They don’t have to deal with expensive software licenses and can jump straight to modern cloud-based solutions, hence their name ‘cloud leapers’.
For incumbent software vendors the times they are changing too fast in Asia. Few can keep up with the rapidly changing market dynamics and most have a hard time adapting to the requirements of the modern end-user.
With a huge pot of enterprise value up for grabs a rare blue ocean opportunity is taking shape for startups that tailor to the needs of the mobile-first Asian workforce.