Indonesia’s SaaS Scene: What You Need To Know
13 June 2019
“SaaS” (short for software-as-a-service) is one of those tech-centric pieces of jargon that tends to scare the uninitiated, who have not quite figured out how to use the term in a full sentence. However, despite the opacity of the word, SaaS ecosystems have become increasingly central for many markets and industries across the world.
According to Market Watch, the market for SaaS products is anticipated to growth by 21.2% between 2018 and 2023, reaching as much as US$117 billion in value by the end of 2022.
There are myriad trends that have led to the explosion of the SaaS market in Southeast Asia, but there are still significant barriers for companies looking to adopt the technology, especially in infrastructure-sparse countries like Indonesia. However, it’s still worth thinking about the imminent impacts SaaS will have on companies throughout the region, and who are the up-and-coming players to watch out for.
Breaking down cloud computing
In order to understand SaaS, you have to understand the cloud, as the former relies on the latter. Cloud computing takes all the processing and network out of the physical world and places it on servers and the internet, meaning that companies’ offerings can be scalable, easily accessible, and cheaper than traditional solutions.
Generally speaking, cloud computing services cover infrastructure (also known as IaaS, which are digital utilities like internet bandwidth, or data storage); platforms (also known as PaaS, this could reference interfaces that manage multiple applications); and software (more on this later).
For the most part, cloud computing remains relatively unpopular in the Asia Pacific market, where it makes up only 3% of the entire region’s tech market, according to market research firm Forrester, though it’s rapidly growing.
Which leads us to SaaS.
The term “SaaS” refers to “Software-as-a-Service”, which is a type of cloud computing that aims to deliver end-user applications online. If IaaS and PaaS services are the foundations, SaaS products are the discrete tools which carry out specific tasks, like word processing or content management.
SaaS providers leverage heavily on the agility and scalability of cloud computing in order to cut out the “middleman”: traditional software installation processes (remember how long it used to take to download Microsoft Office off a floppy disk?), the significant costs of maintaining and managing servers, bugs, security patches and so on. Instead, SaaS providers deliver applications through web browsers, rich internet applications (like your Whatsapp Desktop app) or mobile apps, which are maintained by the company itself. Think of household names like the Google Docs, or Microsoft Office 365.
Old guard notwithstanding, a number of new businesses are cropping up to fill the gaps left in less popular corners of the business world. For example, in the realm of human resource management, a number of SaaS startups are trying to solve the tedious task of tracking and measuring employee performance through data.
Indonesian Synergo is one such company which is providing businesses with the ability to align individuals’ performances with bigger picture targets and goals. Through the use of a user-friendly application, Synergo’s tech is trying to reduce the use of manual processes such as face-to-face interviews, and introduce innovative tools to ease complicated tasks like succession planning and talent growth.
Indonesian businesses’ cost benefit from SaaS
Businesses in particular stand to gain the most out of SaaS products mainly because of the big cuts the software can make to operational costs. SaaS products offer alternatives to costly hardware and software deployment, which includes the salaries of dedicated IT staff. Rather than continuously paying more money for updates or software, companies that are relying on SaaS products are able to benefit from cheaper products, and the predictability offered by the maintenance staff of these companies.
For Indonesian businesses, SaaS products solve a major issue around cost. Unpredictability can have devastating impacts on businesses in Indonesia, a country where there are almost 360 million small and medium enterprises (SMEs). For SMEs, costs are the biggest factor of any business decision, which means that SaaS-centred businesses have a significant advantage.
Unlike IaaS and PaaS, which typically function on fixed subscription business models, SaaS products are sold on “pay-as-you-go” models. This means that these self-contained applications can be utilised as and when customers need them, thus cutting costs and waste, but also provides them with the option of going bigger if they need.
Say for instance, you’re a business owner (for example cafe or restaurant) and you want to help your employees be more efficient. In order to do that, you can use basic offering of Point of Sale (POS) service such as Moka. As your business grows and becomes more complicated, you can upgrade your account to get additional features and services.
Filling Indonesia’s skills gap
Though it can’t be denied that Indonesia is a rising star in the economic landscape, the country still struggles with a skills gap problem. Despite efforts by its government, there are still reports that businesses in the resource rich country are struggling to fill roles with sorely needed workers. Furthermore, as more and more Indonesian companies are going digital, the demand for sophisticated skills will become increasingly pressing.
SaaS products can be hugely beneficial for bridging that skills gap by outsourcing tasks that cannot be fulfilled by a single worker, or by reducing the technical skills needed to complete a task. Companies will be able to employ SaaS products to substitute hiring dedicated professionals for certain tasks such as human resource (HR) management or accounting; or maybe even to reduce the amount of time taken up by certain roles, such as content publishing or record keeping.
Mekari, an Indonesian startup, is a great example of how SaaS solutions can efficiently bridge the skills gap for companies. The company is brought together a gamut of solutions through the merger of four startups: HR information system Sleekr; Jurnal, which simplifies and adapts web-based accounting solutions for companies of all sizes; payroll automator Talenta; and tax management software Klikpajak.
Rather than hiring a dedicated accountant or enlisting an expensive accounting firm, a small business could instead make use of Jurnal to record, draft and report its yearly accounts. Mekari’s suite of tools cuts out the cost of outsourcing each individual task to disparate companies who often charge high retainers, and only imposes fees depending on how each application is used.
For older companies and legacy institutions, SaaS products also help them transition further into the digital era by cutting costs of integrating expensive software across large teams. Many Indonesian companies and public institutions are holdovers from a previous era that are looking to digitize processes to improve their efficiency and relevance today. However, making the transition can often be a painful, bumpy process.
These organisations could benefit from SaaS products, many of which are designed to be scaled to the needs of large, sometimes unwieldy structures, that are usually still heavily reliant on paper-based processes. An example of a startup looking to tackle this issue is Jojonomic, which aims to streamline businesses’ administrative to-do lists by digitizing traditionala processes. Older organisations can make use of Jojonomic’s expense management tool in order to clarify financial issues, or even the company’s time tracking tool to measure their personnel’s productivity.
The transition to digital need not be an expensive, all-encompassing investment with the many different SaaS offerings available to Indonesian SMEs and corporations alike.