South Korea’s software (SW) industry has partnered up with a South Korean online platform company and they plan to create an ecosystem for mutual growth. In accordance with growth of the cloud industry, they plan to raise competitive edge of the SW industry and enter other foreign markets together and export South Korean SW products as well.
The Korea Software Industry Association (KOSA) announced on Thursday that it signed an agreement with NAVER Cloud for mutual cooperation in promoting South Korea’s SW industry and creating an ecosystem for mutual growth.
Their agreement started with an intention to strengthen the industry’s competitive edge based on NAVER Cloud’s cloud platform and the association’s corporate network.
The association and the company will cooperate on many different issues.
In addition to NAVER Cloud, the KOSA is also pushing for cooperation with major cloud platform companies in South Korea such as Kakao Enterprise and KT. The reason why the association is pushing for cooperation with cloud platform companies is because it believes that the cooperation is necessary to secure and raise the SW industry’s competitive edge.
The global SW industry is making a gradual transition to SaaS (software as a service). Adobe started introducing subscription-based SaaS services instead of CDs after 2013, and Microsoft also started introducing SaaS-based Office products after 2015. Software companies such as Salesforce (customer relationship management) and Workday (personnel and HR) that are at the top of their respective fields have also become successful by starting off as SaaS models since their establishment.
The SaaS market has been growing rapidly since last year when the COVID-19 pandemic started. As people started working from their homes and businesses have established contact-free environment, number of companies using SaaS products that can be easily purchased and accessed anytime and anywhere has increased. A market research company called Statista Research estimated that the SaaS market’s size in 2020 doubled from that of 2014.
Although the SaaS market in South Korea has been growing every year, SaaS products are mostly used by major companies and medium-sized companies and are seldomly used by smaller companies. As the market is still in its infant stage, global SaaS companies such as Salesforce, Workday, ServiceNow (IT service management), and o9 (supply chain management) have been actively targeting the South Korean market. As a result, there are many concerns from the SW industry about foreign companies dominating the SaaS market just like how they are currently dominating the packaged SW market.
“Mutual growth in the SaaS market through cooperation with platform companies will not only help us secure competitive edge but it is also a life-or-death decision.” said Chairman Cho Joon-hee of the KOSA. “As transition to SaaS in South Korea continues to become slow when the global SaaS market is growing at a rapid rate, there are growing concerns about foreign SaaS companies dominating the country’s SaaS market.”
Chairman Cho said that cooperation between South Korean SW companies that possess technical skills and companies such as NAVER Cloud and Kakao Enterprise that possess cloud platforms will be enough for them to enter the global SaaS market. He expected that the agreement will create a new steppingstone for growth for the South Korean SW industry.
Kim Hong-jin, who is an executive director at NAVER Cloud said that effects from business synergy while working with competitive SW companies will be great and that NAVER Cloud will actively support the SW industry for its development and growth and provide necessary services.
Staff Reporter Kim, Jiseon | river@etnews.com