cdc_logo.jpgWhat does China have lots of — apart from people? Small businesses, of course. More than 20m of them, according to CDC, the HK-based software company that is currently making news with its hostile bid for Onyx Software of the US.

More on the bid tomorrow, but far more interesting, in our opinion, is CDC's new software-as-a-service (SaaS) offering aimed at China's SMEs.

SaaS is the latest buzzword in the (US-dominated) enterprise software industry. After decades of selling software as a product, the industry has realised that it could just as easily offer software as a service instead.

In return for a monthly fee, companies can wave goodbye to software licences and installation disks. Instead, the software — along with the user data — are hosted remotely and accessed in real-time using the internet .

The SaaS approach is not necessarily cheaper than traditional site-installed enterprise software but it has other benefits, particularly for smaller businesses, as it eliminates the capital cost and headaches of running such software in house.

US upstarts like Salesforce.com and Netsuite pioneered the SaaS approach and their success has encouraged the big established enterprise software vendors to take SaaS seriously. Even German heavyweight SAP is looking at SaaS, according to my colleague Dennis Howlett on his AccMan Pro blog.

But how easily is it going to be to roll out SaaS in China?

I can see one big challenge, namely convincing businesses that China's internet infrastructure is robust enough for this type of application.

Wisely, CDC is concentrating first on a hosted human resources application, called HRP OnDemand. I say wisely because businesses are unlikely to complain if their HR software goes offline for a few minutes or hours. They will if a “mission-critical” application like CRM goes down.

CDC says it will launch a CRM service in December, in collaboration with Microsoft — a potentially fascinating tie-up that we'll look at tomorrow.

CDC claims it has an ace up its sleeve in the nationwide infrastructure of China.com, its sister company. Those with a long memory will remember that CDC — it stands for China Dot Com — began life as an internet company, although it has since sought to reinvent itself as an enterprise software vendor.

The reinvention, is not complete, happily for CDC, so it can exploit the “robust nationwide network” of China.com, which is currently used to play online games — CDC Games has 31m users.

This network, which stretches into 30 provinces, has a track record of 99.9% up-time and provides all the security features required by corporate customers, the company claims.

Those businesses who aren't passed by CDC's network may have a tougher time, however.

According to an ZDNetAsia story, the instability of broadband access and the limitation in access speed are among the top list of consumer complaints in China and are holding back the acceptance of broadband-based applications.

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