Finance and Economics APP learned that XU Shaochun, Chairman and CEO of Kingdee International (00268), stated at the semi-annual earnings conference, "For our software industry, it's not about reaching the 'most dangerous moment,' but rather the golden decade of Chinese enterprise software SaaS services has arrived. Of course, this is also the golden decade of our Kingdee's development."

Currently, based on the demand for cost reduction, efficiency improvement, and refined management of major enterprises, the SaaS industry is experiencing a huge demand explosion. According to the China Information and Communication Research Institute Cloud Computing and Big Data Research Institute's report on the development of China's enterprise-level SaaS industry in 2024, the scale of China's SaaS market reached 58.1 billion yuan in 2023, with a growth rate of about 23.1%. With the continuous development of AI technology, the SaaS industry is undergoing a new round of innovation. The report also points out that China's SaaS industry started relatively late and is currently in a stage of growth and transformation. Currently, all parties involved in production, education, research, and application are starting to explore new models, new formats, and new driving forces, exploring the integration of SaaS with technologies in cross-cutting fields such as AI, big data, and the Internet of Things, to help industry enterprises transition from 'cloud-based resources' to 'deep cloud utilization,' driving industrial growth.

The rapid development of AI technology combined with exploration in overseas markets is bringing new growth opportunities for the SaaS industry. The report indicates that AI's large model technology is redefining SaaS products, creating new opportunities for enterprises. Industry experts believe that AI innovation centered on customer needs can help companies solve practical problems and enhance the market competitiveness of applications. For example, internal research at BlueFocus Intelligence Communications Group shows that its AI technology application has significantly improved employee efficiency, increasing overall production efficiency by 55%. For example, Hisense Group's Employee Activity Platform, combined with Kingdee Cloud · Cangqiong GPT's large model platform capabilities and Kingdee Cloud · Xinghan Human Resource Cloud functionality, has achieved precise candidate identification based on positions, significantly increasing the proportion of internal self-supply of talent on the activity platform, reducing the loss of excellent employees, and improving human resource allocation efficiency.

The growth of SaaS business in major well-known software enterprises is confirming the huge business opportunities in this market. It is reported that in the first half of 2024, including Kingdee, several SaaS manufacturers invested by Kingdee achieved cloud revenues growth of over 20%. Kingdee Cloud's annual recurring revenue (ARR) from subscription services grew by 24.2% in the first half of this year; Funxiong (CRM SaaS) saw a 23% growth in SaaS revenue in the first half of this year; Duodian (retail industry SaaS) had a 24% growth in the first half of this year; Xinrenxinshi (HR SaaS) registered a 24% year-on-year growth in SaaS revenue in the first half of this year.

Industry analysis believes that the growth of well-known software enterprise SaaS businesses is being driven by multiple bullish factors: the digital economy transformation is generating rigid demands, the SaaS subscription model reduces enterprise IT burdens, the maturity and security of mainstream SaaS products meet enterprise needs, and in China's economic transformation, AI has become an engine for additional growth. AI will disrupt the SaaS industry, bringing both challenges and opportunities. Enterprises that integrate AI innovation with a customer-centric approach will achieve greater growth.

Zhijun Finance and Economics learned that a variety of cloud service products under Kingdee (00268) have been favored by benchmark enterprises, including Kingdee Cloud · Cangqiong (next-generation enterprise-level AI platform), Kingdee Cloud · Xinghan (large enterprise SaaS management cloud), Kingdee Cloud · Xingkong (high-growth enterprise SaaS management cloud), and Kingdee Cloud · Xingchen (small and micro enterprise SaaS management cloud), providing enterprise management cloud products and services to over 7.4 million enterprises, governments, and other organizations worldwide.

Innovation and collaborative development are the core strategies for future development at Kingdee International (00268). Domestic SaaS companies have always been "rolling prices," and even some manufacturers have chosen irrational ultra-low quotations to win market competition, which although attracts customers, leads to continuous losses and faces enormous financial risks. Investigation analysis points out that SaaS requires software suppliers to invest more resources in developing products, and the customer migration cost is low. Once customer needs are not met, customers will quickly churn. Therefore, what SaaS companies truly need to focus on is not just the price but the value. When products truly deliver value to customers, bring new value increments, the product prices naturally have room to rise.

For example, in August last year, Salesforce increased the average price of Sales Cloud, Service Cloud, Marketing Cloud, Industries, and Tableau by 9%. According to industry analysis, the price increase was attributed to the value created for customers. With Salesforce, customers can deploy innovative technologies in sales, service, marketing, and commerce areas, thus reducing complexity and achieving value quickly. Another example is when related institutions conducted a pricing survey for SaaS products. Data showed that sales-based pricing was perceived to have the highest value, provided that SaaS companies could prove that sales growth was directly related to the product. Therefore, it is evident that SaaS companies should place real emphasis on and continuously cultivate product value.

In addition to value-based operation, for SaaS companies and Kingdee Int'l, the key to unlocking the golden decade and embracing vast market opportunities lies in collaboration, cooperation, and win-win outcomes. It is important to develop an ecological approach driven by an altruistic mindset to promote ecosystem prosperity and achieve mutual success with partners. It is widely recognized in the industry that the core of the SaaS model lies in standardized products. SaaS companies cannot meet all the needs of different businesses. Therefore, the appropriate approach is for SaaS companies to focus on their core competencies at the R&D level, refine their products to perfection, and let partners handle other aspects. At the marketing level, it is crucial to treat channel partners well by providing necessary assistance and support in delivery and market expansion, thus achieving mutual success.