SaaS Adoption in Japan
Introduction
Digital transformation (DX) has been a big focus for Japan, especially with the digital competitiveness ranking dropping three spots to 32nd in 2023. A part of the DX push is to increase the number of startups through the Startup Development Five-year Plan. One side of the story is increasing the availiability of software services available. The other side of the story is increasing the adoption of new technologies. There are many different figures on SaaS adoption in Japan. This post summarizes all the SaaS adoption figures that we come across and new data will continually be added.
Packaged Software vs. SaaS
Boxil has been released as a “SaaS Industry Report” since 2016. One of the SaaS trends included in the report is the proportion of the packaged software and SaaS market in Japan. Not only is the overall market for software growing, but the proportion of SaaS is also growing: SaaS is gaining market share while the overall market is growing.
SaaS Usage Survey
The 2023 version of Boxil’s “SaaS Industry Report” included a survey on SaaS adoption. The results of the survey show that only 34% of the respondents use any SaaS tools. The results were broken down by region and showed that the Kanto and Kinki regions were the only regions with implementation rates over 30%. Tokyo and Osaka, two major cities in Japan, are part of the Kanto and Kinki regions, respectively.
The survey also showed that, of the companies that use any SaaS service, 63% answered that they use 1 to 5 services. 12.1% answered 6 to 10 services. Over 75% of the companies that use SaaS tools use less than 10 services.
Number of apps used by companies
Okta’s 2024 version of their “Businesses at Work” report shows that the number of apps used by Japanese companies is 35 while the global average is 93. The United States is the leader in the number of apps used with 105.
Japan’s app adoption is increasing at an accelerated rate. The global average of the year-over-year growth was 4%. Japan’s growth was 9% and is playing catch up. If this trend continues, the number of apps/SaaS products being adopted should increase rapidly.
One thing to note is that Okta uses anonymized customer data. There is likely some selection bias, as Okta users in Japan would be advanced in terms of SaaS adoption.
IT Adoption by Small and Medium Enterprises (SMEs)
Small and Medium Enterprises (SMEs) in Japan are an important and substantial part of the economy, as they make up 99.7% of all companies and employ 69.7% of the workforce.
In the 2023 version “DX Whitepaper” created by the Information-technology Promotion Agency (IPA) shows that Japan seriously needs to catch up to the United States regarding having departments and teams for digital transformation. The gap between departments dedicated to DX between Japan and the US for Companies under 1,000 employees is over 20%. The only companies that are on par with the US are companies with over 1,000 employees.
Small and Medium enterprises especially aren’t as aggressive in adopting technology. The percentage of companies in Japan that either have departments or teams dedicated to DX is 40.7% for companies with under 100 employees and 68% for companies with 101 to 300 employees. In the US, these numbers are close to 90% for both.
Conclusion
All data indicates that SaaS adoption is growing. The data also indicates that there’s a lot more adoption due to happen, especially for SMEs. Investments in SaaS companies are growing, as well. As the number of services becomes available and awareness increases, the adoption should accelerate. The success of SaaS companies in Japan is a reflection of increased SaaS adoption — SaaS companies are growing in Japan and if their global comps are any indicator, they have a bright future ahead. That being said, as shown by data, there’s plenty of room for more SaaS companies, including global solutions, as SaaS adoption has only begun.
Nihonium can help your SaaS solution gain traction in the Japanese market. If you’d like to learn more about our approach on Japan entry, book a consultation here.
English 
Japanese