IBM is helping shepherd increasing numbers of local software companies onto the global stage as they move outside of the comfort zone of their home markets.
As well as software vendors looking to grow their revenue by developing an international business, increasingly customers are demanding that their technology providers can operate globally, according to Mark Hanny, vice president of ISV (independent software vendor) alliances with IBM. He was speaking this week at IBM's PartnerWorld conference in St. Louis.
IBM acts as a consultant to ISVs as they look to establish themselves in new markets. The vendor provides technical help, advice on the localization of their products, and how to get connected to local partners. IBM currently has 33 Innovation Centers around the world where partners can go to for such assistance or they can connect with the centers virtually. IBM expects to launch an additional three centers later this year, mostly likely in Eastern Europe.
In many cases, IBM has had a presence in countries for decades, for example, having in operations in China for 50 years and in Brazil for 90 years. In those markets, "We are a local company," Hanny said.
The key piece of advice from both Hanny and ISVs who've partnered with IBM to enter new markets is the importance of hiring local people from the get-go, particularly around providing presales and postsales support for the software.
Business applications vendor TOTVS/Microsiga, which already dominates its home Brazilian small to midsize business market, has teamed up with IBM to reach other countries in Latin America.
Coming from a Portguese-speaking nation meant TOTVS could easily sell its software in Portugal and through that country also reach users in the Portuguese-speaking nations in Africa of Angola and Mozambique. However, moving into Spanish-speaking nations in Latin America wasn't so straightforward, according to Claudio Bessa, corporate marketing and business director at TOTVS/Microsiga.
The Spanish used in each country is different as is the style of negotiating business deals, another reason why having locals in place from day-one is so important, he said. Also, Latin American countries have a host of legal and financial issues relating to ERP (enterprise resource planning) software. "The rules change every day, every single hour," Bessa added, not entirely joking.
The Brazilian ISV's software previously only ran on Microsoft's Windows operating system, and TOTVS has worked with IBM to have it also run on Linux.
Many companies initially look to enter markets that are geographically close to them. For example, business applications vendor Ufida Software, the largest ISV in China, is expanding its business elsewhere in Asia, notably Japan, Malaysia and Singapore. IBM is helping Ufida enter those markets.
Hanny said he won't be surprised to see Ufida and another Chinese ISV Kingdee International Software Group, which caters mostly to small to midsize business applications users, as well as Brazil's TOTVS, enter the U.S. market within a few years.
"IBM's global technology unit [in Tel Aviv] was like our commando unit; it opened doors," Udi Mokady, founder, president and CEO of Cyber-Ark Software Inc. The digital vault software vendor was founded in Israel, but soon after that established its headquarters in the U.S., retaining its research and development arm in Israel.
Working closely with IBM can be "something of a leap of faith" for a small ISV since it may involve the sharing of information about potential customers, he said. The ISV has to trust that IBM's "in business not to take our business," Mokady added.
The relationship between IBM and ISVs is very much a two-way street.
With its headquarters in Ra'anana, Israel, Exanet specializes in clustered network-attached storage software. The company is partnering with IBM to access potential users in France, Germany, Japan and the U.K. "We need IBM and their reach to the customer," said Rami Schwartz, CEO of Exanet. At the same time, Exanet, which won a deal with the U.S. National Aeronautics and Space Administration (NASA), has given IBM access to a piece of NASA with which the U.S. company wasn't doing business previously.
IBM has been focusing on emerging markets for several years, notable five nations it dubs the BRICK countries -- Brazil, Russia, India, China and South Korea. The company is also seeing rapid growth elsewhere in the world.
"Eastern Europe is an unbelievable growth area," Hanny said. "I see Eastern Europe as being one of the real leaders in IT." He namechecked Romania and Poland as particularly strong areas for homegrown software development. In Asia-Pacific, "Vietnam is starting to step up," Hanny added. "We see a lot of really good seeds of IT shooting up."
IBM is also working with U.S. companies looking to extend their worldwide reach, for instance supply chain software vendor Manhattan Associates, which hopes to gain more customers in Asia-Pacific.
"Partnering with IBM in global markets gives us a leg up," said Jeff Cashman, senior vice president of business development at Manhattan Associates.
The ISV had previously tried to enter overseas markets solo with a direct sales team from the U.S. and didn't see the results it had hoped for, realizing that the way software is sold in the U.S. is not the same, say, as in Japan or France.
"Once you're in a market, you've got to deliver," Cashman said. "Your credibility in a local market can go very quickly."