Top 10 considerations for Australian ISVs expanding overseas

Top 10 considerations for Australian ISVs expanding overseas

1. Import vs export of IT

Some countries, like Australia, are natural importers of IT solutions – we import more than we export, and we’re very comfortable buying from overseas vendors. This is not the case in many regions. In the US and most of Europe for example, there is a very strong ISV community and the emphasis is on exporting local products. There’s a strong bias towards purchasing local, which is a barrier to entry that Australian companies need to overcome, and this can’t be done without innovation and the ability to sustain the business during start up mode.

2. Innovation is mandatory

As an Australian company, you must have an innovative product that will help to break down the barriers to entry. Innovation is mandatory, but it’s not the only key to success. There’s a mentality in the IT industry of “build it and they will come”, but the reality is it takes much more than an innovative product to be successful.

3. Research and get external help

Research as much as you can and talk to others who’ve done it before. The more prepared you can be, the better your chance of success.

4. It always takes longer than you think

There will always be social, political and economic forces you didn’t initially factor in. There is always a delay in revenue between the time you start-up in a country and revenue coming in the door, and it invariably takes longer than you anticipate.

5. Capitalise properly Because of the delays in achieving revenue, expansion always costs more than you anticipate. You don’t want to be in a situation of starting up, but then having no room to move. My rule of thumb is whatever capital you think you’ll need, multiply it by five.

6. Get your business model right

Spend time and money getting your business model right before you expand. I believe the indirect business model makes the most sense when expanding overseas. It allows you as the ISV to maintain focus on your product, your support and your marketing, while you recruit local companies to do the selling, who already have local contacts and credibility. This approach is the only one that allows rapid scalability. In today’s environment, if you have innovation, you need to move extremely quickly to gain a first mover advantage.

7. Get external validation

There is natural skepticism when you start-up overseas. You must get validation from external parties to boost your credibility – whether that’s press coverage, awards, certifications, endorsements or customer references. Zap was awarded the 2009 Microsoft ISV/Software Solutions Innovation Partner of the Year, which is a global award and really helped to establish us as a leading partner in overseas markets.

8. Don’t undercut on marketing

You have to work really hard to overcome the bias in overseas markets towards buying local products. You’ve got to market continually and well and put serious investment into building your profile and reputation.

9. Hire the best people

Colonising will get you nowhere. Hire the best local talent you can afford, and leverage their existing relationships and cultural understanding.

10. Don’t underestimate the challenges

Global expansion is hard and demanding. You must take the decision very seriously and judge for yourself if your company is up to it. It’s possible, and achieving global success is extremely rewarding, but it’s also draining, punishing and unpredictable. It’s not a decision to be taken lightly.

Garth Laird is the president of Zap Technologies.

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