The right stuff: What the soaring dollar means for business

The right stuff: What the soaring dollar means for business

NSW Export Awards nominees tell us how it affects business

As the Australian dollar soars to record heights – reaching highs we haven’t seen since pre-GFC levels – six NSW exporters have been recognised at the forefront of Australian ICT export as nominees for the Premier’s NSW Export Awards 2010.

Overcoming a sea of challenges in international markets, the six finalists in the ICT category include ISVs Atlassian, Integrated Research and Clarity, and integrator and service providers, CustomWare and Ideas International. The sixth, Stoneglass Industries, offers tailored solutions to the dental industry.

With the Aussie dollar on a tear, will it hamper export opportunities for these Australian companies? The award nominees – the winner of which will be crowned on October 28 at Star City Ballroom in Sydney – offered up a mixed bag of views, and shared some of their secrets to success.

Clarity CEO, Jon Newbery, said the high dollar is affecting the company in terms of its profit and loss (P&L), but it isn’t a major concern.

Clarity, which provides software dedicated to the operation and management of telecommunications networks, does 90 per cent of its business in offshore markets.

“Our revenues are obviously impacted because we’re selling mainly in US dollars and Euros, but reporting in Australian dollars. As a result we’re not getting as much revenue to cover our Australian costs, which impacts profitability. We continue to address this by using local resources in the countries where we are delivering to create some natural hedge against currency movements.”

The crew at Integrated Research aren’t too concerned. Its general manager, product management and marketing, Pierre Semaan, said the company is protected from the soaring Aussie dollar.

“The Australian dollar does affect what we can do in the markets. Under the $0.80 mark we’re quite happy. However, it’s not causing losses this year – we’ve been in operation for 22 years and profitable for 18 of them, and our finance department does its due diligence with hedging to protect us from these kinds of highs.”

Top markets for the company include the US and select parts of Europe, he said. “We’re finding the US very good for exports, but Europe can’t be treated as one big happy family yet – Germany is doing nicely, but it’s not so strong in the UK yet.” Asked the hot button areas, he said IP telephony is one to watch. Last year, the company formed an alliance with Avaya to have its product shipped with each new PBX shipped, which has led to new customers.

Meanwhile, Atlassian marketing director, Jon Silvers, said the high dollar wasn’t adversely affecting company operations. For the last eight years, the company has been selling internationally and sales are in the US dollar – and Silvers is forecasting a big year ahead.

“We hit a major milestone with $US59 million in revenue for the last year – an all-time high for us.

"We acquired a new technology in GreenHopper, which has proven to be one of the highest earners in the year."

The company recently acquired bitbucket, a two-year-old company that specialises in hosting code. “What we’ve done is slashed the cost of that product and changed its business model. We expect it will open a whole new market for us with small companies of one or two people, who might not even have heard of us before starting to deal with us.”

A big move this past year and a potential contributing factor for the award nomination is its move into software licensing, starting with the rollout of $10 versions of its entry level software products.

“In the first day we sold over 13,000 licenses – and so far in total we’ve made $600,000 from the $10 licenses. That money has all gone to charity, but what it has done is generated lots of interest in our higher grade products.”

Indeed, Aussie innovation is the key. CustomWare founder, Robert Castaneda, said Australian products have a good reputation overseas.

“Australian services and solutions are well respected and in demand; the rising dollar has reduced our competitiveness on raw cost basis, but those customers that understand quality are still very active,” he said.

On the flip side, the high dollar is a worry for integrator and service provider, Ideas International, which has a high percentage of revenue derived from overseas markets – a whopping 98 per cent, in fact, CEO Stephen Bowhill said.

“The challenge has been in terms of forecasting the variability of the US/ AUS exchange rate, but on top of that the high dollar is a real concern. The current prediction that it will reach $1.20 means we would need to increase revenues by another 20 per cent to compensate.”

He predicts happier days ahead. “We can’t make specific forecasts, but the market is definitely stronger than it was in 2008, and people are looking to the future now, rather than worrying about the day-to-day.”

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Tags ideas internationalintegratorisvatlassianClarityservice providerStoneglass IndustriesIntegrated ResearchCustomWareNSW Export Awards 2010dollar parity


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