For many Australian businesses, expansion into Asia is a lucrative prospect, but a new research commissioned by NTT Communications claims that businesses underestimate the difficulty in breaching such markets.
Findings show that nearly 50 per cent of all businesses that expand into the region fail to recognise any greater competitive advantage as a result.
NTT Communications COO, Tarquin Bellinger, said Asia is an incredibly diverse continent where customer requirements, legal regimes, and levels of IT infrastructure can vary immensely between countries which are only miles apart.
Bellinger said the key data point which came from the research was that while 50 per cent of organisations sited winning more customers as a key strategic objective, but 65 per cent did not increase their customer base as a way of expansion.
Bellinger added that in hindsight, the less successful organisations wish they had more advice on regulation and compliance and felt that was a factor which slowed down a business plan.
“In addition, 49 per cent of organisations felt they needed more expertise on the ground at the Asian and Australian ends," he said.
“One of the biggest insights we found was that of the organisations that expanded into Asia, 65 per cent had customer experience challenges caused by poor IT.
“If you have poor IT in an environment where IT is pretty fundamental, Asia is very IT savvy, it is probably not going to help your customer acquisition and retention plans.
“There are fundamentals in IT infrastructure, the first is that you need to be able to host applications so that your applications are always on and that you have a good user experience.
“Secondly, you need to be able to connect to your community’s interest, your customers, your business partners need to be able to get to your applications effectively.
"Thirdly, they need to be effective in their role, so they need to have the right infrastructure in their offices in terms of local area network, voice, desktop services, and when they are on the road, they need to be able to interact effectively with home base."
Bellinger said that 15 per cent of companies interviewed had already expanded into Asia and 18 per cent of respondents who were planning to go into Asia.
Bellinger explained that of those Australian companies planning to go into Asia, only 10 per cent of felt that getting IT right was a critical success factor.
“We see a difference between IT-centric companies and non IT-centric companies," he added. "We recently won a piece of business to support a global Software-as-a-Service player expand into Asia.
"They were very particular, they understood the challenges, they understood the time frames they needed to deploy things in, and they were very prescriptive about things like service level agreements, the way you project manage deployments, ongoing service management, they really understood IT. As a result they were very prepared.
“Conversely, we have one customer in the financial services sector that had a series of big hiccups. They deployed, it hasn’t gone well, and we have come in and helped them out, fixed their problem, and now we support them across all of Asia.
Bellinger said there were a lot of people that do not appreciate the complexity of IT and that there was an expectation amongst certain organisations that IT “just happens.”
“Those organisations are taking on a risk that they don’t understand," he added.
Bellinger said there were certain steps organisations should take to ensure successful expansion into Asia.
“The first is that you have to test for quality," he added. "Quality varies across Asia, I would recommend organisations test their supplier. You need to have support on the ground in Asia and in Australia, and you need to have the people who can get things done, you need to check that they are there.
"Service delivery managers, project managers, engineers, you need to make sure that both ends of the equation have the right people on the ground.
“Buying into cloud services is a good thing because it means you get access to services quickly and you can grow with demand.“Getting the IT department engaged in your business plan early so that you can avoid some of those customer experience challenges. The organisations that are prepared from an IT perspective, have a better experience," he mentioned."