Succeeding in its expansion strategy, in an environment of constantly changing technologies

Succeeding in its expansion strategy, in an environment of constantly changing technologies

Expert Opinion

Nowadays, it is clear that software vendors must find new sources of growth beyond borders to enhance their competitiveness and achieve a critical mass. A successful international expansion strategy is a complex process that should be well prepared to transform this project into an operational reality that generates added value. To ensure success, it is therefore necessary to establish a complete mapping of the elements in order to take them into account, so as not to encounter numerous constraints. We cannot ignore the fact that international expansion leads to spending more energy and resources, thus the need to take into consideration all strategic variables.

The Marketing Method

How to position itself to sell these solutions abroad? Several methods exist:

The local presence through the creation of a subsidiary:

A structured approach, very constructive for the company, it allows the software vendor to benefit from the proximity to its new market. It provides local representation and immediate support and maintenance services (whether at the level of local partners, or customers). Note that the designation of a manager on site who knows the market and how it operates would definitely help reduce the time to identify the first valuable projects. In order to guarantee the efficiency of this approach, close and continuous follow up, monitoring and interference from senior management and board of directors is required. This will certainly require frequent travel to the targeted country or region to contribute in the development of this new structure.

The establishment of a network of local resellers without the creation of a subsidiary:

This process involves extensive training of resellers or software integrators on the products. Given the complexity of these solutions, the partner must master this subject to be able to answer the demanding customer needs. By approaching a partner already operational on the market, the software vendor benefits from an existing reseller network and from its sales force. This can be more advantageous than setting up a commercial force at the local scale. Several solutions exist for sharing revenues: partner agreements usually ensure that all parties get a fair deal. It should be noted that the approaches by the subsidiary and partners are often complementary and depend on various criteria (type of solution marketed, targeted market development, partner skills ...).

The Language Barrier

This point is an essential element. In fact, unlike the native English / American software houses who can directly market and export their applications in a larger market (English-speaking countries), French based software vendors in turn, have to translate their software before marketing it. This strategic work should be conducted as part of a continuous development process (following road maps and versioning ...). A dedicated team for this task is complex to envision.

Research and Development, and the enforcement of Norms and Standards

Beyond the pure technological aspects, these software products should be adapted, parameterized and localized according to the country specifications in terms of legal and financial rules, norms and standards ... This strategic point justifies the creation of services and functions dedicated to specific geographical or administrative zones, and therefore add a layer of development leading to dedicated Research & Development. An industry-specific watch is also recommended in parallel.

The Recruitment

The establishment of a local team is also strategic. It is convenient to clearly define the key profiles to be recruited in order to reduce and eliminate unnecessary costs. One has to think "market" and understand the current practices in target countries to carefully define the job positions. Sometimes the relocation of French employees who wish to move abroad can be beneficial, as they will provide the knowledge transfers allowing staff on –site to benefit from their expertise acquired in the mother company.

Many other elements could also be developed to illustrate the necessity of substantial and exhaustive work in order to fully build the expansion strategy for a successful international growth. Although it requires careful preparation, the implementation of an international business development strategy may prove to be a winner. A pilot approach and the definition and monitoring or realistic objectives based on geographic regions is necessary. Once all of these conditions are met, it is not uncommon for software vendors to generate more than half their sales revenues abroad. This is an encouraging fact that should greatly help increase the performance of the local (i.e French) IT industry worldwide.

"The originality of EVER TEAM’s development strategy abroad is that it relies on the combination of two approaches: subsidiaries and partners; Having identified the gaps in a system based solely on partnership (pre-sales support and sales incentive) and the heaviness of the subsidiary based approach, we decided to adopt a mixed approach based on local partners and the hiring of a local solution expert, a Partner Manager.The Partner Manager's mission is to follow up with partners, encourage them to sell and provide pre-sales and quality support, accompany the partners to the prospects in order to present and demonstrate EVER TEAM's solutions. This avoids the need for partners to undergo long, time consuming product training sessions to learn our products. The presence of both a local partner and a partner manager directly representing the mother company comes to comfort the prospects on the seriousness, quality of the offering and the close support of EVER TEAM when needed."

Antoine Hraoui, Senior Vice President Business Development - EVER TEAM.