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The United States is responsible for the production of over three quarters of the software used around the world, but there are solid development centers in countries such as Ireland, Israel, Philippines and, of course, India, while the remaining emerging countries of the BRIC (Brazil, Russia and China) promise to also become future powerhouses. Moreover, the Internet allows consumers and vendors to connect as if geographical borders did not exist. For software vendors, particularly the ones in the realm of enterprise software and similar complex transactional products, that means that globalization will just continue to expand. Regardless of direction, globalization has made internationalization of products and processes a medium and long-term requirement for most growing software organizations.
The internationalization of a software company may be pro-active, for business growth, or reactive, for the protection of the acquired customer base. Regardless of their intention, software companies will continue to have internationalization and localizations as a growth option, while internationalization for many organizations will become a condition for survival.
Internationalization can be a move driven by opportunity or by strategy. Sadly it is too often driven by opportunity only. Companies take advantage of a client who is establishing business in another country and “localize” their product or, worse, accept invitations from potential “distributors” from any market, many times organizations without the minimum required structure or credibility for the job. In these lines, the only successful attempts are those from companies that review their strategies and plan for the international initiatives within a broader context of business and organization.
Acting based on an opportunity is the “long short path”. Short because actions are taken swiftly and prematurely. Long because those actions tend to be ineffective and results take long, if they ever happen, and because investments seem endless and deadlines are never met. On the other hand, a strategic and planned approach can look like a “short long path”. Long because deep analyses are performed, detailed strategies are put together, tactics are articulated, and sometimes years go by. Short because costs are minimized by synergy with other measures, deadlines are met, execution is swift, surprises are minimal, customers are soon satisfied and the results consistently appear.
Methodical and adequate planning for the internationalization and localization of software products and processes promotes numerous benefits, such as:
- reduction of time-to-market;
- reduction of costs from trial-and-error approaches and adaptation processes;
- increased adherence of products to the chosen markets;
- reduction of risks and liabilities;
- readiness for more rapid and adequate responses to the market;
- optimization of investments through better analyses and anticipation of needs; and
- reduced taxes.
If internationalization can be defined as “adaptation of products and processes for international environments and for simplification of localizations”, localization is the “adaptation of products and processes for a specific market (country)”. The process of internationalization of a company should encompass not only its products, but also its organization, processes and culture. Its main requirements include:
- the understanding of methodological, technical, organizational and market aspects that support productivity and quality at international levels;
- the knowledge of local and foreign competition, supporting the definition of strategies for the evolution of the company’s processes, products and services;
- the conception of structured business approaches–strategies and tactics; and
- the qualification of the professionals at the management and operational levels from the several involved areas within a company.
Choosing target markets should be a careful activity and special attention must be paid to the long-term perspectives. A failed entry into a market (country or region) may represent closed doors for many years or a level of investment for a new attempt far higher than what would be required for a right approach at the first time.
Entering a new country is no different than entering any market. It demands products, brands, distribution channels and services. As the use of indirect distribution channels is a typical way to expedite the availability of these components, it should be noted that:
- although authority will be delegated to a partner (distributor or representative), the responsibility for the market presence will always be of the software provider, once its name and image will be at stake, even if the distribution channel is replaced at any given time;
- the planning and analyses for exiting a distribution agreement should be carefully carried out prior to signing off contracts, forcing an understanding of the terms and implications of short and long term to both parties;
- in the case of partnerships, the track history is not encouraging. Detailed analyses and a structured process for the definition and implementation of both the new operation and the new relationship are necessary, once studies show that 75% of all partnerships do not work out and my own experience show numbers above 90% when partnerships involve software applications on both sides.
Target-market selection in an internationalization process has its facilitators, such as natural paths to expansion due to the strategic importance of each country, attractiveness of markets, SWOT analysis data, and synergies between requirements of different countries in relation to products, organization, customers and complementary products. During such process, a company will naturally move according to its desires for expansion, but it should also consider potential demands for expansion, which may come from clients that are establishing operations in other countries and also from potential clients that will only be attracted to companies that provide solutions to the multiple markets in which they are already established.
Even though the internationalization of software products, a typical spearhead of a company’s entire process for internationalization, may not necessarily be the main demand for resources, it will require investments for the following:
- evaluating existing solutions (potential competition);
- complying with target-market requirements;
- evaluating how utilized technologies are seen by the target market, when applicable;
- adapting product functionality to common international features and providing flexibility for adaptations and reconfigurations;
- making available technical and functional architectures that enable localizations, customizations and support to multiple languages; and
- providing functional, technical and process documentation.
Internationalization of processes, on the other hand, should address strategic processes such as planning, marketing and product management, and operational processes such as sales, channel management, product development, services and customer support.
Localizations require much more than the translation of applications. Products, processes and documentation need to be adapted to address local business practices, legal requirements and aspects related to the local culture and infra-structure.
Internationalizing a company and localizing products and processes require much more than the creation of an “international department”, but it does have its advantages– including, in some cases, survival.