Global expansion is never easy. The key is to not allow a great business decision to become derailed by a costly and time-consuming IT decision. For many businesses, it could be as easy as looking to the cloud.
Built over the internet, cloud computing solutions are not only borderless, but they already contain the building blocks for your international subsidiary. This allows you to take a low risk, low cost and measured step to global expansion.
Global pressures forcing change
For some SMEs, expansion is driven by desire for growth and global success. For others, however, increasing global pressures are forcing businesses to expand outside Australia to survive, rather than by choice.
Factors out of the control of many SMEs are forcing change, particularly the strong Australian dollar, Australia’s industrial relations and regulatory framework, higher direct costs, a relatively small domestic market, weak private sector spending, the impact of cheap imports and goods into Australia and fierce manufacturing competition, particularly from Asia. To survive, growing numbers of SMEs are being forced to look outside Australia’s small domestic market to find new markets to maintain growth and remain viable.
This is particularly evident in the retail market. According to Frost & Sullivan, one third of Australian retailers don’t have a website, yet Australians spent $6 billion on overseas websites in 2011 alone, sourcing greater product variety at more affordable prices. Many retailers that haven’t adapted their business model to expand into e-commerce to compete on a global scale simply won’t survive these global pressures, and already many haven’t.
It is a similar scenario for manufacturers, wholesalers and distributors, as their future survival is being determined by global influences that can’t be ignored. Despite strong local brands, the latest state of the art manufacturing technology and efficient processes in place, many Australian manufacturers are struggling to survive external pressures, forced to either offshore or close their doors. Significant job cuts show how increasingly vulnerable we are to international economic conditions. The manufacturing sector employed 16 percent of Australia’s workforce 30 years ago; today it is half that, with 4,400 jobs lost in the past year alone.
Australian businesses can no longer think they are on an island that the global marketplace won’t impact. It already is – SMEs that don’t make necessary changes to their business models to join this marketplace risk disappearing all together. Naturally, this is not true for all SMEs, but it does affect a sizeable percentage.
Asia – the latest sweet spot
As more SMEs look offshore to grow, the formidable and fast-moving Asian market is increasingly becoming a major drawcard, especially for retailers, manufacturers, wholesalers and distributors.
While many foresee their business future in Asia, just as many hesitate on the doorstep of this economic powerhouse, wondering how to break into this diverse market where languages, currencies, regulations, markets and cultural morays are not only so different to Australia, but also significantly different within the region.
How do you best set up a functional business quickly and affordably in Asia with the lowest level of risk possible? What’s the easiest way to move a business or open a subsidiary there, while maintinaining control from an Australian headquarters? How can you minimise the cost of IT systems choking growth plans, while still managing multi-currency, multi-language, multiple reporting requirements and financial consolidation of all subsidiaries.
These are complex business questions that require case-by-case market analysis. However, regardless of differences, it’s clear that cloud computing plays a crucial role in helping Australian companies expand into Asia more easily and cost effectively, by giving them the agility and flexibility to set up new businesses operations. In addition, the speed of implementing cloud solutions gives businesses rapid entry into foreign markets that legacy on-premise software would not offer. By understanding the benefits of cloud computing, your business stands to gain a real competitive advantage.
Cloud speeds up new market entry
Restricted IT resources, particularly infrastructure, budgets and staff, have been a long-standing issue for many SMEs. Cloud computing provides a way to move beyond traditional borders faster, partly because it removes the weighty costs of traditional on-premise IT infrastructures that cramp growth.
Now you can establish a comprehensive core platform for business management, particularly for key back-office operations and financial business processes, without the huge costs and manpower required to install, operate and maintain hardware and software systems.
Customer relationships, enterprise resource planning (ERP), financials, e-commerce, HR, manufacturing, distribution and supply chains, can now be managed from one system on the internet. This gives you deep, and up to the minute visibility of every interaction, transaction and relationship occurring in your business in every market, anywhere in the world.
Many cloud-based business management systems are built to accommodate multiple languages, currencies, taxes and reporting standards to fulfil international business customers’ needs, enabling SMEs to use one system to automatically manage local financial requirements in any market they expand into.
Without being encumbered by IT infrastructure, SMEs gain the agility and flexibility to explore new markets knowing they can easily switch on vital business systems already geared to work in whatever market they enter. The best bit? This can all be done from your Australian headquarters, or anywhere.
Differentiate and gain control of your business
If you plan to deal with different suppliers, distributors, retailers or wholesalers in Asia, or even anywhere else in the world, you can dictate the system they need to use to operate with you effectively. Simply replicate all core business components for whichever partner you forge a relationship with and they can be up and running with that system in real-time and at the same time. This will give you a key differentiator, not to mention so much power and control back to your business.
Traditionally, businesses have been doing this by fax, email, Excel spreadsheets and by giving people access to separate instances of applications in different countries. Others relied on integrating with suppliers, manufacturers or distributors’ systems in some other format. This causes delays to gather, enter and collate information, to get a real view of what’s happening in the business. It also results in heavier costs most businesses are looking to strip out to increase competitiveness.
SMEs given fresh opportunities
The most exciting news for SMEs is that these business management systems have in the past been in the realms of massive global companies that spend tens of millions of dollars. Cloud computing now gives all businesses this opportunity to build a more robust business at a fraction of the cost of on-premise software systems.
Managed and hosted by a cloud provider, a cloud application is built to service companies with one to 100,000 employees. You only pay for number of users on a subscription basis. The result: enterprise level functionality without the IT overhead.
While avoiding upfront capital investments is a key driver, many SMEs prefer the flexibility of IT use from the cloud without having to depend on internal IT resources. In addition, SMEs don’t need to worry about upgrade hassle, version lock and high maintenance costs. This delivery model offers fast implementation, easy configuration, flexibility, security, automated upgrades, customisation automatically carried forward to new versions, scheduled data backup, as well as the ability to gain access from anywhere using a web browser or mobile device.
It enables you to focus on expanding beyond Australian borders with the support of enterprise level functionality, but without much of the hassle and costs involved.
At a minimum, if you’re going to be a part of a global growth story, you need to look beyond Australian shores for opportunities to expand your business. You will also need to pick the best technology to enable you to do that – a solution that for most will inevitably be cloud computing.