I have been thinking recently about how the development and more importantly commercialisation of software in the Australian market has changed in recent years. I have been fortunate enough to spend most of my career working for organisations that have developed software solutions with a view of commercialising them and taking them to market. Some of these products have been very successful and a couple that really havn't amounted to much. I firmly believe that a key success factor (or failure in the case of the not so successful products) has been the market reach of the product and hence the potential customer base. Now I guess this really isn't rocket science and it is pretty obvious when stated simply. In order to succeed with any product (software or otherwise) there needs to be a clear strategy of how to best reach the market and there needs to be a potential customer base large enough to justify investing in the product.
Now I also believe that here in lied the primary challenge for Australian software companies of the past (ie 2-3+ years ago). For an Australian company the potential target market used to pretty much be Australia. As little as a few years ago the reality was that for a small company that wanted to develop software in Australia the market was pretty much 20 million people (the population of Australia). For companies based in the Europe or America the market was much larger (American Population ~295 million people). So what does this mean? Well for a software company building a very niche product the market in Australia is probably pretty small. Whereas American and UK software companies have a much larger audience for niche products simply due to their populations. The reality was that unless you had some significant backing (ie $$$) it was very difficult to promote, sell, distribute, and support software overseas.
A good example of this is ISW's Address-IT software suite. Address-IT was developed specifically for the Australian market to barcode mail as part of the Australia Post AMAS program. We have been pretty successful with the product over the last 7 or 8 years it has been in the market. We have a good client base that is continuing to grow and the product provides a good return for the investment made. In real terms the product employs 3-4 people and has enabled us to invest further in our software business. We are pretty proud of what we have acheived with the product. The reality is though that the product is only designed for the Australian market and hence the potential growth into the future is limited.
Now as a comparison, ISW partners with a company in the US (based in Seattle), Satori Software. Satori develops a product called Mail Room Toolkit. The product is essentially the same as Address-IT in that it enables American companies to barcode their mail under the equivalent American postal programs. Now Satori have also been pretty successful with what is pretty much the same niche software product (there are a few differences but the underlying purpose of the products are the same). The difference is off course is that their product is aimed at the American market (295 million people). So their potential customer base is simply huge compared to that of Address-IT. As a result Satori now employ something like 85 people and are focused primarily on this one product!! That is a pretty amazing difference to Address-IT and makes our success look humble in comparison.
There are of course may be a number of difference but I am pretty sure the market size is the key factor here differing the growth of two products.
So what is the point of all of this. Well the natural extension of this is that if Australian software companies want to grow to significant businesses they really needs to have a broader focus than just the Australian market. The great thing is that the world has changed even just in the last few years. I believe that the internet phenonemon has truely taken hold and companies are in no way restricted by their geographic locations. Google, Yahoo , etc....Web Conferences, Web Demos, VOIP, and real time collaboration over the net have enabled us to reach these remote locations like they are down the road. Sure you may need to get up at 2am for the occasional meeting but I am happy to sleep in after those meetings. Companies, and more importantly the people making the buying decisions understand now that geographic location isn't really a big deal. Small IT companies have had true world wide success with niche products. Companies all around the world now have the entire world as their potential market without having to spend heaps of $$$ to do so. Setup a good web presence and off you go.
ISW has invested a lot of time and effort into ensuring the products that we are now taking to market have broader market reach and potential. We are pretty excited about a few of our products such as IVR-Xpress Visual builder (we have sold more licenses overseas than we have in Australia and fully expect this trend to continue and grow). Our IBM Lotus Notes & Domino products such as Workflow-Xpress and BusinessWorks have a potential audience of 125 million users around the world and thru clever use of google etc we have successfully penetrated both the American and European markets as well off course the Australian market.
I believe that an important factor in successful software development is that software isn't all about the code. The greatest code in the world won't alone make for a successful product. I might chat about that next. If anyone has want to comment what they think are the keys to commercialising software around the world I would be keen to hear from you.
Wednesday, September 20, 2006 at 12:58PM 