Tokyo (SCCIJ) – The small software operator and consultancy ITPC from Zurich, Switzerland, has dared to venture into the Japanese market despite its own small size and a lack of Japan experience. But with local expertise and some support by the Swiss Business Hub Japan, a partner of Switzerland Global Enterprise (S-GE), ITPC has managed to set up the joint venture Value Consulting Services Ltd. and to be certified by Microsoft Japan. It is now working on establishing a solid customer base. The strengths of ITPC reside in SAP technology consulting, SAP on Cloud, as well as the operation and hosting of SAP system landscapes.
Global footprint with 40 people
ITPC was founded in 2006 and has a fully owned subsidiary in India since 2010, a branch in Great Britain since 2015 and employs over 40 staff who are working together with trusted partners selectively on a project-by-project basis. One long-term customer in Switzerland is Japan Tobacco International (JTI), the international arm of Japan Tobacco (JT) headquartered in Geneva, Switzerland.
The Japanese were impressed by the efficiency of ITPC services and invited its founder and Chief Executive Officer, Vincenzo Boesch, to Japan. During his visit to Tokyo, the Swiss met the Japanese software consultant Harumi Shibata who was also working for Japan Tobacco. The two men went along very well and decided to bring the ITPC business model to Japan. “We felt like we had a similar background and that we get along very well,” says Boesch.
Joint venture as market entry solution
On several trips to Japan, Boesch and Shibata developed different scenarios how to proceed. Supported by the Swiss Business Hub Japan, the two business men talked to several market participants. Boesch knew from the start that he would not be able to enter the Japanese market by himself. “It is important to have a Japanese partner who knows the habits and the rules of the markets and how to deal with market participants. I should not assume to convert a deal in Japan as a Swiss. If I have this expectation, it will be difficult,” he says.
So in April 2016, the joint venture Value Consulting Services was founded. Boesch chose this form of co-operation because the venture partner also takes responsibility and builds up ownership. The legal process to the joint venture was not more complicated than in Switzerland but two very different contract cultures had to be bridged. “You have to have someone who comprehends our Swiss and the Japanese mindsets so that both can be accounted for,” he explains. A German lawyer in Japan who knows Swiss as well as Japanese law was able to remedy this situation.
Fast growing cloud-based software services
The basis for a good sales start exists: The Japanese cloud market has seen fast growth as a result of a developing infrastructure and a growing awareness for this new service, most recently by a rate of 30 percent in 2015. According to Euromonitor, demand will continue to grow as more and more Japanese small and medium enterprises are changing to cloud-based services to reduce costs. But despite high demand, it is not easy to find new customers in Japan as a small venture.
Japanese companies demand Japanese reference customers. Fortunately, ITPC already has two big Japanese customers outside of Japan which can be used for reference purposes: One is JTI in Geneva, the other Bridgestone India. To further improve its market entry chances, ITPC used its close relation to Microsoft in the area of cloud services.
Cooperation with Microsoft Japan
Microsoft Japan was interested in a cooperation because cloud-based software platforms (iPaaS) are still in a nascent phase in Japan, so Microsoft welcomes any competent partner promoting this service. Thus, Value Consulting Services signed a partnership deal with Microsoft Japan and is now a certified cloud solution provider. Microsoft will refer customers in Japan who want to migrate SAP to its cloud-based service Azure to the ITPC joint venture.
ITPC AG and Value Consulting Services are now working on obtaining additional certifications for SAP and Microsoft services because these are important in the Japanese market. Boesch and his Japanese partner are visiting potential customers. “I am convinced that the first customers will come in the next six to twelve months,” says Boesch. He is already thinking about the next step in his vision to establish SAP on Cloud in Japan – to learn about the expectations of Japanese customers and then gradually expand the local employees of the joint venture.
Text: Martin Fritz for SCCIJ based on an article produced by the Swiss Business Hub Japan for the German magazine Japanmarkt March/April 2017; Photo: ITPC