Moving to Cloud ERP is a critical factor for successful internationalisation of local businesses
SYDNEY—September 29, 2016—Frost & Sullivan research commissioned by NetSuite Inc. (NYSE: N), the industry's leading provider of cloud financials / ERP and omnichannel commerce software suites, has revealed that companies in Australia are not yet capitalising on international expansion opportunities that have been made possible through cloud technology. The Frost & Sullivan study of more than 800 senior executives (CEOs, CFOs and Finance Managers, CIOs and other senior managers) from across Australia, Hong Kong, New Zealand, the Philippines and Singapore was carried out to understand how business confidence in exploring international opportunities is changing to keep pace with industry demand and how cloud technology plays a role in global expansion. The study found that companies using cloud computing are far more likely to have capitalised on international business opportunities than those that are still primarily using on-premise systems.
According to the research, 61 percent of Australian businesses currently operate domestically only. This contrasts sharply with businesses in Hong Kong and Singapore, where only 30 percent and 42 percent of businesses respectively are domestic only. Additionally, just 28 percent of Australian businesses are planning to enter additional overseas markets in the next five years, according to the research.
The findings also showed that overseas expansion is viewed as a primary growth engine for businesses in Singapore and Hong Kong (average of 70 percent), yet not for Australian companies (55 percent). Conversely, almost one fifth of Australian companies (19 percent) perceive globalisation to be a threat to their business.
“The last few years have seen a concerted effort by the Australian government to encourage international expansion, including the creation of several Free Trade Agreements, so it’s surprising to see that Australian businesses are not responding to this opportunity more enthusiastically. With other markets in Asia pursuing globalisation aggressively, Australia is in danger of falling behind,” said Mark Dougan, Managing Director for Australia and New Zealand at Frost & Sullivan. “Australian businesses need to look beyond the obvious barriers of distance and complexity, and find enabling technologies like cloud which will enable them to start taking advantage of the possibilities that internationalisation offers.”
Cloud Adoption Plays Key Role in Internationalisation
Frost & Sullivan believes that there is a strong relationship between the use of the cloud to access IT resources and the degree to which a business is internationalised. According to the research, 70 percent of organisations that currently use the cloud are internationalised, compared to only 22 percent of non-cloud users. Furthermore, 71 percent of cloud users have entered new geographic markets in the past five years, compared to only 31 percent of non-cloud users. Lower operating costs are seen as a major benefit of deploying cloud solutions in internationalisation.
Mark Dougan added, “The research shows a clear linkage, by a factor of three, between companies using cloud–based software, and becoming international. Leveraging a cloud based business platform is a good place for all businesses to start when considering how to tackle overseas expansion.”
Lee Thompson, SVP, APJ at NetSuite commented: “Many of our Australian customers have used NetSuite OneWorld as their ERP platform for international growth. NetSuite OneWorld can allow you to navigate the complexity of doing business globally without the usual barriers to entry. Numerous customers have built global success on the back of our platform, and have been surprised by how seamless the process can be.”
Enabling the ‘Born Global Business’
The survey also shows how the rapidly evolving business environment has paved the way for ’born global’ businesses to emerge. These businesses have successfully internationalised, leapfrogging the traditional expansion stages and entering overseas markets at an extremely early stage of development.
“One distinctive feature of these businesses is their ability to leverage IT solutions and platforms to quickly scale their business into overseas markets. They typically undertake critical business functions such as accounting, order processing, taxation and statutory reporting using cloud-based software that is already adapted for international markets, instead of the earlier generation of on-premises software, which requires substantial and costly enhancements to support overseas operations,” concluded Mark Dougan, Managing Director for Australia and New Zealand at Frost & Sullivan.
A more detailed analysis of the research can be found in the Frost and Sullivan white paper: “The Born Global Business.”
In 1998, NetSuite pioneered the Cloud Computing revolution, establishing the world’s first company dedicated to delivering business applications over the Internet. Today, NetSuite provides a suite of cloud-based financials / Enterprise Resource Planning (ERP) and omnichannel commerce software that runs the business of more than 30,000 companies, organisations, and subsidiaries in more than 100 countries.
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1Cloud users are defined as businesses that currently access most of their main business management software over the cloud