Asprova, Japanese developer of production scheduler/advanced planning and scheduling (APS) solutions, is eager to break into the US market. The company is curious, however, and perhaps a bit puzzled by the fact that there seems to be hesitation in the US market about buying Japanese-made software. Considering the popularity of Japanese-made consumer electronics and computer accessories, (in 2007, the US imported from Japan $5.4 billion in computer accessories, and a total of $14.4 billion in various consumer electronics), this does seem rather surprising. The US also recognizes the high quality of Japan’s electrical and electronic equipment.

So, what’s causing this hesitation? Or is there even any hesitation on the part of consumers—is it simply that they’re unaware of the Japanese-made solutions that are already available? Does the apparent lack of success thus far have to do with other less visible or obvious factors?

Below are some hypotheses for the difficulties Japanese enterprise software vendors have been experiencing as they try to enter the lucrative US enterprise software market.

1. The traditional/historic process of software development in Japan may have hindered entry into the US market over the past decade or two.

• The two countries have different business practices: developers in Japan have traditionally been more team-oriented (or, as one of my colleagues remarked, “In Japan, employees work like an ameba [or a multicellular organism], not a part”), which may slow the development cycle as a greater number of approvals may have been needed to get a software program to completion. In an industry in which product obsolence—read: necessity for upgrades and new development—is arguably faster than in others, software products need to enter the market as soon as possible to be competitive.
• The two countries have different standards: developers in Japan are reputed to be more perfectionist. This may be good for quality, but also contributes to a slower development cycle. See the above point about obsolence; software applications should hit the market as soon as they have reached a reasonable level of maturity, rather than be tested again tested again to the point where the market is already clamoring for the next or upgraded product.
• Japanese computer manufacturers “bundle[d] software programs with their machines, making it difficult for independent software makers to compete” (see above link), and often customized their programs/applications for their large, corporate buyers.

2. Many companies in Japan operate on a particular system or model of distribution called keiretsu that includes banks, manufacturers, distributors, and the Japanese government. The business affiliations of the keirestsu conglomerate affect how Japanese companies enter markets in various industries within Japan, and may influence their thinking about entering foreign markets.

• The fact that industries and companies are controlled centrally may inhibit companies from migrating abroad; stockholders may not want to risk expanding to other markets.

• Companies not affiliated with the keiretsu (i.e. smaller companies) would not have the financial leverage to attempt expanding to the US market. Non-keiretsu companies do not have direct associations with the larger or more profitable banks/lenders in Japan, and would perhaps not receive as much credit to enable them to research and develop either products or plans for global expansion.

• Japanese software companies familiar with the keiretsu system may not know how to develop long-term relationships with suppliers in the US, which do not have an analogous system/method of distribution.

• Small to midsize businesses in Japan may not be a part of the keiretsu system, and so might be excluded from lucrative export markets… (i.e. Japan traditionally was much less involved that the US in venture capitalism; again, funding or credit would not have been—and may still not be—available to small Japanese companies, making it difficult for them to expand abroad).

3. Computer software engineering originated in the US (as a side note, several women were key to early software programming), with the single-byte character set (SBCS; one byte is used for each graphic character). Many computer programs and operating systems were already built and perfected while the double-byte character set (DBCS), typically used for programs in Asian languages such as Japanese, was still being developed. So as new software—and new hardware—was developed and entered markets, double-byte software was already behind demand.

4. This next reason is of the snake-chasing-its-own-tail/vicious-circle variety, but it’s arguably still valid: there simply aren’t very many Japanese-made enterprise software applications currently available in the US. If applications aren’t there, then consumers or users can’t buy ’em. A few do have a presence, though:

• FlexProcess, by NEC
• Glovia, by Fujitsu
• and of course Asprova APS, by Asprova…

Though these companies do have many satisfied customers in the Americas including the US, the prevalence of solutions from SAP, Oracle, and other giant multinational providers may eclipse them.

5. Localization, localization, localization! This has to do with many things, including making the software suitable for the client’s business environment, language, etc., and ensuring that all marketing materials are in the language of the target market, and appeal to it on a number of levels—not just that of the software’s technical/functional ability. And, having an office in the country in which you want to do business can’t hurt, either—with employees that speak the local language… (but doesn’t that go without saying?)

6. The patriotism of the majority of Americans could be at the root of their reluctance to seek and buy Japanese-made software. True—consumer electronics from Japan are popular in the US; but how about cars made by Honda or
Toyota? Perhaps it simply boils down to the fact that Americans will buy products from another country if those products aren’t from an industry that is perceived to be keeping their own economy going. (Or, that used to be keeping their economy going—ouch! Recent stats actually show that Toyota sales are making gains, while GM and the others are slipping…)

But all that being said, Asprova seems to be covering all its bases and doing what it should to become established in the US. The company:

• recently signed a contract with NEC Corporation of America, which “intends to expand the promotion of sales of Asprova APS in the USA, Canada, and Mexico”
• has 4 other Japanese-related (NEC began in Japan) distributors “and 2 local ones with which to strategically cover the whole of America”, including PMC (with several locations across the US and one in Windsor, Ontario, Canada)
• has middleware partnerships with SAP (NetWeaver), IBM (Universal DataBase and Websphere), and is looking for a similar partnership with a manufacturing execution system (MES) provider
• is available in English, as well as 8 other languages
• has won awards in Japan and the UK for its software
• highlights its adherence to lean manufacturing principles, which have been adopted by many US manufacturers (and which most ERP software solutions seem to offer, these days)
• has a high share of the APS market in Japan (54.4%, according to the site above), which demonstrates that the solution meets the needs of Japanese manufacturers

Things Asprova might aim to do (as well as other software vendors based in Japan…):

• acquire more local, rather than Japanese-related distributors
• establish an office in a major American city (not just a reseller partnership office), with managers who understand the US market and US style of management, etc.
• ensure that either the local distributors or the company itself (once it has a permanent office in the US) provide direct / localized service and support to clients, including implementation
• provide a case study of how its solution helped a US client (currently, the case studies are for Mexican and Japanese clients… which is a good start, but might not be enough for potential clients who are either patriotic or nervous about various aspects of localization)

What do you think? Why is enterprise software made in Japan not selling well in the US? And is there something else Asprova could be doing to improve its chances, or it is just a matter of time before it builds up a solid US client base?

References and other sources: http://www.innovationwatch.com/enterpriseecology/books/bks_0070425833.htm

http://www.questia.com/googleScholar.qst;jsessionid=JQhG7Ffy1WS20T2pRqRhLryBX0nhcNLTPRJJbHC9Dvdt6txqSBL8!1304031172?docId=5001415390

http://www.littoralis.info/iom/secure/assets/2000050115.pdf

http://findarticles.com/p/articles/mi_qa3674/is_200010/ai_n8909859/pg_2?tag=artBody;col1

http://en.wikipedia.org/wiki/Keiretsu

http://www.asprova.com/en/case/file/NECAmerica.pdf

http://www.japaninc.com/cpj/magazine/issues/1998/mar98/ohsuga.html