The Newbury, Berkshire-based software house Micro Focus Plc has been making favourable impressions in City circles lately because of its exceedingly strong interim results which saw pre-tax profits rise by 299% (CI No 1,263). Around 41% of its revenue comes from OEM customers, a business that is masterminded by the company’s Computer Industry division. A new president, Paul Adams, has recently been appointed to head this division. This is a noteworthy event because Adams’ particular expertise lies in the forging of a Micro Focus identity in Japan where 20% of the company’s OEM business is now conducted. The penetration of the Japanese market is something that sets Micro Focus apart from other UK software houses, and is a key factor in terms of the company’s further growth. Entering this market was not easy, not least initially because of prejudice on behalf of the UK’s Computer Services Association which invited a delegation of Japanese businessmen to tour English manufacturing and software houses in 1978, but refused to recognise Micro Focus as a legitimate stop for the tour because of its product (rather than service)-based business. Undaunted, Adams, in his role as international sales manager went direct to the Japanese Embassy to get Micro Focus included on the delegates’ tour. Eventually a visit was scheduled for a Bank Holiday Monday and the company was able to make personal contacts with people from companies such as Fujitsu Ltd and Toshiba Corp. Consequently, Micro Focus was invited to Japan to exhibit at a show for computer-aided manufacture. By 1983 theP/roundwork had been laid for the establishment of Micro Focus Japan Ltd in Tokyo which was set up as a joint venture with the software distributor Microsoftware Associates. The subsidiary became 100%-owned by Micro Focus in 1985 with Adams as its president. Adams knows from first hand experience that it is not easy to penetrate the Japanese market and that difficulties such as the language barrier must be overcome. He maintains that British companies will never succ-essfully enter this market if they are half-hearted about their attempts to do so. First and foremost comp-anies need to ensure that they offer the Japanese a natural user interface – not a Japanese version that reads as badly as many of the English manuals that accompany Japanese products in the West. Secondly the calibre of packaging and documentation is crucial to a product’s reception in Japan, much more so than is the case in Britain. Thirdly, the product will need to be adapted integrally for Japanese requirements. For example, Micro Focus had to extend the Cobol language to provide data types for Japanese data handling through a multi-byte character set. This was done in collaboration with Mitsubishi Electric Corp, Hitachi Ltd, Microsoft Corp and Digital Reserach Inc to produce the JIS standard. Micro Focus then modified its compiler to represent this standard as well as ensuring that the compiler was consistent with Japanese Cobol standards. The resulting Japanese product has the same source code as the rest of Micro Focus’ compilers and constitutes a compatible superset of the company’s basic product. According to Adams this approach, without the need either for retro-enhancing or for the development of two separate products, is crucial to success in Japan since the continuity of a language between new and old products is very important to the Japanese who will not tolerate differences in new versions. Consequently a company that tried to keep European and Japanese products separate would run into upgrading difficulties sooner or later, says Adams.
75% of the Japanese Cobol market
Micro Focus itself has only a relatively short lead time of six months between launching a product in the West and its appearance as a Japanese product. Another consideration a UK company has to make when looking at Japan is the precise nature of the niche it wants in the Japanese market. Micro Focus was fortunate when it set up a Japanese operation that its main competitors were Fujitsu and Hitachi, who wer
e running compilers on proprietary hardware. Micro Focus was thus able to push open systems architecture so that its product was sold via the idea that it enabled these Japanese giants access to other manufacturers’ market places. Six years later and Micro Focus has 75% of the Japanese microprocessor market for Cobol compilers. It also has high hopes that Unix will open up the minicomputer and mainframe markets for Cobol compilers in Japan. In all Adams is adamant that any British software company looking to be an international player must look seriously at setting up a subsidiary in Japan. Certainly Micro Focus sees its Japanese activities as a market entry point for the expanding Far East information technology boom and as a necessary part of the dynamo for its own corporate growth. Furthermore, it is keen to publicise the view that there is plenty of room for small British companies with a reputation for quality in the Japanese software tools arena. Those envious of Micro Focus’ interims should take note.
