The MGS Blog

Tuesday, January 31, 2017

Symantec moves off-shore (case)

"The problem with success" thought Gordon Eubanks “is you need to keep changing the game to keep winning".
Gordon had achieved outstanding success in the software market in the US in a host of software product and utility categories (programming languages, antivirus, disk management and more). The company had developed in-house products and acquired competitors such that it was now the dominant supplier of these products in the US. What was left was the rest of the world; the question was how?

The Symantec board was meeting to review plans for the next stage in the company's expansion. Their strategy was to transform Symantec from being a national leader into the global brand for computer utilities and productivity applications. The corporate target was to reach sales revenues of over 100 million a quarter within three years. International sales already accounted for around 5 million dollars a quarter over the last financial year and its value was growing but not fast enough. International customers wanted software in their own languages, not just English. This meant localised versions with translated or enabled software interfaces AND help systems, user guides, packaging, marketing etc. It also meant that the software had to be tested on the types of computers and operating systems in use in those markets.

Some thought it odd that a company with its roots in LA and San Francisco had yet to produce a Spanish-language version of any of its products. But computing was a science and industry that had long neglected the needs of non-English language users. Gordon wasn't even sure if his products could be localised without more or less radical rewrites and redesign. Software with hard-coded strings and assumptions about character sets were embedded throughout most of the products. Then there was the Manufacturing challenge. The company was going to need boxed versions in German, French, Spanish, Italian, Swedish; they might even need to release a version of each product in UK English if the sales justified the cost or customers demanded it. And then there was ‘double byte’, the Asian markets Japan and China.

The company currently manufactures around 200 SKUs (stock-keeping units) for products in American English sold in the US and to the rest-of-world (ROW). With localised versions of all product lines they would end up with over 1,000 new SKUs to manage and maintain in the first year alone. Gordon considered his options; he could outsource manufacturing to 'turn–key' providers, manage the job 'in-house', or leave it to resellers and distributors to create localised versions and handle the manufacturing for each national market. The current reseller agreement with Softbank in Japan was just like that. Softbank did localisation and translation but it also got to keep most of the sales revenue. Japanese language versions of their products attracted a lucrative premium. OEM (original equipment manufacturer) deals with non-US PC manufacturers bundling 'lite' versions could also bring more money while at the same time reaching new customers who might then upgrade to 'full' versions or pay for monthly updates.

Should a single division be given responsibility for all language and manufacturing or should the work be farmed out to each national office? The problem with leaving it to resellers or country sales offices was one of quality control, marketing and message management. Can you imagine having one 'country version' translating the product name one way and another choosing to go with the English title? Should Symantec establish an international base and if so where? Gordon's erstwhile competitor Mitch Kapor, the creator of 'Lotus Notes' had established a software lab in Dublin, Ireland, but Israel and India also had growing software services and manufacturing sectors. Having a headquarters based inside the European Economic Community might avoid import tariffs if products were manufactured and had value added in Europe. There were also favourable corporate tax rates on profits in some countries.
Gordon pondered, “does success follow the money... or is it that money followed success?"



Why Ireland?
The Irish Development Agency (IDA) promotes Ireland as a 'pro-business' environment (www.idaireland.com - Investment Ireland). The IDA summarises the benefits of Ireland as follows:
  • a favourable tax regime,
  • a young and talented workforce,
  • a critical mass of relevant supporting industry and infrastructure,
  • a unique political and social commitment to supporting FDI and multinationals,
  • and excellent managerial talent.
The 2008-2012 Business Environment Ranking of the Economist Intelligence Unit placed Ireland 11th globally out of 82 countries.


Invest in Israel
Israel's Ministry of Industry, Trade and Labor (and http://www.investinisrael.gov.il/) promotes Israel as an investment destination based on the following criteria:
  • a positive business climate (access to venture capital, access to international markets),
  • an exceptional workforce (educated, entrepreneurial and multi-lingual),
  • investment incentives (grants, supports, structures)
Israel invests 4.5% of its GDP in R&D, which is the highest ratio of any country in the world (IMD World Competitiveness Yearbook 2008).


India: Why Maharashtra?
The Maharashtra Industrial Development Corporation (www.midcindia.org) - MIDC - of Maharashtra State (capital Mubai, regional centres Pune and others) claims the state as a proactive driver of inwards investment and support for entrepreneurs. It "continues to attract the largest quantum of investments, both domestic and foreign". Maharashtra's strengths include:
  • high literacy,
  • good infrastructure (power, ports, airports, rail, and road),
  • global players already based there,
  • access to an educated workforce,
  • surrounded by India's most prestigious universities and research institutes,
A joint survey of leading Indian States conducted by the World Bank along with the CII, found that Maharashtra has the best investment climate.