05/26/2008

Software Internationalization and Localization – How to Break Through Barriers and Frontiers

By Ernani Ferrari

While around one third of the global consumer market is in the United States, over three quarters of the software used around the world is produced in America. However, development centers are getting stronger in countries such as Ireland, Israel and the Philippines, while the BRIC emerging countries (Brazil, Russia, India and China) promise to become future powerhouses. To further complicate the international scenario, the Internet allows consumers and vendors to contact one another regardless of geographical frontiers.

This current reality means that for software vendors, particularly those in the fields of enterprise software and similar transactional products, globalization continues to expand. Regardless of direction, globalization has made the internationalization of products and processes a medium- and long-term requirement.

In practicality, there are two reasons behind the internationalization of software companies: the first is proactive, for business growth; the second is reactive, for protecting the acquired market share. The proactive aspect aims at taking and offering solutions to new markets to promote the growth of revenue and customer base. The reactive aspect is related to the obvious entrance of multinational companies in the battlefield to fight for the same accounts and to the not-so-obvious fact that current clients are also growing, merging or being devoured by the competition. In either of these situations, clients are increasingly becoming globalized and, consequently, set on a path of no return that will require internationalized solutions. Regardless of their intention, software companies do have internationalization and localizations as growth options, though, for many, internationalization will become a necessary condition for survival.

Internationalization can be a move based on opportunity or strategy. Unfortunately, most times it is, and remains for some time afterward, a move based solely on opportunity. Companies take advantage of a client who is establishing business in another country and “localize” their product or, worse, accept invitations from potential “distributors” from any market, many times organizations without the minimum required structure, who have seen their own previous business fail and who have little or no credibility to establish another line of business locally. In this context, few attempts are successful, only those of companies that review their strategies and plan for the international initiative, within a broader context of business and organization.

Acting on opportunity is the “long short path”: short because actions are taken swiftly and prematurely; long because those actions tend to be ineffective, because results are slow to come, when they come, and because investments seem endless and deadlines are never met. On the other hand, a strategic and planned approach can be like a “short long path”: long because deep analysis is performed, detailed strategies are put together and tactics are articulated, and sometimes years go by in the process; short because investments are reduced once costs are minimized by synergy with other measures, and because deadlines are met, execution is swift, surprises are minimal, customers are soon satisfied and the results consistently appear.

Methodical and adequate planning for the internationalization and localization of software products and processes offers numerous benefits, such as:

• reduction of time-to-market;
• reduction of costs from trial-and-error approaches and adaptation processes;
• increased adherence of products to markets;
• reduction of risk and liabilities;
• preparation for more rapid and adequate responses to the market;
• optimization of investments through better directions and anticipation of needs;
• tax optimization.

If internationalization can be defined as the “adaptation of products and processes for application to international environments and for simplification of localization,” localization is the “adaptation of products and processes for a specific market (country).” The process of the internationalization of a company should encompass not only its products but also its organization, processes and culture. Its main requirements include:

• the understanding of methodological, technical, organizational and market aspects that support productivity and quality at international levels;
• the knowledge of local and foreign competition, supporting the definition of strategies for the evolution of the company’s processes, products and services;
• the conception of structured business strategies and tactics; and
• the qualification of the professionals at the management and operational levels, from the several involved areas within a company.

Choosing target markets should be a careful activity, and special attention must be paid to the long-term perspectives. A failed entrance into a market (country or region) may represent closed doors for many years or a level of investment for a new attempt far higher than what would be required for a successful approach the first time around. 

Entering a new country is no different than entering any market. It demands products, brands, distribution channels and services. As the use of distribution channels is a typical way to expedite the availability of these components, it should be noted that:

• although authority will be delegated to a partner (distributor or representative), the software provider will always be responsible for market presence since its name and image will be at stake, even if the distribution channel were to be replaced at any given time;  
• planning and analysis for an eventual cancellation of a distribution agreement should be carried out prior to signing the contracts, forcing an understanding of the terms and the short- and long-term implications for both parties;
• in the case of partnerships, the history of success is not encouraging. Detailed analysis and a structured process for the definition and implementation of both the new operation and the new relationship are necessary. Studies show that 75% of partnerships do not work out, and my own experience show numbers above 90% when partnerships involve software applications on both sides. 

Target-market selection in an internationalization process is supported by some facilitators, such as natural paths to expansion due to the strategic importance of each country, attractiveness of markets, SWAT analysis data (strengths and weaknesses, opportunities and threats), and synergy between countries in relation to products, organization, customers and complementary products. During this process, a company will naturally manifest its desires for expansion but should also prepare for the demand for expansion which may come from clients that are establishing operations in other countries and also from potential clients that will only be attracted to companies that provide solutions to the multiple markets in which they are already established.

Even though it is not necessarily the greatest consumer of investments, the internationalization of software products typically spearheads a company’s entire process for internationalization. It requires efforts and resources for the following:

• to evaluate existing solutions (potential competition);
• to comply with target-market requirements;
• to evaluate how the technologies utilized are seen by the market, when necessary;
• to adapt product functionality to common international characteristics and to provide flexibility for adaptations and reconfigurations;
• to make available technical and functional architectures that enable localizations, customizations and support to multiple languages; and
• to provide functional, technical and process documentation.

Internationalization of processes, on the other hand, should essentially address strategic processes such as planning, marketing and product management and operational processes such as sales, channel management, product development, services and customer support.
Similarly, localizations require much more than the translation of applications. Products, processes and documentation need to be adapted to address local business practices, legal requirements and aspects related to the local culture and infrastructure.
Internationalizing a company and localizing products and processes clearly require much more than the creation of an “international department.” They do, however, have their advantages, including, in some cases, survival.  

Chief consultant and founder of Mondo Strategies (www.mondostrategies.com), Ernani Ferrari has almost twenty years of experience with internationalization and localizations. He has helped some of the largest global enterprise software companies, worked in every continent and distributed software applications to seventy-six countries in twenty-six languages.

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