Dear SaaS providers, here are 4 key success factors for your expansion in SEA (TIA)

March 9th, 2017

Article originally published in TechInAsia

No one can deny it: Software as a service (SaaS) has revolutionized IT and still is. But the SaaS market in Europe and the US has reached a level of massive competition, and barriers to entry are getting lower. New entrants are emerging in every segment and want to embrace the potential of these mature markets.

Asia Pacific, however, is a region with huge growth. The SaaS market valuation in the region has increased from US$380 million in 2008 to US$4.3 billion in 2015 and is still expected to grow. It was predominantly the mature markets in Asia Pacific–Australia, New Zealand, Singapore, and South Korea–that contributed to this massive spurt.

However, in the next decade, the main opportunities for expansion will take place in the untapped, emerging markets such as Malaysia, Indonesia, Thailand, and the Philippines.

Here are four crucial pillars SaaS providers must build to successfully expand in the region. Some of these may sound obvious, yet you’d be surprised how many companies fail because they underestimated the importance of these guidelines.

The cityscape in Jakarta. Photo credit: leolintang / 123RF Stock Photo.

1. Have a solid, differentiated product

Sounds trivial, but this is essential. When I speak to a new SaaS startup owner, I often realize that their product is very similar to those already in the market. When I ask them how they differentiate from competitors, their reply is often filled with buzzwords, but have very little substance: “Oh, we’ve built a new proprietary disruptive technology that is faster, smarter, and cheaper…”

To win the right to play you must deliver a much better service or experience.

As an entrepreneur, you often learn the hard way that your amazing idea is a lot less appealing when it hits customers and market reality. How disruptive is your product? Tweaking what already exists won’t be good enough. To win the right to play you must deliver a much better service or experience.

Don’t get me wrong, amazing new disruptive companies do exist with efficient execution. However, increasing your market share in an already overcrowded market is capital-intensive and time-consuming; you might be dead before you get there.

2. Be specialized

Big SaaS players have already gone for the new gold rush in SEA. However, the type of service they provide can be used by any company regardless of sector. In other words, the need for services and platforms targeting specific industries is still not satisfied.

Some sectors such as real estate are booming in these countries, but very few tailor-fit solutions are available. Developing these for a smaller target segment can open untapped opportunities.

3. Go glocal

Experience acquired globally is important, but it is fundamental to adapt your solution to the local way of doing business. I am not only referring to language and legislation but also to processes and sales cycles that might differ from what you are used to.

Don’t assume your current best practices can be applied all over the region or else you could be facing significant headwinds.

4. Focus on service

This is an absolutely essential–yet often underestimated–success factor for your business in SEA. The North American “do-it-yourself” culture hasn’t reached the region yet–partially because of the low labor costs. Your customers will expect you to take care of them with extensive product education, customer support, and much more.

You might have read “Blue Ocean Strategy” by Kim and Mauborgne. It explains the art of finding untapped paths out of ordinary trends and behaviors. I believe that SEA will require a Blue Ocean Strategy from the US and European SaaS players for at least the next five years.

What is surprising is that many top Silicon Valley companies are not here yet.

The economic, cultural, and language diversity of SEA does create barriers to entry, but these could very well be your best opportunities.

Indonesia, Thailand, and Vietnam have a combined population of 450 million with double-digit GDP growth. By analyzing markets, you’ll see traditional players such as Microsoft, IBM, and other IT dinosaurs mixed with local players.

What is surprising is that many top Silicon Valley companies are not here yet.

Ok, I know it’s not that easy to land in chaotic Jakarta and start your journey. But, recognizing diverse challenges as opportunities may give you that competitive edge. So when looking at where to grow next, it might be time to think about your SEA Blue Ocean Strategy.

Written by
Serial entrepreneur with 20 years of experience. Core specialties include disruptive business ideas, start-up modeling, recruitment of growth team, sales and marketing strategy. Currently CEO at Galixo, Raphael previously co-founded a media group in Switzerland specialized in business and lifestyle. He scaled the brands through franchising in more than 20 key cities around the world. He also co-founded the leading web agency of Switzerland in the web 1.0 era, recognized as one of the most innovative. Raphael was awarded most promising entrepreneur of the new Millenium by Bilan magazine in Switzerland. Personal passion goes to Clean Tech. Currently working on feasibility study for a self-sufficient village. More to come... #savetheplanet