A few years ago at a European conference discussing how to stimulate the growth of the region's own indigenous cloud ventures, I had an epiphany. All the talk about pump-priming infrastructure and standardization to build the next Google or Amazon was missing the point. Language was the key problem. The one thing stopping European cloud ventures from growing as fast and as big as their US peers is that, each time they reach the limits of a national border, they have to start over.
In a world where success is determined by how many customers you can reach with your online presence, businesses that don't operate in English as their primary language are at an instant disadvantage (the one up-and-coming exception to that global rule being those who operate in Chinese). Businesses that operate in multiple languages are even more disadvantaged, because every major web platform has been developed for the English-language web and is therefore built on the assumption of operating in a single primary language.
My epiphany was this: if the European Commission really wanted to see home-grown cloud ventures succeed, it should forget about trying to nurture the next search engine, e-commerce marketplace or cloud computing giant. To unleash the full potential of European digital ventures, it simply needs to encourage development of a truly multi-lingual, open-source platform for building business web sites. One that makes it as easy as possible to establish an online business that trades in multiple languages, currencies and business rules so that it can sell to a $20-trillion economy across Europe — just as easy as it already is to set up anywhere in the US and instantly sell to the same size of economy using a single language, currency and business regime.
When US companies come to Europe
The disadvantages for home-grown European ventures are compounded when they face competition from mature US businesses, already prosperous from success in their huge contiguous domestic market, once they arrive in Europe. The only saving grace is that Americans, unfamiliar with the byzantine complexity of doing business in a continent made up of many different nations, routinely underestimate the scale of the European challenge, and thus under-resource their own expansion plans.
Take NetSuite, a 20-year-old cloud ERP vendor from Silicon Valley that has been working to expand its presence in Europe ever since it first launched in the UK in 2003. That early start enabled the company to build a decent presence in the UK, but progress elsewhere had been slow until its acquisition by software giant Oracle two years ago. When I spoke to its then EMEA chief in late 2015, the company had just opened its first European data centers, and planned to build up local staffing in Benelux, Nordics and the German-speaking DACH countries (Germany, Austria and Switzerland). But as a publicly-listed company since its IPO at the end of 2007, progress was constrained by available finance.
Once Oracle had closed its acquisition of NetSuite in late 2016, those constraints lifted. The larger company already had a presence across Europe and plenty of funds to accelerate building up localized product and customer support. NetSuite now has a physical presence in 15 countries across Europe — not just a sales team, but the full works, explains VP EMEA Nicky Tozer:
In all of those countries, we haven't just put salespeople there, we've put in a whole business unit. We've got sales people, we've got marketing people, we've got solutions consultants and implementation consultants to help customers evaluate and implement in their own language — so that it's the whole ecosystem.
NetSuite's growth in EMEA
This has helped underpin NetSuite's growth in EMEA, although the hotspots don't necessarily match to where the company has feet on the ground. As with any cloud software vendor, customers can sign up for its products wherever they're based. Combine with this the many businesses that take advantage of NetSuite's support for multi-country operation, and the vendor already claims a user base that stretches across 212 countries and territories worldwide. More than half of those fall in the EMEA region.
France and Germany have been posting strong growth that coincides with the addition of new in-country resources. But that's not necessarily true elsewhere in Western Europe, where NetSuite has expanded its presence in the Nordics, Benelux, and Spain, Portugal and Italy. While these countries are showing growth, the more noticeable surge has been further afield, says Tozer, with bright spots in Israel, Dubai, and parts of Africa, where NetSuite's mobile functionality plays well. But these newer markets, supported from the region's call centers in Dubai and Dublin, are growing from a much lower base.
The key to really penetrating a market is establishing that local presence in each individual country. NetSuite is now doing that in fifteen countries, and is starting to see the benefits. But there are 103 more across EMEA that it sells into without yet having a full in-country presence. That's the enormity of the challenge in truly conquering the EMEA region.
The irony is that US companies like NetSuite — especially now with the backing of Oracle — are much better placed to step up to the EMEA challenge, simply due to the resources they can command because their own domestic market is so massive.
And that universal, multi-lingual platform for building business websites? While it's not exactly what I had in mind, NetSuite's platform goes some way towards meeting the needs for e-commerce businesses. There are still some wrinkles to iron out — among last week's announcements at the company's annual SuiteWorld conference was the introduction of support for reimbursing employee expenses in their local currency rather than that of the company's headquarters. That struck me as functionality you'd have seen a lot earlier if the vendor had started out in the Nordics or central Europe, for example.
Nevertheless, NetSuite's progress to date shows that, while US companies have a hill to climb as they adjust to the realities of Europe's multi-country business landscape, the resources they can draw on help level the playing field. European rivals may understand the challenge better, but they face the same obstacles to growth at a much earlier stage in their lifecycle. For everyone, that makes Europe a much more fragmented market — especially in a field like business software where rules vary from country to country — than the similarly sized US market.