Internationalization Strategy of Quidgest´s ERP in the French Market

Transcription

A Work Project presented as part of the requirements for the Award of a Masters
Degree in Management from the Faculdade de Economia da Universidade Nova de
Lisboa.
IWP International Business – SME COMPETITIVENESS
Pedro Miguel Leão da Fonseca Duarte, #513
A Project carried out on the International Business course, under the supervision of:
Professor Sónia Dahab
and Professor Filipe Castro Soeiro
7 of January of 2011
Executive Summary
Software information management systems are a source of efficiency in terms of
time and costs savings nowadays for enterprises. Quidgest provides the solutions
adequate, for enterprises that are looking for performance improvement and want to
reach better results in the market. In addiction Quidgest went further, through
customized applications targeted to private and public sector, supported by high
qualified technical engineers, being indeed first mover of this kind of software
applications provider in Portugal. Therefore and given ambitious as a SME to expand
market boundaries, new markets are being targeted. I developed an Implementation Plan
towards France, where the conditions are favourable for Quidgest to be a successful
ERP vendor in the near future.1
Keywords:
Software information management system; Quidgest; ERP; International
Implementation Plan
1
Work Project was developed as a student of NOVA but does not mean these are necessarily the views of
NOVA-Lisbon School of Business and Economics.
Pedro Leão Duarte
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Table of Contents
Executive Summary.......................................................................................................... 2
Keywords: ..................................................................................................................... 2
Table of Contents ............................................................................................................. 3
Start written pages
Description of the firm ..................................................................................................... 4
Business Mission, Vision and Strategic objectives ...................................................... 5
Methodology..................................................................................................................... 6
Portuguese Market Attractiveness: Industry External Scanning ...................................... 7
Quidgest internal scanning ............................................................................................... 9
Criteria of Country Selection – France ........................................................................... 12
French ERP Industry External Scanning: Market Attractiveness .................................. 14
Factors of Quidgest Competitive Advantage in French Market ..................................... 16
Analysis of the Modes of Entry, Advantages and Disadvantage ................................... 18
Proposal of Implementation Plan ................................................................................... 20
4 M´s: Men, Money, Minute, Memos ........................................................................ 21
Conclusions .................................................................................................................... 23
Implementation plan recommendations: ERP applications in the French market...... 24
Figure II ...................................................................................................................... 24
Chronogram: main activities to be taken for the implementation plan ...................... 24
References ...................................................................................................................... 25
Appendices ..................................................................................................................... 26
Appendix 1: Quidgest value chain ............................................................................. 26
Appendix 2: Porter five forces for Portuguese ERP market ....................................... 26
Appendix 3: Industry map for Portuguese ERP market ............................................. 27
Appendix 4: ERP market size in Portugal, 2009 ........................................................ 27
Appendix 5: ERP application revenue estimate, 2006-2011 for European Market ... 27
Appendix 6: ERP application revenue growth rates by application segment, 20062011 ............................................................................................................................ 28
Appendix 7: Timeframe to generate and implement applications with/without Genio
.................................................................................................................................... 28
Appendix 8: Learning curve: Time needed by project manager/engineer to design
ERP applications ........................................................................................................ 28
Appendix 9: Potential Partners of Quidgest in the French market ............................. 28
Written pages 25
Additional Appendices ................................................................................................... 29
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Description of the firm
Quidgest is 100% Portuguese firm founded in 1988, a technological company in the IT2
sector, it focuses on designing and manufacturing ERP software management
information systems resulting on customized applications provided that go from Human
Resource Management until Accounting and Financial Management3, targeted to
enterprises and public administration. Quidgest also provides consultancy service in the
implementation of documentary management systems through partnership. Quidgest is
a SME with around 200 clients and 150 ranges of software applications. In 2007
registered 1.661.059 €4 turnover on the IT market, which represents less than 1%5 of the
market. Targeted to enterprise sector Quidgest has ERP6, an Enterprise Resource
Planning built for specific needs of each single client. It consists on a flexible tool that
can be parameterized in each project and easily integrated with other technologies
(Visual ++, C#, Java, several versions of Windows). Internationalization of Quidgest´s
ERP has been developed. It is already present in the European market (Spain, UK and
Lithuania) in Timor, and more recently it established a partnership with a German firm,
Manfred Raush GmbH7, aiming to develop new logistic software, Xybermotive8, to be
distributed in the international market mainly in Portugal and Germany. Besides ERP
applications, Quidgest provides software solutions systems towards public sector
(SI.GAP) which covers all needs of Public Administration and constitutes around
60%9 of total revenues. SINGAP´s internationalization process has been done towards
2
It is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical
information by a microelectronics-based combination of computing and telecommunications.
3
Consult appendix18.
4
Survey DPP 2007; Source: Informa D&B Portugal 2006/2007. Survey about Software sector and IT
services in Portugal. Work document Nº 4/2008
5
Consult apendix4 about Quidgest Portuguese ERP market share.
6
ERP is an information system that manages all resources available in a company. Is a co-operating
software that manages and co-ordinates much of a company´s resources, assets and activities. The system
includes orders, purchasing, assets, storage, vendor contacts, financials and human resources.
7
German technological corporate partner of Quidgest.
8
Efficiently manage suppliers’ production in the automobile sector.
9
Information provided by João Paulo, CEO of Quidgest, over the several meetings taken.
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Timor Public Administration and for Mozambique. Indeed was reinforced its presence
by designing and implementing a solution under the Program of Development of the
Maputo Municipality10.
The applications designed for clients are made on Genio, the star product, which
is an integrated developed system designed by Quidgest, responsible for enterprise and
public software systems manufacturing. It enables reduction of maintenance costs,
delivery time11 as well as development of complex solutions in permanent collaboration
with clients, instead of the actual paradigm on the market based on the statement: one
size-fits-all. Although Genio is an IT mechanism capable to design and create
applications by itself, requires technologies (Microsoft, Oracle, and IBM) to support it.
Quidgest has a multidisciplinary team with strong theoretical knowledge on
information systems, management and strategic planning, complemented by a technical
ability to evaluate and to purpose practical and efficient solutions. Quidgest by now has
a workforce of 85 employees12 coming from different areas such as engineering,
management, marketing and design, characterized by a multicultural place of learning
(workers from Poland, Greece and Spain).
Business Mission, Vision and Strategic objectives
Quidgest´s mission is to leave its mark on the technological revolution of our
time (open new ways, show the differences, do faster and better) and to make a
contribution for the society based on productive structures that are more
intelligent/rational in terms of how easy, simple and fast is for the user to deal with
software applications.
Quidgest´s vision is to become on the markets where operates a reference on
information management systems in the next 5 years. Become a company of excellence
10
Source: África 21.
It includes the order preparation, receipt of material and manufacturing lead time.
12
References: Quidgest website: www.quidgest.pt
11
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in this century, where it is a pleasure for employees to work for, focused on innovation
through investment made on R&D and partnerships established with Research Centers,
developing more efficient and of easier comprehension software engineering processes,
taking less time that enhance enterprises performance on the market. Focus on quality,
participation and development of its partner’s skills, not only selling the product
(software applications) but also hand on the technical know-how aiming to contribute
for better results and performances of its clients.
Quidgest´s strategic objective encompasses the goal of reaching a turnover of
approximately 4.9 million Euros in 2011, double employees every two years, increase
number of products 10% yearly and double weekly changes on Genio in one year
period13. Quidgest aims to guide their R&D on software engineer to design information
systems focused on the objectives of each single company; ensuring efficiency,
productivity and flexible systems of easy maintenance, capable to follow strategic
movements of the organizations.
Methodology
Work project elaboration made use of several sources of information. First of all
knowledge acquired by me, as a student of Masters in Management throughout the
several courses taken in the areas of logistic, operations management, marketing,
international trade, advanced negation and others more. Secondly information obtained
on the several meetings with the Quidgest senior partner, who was available to provide
specific information on the interviews taken. To convey reliable information along the
WP all the date are strongly fundament. It was in particular made use of CBI14 survey
for the French market analysis. The information about ERP Portuguese market was
13
Quidgest registered on 2007 turnover about 1.6 million Euros surpassing a bit the European average
growth which was around 10 a year% from 2005-2010. Assumption consists on a 15% GAGR of
Quidgest. In 2010 Quidgest reached a turnover about 2.45 million Euros with the assumption made.
14
Center for the Promotion of Imports from developing countries.
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found out on several IT magazines such as Semana Informatica and on a detailed survey
Estudo sobre o Sector de Software e Serviços Informáticos de Portugal by João Matoso
edited by Departamento de Prospectiva e Planeamento e Relações Internacionais.
Furthermore was provided important contribution/advices by the advisors Prof. Filipe
Soeiro and Prof. Sonia Dahab through presentation sessions and customize support,
helped to guide the WP in the right track.
Portuguese Market Attractiveness: Industry External Scanning
Portuguese IT market has grown over last years, reaching a CAGR15 of 12.83% in 2007
involving 4477 enterprises and 30.214 employees16. Boom of information technologies
dues to growing need of companies to better and more efficient manage their assets.
This scenario enables software information vendors increase their opportunities of
growth and to expand their range of products/services. The ERP market lies within the
IT market, targeted to the enterprise sector, providing a variety of software information
solutions for specific areas such as: CRM, Logistics and Asset Management, Supply
Chain and Human Resource, aiming to more efficiently manage and allocate
enterprises´ resources. ERP vendors produce and sell applications requested by clients,
based usually on technologies from software suppliers such as Microsoft, Oracle, IBM
and Visual ++17.
The industry is composed by several clients, ranging from SME to multinational
enterprises, either Portuguese or foreign from several sectors that seek for software
information systems to manage efficiently and digitally their activity/assets. Customers
bargaining power in this industry is relatively high given the range of software vendors
15
Compound Annual Growth Rate.
References Surveys: ESTUDO SOBRE O SECTOR DE SOFTWARE E SERVIÇOS
I.FORMÁTICOS EM PORTUGAL, Documento de Trabalho Nº 4/2008
17
To emphasize those suppliers can be at same time partners. To better understand where they are placed
in the industry, consult appendix3.
16
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they can choose, therefore differentiation of products is a key feature to be used by
software vendors in order to be more competitive in the market, either by low
maintenance services, quality of the technical support or by unique software that can be
easily integrated and fits what clients are looking for. Since charged price among
competitors is similar, client purchase decision will be defined by flexibility on the
applications provided to integrate processes, quality of the applications and technical
support, quickness to run applications, marketing issues and maintenance service costs.
In what concerns to software suppliers mentioned above, they provide the
software needed by ERP vendors to run the applications designed for their customers.
The dependence from a supplier increases somehow the bargaining power on the
upstream market thus affecting prices set up on the software information systems
bought by consumers. In the industry there are also institutions such as IDC18 and
Gartner that provide forecasts and information regarding to all market issues.
ERP market in 2007
ERP vendor
SAP
Oracle
Primavera
Quidgest
Meta 4
Turnover
50.845.680
42.964.788
7.103.000
1.661.059
1.281.586
-2.87%
-
18.89%
-
-
Growth rate
(2006/2007)
Figure I
Source: Informa D&B Portugal 2006/2007.
The vendors above represent 60% of ERP market, which means that ERP vendors fight
for their place in the market, through innovative applications adjusted to customers’
needs where price is indeed a consequence of quality incorporated on the products. In
IT sector having partners that somehow can leverage a company’s brand image is
18
IDC aims to help IT professionals, business executives and investment community to make fact-based
decisions on technology purchases and business strategy. It is the premier global provider of market
intelligence, advisory services as well conduct meetings for information, telecommunications and
consumer technology markets.
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important (Microsoft golden partner of Quidgest), since it conveys a message of quality
and reliability close the consumer. Therefore the product will be perceived as a good
one and so weighting in the consumer´s purchasing decision between one product and
the other.
Intensity of competition can be affected by some strategic barriers, for instance
if the government through administrative decision removed references, it meant that the
exclusivity of software supply would be given to a specific ERP vendor avoiding
competition in the among players. Besides this, from 1 January of 2011 on, billing
software has to be certified19 by DGCI20 which ensures quality on the software bought
by consumers as at the same time obligates ERP vendors to sell reliable software
applications according to legal requirements.
ERP price21 is defined by cost structure of the industry as well by specific and
unique features incorporated on the applications which will contribute to position the
product at higher standards. Consumers perceived quality on software systems and
therefore define their purchasing decisions. Nevertheless marketing issues, participation
in national and international trade fairs with huge visibility, and establishing sound
partnerships are key aspects that weight in the consumer´s purchasing decision as well.
Quidgest internal scanning
In ERP industry being innovative and unique on the set of products provided is a key
feature to be successful. Quidgest is a software information system vendor that seeks to
produce software applications customized to its clients. The main competitive
advantage of Quidgest is the capability of generating software automatically through
19
Portaria nº363/2010
Direccão Geral de Contribuições e Impostos.
21
On appendix1 is detailed represented the value chain of Quidgest.
20
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Genio22. It enables a great decrease on delivery time23 of end applications, sharing a
common programming language within the firm, automatic generation of prototypes,
reduction of maintenance costs and flexibility on software production that easily adapt
to customers own processes. In other words Genio builds and creates systems
immediately. The shorter time needed to design specific systems without errors than
their competitor is a key advantage. However in order to reach these results, a great
effort on R&D24 has been done by Quidgest staff, who work daily on several areas
trying to develop ways to improve their products, always taking into account customer
satisfaction. Cooperation with R&D partners (Universidade do Porto, Universidade de
Evóra, ISCTE IUL, ISAG, CEFA, and ISCAD)25 facilitates all processes of
development and Quidgest’s growth. To be a reference SME in the IT market, several
features have contributed as well. The fact of Microsoft being a golden partner creates
an image of quality and reliability. Also through (P ISO 9001:200826 certification
received, quality of services provided are reinforced and it also consolidates the firm´s
position as a reference company (PME Excelência – IAPMEI, Microsoft Gold Certified
Partner, IBM business Partner). In what concerns the international approach Quidgest
developed Quidnet27. It is an online platform functioning as an integrative leverage tool
giving the possibility of automatically generating improvements and innovations in
terms of programming code that can be used for future applications, products and
services. Quidgest brand awareness is mainly done by the mechanisms stated above
22
Genio created a reference framework Quod (Quidgest Organized deployment), reaching forecasted
costs enhance systems quality and go straight to client request.
23
On appendix7 is possible to perceive the quickness of Genio on software design.
24
Appendix1 shows budget available for R&D.
25
Appendix3. R&D partners perform an important role since they provide the know-how required to be
implemented on the manufacturing of the software applications.
26
Set of rules and criteria that IT tools have to follow in order to be considered legally certificated.
http://www.apcer.pt/arq/fich/A_Implementa__o_da_ISO_90012008_RO.pdf
27
It is an enterprise net aimed to sharing advantages from Genio. Through it, is possible add value
towards clients at a lower price. Challenge actual leaders of the market, characterized by strong
constraints, low evolution capabilities and low flexibility to generate user-friendly solutions.
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since it does not have a marketing budget to do so, comparing with its bigger
competitors (SAP, ORACLE) which develop huge promotion campaigns. Instead of
this, what makes Quidgest known are: good references, by theirs former clients,
partnerships and recently the fact of being exclusive provider of software information
system for Portuguese Public Administration leveraging the firm’s image in the market
through recent media exposure. B2B approach followed, helped Quidgest to create
network, reducing costs, increasing efficiency, client satisfaction and collaborate closely
with partners and clients. Location issues do not seem to be a source of disadvantage.
Quidgest is headed in Portuguese market (Lisbon), but the number of clients (around
200) and business volume are quite spread all over the country.
ERP market is a competitive market with potential to grow28, since almost of the
enterprises are SM with obsoletes information systems misadjusted to their actual needs
that require to be rebuilt. The investments made in the last years have now an
opportunity of return, although medium rivalry29 faced by wide ranges of ERP products
available in the market. Quidgest´s ERP applications have an advantage over
competitors because of the scope of functional areas covered, that follow all clients
specific procedures in an easy and fast evolution, made by small teams of experts
quicker30 in projects elaboration than its competitors that sell standardized software
information systems. Quidgest´s ERP make to order31 processes give towards clients
the opportunity to design exactly what they need, at real time and faster manner.
28
Although Portuguese market has its own specificities and market features/trends it will follow the
European growth tendency. Consult appendix5.
29
Consult appendix2 about Porter five forces in the Portuguese market.
30
Consulting appendix8, one project manager/engineer from Quidgest allocated to a project will benefit
from a kind of economies of scale on time.
31
It is a production approach where once a confirmed order for products is received, products are built. It
is used for highly customized products as for instance computer services. Main advantages are on to
supply the customer with the exact product specification required the reduction costly sales discounts and
finished goods inventory, as well a reduction in stock obsolescence risk.
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Criteria of Country Selection – France
As an Egyptian proverb said “A man must put grains in the ground before he can cut the
harvest”. Given the internationalization process that has been followed by Quidgest so
far, new boundaries have to be expanded; therefore the French market is the next step to
be taken. The internationalization process makes sense; first of all because it is aligned
with Quidgest´s strategic objectives, grow overseas motivated by expansion on sales.
By now revenues from overseas markets represent approximately 20% of Quidgest´s
total revenues, therefore expanded software applications and services reaching each
single customer needs regardless from where he is from, enables source of revenues
diversification and decreased risk on demand drop. Also through synergies resulting
from strategic partnerships celebrated, Quidgest can get the know-how needed to
improve engineering methodologies and processes. At first France looks an interest
market to get in because there is still space enough to grow32, although economic
conditions in 2008 were unpleasant because of the crisis that affected markets
worldwide, is expected a positive growth rate of about 1.5% per year33.
Is quite important to highlight cultural issues and perceive the weight they have
in the strategic decision of choosing one country instead of other. France is commonly
an immigrant country. According to data from 2001 around 5.6% of total population is
immigrant34. Indeed France constitutes one of the main destinies of Portuguese
emigrants, around 492.000, which represent 13.6% total immigrants in France35
therefore is quite easy to find out either a Portuguese community or enterprises that
decided to establish and start their own business there. As it happened when Quidgest
approached the Spanish market, similarities in the language and cultural issues
32
According to data, French ERP market follow Europe tendency, 11% CAGR in 2008. Consult
appendix6.
33
References, Surveys: CBI Market survey: The software and IT services market for offshore and
nearshore outsourcing in France Publication date: September 2009
34
References: http://imigrantes.no.sapo.pt/page3.html
35
References: European Union official statistic office report, 2009
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contributed to a faster market entrance. Since Quidgest is already present in Spain and
given that France is geographically close, this proximity might leverage and accelerate
expansion towards French ERP market. Recall that the product to be internationalized,
ERP applications, are technologically developed, so in order to be easily accepted and
successfully implemented, it requires technologically mature markets, meaning that
enterprises are familiar and used to deal with this kind of product/service36. Since France
belongs to EU, regulatory rules are easy to deal with. There is free trade and no
constraints regarding to foreign enterprises presence. Bureaucracy needed is not as
complex as in Portugal; indeed it is not mandatory to get a certificate for software
applications, therefore this scenario contributes to reduction on implementation time, as
well as cost savings. Certificates will enable cost savings when an international
implementation plan is being done, but to overcome quality and credibility perception
other ways have to be developed. Using customer testimonial and free trials are some
manners to convey quality on applications provided.
Quidgest as a Portuguese SME operating in the French market, that seeks for
success has to bet in a niche market because software enterprises origin from France
traditionally do not position themselves in designing packaged software and also
because leading players (Microsoft, Oracle, SAP) are growing in size and importance.
The 4 largest firms in the industry accounts for 31% of the market37, therefore an
opportunity for Quidgest to provide customized software that is not on paradigm of the
market arise. Clients and partners are key elements in the internationalization process,
so Quidgest has already received some commercial leads of potential clients. The next
step to be taken is to find out on field some potential partners that could help to spread
faster Quidgest´s applications.
36
In 2008, according to data from EITO (European Information Technology Observatory), French
software and IT services value 34.1 billion Euros, ranked third in EU followed by UK and Germany.
37
References: CBI Market survey: The software and IT services market for offshore and near shore
outsourcing in France, publication date: September 2009
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French ERP Industry External Scanning: Market Attractiveness
French ERP market valued 34.1 billion in 2008, ranked 3rd place in EU, ahead of Italy
and Netherlands. Over the period 2006-2008 reached a peak of 5.8% growth rate
slightly higher than EU average that registered 5.5%. As a consequence of economic
crisis on 2008 the growth rate slowed, however forecasts indicate a growth of 1.5%
year38. The ERP market is composed either by software applications and technological
services. Both sectors in the period 2006-2008 surpassed EU average growth. Software
market registered an average annual growth of 5.6% and IT recorded an annual growth
of 5.9%, however is expected a standstill in the next years as a consequence of difficult
economic situation in several French end user markets. French ERP market represents a
significant slice of the economy, it employees around 335,000 people and has 33,000
companies operating on. 60% of the market is dominated by large companies, those
who bill more than 500 million Euros a year. Slowed of the economy since September
of 2008 spread particularly on the software applications, where interest of large and
multinational corporate clients in this kind of software reduced. Demand drop on IT
services was not so fierce, is expected to grow 2%, but at a slower pace than before the
crisis. Besides external impact of the unpleasant economic environment, market
tendency is changing. Companies tend to focus on IT projects with short return on
investment since French citizens are not long term oriented, as Hofstede study
concluded39. Also new areas of interest namely Business Intelligence and CRM
solutions are becoming even more attractive to start investing on. Moreover a new
model of providing software is also arising. Saas40 could make up 25-30% of the overall
38
References surveys: CBI survey
Appendix15. According to Hofstede study there are five variables affecting and that explain people
decisions. In particular case of France enterprises are not long term oriented means that are looking for
immediate returns. Time is a variable that influences investment decisions.
40
Saas(software as a service) is software that is deployed over the internet to run behind a firewall on a
local area network or personal computer. Through Saas, a provider licenses an application to customers
either as a service on demand, through a subscription, in a “pay-as-you-go” model.
39
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ERP market by 201141 given the growing number of projects involve financing
subscription of Saas, therefore it would be recommend to Quidgest start rethinking its
strategy by enhancing its ERP on-line platform in order to be competitive in this field.
Regarding to industry structure, in what concerns to main players, who are they,
how they behave and what policies are being taken, there is much to be analyzed.
Software vendors are really sophisticated, having a team of experts with a deep
knowledge about the sector, working on the conception and design of new applications
and solutions. By now landscape of ERP European market is changing a little.
Importance and size of large firms are increasing over small firms. Therefore it looks
advisable for those who want to entry in a European market to start bet on a niche
market, providing something that was not developed so far.
The main players of software are Microsoft, IBM, Oracle and SAP with 16%,
6%, 5% and 4% market share42 respectively. In the IT services industry landscape is not
the same. IT services enterprises origin from France still control 68% of the market.
Capegmini and Atos Orange are ranked in second and third place respectively, as 10th
greater players followed by other strong domestic providers as Stéria Orange and
Sopra. It can be easily perceived how domestic firms dominate the market. The close
link between public sector research facilities and private sector business is an additional
feature that strengthens French ERP vendors. This close linkage enables a faster launch
of products and technologies, as it works as a barrier or even a disincentive for foreign
ERP vendors’ market entrance.
Price is indeed an issue, given fierce competition among competitors raised in
the last years. New entrants may charge a price within the range of the market, however
will not be competitive, if alone, given initial costs incurred, as recommended patents to
41
42
References: John Franke, <ew editor 12 Jul 2007
References: CBI survey.
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ensure know-how protection. Besides protection concerns new entrants must take into
account all the regulatory and legislative requirements43. Ensuring world class quality
and service delivery, is an increasingly important access requirement for offering global
IT sourcing solutions. Using the worldwide-adopted Capability Maturity Model
Integration (CMMI44) approach, in achieving a 1-5 level rating is a very useful way of
delivering and proving the required service quality.
It must be addressed what are the critical factors in order to successfully
implement ERP applications in the French market. First of all seeking a sound
partnership with a French company is advisable, since they look for potential customers,
and given their deep information about the market. Moreover being physically present is
also important in order to be close to customers. This presence shall be more developed,
means besides having an office or a branch, having few employees that had lived in
France for a period, or even more, are originally from France is recommended since
French are hesitant to speak English. Thus establishing a partnership with a French
company, mainly from consultancy (IT, Finance) sector facilitate Quidgest´s entrance.
Factors of Quidgest Competitive Advantage in French Market
Quidgest will enter in the French market, providing ERP applications targeted to
private sector. There are a variety of ERP applications that go from CRM solutions to
Business Intelligence. These two look more attractive to bet on, since they are in good
demand, as analyzed before.
Genio, the software developed by Quidgest engineers is the main source of
competitive advantage over its competitors. Genio is a software program resulted by
43
These requirements are based on working conditions, health, safety and social concerns, labels, codes
and management systems.
44
Is a process improvement approach that provides organization with the essential elements for effective
process enhances. Integrate traditionally separate organizational functions, set process improvement goals
and priorities, provide guidance for quality, and provide a point of reference for appraising current
process. Appendix16.
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efforts made on R&D enabling the design of a unique programming code, which
basically can provide software applications specifically required by customers, instead
of standards programs designed in advance, that do not fit completely enterprises needs.
Quidgest seeks for what customers need and then design the solutions required. SAP
and competitors assemble to order45 approach, pushes applications46 towards customers
designing standard applications resulting on inflexible software information systems,
misfits customers’ real needs and demanding huge initial acquisition costs. IT platform
Genio, where all applications are run enables great reduction on delivery time. In less
than two days, with technical support is possible to build up functional prototypes of
any kind of management information system. To have a better understanding, time
required by their competitors to develop systems similar to Quidgest, are ten times
greater47. For instance imagine a project of information system will take 5 years, by
using Quidgest applications will take only 6 months, which in a strategic level is quite
useful since in five years a set of systems have no relevant interest because they will
become obsolete. Moreover with Genio it is possible to develop complex information
systems in modular manner, but integrated. In other hand it enables the collection of any
kind of specifications of management information systems. Given Genio capability to
design any kind of application, Quidgest did not specialize in any specific segment
sector, but designing a variety of customized applications able to cover each single
request by its clients.
Because of Quidgest´s projects nature on software development, during a certain
period of time their consultants are present in 10 more projects than any company else.
Quidgest can achieve a kind of economy of scale, reducing variables costs since one
45
It is a business production strategy where products ordered by customers are produced quickly and are
customizable to a certain extent. Is a hybrid between a make-to-stock strategy –where products are fully
produced in advance and the make-to-order strategy-where products are manufactured once the order has
been received.
46
Consult appendix13.
47
References: http://www.quidgest.pt/documentos/Genio_ExecutivosPT.pdf)
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project manager can be allocated to more than 1 project at same time48 and therefore
benefit from know-how synergies coming from different processes he deals with.
Project managers and engineers quickly get a significant experience that values them
professionally as well represent a guarantee of quality for clients. Another aspect of
Quidgest’ competitive advantage is on the maintenance service, since it can do several
changes less costly comparing competitors. Quidgest provides a dynamic assistance
supporting clients closely, means that all evolutions on information systems of their
clients are anticipated. Quidgest through its service level agreement can achieve high
client satisfaction, by low TAT49 and high TSF50. Last intrinsic quality on Genio is the
capability, to do it right at first. Is possible to finish the design of a program, ask to
Genio to build it, and deliver it to customer immediately without errors.
Analysis of the Modes of Entry, Advantages and Disadvantage
Quidgest implementation plan in France will be done locally through one or two
partners in the region of Paris51, because market dimension and demand of high tech
products requiring specific knowledge in financial and technology are greater than in
other region. The attractiveness of France is also on the cultural proximity, an example
of it, is the significant community of Portuguese emigrants/enterprises and the few
business network contacts with potential clients that are being established. In order to
implement ERP applications in overseas markets an international strategy shall be
adopted. Among several modes of entry and according to Quidgest International
experience, partnership is the one that better fits Quidgest foreign expansion towards
its main goal of sales expansion. It consists on a non equity collaborative arrangement,
48
Consult appendix8.
Time to taken complete a certain task.
50
Number of solutions run in a definite timeframe.
51
On appendix9 is the detailed information about potential partner. What sector they came from, where
are they placed. In addition might be considered that all potential partners are France native and mainly
SME. Also the potential partners must not work with other Quidgest competitors.
49
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means that there is not equity enterprises participation, enabling more flexible
agreements allowing learning about partner´s technology and home market, where the
production process is done in the foreign country52. Applications required by each
customer are developed in the destiny country because are customized solutions that
require “work on field” by Quidgest staff. However it might be addressed that part of
production process is done in Portugal, which will represent a major advantage from the
operations point of view and IP protection. Genio is developed in Portugal but since it is
installed on Quidgest notebooks office in France, all production process begins there, so
this does not follow a pure export strategy rules. Partnerships consist on an agreement
signed, composed usually by two agents. In one side there is Quidgest that works on
software applications design, and in the other side a partner usually from consultancy
sector looking for potential clients. Through partnership firms can improve its
performance by concentrating on those activities that best fits its competencies. In the
case of Quidgest focus on software manufacturing and applications design supported by
partner for those activities it has lesser competency. However collaborative arrangement
advantages some issues might arise, if for instance there are disagreements that
necessitate legal action for settlement, the smaller firm will be in a worst position, given
its lack of resource to fight large company. Quidgest was somehow aware of this issue,
thus celebrated agreements with partners of the same dimension53. Sharing assets with
another company might lead to lose of some control on extent and quality of the assets´
used. However this issue does not fit Quidgest because of its competitive advantage on
Genio. A partner might appropriate Genio technology and use it somehow to get
advantage, but time needed by the partner to get and to learn the mechanism of how
52
53
Daniels, J.D., Radebaugh, L.E. and Sullivan, 2007 page 574.
Mainly SMEs (Bloom consulting corporate partner in the Spanish market) consult appendix3.
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Genio works in detail, is more than enough for Quidgest staff enhance it, making the
technology acquired by partners outdated.
Remind Quidgest works on IT sector, therefore know-how and technologically
improvements are quite important for Quidgest growth. An example of Quidgest
concerns to still enhance its engineering and methodologies processes is through
Quidnet platform that will leverage team work with partners and customers. Since there
is a close link between research public facilities (Universities, technological research
institutions) and Private IT sector, foreign enterprises are somehow blocked to enter, so
having a native partner would overcome some governmental and legal constraints.
Quidgest´s asset besides employees, is on the informatics code incorporated on
software applications, thus protecting it might be crucial. In a country where provide
little de facto protection for intellectual property rights, the collaborative agreement
sealed must rely on a registered patent or even further, on contractual clauses that would
monitor misuse and pirating property of the asset locally .
Proposal of Implementation Plan
Quidgest aims to expand ERP applications in overseas markets focusing multi sectors
application, motivated by expansion on sales, thereunto intend to spend at most 5%
2010 turnover for internationalization plan in France. Quidgest grew54 from 2007, 15%55
per year and expects a return in a timeframe of 1 year twice the investment made56.
Furthermore international presence has to be reinforced due to its competitive advantage
on the products provided, and new trends (customized software) arising on the market
that fits what Quidgest provides (house ERP rising). To better perceive an international
implementation plan I may do use of theoretical model 4 M´s that I believe it can gives
54
Quidgest registered a turnover of about 1.6 million Euros.
Assumption made for Quidgest growth from 2007 to 2010. The facts state that Quidgest surpass a little
the European market that grew about 10%.
56
Consult appendix14
55
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the demanded responses to understand how firm shall allocate resources based on
investments required, time needed and improvements to be done.
4 M´s: Men, Money, Minute, Memos57
To implement ERP applications abroad, Quidgest has to allocate resources to do so.
Human resources needed are a key aspect to take into account when follows an
internationalization plan. Therefore to go ahead with the implementation plan, Quidgest
has to allocate two or three French engineers that could be hired58 or transferred (Plan
B) from Quidgest headquarters to Paris office. Engineers required are justified by the
few businesses expected in the beginning. Engineers will provide all technical
assistance, implementation of ERP applications and updating operations that might be
needed by clients. Moreover in order to manage all administrative work, passing by
arranging meetings with clients, partners and forward all important information to
Quidgest headquarters, a secretary origin from France (fluent speaking French) due to
consumer’s acceptance to speak English shall be hired. Additional costs regarding to
employees might be taken into account. Training session to update engineers’
skills/capabilities reinforcing their competences would ensure a quality work/service for
clients, as at the same time value employees, motivating them to improve software
applications/solutions (reducing delivering cycle time, more flexible systems, add
features on IT code) and thus contributing for Quidgest growth in the market. These are
the main human resources required to start operating in French market, furthermore
looks advisable that Quidgest hires a marketer or sales representative focuses on
company promotion, developing its marketing issues in order to arise faster consumers’
brand awareness, since the variety of ERP solutions already on the market is very large.
The issue links now with how to do it? Be present in some trade fairs such as:
57
Theoretical model sustains that to build up a successful small business four keys elements (Money,
Minute, Memo, Men) shall be taken into account. It is an important tool for marketing problems solving.
58
Consult Figure III about the implementation plan.
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Automation optimation59 in Lyon, and Salons solutions60 in Paris. Also by trade press, an
interesting story about Quidgest products will boost its image and increase user
awareness, therefore build up contacts with some relevant magazines ZD<ET.fr and Le
monde informatique might be done, before enter in the market61. Besides internal
resources needed, in order to fully perform Quidgest´s implementation, establishing a
partnership is crucial. Having one or two partners from IT/Strategy/Financial
consulting62 sector mainly from the region of Paris would help to integrate software
applications by pulling what customers want to improve, and consequently forward
software designing to Quidgest.
Initial investment required to start operating passes by all basic equipment needed,
software adaptation for French language, available free trials for customers as a first
channel of promoting themselves, and recommended patent to avoid misuses and knowhow protection incorporated on the technologies designed. Also get certified
applications are quite important to achieve quality standards and consumers awareness.
Even if initial costs at time 0 to get a certificate are high, potential revenues losses
might be addressed when a software implementation process is being developed. Cost
structure, demand of ERP and industry structure will affect price charged and
consequently profit margin. Quidgest profit margin in France will change comparing to
Portuguese market. In the downstream market we have price charged to corporate
clients that is a strategic decision defining firm position in the market, strictly linked to
final outcome achieved. Means if for instance a project offers more cost savings than in
the service level agreement, the software vendor is entitled to a bonus. On the other
hand, if the goals are not reached the reward will be lower. Furthermore dimension of
59
Is an automatic and electronics biennially fair happening on December.
Various IT segments such as ERP and CRM solutions are annually presented on October there.
61
On the chronogram (Figure II) about the main activities to be taken for the implementation plan, it is
mentioned some tasks that have to be done in advance before physically start operating in the market.
62
Consult appendix9 to select one or two partners out of seven that I searched.
60
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projects involved and features implemented on the specific software will increase price.
In the upstream market besides the initial costs demanded (fixed costs) to start operate
on the market we have variable costs, which configuration will be slightly different
comparing to the costs on the Portuguese market mainly because of the marketer
specifically allocated to develop efforts on sales/marketing to find out a partner, through
fairs attendance and trade press as at same time “works on field” promoting the product
to potential clients signalling Quidgest presence in the market.
Conclusions
Along the work project developed, I realize that Quidgest has the raw material
(employees skills, senior partner motivation, technological know-how and different
mindset) required to go ahead and position itself as a unique firm capable to inject a
new way of operating in the market.
Quidgest is motivated to follow an implementation plan in France, but besides this, it
has the competencies to do so. The competitive advantage on the customize software
applications provided, the low cost of the maintenance service and the know-how of
theirs employees are features that enable a faster launch of the product abroad.
Expanding boundaries towards France, enables Quidgest to increase revenues, benefit
from economies of scale operations (lowering cost per unit), increase competitiveness of
portfolio offering (lowering average cost for a variety of products) and increase P&S
performance. However if Quidgest wants a sustainable growth in the French market, it
is strictly advisable to patent Genio, to avoid pirating, enhance its marketing policy
passing by promoting themselves on the market, through trade press/fairs and mainly
establish a sound partnership in order to ease and consolidate Quidgest position in the
market.
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Implementation plan recommendations: ERP applications in the French market
STRATEGIC
THEME
FINANCIAL
CUSTOMER
INTERNAL
LEARNING
OBJECTIVES
MEASUREMENT
TARGET
INITIATIVE
Expand sales
Increase number of clients
Increase ROI
Profitability
Turnover
Number of clients
40% of revenues coming from
overseas market in the next 6
years
Provide customized software
applications within market price
range.
Increase customer satisfaction
Ensure loyalty of rentable
customer
Increase density of products per
customer
New manners to make available
software applications
Recruit French engineers
Training session provided to
employees
Reinforce brand awareness
Establish an office
Clients
questionnaires
Market survey done
by IT information
providers (Gartner,
IDC)
Number of loans
from Quidgest clients
to bank partner (BPI)
Saas represent 20% of total
revenue in the short run
Achieve level 9 of client
satisfaction out of 10.
Number of
employees
Level of training
Minutes of
advertisements
passed on media
Time of
implementation
Recruit 2 or 3 engineers
Find out a media partner to
facilitate Quidgest promotion
Hire 1 marketer
Find an office to stand on
Training session
Recruitment
Promotion through trade press
IT magazines, papers
Start operation in 7 months
Formation session
Training campus (Universities)
Software adaption
Make use of QREN funds
Improve capabilities of key
personnel
Potential alliances settled
Quidnet platform
Obtain funding sources
Strategic partnerships with
native firms from consultancy
sector
Promotion: through
participation in International
trade fairs
Launch advertising campaigns
Open sessions for University,
community and IT sector such
as Q-Day event.
Establish a financial
partnership with a French
bank to grant facilities on
credit in the first 12 months
Improve cloud platform
Free trials for 6 months
Figure II
Chronogram: main activities to be taken for the implementation plan63
Figure III
63
To effectively start operating in the French market it will take 7 months. The red arrows represent the
tasks to be taken before enter in the market. The yellow arrows represent the tasks to be done after enter
in the market. The yellow dashed arrows represent tasks to be taken after enter in the market, and that are
recommended to be developed continuously over time.
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References
Interviews
Carvalho, João Paulo. CEO of Quidgest
1st Interview on 15/09/2010, 2nd Interview on 16/10/2010, 3rd Interview on 02/11/2010
Soeiro, Filipe Castro and Dahab, Sónia Professors at Universidade NOVA de Lisboa
Several meetings from 09/2010 until 12/2010
Books
Daniels, J.D. Radebaugh, L.E. and Sullivan.2007. International Business:
Environment and Operations, Pearson, Prentice Hall
Michael E. Porter. November-December 1996. “What is Strategy?”. Harvard Business
Review
Wheelen, T.L., Hunger, J.D. 2002, “Internal Scanning: Organizational Analysis”. In
Strategic Management and Business Policy 9th edition, 80-107, Upper Saddle River,
New Jersey: Pearson Prentice-Hall.
Besanko, David. Dranove, David. Shanely, Mark. Schaefer,Scott.2010: “Strategic
Positioning for Competitive Advantage”, “Sustaining Competitive Advantage”, “The
origins of Competitive Advantage: Innovation, Evolution, and Environment” In
Economics of Strategy 5th edition, 299-409. John Wiley & Sons.
Reports
The ERP Market Sizing report, 2006-2011
Surveys
CBI Market survey: The software and IT services market for offshore and nearshore
outsourcing in France Publication date: September 2009
ESTUDO SOBRE O SECTOR DE SOFTWARE E SERVIÇOS I.FORMÁTICOS
EM PORTUGAL, Documento de Trabalho Nº 4/2008
Web-sites
An analysis of the current and future ERP market with focus on Sweden: www.dpu.se
Scan Source Europe: www.scansource.eu
Computer world.com: www.computerworld.com.pt
Semana Informática: www.semanainformatica.xl.pt
Quidgest website: www.quidgest.pt
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Appendices
The following appendices are essential for the Work Project comprehension. Statements
and information written along the thesis are reasoned below.
Appendix 1: Quidgest value chain64
Appendix 2: Porter five forces for Portuguese ERP market
64
Percentages of each task on the value chain were obtained by the information provided on the several
meetings taken with Quidgest senior partner, João Paulo.
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Appendix 3: Industry map for Portuguese ERP market
Appendix 4: ERP market size in Portugal, 2009
Source: Informa D&B Portugal 2006/2007
Appendix 5: ERP application revenue estimate, 2006-2011 for European Market
Source: AMR research, 2007
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Appendix 6: ERP application revenue growth rates by application segment, 20062011
Source: AMR research, 2007
Appendix 7: Timeframe to generate and implement applications with/without Genio
Source: Quidgest website
Appendix 8: Learning curve: Time needed by project manager/engineer to design
ERP applications
Appendix 9: Potential Partners65 of Quidgest in the French market
65
All the potential partners analyzed are SME in the retail, logistic, financial consulting sector French
native mainly from Paris region. Some of them are on the market shortly and therefore have potential to
grow requiring not expensive software information systems adjusted to their needs and scale.
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Additional Appendices
These appendices are not essential for the comprehension of this Work project. They
serve the purpose of presenting additional information to specific points of the thesis.
Appendix 10: ERP license revenue by geographic region, 2005-2006
Source: AMR research 2007
Appendix 11: ERP license revenue by application segment, 2005-2006~
Source: AMR research 2007
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Appendix 12: ERP system
Source: Davenport (1998)
Appendix 13: Technology push and a market pull
Source: Martin. Michael J.C (1994). Management Innovation and Entrepreneurship in technology-based Firm
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Appendix 14: Operational costs incurred by Quidgest for international
implementation plan
Monthly Expenses
Annual
Initial Investment
Internal Costs
Human Resources
Marketer
Secretary
Engineer (3 engineers)
Training
1000
800
66
6000
Training session
Introductory session
14000
11200
84000
Subtotal
109200 Subtotal
Operational costs
Trade fairs/press
Rental office
2000
Patent
Certificates
Pc´s acquired
Furniture,
equipment
Software
adaptation
Trials of Genio
345
24000
Logistic cost
Trips to France from Quidgest representative
board
360
69
Current Expenses
electricity, telephone, clean service, water,
others
Subtotal
TOTAL
100
80
300
180
40000
2000
67
6000
4500
3000
300
3600
28305 Subtotal
137505 TOTAL
55800
55980
Appendix 15: Cultural dimensions from Portuguese and French market (Hofstede
study)
Hofstede´s study demonstrated that there are national and regional cultural groups (variables stated in the legend) that
affect corporate and society behaviours, and that these are persistent across time.
Source: World Factbook 2002
66
Source: Payscale. It is an online salary, benefits and compensation Information Company, that was
developed to help people obtain accurate real-time information and job market compensation.
67
Source: Informatics store.
68
Source: IKEA, worldwide furniture vendor.
69
Source: Easyjet. Since it is low distance trips that take a few hours’ low cost fly companies shall be
booked.
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31
Appendix 16: Capability Maturity Model-Integrated
Source: Sally Godfrey (2008) What is CMMI? NASA presentation. Accessed 8 dec 2008
Appendix 17: A global oriented company
Source: www.quidgest.com
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Appendix 18: Range of ERP Applications Provided by Quidgest
Source: Quidgest website
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Internationalization Strategy of Quidgest´s ERP in the French Market

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