Australia is not yet capitalising on international expansion opportunities that have been made possible through cloud technology, according to research by Frost & Sullivan.

Titled “The Born Global Business”, the study of more than 800 senior executives (CEOs, CFOs and Finance Managers, CIOs and other senior managers) from across Australia, Hong Kong, New Zealand, the Philippines and Singapore looked at the approaches companies take to exploring new opportunities and the role cloud computing can play.

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Cloud ERP vendor NetSuite commissioned the study, so you will need to apply the obvious filters.

Frost & Sullivan found that companies using cloud computing are far more likely to have capitalised on international business opportunities than those that are still primarily using on-premise systems.

According to the research, 61 per cent of Australian businesses currently operate domestically only. This contrasts sharply with businesses in Hong Kong and Singapore, where respectively 30 per cent and 42 per cent of businesses are domestic only. Additionally, just 28 per cent of Australian businesses are planning to enter additional overseas markets in the next five years, according to the research.

Other notable findings include:

  • Overseas expansion is viewed as a primary growth engine for businesses in Singapore and Hong Kong (average of 70 per cent), yet not for Australian companies (55 per cent);
  • Almost one fifth of Australian companies (19 per cent) perceive globalisation to be a threat to their business;
  • 70 per cent of organisations that currently use the cloud are internationalised, compared to only 22 per cent of non-cloud users;
  • 71 per cent of cloud users have entered new geographic markets in the past five years, compared to only 31 per cent of non-cloud users.

According to Mark Dougan, Managing Director for Australia and New Zealand at Frost & Sullivan, “The last few years have seen a concerted effort by the Australian government to encourage international expansion, including the creation of several Free Trade Agreements, so it’s surprising to see that Australian businesses are not responding to this opportunity more enthusiastically.”

He said that with other markets in Asia pursuing globalisation aggressively, Australia is in danger of falling behind. “Australian businesses need to look beyond the obvious barriers of distance and complexity, and find enabling technologies like cloud which will enable them to start taking advantage of the possibilities that internationalisation offers.”

While businesses in Singapore and Hong Kong see overseas expansion as important (average of 70 per cent), that was less so for Australian companies (55 per cent). Instead, almost one fifth of Australian companies (19 per cent) perceive globalisation to be a threat to their business (and with an attitude like that, they are right).

Cloud Adoption Plays Key Role in Internationalisation

Frost & Sullivan also said there was a link between internationalised businesses and investment in cloud computing.

“The research shows a clear linkage, by a factor of three, between companies using cloud-based software, and becoming international. Leveraging a cloud-based business platform is a good place for all businesses to start when considering how to tackle overseas expansion,” said Dougan.

According to Lee Thompson, SVP, Asia Pacific and Japan, “Numerous customers have built global success on the back of our platform, and have been surprised by how seamless the process can be.”

Enabling the ‘Born Global Business’

The survey also shows how the rapidly evolving business environment has paved the way for ‘born global’ businesses to emerge. These businesses have successfully internationalised, leapfrogging the traditional expansion stages and entering overseas markets at an extremely early stage of development.

“One distinctive feature of these businesses is their ability to leverage IT solutions and platforms to quickly scale their business into overseas markets. They typically undertake critical business functions such as accounting, order processing, taxation and statutory reporting using cloud-based software that is already adapted for international markets, instead of the earlier generation of on-premises software, which requires substantial and costly enhancements to support overseas operations,” said Dougan.

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