Having become the
biggest Japanese vendor of business software for payroll and human resources by
taking on Oracle Corp. and SAP AG in its home market, Works Applications Co. is
now adopting an even more ambitious plan: breaking into the U.S.
So what’s the big deal?
Simply put, no Japanese software maker has been able to replicate the success
that Toyota Motor Corp., Sony Corp. and other manufacturers have enjoyed
outside the archipelago.
While theories as to
why this is range from the government’s focus on industrial prowess in the
postwar years to an education system that does not encourage creative thinking,
the fact remains that the only “soft” breakout industry from Japan has been
video games.
“We are completely
followers,” said Masayuki Makino, Works Applications co-founder and chief
executive officer, speaking through a translator about Japanese
information-technology providers. “I don’t think many companies have been able
to enter the American market — Japanese IT has been very delayed. How many
software makers do we have in Japan first of all? Not many.”
Makino is seeking to
change that, with a product aimed at the U.S. market that will debut in
January. The software, called AI Works, makes use of machine-learning
technologies to automate tasks such as data entry. The Tokyo-based company will
start taking orders this month, and some U.S. subsidiaries of Japanese
companies have already expressed interest, Makino said.
Works Applications,
which is not publicly listed and counts Mitsubishi Chemical Corp. and Yamaha
Motor Co. among its clients, says it has passed Oracle and SAP in terms of
share in the Japanese market by offering lower prices. Works Applications is
the biggest vendor in payroll and human capital management software in Japan,
according to IDC. It recorded ¥36.6 billion in sales for the year ended in
June.
“To really make a go of
it, it’s going to take time and require diligence,” said Chad Eschinger, an
analyst at Gartner Inc. Having Japanese multinationals who may want to use
Works Applications software at their U.S. operations will help, he added. “They
have a better shot in some regards, but they have to build out a sales force, a
channel, and certify and educate a broader American market on the value
proposition they bring.”
Works Applications
software costs 30 to 50 percent less to use than SAP and Oracle because its
products include features that other companies have to outsource from other
vendors, according to Makino. Globally, cloud-based business software makers
have been chipping away at Oracle and other traditional vendors, which have
been slow to get into Web-based computing. Works Applications considers U.S.
cloud companies such as NetSuite Inc. and Workday Inc. as competitors, Makino
said.
Selling software
designed for Japanese businesses comes with its own challenges. Differences in
U.S. law and practices in accounting and human resources required tweaks to the
software, Makino said. For example, U.S. employers do not ask job applicants
for their age and gender, while a Japanese job seeker would be expected to put
that on a resume, the CEO said. The company also needs to build its sales
network in the U.S. and plans to hire more salespeople.
Entering the U.S.
market is uncommon and challenging for Japanese software makers, said Makino,
who could not name any others that have tried.
“No one has been
successful — well someone told me that 19 years ago,” Makino said of the time
when he first started the business. “People said, ‘why are you even
establishing the company? SAP and Oracle are here. We don’t need another one.’
“
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