Its decision to enter Australia was driven by:
- identified market need. Revera’s competitors are much larger multinationals whose cost structures prevent them delivering cost effective service to the SME market
- an opportunity to acquire and build from an established business
- an ability to leverage its New Zealand operation to service the Australian market.
Revera’s investment in Australia is being built over time. The strategy has meant it has attracted potential new business and also turned opportunities down to ensure the Australian operation grows in a controlled way.
Creating an Australasian business has strengthened its overall service offering, while servicing New Zealand customers in Australia has led to increased business in New Zealand.
Setting up
Revera decided to buy the Australian Hitachi Data Systems International operation as it was a good fit with its own growth aspirations. Management recognised their structure would be able to provide a service different to that of Hitachi.
Revera’s management team was aware the company was entering the Australian market earlier than it would have liked. However, strong relationships had been established in Australia and their view was that this was a rare opportunity not to be missed.
Acquiring the Australian operation allowed Revera to inherit knowledge of the local business environment and streamlined the establishment of its Australian presence.
Revera made bids for the two large contracts previously held by Hitachi. It lost both bids despite both customers telling Revera it had won the contract, learning that in Australia, it all comes down to the contract.
Through the bids it had established a market presence and felt it was valuable to maintain this to demonstrate commitment to the Australian market. A contractor was retained to sustain the operation.
To provide the required services for a client, Revera invested $NZ500,000 in an Australian data centre. It now serves 15 Australian customers.
Australian SMEs are generally larger than their New Zealand counterparts. Without the necessary financial resources, or need to establish a brand, Revera focused on selling to IT suppliers, taking an indirect route to market. This enabled Revera to build a market presence complementing other IT businesses, rather than being a threat.
Lessons
- Zero in on customers not targeted by larger competitors.
- A physical presence is essential.
- Revera estimates a financial buffer of around NZ$1 million is essential to be successful in Australia.
- Having Australians working for the firm is important. It delivers access to networks, establishes trust with customers and increases market knowledge. If Australian business characteristics are embraced, and service levels met, Australians are loyal business partners.
More information:
www.revera.co.nz
