Most of the clients and companies we deal with develop and sell software – increasingly cloud software. Cloud software knows few geographic boundaries, and installation hassles are few. With an absence of trade tariffs and other nasty things that can make it difficult to do business, entering the U.S. seems as easy as a few mouse clicks – often a customer’s. It often seems like a no-brainer. Easy. Deceptively so.
The U.S. and Canada together account for 55% of all software expenditures globally. That’s a tough number to ignore, and a fact that is seldom overlooked by any serious software player. Further, take a good look at the BSA (Software Alliance) report on the U.S. There are lots of pluses – like 85 million broadband subscribers (72% of households) and 233 active mobile users (75% of the population).
As attractive as the market is, software vendors of all makes and descriptions find it a struggle to sell in the U.S. for four reasons.
- The extent of competition is underestimated (there are over 100 thousand software companies in the US). A firm’s well-differentiated advantage in their home country may bump up against several contenders who, to the buyer, are indistinguishable on the merits of the product.
- Unless a company wants to be a bit player flying below radar, one is going to have to abide by the rules set by the FCC, the FTC, the IRS, and potentially 50 State tax authorities).
- As a rule, American B2B buyers do not roll the dice by running their businesses sight unseen using the software of from offshore providers unless they pass muster. Lack of solid evidence of both on-the-ground support and the ability to stand behind promises and warranties, are the kiss of death for offshore software providers. Accountability is everything.
- Importantly, winning in the U.S. boils usually boils down to one thing: having a great value proposition, targeted at the right market. Always easier to say than to do.
The firm that takes stock of these four factors, and intelligently provisions for them, will find that the struggles of others can turn into upside