Joining hands for growth

A successful local business hinges on three parties, says CHEN HUIFEN

Just like marriage, a successful business depends on finding the right partner, though a business may have more than the one alliance that a monogamous society allows.

Enterprises have been known to leverage on partnerships for growth, technology, funds, co-branding, to penetrate new markets or gain a competitive edge.

Homegrown water treatment specialist Hyflux is one example. It tapped on the technology of a US partner to come up with a new product. This technology was combined with Hyflux's own membrane filtration technology to create an air-to-water generator - the first of its kind then.

When it comes to new markets, Singapore firms often cite the 'right partner' as the most critical factor. Apex-Pal International chief executive Douglas Foo, who plans to take the Sakae Sushi chain to Russia, once said that having the right partner can 'make or break' a venture in that country.

You can't over-emphasise this,' he said in an interview with BT. 'Securing a good partner is important for most markets, but it's especially so for Russia.'

But how does one find the right partner? Here, we look at one multinational company that has used Singapore's enterprise eco-system to gain access to partners.

MNC versus start-ups

A company like Microsoft Singapore has no lack of suitors waiting in the wings. And having the pick and choice of partners, you would think it would naturally seek out established or mature names. But you would be wrong.

Microsoft has a special interest in start-up firms - even start-ups that have no track record or revenue to speak of.

The rationale is simple. 'We think that start-up companies are where most of the innovative technologies - which are probably going to be interesting five or 10 years down the road - are going to come from,' said Daniel Ingitaraj, director of developer and platform evangelism at Microsoft Singapore.

'Start-ups are formed because they have innovative ideas. Venture capitalists invest in start-ups because they have some innovative ideas. Take for example, Google. Three years back, it was a start-up. But today, Google is a very well-known company.

'So we look at it the same way. Mature companies tend to make money on some previous idea that is five years old. Where are the new ideas and innovations going to come? They are more likely to come from interesting start-ups working on fresh ideas.'

Strategic alliance

Having access to innovative ideas is particularly important in IT, where a technology that is the talk of the town today could be obsolete in a few short years.

Hence, in 2001, Microsoft Singapore started building a team to focus on building relationships with start-ups. The team, which has 10 members, has no quotas or sales targets. Its responsibility is to foster innovation with start-ups here, typically those that focus on software.

'We are called the developer and platform evangelism team,' said Mr Ingitaraj. 'Our job is to work with the ISVs (independent software vendors) and help them build their products on any Microsoft technology. And then we hand these solutions over to our sales team who may have customers looking for those kinds of solutions. We are in the business of creating horizontal products.'

As with any successful tie-up, all parties involved must benefit from the relationship. For the start-up, having a partner like Microsoft gives it access to technical support, opportunities to showcase its technology at Microsoft-led events, as well as professional advice from a company with global reach.

'So it's a win-win situation,' Mr Ingitaraj added. 'We are in the business of creating mind-share of Microsoft platforms, and hopefully, in the long term, it will benefit Microsoft and its partners. If these partners are successful, we think Microsoft will also be successful.'

Partnerships come in many flavours. Microsoft Singapore takes part in HOTSource, an event for buyers to outline their procurement and technology roadmaps so start-ups can better tailor and pitch their products. Microsoft also works with the Economic Development Board to identify potential start-ups that may be relevant to the company. The government agency has access to numerous start-ups through programmes such as the Start-up EnterprisE Development Scheme (Seeds) and LEAP (Locally-based Enterprise Advancement Programme).

Local start-ups that have benefited from being under Microsoft's wing include HeuLab and Mozat.

Education solutions provider HeuLab designs software based on the Microsoft platform that can be used for tablet PCs in classrooms. The company is now a certified ISV of the Microsoft, a status that has helped open many doors.

'For example, when Microsoft had their Government Leaders Forum some time ago, they offered us an opportunity to present,' said HeuLab co-founder and chief executive Rakesh Gupta.

'I remember (Microsoft CEO) Steve Ballmer and all the education ministers from the Asia-Pacific were here. So we did a mock-up classroom of the future and used our solutions to showcase how the educational landscape of Singapore is changing. That actually sparked enquiries from the region.'

In the past year, Microsoft Singapore has engaged more than 100 start-ups. For this quarter, it is working with 35 start-ups under a partnership with EDB. In May this year, it even opened a Microsoft Innovation Centre (MIC) as part of its effort to engage the software community. Located at One Marina Boulevard, the centre is available to all start-ups under the EDB Seeds programme. Besides being a training site for Microsoft platforms, the centre may also be used by companies to test-bed prototypes and showcase solutions to potential customers.

Over the next year, MIC aims to help Microsoft Singapore and its partners to develop and ship 100 commercial applications. Mr Ingitaraj acknowledged that it will be hard to assess MIC's return on investment from helping the local software industry, but one way to look at it is through the intellectual property (IP) creation of its partners.

'How much IP is created through our engagement at MIC? Are we helping to create more IP in Singapore? That is something we keep measuring,' he said. 'The second thing is, how many of the IPs we helped create have been successfully exported? So if HeuLab says its products have now been sold in 120 schools, in Australia, Korea, Europe, that's ultimate for us.'

His goal is to help create 200-odd IPs in five to 10 years. Among them, about 50 partner companies should be able to have exportable products. But at this time, it is too 'preliminary' to gauge the success rate.

The enterprise eco-system

The enterprise eco-system in Singapore appears to have all the components required for success. Should he want to set up a start-up, Singapore would be an ideal place because there is plenty of support, Mr Ingitaraj said.

'The eco-system is all about having three people - it's about government, it's about the MNCs and it's about the local companies,' he said. 'These three need to work. The government supporting the local companies, the local companies working with MNCs, and the MNCs working with the government. If each is able to feed on each other for success, overall the eco-system is going to be a very fruitful eco-system.'

The main challenge is the small size of the domestic market. Any local company that aims to grow beyond revenue of $5 million will have to look beyond Singapore. 'When somebody is born and brought up in Singapore, you know the local market very well,' said Mr Ingitaraj. 'When you go overseas you are playing against the local players there who know everything about the local economy - and you are the foreigner there. Competition is much tougher, because it's a different landscape.

To make a presence in the market, you need to stay long. To stay long, you need resources, you need money, the infrastructure to stay long. If you are going to stay that long, do you have something innovative that makes you play competitively against all the rest of the local players in that market? That becomes key.