The mission of Going Global, which appears on ePrairie on most Tuesdays, is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.
CHICAGO – Bill Merchantz is a graduate of the University of Illinois at Chicago (UIC). He began his professional career as an application programmer for a division of Federal Mogul where he gained financial and sales systems experience.
Merchantz was then the financial systems manager for architectural firm Skidmore, Owings & Merrill. His experience on the customer side of the computer industry helped shape his convictions about the importance of total solution management, long-term value propositions and the positive customer experience.
He also co-founded Whittman-Hart, a Chicago-based information technology services consultancy that focused on the IBM mid-range market. Over the next seven years, he led the growth of the business into a 200-person consultancy that offered complete solutions in system software, technical education and professional services.
Merchantz founded Lakeview Technology in 1990 to focus on advanced solutions for continuous data and application availability. Lakeview’s technology works to ensure the availability of business information so customers can increase productivity, reduce costs and satisfy service level and compliance requirements.
He is an active member of the board of directors of the Illinois Information Technology Association (ITA) and acts as its treasurer. He also participates as a member of UIC’s Business Advisory Council and is associated with various other professional organizations.
Michael Muth: When did you embark upon international expansion?
Bill Merchantz: Lakeview was founded in 1990 and very early we embarked on international opportunities for businesses that needed to protect their critical data and applications. Lakeview offers software that ensures information availability for businesses.
Underneath that umbrella description is high-availability data protection and recovery and data management software. It’s very helpful to understand the software because it defines our roots. Our replication technology enables customers to have access to data that has been backed up from a server or set of servers to another server or set of servers. They can have real-time access to such data even if the primary server goes down. It’s in the infrastructure.
This was technology that was spun out from my first start-up company. We had developed MIMIX software from 1987 to 1988.
By 1989, we had already found our first international customer: a company in the United Kingdom called BritVic, which is a soda pop bottler and distribution company. They were running business applications and their data was very important to them. They needed to pull the data from their production databases in real-time over a network and then store it on another server so it could be available if there was some type of outage (such as a fire, flood or power outage).
Our software justifies and drives sales for more servers, storage, networks, applications and databases.
If your infrastructure software drives hardware, you look for hardware vendors that get more margin and value. They take on your software and sell it for you. It’s very similar to an operating system company that goes to Dell to deliver its operating system. One of our major partners is IBM, which sells the hardware and storage and applications. Through our IBM network, we conveyed that we had this offering. It wasn’t the Web in 1987 but the IBM partner network that helped us expand.
MM commentary: Though selling infrastructure solutions is a big advantage in going global, Lakeview’s choice to pursue international markets relatively early on was much easier than for developers of more culturally dependent types of software. Going to an English-speaking country first is a good first step as well.
MM: What percent of your sales comes from outside the U.S.?
BM: Though we’re a private company, it’s safe to say that roughly half our revenue comes from outside the U.S. There are peaks and valleys in the geographical markets. One year EMEA (Europe, Middle East, Africa) will be strong while the AP (Asia Pacific) is down. Without the granular details, about 35 percent of our revenue comes from EMEA, 10 percent from Asia and 5 percent from the other Americas.
MM commentary: When you are bound to the U.S. only, your fortunes are inextricably tied to the ebbs and flows of our domestic market. While many perceive expanding internationally as risky, it actually mitigates risk by spreading it around the globe so others are up when some markets are down.
MM: How does international revenue growth compare with your domestic revenue growth?
BM: Over the years, our growth has been pretty consistent. The growth rates are similar if not the same compounded. Geographically, we’ve penetrated more than 70 countries with our software, but the geography isn’t really as important as the economy. Because we’re infrastructure software, the economies really dictate our growth.
MM commentary: I’d bet there are some countries with much higher growth just as there are some laggards. Again, spreading things around can mitigate growth. By targeting high-growth markets and growing with them, you can beat the overall average.
MM: What percent of your resources do you dedicate to international?
BM: When you talk about resource percentages, there are a lot of ways to explain it. As far as distribution, business development, marketing and sales, we have these groups located in the U.S. as well as abroad. Our go-to-market strategy is through quite a few of our partner firms.
We have very close relationships with them and treat our partners as a close extension of our organization. Our partners hire quite a few people – hundreds, actually – to represent and sell our brand. They are very skilled and trained in our solutions. For representing us, they receive a considerably discounted list price.
As far as development, Lakeview is organized around platforms. In the U.S., our software, services and support are organized around our development labs. Our IBM i5 lab is in Rochester, Minn. and our open systems (UNIX and Linux) lab is in Waltham, Mass. About 100 development staff members build for international markets.
MM commentary: Though 50 percent of Lakeview’s revenues come from abroad, 50 percent of its internal employees don’t work directly on international tasks. However, when including partner activities (especially in marketing, sales and business development), it’s much more in balance. By delegating so much to partners, you lose an element of control. If you train them well, though, they should be able to represent you well.
MM: Has having Goldman Sachs as an investor helped you internationally?
BM: When Goldman became an investor in 1998, we already had eight strong years of development and growth with partners in many countries. Goldman did give us some strong brand recognition and financial backup in the minds of our customers. In that respect, our relationship has been very successful for Lakeview as well as for the Goldman offices that need our software.
MM commentary: Goldman Sachs has offices in 24 countries around the world and features a page on its Web site that highlights business continuity, which probably contains at least some elements of Lakeview’s solutions. That’s got to be a helpful selling point with Goldman customers as well as others.
Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at firstname.lastname@example.org.
Click here for Muth’s full biography.
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