Microsoft says NZ companies have a great post-Covid opportunity to go global.

In this opinion piece, Vanessa Sorenson, Managing Director, Microsoft New Zealand, looks at how growth in the digital technology sector will boost New Zealand's economy.

The past few months have turned the world into a snow globe version of itself, with the Covid-19 pandemic giving societies and local economies a vigorous shake.

The pieces are settling in new places – and, as part of that process, if New Zealand's digital technology sector can realise its growth potential, that will be key to establishing a resilient and diversified economy stronger than before.

To really scale up our digital economy and make New Zealand's ICT sector globally competitive, we need to reconsider our whole approach, from software development to expansion into new markets.

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Already our technology sector is New Zealand's third largest exporter, with ICT alone representing $6.7 billion worth of revenue in 2019. It looks likely to become even more important to our economy in 2020 as sectors like tourism recover.

While the pandemic created short-term demand for software and services to enable business continuity, remote working and essential services, there's a much greater opportunity for local tech innovators to transform into global players, supporting a strong economic future for this country.

The government has recognised this in its Industry Transformation Plan for digital technology, which includes support for local businesses to achieve international growth.

One of the driving factors in Microsoft establishing a datacenter region here in New Zealand is the huge scope to fuel business growth through cloud adoption and accelerate local digital transformation. New Zealand has been recognised internationally as a 'standout digital nation' that demonstrates to the world what the future might look like.

We were excited and proud to announce recently the signing of a new strategic partnership with Fonterra that will see the dairy co-operative migrate many mission-critical operations to Microsoft Azure to support its global growth plans. Once Microsoft's New Zealand datacenter region is launched, Fonterra will also benefit from real-time business intelligence and exponentially greater capacity to innovate with cutting-edge technologies.

Transferring data from on-site datacenters to Microsoft's virtually unlimited Azure cloud platform will vastly increase the amount of data Fonterra can gather and analyse in real time, using everything from IoT sensors on farm milk vats to smart machines in its factories to help optimise its operations.

Already, Fonterra is trialling machine learning to detect improperly sealed or faulty bags of powdered milk in its factories, so all products arrive at stores in perfect condition without wastage.

Fonterra has positioned itself well to remain agile and competitive for years to come, but it's not just about having businesses like Fonterra using new technologies to get work done – this is a chance to think even bigger and become a true exporter of digital innovation.

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With our datacenter, we hope to encourage more local developers to create scalable cloud-based solutions easy to sell in to other markets – creating a much stronger economic base for the future.

The most essential factor in our Kiwi tech sector's success is behaving globally from the beginning. That starts with cloud. Adoption of cloud-based technologies like Microsoft 365 or collaboration platform Teams scaled up dramatically during lockdown – worldwide, we saw a 70 per cent increase in Teams usage and around two years' worth of digital transformation in just two months.

Yet many New Zealand businesses – including ICT companies – haven't yet switched to the cloud. Most of our software developers design with the world, not just New Zealand, in mind but many of the solutions developed here are still built on platforms that can't be integrated with other applications, hosted on small local servers.

Our experience with the Microsoft One Commercial Partner network, which we launched in 2017 to help local developers build, market and sell innovative solutions worldwide using our global networks, shows using cloud-based applications unlocks phenomenal growth not possible otherwise.

Many developers we meet believe (mistakenly) that you can simply use the same platform or product in a market 300 times the size of New Zealand. However, if it cannot easily be integrated with different software or scaled to serve a significantly larger population, it greatly limits the appeal to overseas markets; the solution will need to be rebuilt from scratch using cloud technologies.

Many financial services companies also require an additional layer of security that's hard to achieve without regular updates provided by public cloud and trusted name recognition of cloud platforms like Azure. While some businesses once hesitated to store data in the public cloud (owing to fears about security), the opposite is now true – they're realising the power of a global cloud network is its ability to learn and adapt faster to threats. Increasingly, that's what they expect.

Local innovator 9 Spokes is a great example. While it had real success helping small businesses take advantage of the same top-shelf solutions and data insights as large multinationals, having to manually replicate and monitor software scripts for every customer held it back from growing further.

It was only after switching to a Microsoft Azure cloud platform that it could automate mundane tasks – helping it take on new partnerships with overseas banks such as Bank of America and OCBC Bank in Singapore, as well as BNZ.

Cloud has the additional benefit of helping businesses manage costs better, shifting from capital investment in on-site servers and assets to a transparent operating budget that grows or reduces in line with the size of the business – something particularly important in building future resilience to shocks such as Covid-19.

Scalable technology is only part of the success equation – it's also about understanding how other markets work, including how to build relationships. This is key to growing our digital economy and succeeding where others have failed.

It's a common perception among software companies that you can just expand overseas from your base in New Zealand – if you can work remotely, surely you can deliver remotely too. That's not necessarily the case; we've seen many excellent businesses fail to gain traction overseas because their leaders didn't realise how important it was to have local connections.

One of the core parts of our business is helping our partners understand how different markets operate. With our experience of more than 60 markets around the world, where we help create networking and partnership opportunities for software vendors, we're well aware of local idiosyncrasies that can make all the difference to building a strong presence and relationships.

In the US, for example, telesales is still the front line for many businesses, unlike New Zealand where a personal approach is the norm. Most successful software exporters partner with on-the-ground experts to run local offerings, or better yet, set up satellite offices in the target market.

Other simple steps to create an internationally strong ICT business include developing apps supporting non-English speakers. Even where English is widely spoken, such as the US, the Philippines, Singapore and India, there's increasing realisation accessibility is essential for business.

For New Zealand companies such as Valocity, which we are supporting to sell automated property valuation solutions for banks and other lenders, enabling multiple languages is key to its plans to expand into the vast Indian property market.

The message is that if our tech innovators put the right strategies in place now, including being in cloud from the beginning to accelerate growth and scale, as well as partnering with local experts to navigate the cultural and operational aspects of a different market, this will pay dividends not just for our tech sector but for New Zealand's economic wellbeing as a whole.

There are tremendous opportunities ahead for software businesses with the vision to think big – and act – big from day one.

For more stories of software innovation in New Zealand and further information on how to reach customers globally, visit https://partner.microsoft.com/en-nz/community/isv.