Axel Hass
Siemens Nixdorf:
On the Move in the Asia-Pacific
In October 1990, the Data Information Systems division of Siemens AG merged with Nixdorf Computer to form Siemens Nixdorf Informationssysteme AG (SNI). Just over two years ago, SNI instituted a relatively radical change of organizational structure to proactively adapt to changing market conditions and reverse a downward trend in revenues. This effort was successful; in fiscal year 94/95, SNI had global revenues of about $8.9 billion, a 10% year-on-year increase in revenues and 370% increase in profits.The Asia-Pacific is one of Siemens Nixdorf's three regional groupings (the other two being Europe and America). SNI currently does over 90% of its business within Europe (65% in Germany), but by 2000, the target is to generate one-third of its revenues outside of Europe, including building a $1 billion business in the Asia-Pacific. SNI has built up a number of competence centers, R&D resources, and manufacturing and purchasing facilities in the Asia Pacific. Operations are as much as possible decentralized, with headquarters functions shared among 10 cities throughout the region.
Interview with Axel Hass
Asia Pacific Regional Manager, Siemens Nixdorf InformationssystemeAxel Hass studied economics in Freiburg university in Germany, and has been working in the IT industry for about 25 years. After 5 years with ICL, he joined Nixdorf Computer in 1974, where he served in a variety of national and international sales and management positions. With the merger of Nixdorf and Siemens DI (Data Informationssysteme) in 1990, he joined Siemens Nixdorf Informationssysteme where he is now manager of SNI's Asia Pacific region. Mr. Hass is an avid sportsman and reader who believes in decentralization and the power of positive thinking.
interviewed by Wm. Auckerman
Mr. Hass, please tell us a bit about your background. Especially, what brought you to Asia?
Axel Hass: I've had experience in all areas of sales and marketing, and development and production areas as well. In the '80s, I was responsible for Nixdorf's worldwide retail business -- production, development, and worldwide sales. This is something that I look back on with pride, because we could develop this business from zero to 1 billion Deutschemarks ($675 million) within eight years. I left the retail business with Siemens Nixdorf being number one in Germany and number one in Europe, and with big customer bases in America, Asia, and Australia.
Then, with the German reunification, I got the opportunity to work for SNI from 1990 to 1995 in East Germany. We captured 35% of the market, which is the highest market share in a region in Europe, and about double the market share we have in the rest of Germany. This is the only area in the world besides Japan where IBM is not the market leader. That is what I could achieve in those four years in East Germany.
So because of my record in East Germany, my experience in the worldwide retail business, my knowledge of international business, and my background in product information, the company felt that I could do something to develop Siemens Nixdorf in the fastest growing market in the world: the Asia-Pacific. This mixture of international experience, knowledge of how to handle growth, and how to build up momentum lead to the decision to ask me to be responsible for this area. So I took over here in January 1995.
Where in the Asia-Pacific are you based?
Hass: I live in Hong Kong. It is a very good place, right in the middle of the region -- a good bridge to all major countries, with an exciting business climate that gives the inspiration for business in the region.
I tried to build up the business operation here in Asia without having an actual "headquarters." What I wanted was a virtual, flexible community of competence centers spread over the region, networked by modern communications into what I call a "virtual headquarters." In this way we avoid an organization where managers spend most of their time talking among themselves, which is what normally happens in a big headquarters operation.
This decision has had a very positive impact on SNI culture and the people here in the region, because we have competence centers in the field, where the action is. The presence of these competence centers in the different areas means that all areas have a say in any "headquarters decision." All areas are represented, and decisions for the region are influenced by the different market experiences. What we get, then, is the utmost influence of developments in the different countries.
That sounds like a very flexible business model.
Hass: Nowadays, it is important that you stay flexible. Building up a headquarters in one place tends to build up status quo thinking; you can't adequately change in response to market conditions. With our decentralized headquarters, we are open to move our decision "center" to anyplace possible.
I strongly believe that having the right culture and the right working relationship between people, and having open communications, is very important in our challenging business. You need the ultimate positive support of your people to be successful. We are working on creating this kind of entrepreneurial, creative, open-minded communicative culture.
Tell us more about SNI in Asia.
Hass: We have offices in most countries normally seen as part of the Asia-Pacific. In some -- such as Vietnam, Sri Lanka, Mongolia, Laos, and Cambodia -- we are working with distributors. In others, we have our own companies. And in each country, we try to use the help, the synergy, of Siemens, the mother company of Siemens Nixdorf. Siemens is a big company in many Asian countries, with a long tradition, so we try to capitalize on their support and their established existence.
Our operation is structured in "lines of business." We work in a matrix where the strategy is developed globally, and these global strategies are then implemented by lines of business and executed by the country operations. We have 12 lines of business, divided into three main groups: the product business, the solution business, and the service business. Each country office is responsible for implementing SNI's global strategies in their country; they are responsible for hiring staff, for customer contact, and building up the country infrastructure.
The Asia-Pacific, together with America and Europe, are our regions around the world. Europe is nowadays by far the biggest, generating about 90% of SNI revenues. Within the next five years, we hope to have one-third of our business from Germany, one-third from the rest of Europe, and one-third from outside of Europe. Our target is to become more international.
What are your strategies to increase sales in Asia?
Hass: Over the past twelve months, we have been trying to identify in which areas the basic core strengths of SNI can match the needs of the Asia Pacific. One of our strengths around the world, and especially in Europe, is the banking business, so obviously we are targeting this: both the product business, like ATMs [automated teller machines], and the solution business, mainly for retail banking to implement branch solutions and nationwide networks. This is one target.
Target market number two is industry solutions. There we have worldwide cooperation with the company SAP, from Germany. Our strength is not only selling hardware with SAP's software, but also selling the full software solution while having on-hand implementation resources and resources to perform all the needed consultancy and service. In Asia we have built five business centers for this activity, with people from Asia, Europe, and America staffing our competence centers.
Another target market is the retail business. Siemens Nixdorf is number one in the point-of-sales business in Europe, and we have a good basis here in the Asia-Pacific so that we can give some additional push to this market. We are very strong in our products in this area, many customers tell us, because we have a totally open PC-based technology on the shelf. We combine our high-quality hardware with state-of-the-art software, mainly based on Windows, and our strong network capacity.
What about the public sector?
Hass: Yes, target number four is markets in the public area. We have very complex software solutions for utilities: gas, water, energy. And telecom; we have a number of customers built up already in Asia -- in Australia with Telstra and Optus, for example, and we have solutions built up with Hutchinson in Hong Kong. We are also working with telecom providers in Malaysia, Thailand, and the Philippines. We have a number of reference installations in telecom for billing and for intelligent network solution products. Another public area market is security, border control systems. We have implemented the system in Singapore, for example.
And PC sales?
Hass: All of these areas, of course, are supported by PC sales. We are number one in Germany and number four in Europe in the PC market. Our full line of PC offerings features high quality and security and meets environmental standards.
What are your best IT markets in Asia?
Hass: In the past, these have been Australia, Malaysia, and Japan. And recently, there has been strong development in China, India, and Indonesia. The countries with the highest potentials for the next decade, because of their high population and gross national product, will be Japan, China, India, and Indonesia. And, of course, other countries like Australia and Korea, with high development already, will stay very important for the next 10 years.
The growth in this region is huge. The gross national products of Asian countries by the year 2000 are expected to be nearly as big as Europe and North America together. It is said that Asia will spend about $250 million on IT by the year 2000, coming from $170 million today.
Where does Japan fit into the overall Asian picture?
Hass: Japan is a market all its own. Out of the $170 million Asian IT spending today, Japan is $110 or $120 million. And in the year 2000, out of the $250 million, Japan will be something like $150 million, so it will remain a dominating market. It is vital to develop strategies, product ideas, and software packages dedicated to the Japanese market because it is so big and so important.
This is why we decided to put more investment and new people into our operation in Japan. This has been done over the past twelve months. Since last autumn we have been in full operation with new management and a clear business structure.
What is the greatest challenge of the Japanese market?
Hass: The most obvious thing is that you have to adapt some of your hardware pieces -- and, of course, your software, because of the language. Even on the hardware side, there are some things you have to adapt because of administrative rules, rules in bookkeeping, and business and public administration requirements. This is something you see very clearly from the beginning, so you have to implement procedures, determine how you can make the best of a worldwide offering yet adapting to the Japanese needs.
It's an ongoing process that all suppliers have to fulfill. Only the Japanese suppliers, if they start with everything based on Japanese rules, can avoid this task. This can add some costs onto your product, but if you have a focus so you don't have to do everything, these kinds of costs will pay out because the Japanese market is so huge.
So there is a lot of adaptation necessary for a foreign firm to succeed in Japan?
Hass: Yes, but again, the decision on whether you do this or not has to be compared with the market share. And it is important for a European company to understand that there are enough talent, skills, and expertise here in the market so that for the longer term you don't need European staff to run your Japan business. This is something that you have to understand quickly: the need to give management and operation into local hands. We are actively working on this.
The competition in Japan, of course, is very tough. But competition is tough everywhere in the world -- in Frankfurt, in New York, everywhere. It is difficult to say whether competition is stronger in Japan than in other places, but certainly you have to be very stable in what you are doing, and very serious in your business behavior.
Why should prospective customers choose Siemens Nixdorf? How do you differentiate yourself from your competitors?
Hass: One thing would be our capacities to mix hardware and software, because we have more experience. Siemens and Nixdorf have long been among the biggest suppliers in Europe for packaged hardware and software, so Siemens Nixdorf has much more experience than most other suppliers in how to package hardware and software into one solution. This, together with our SAP offering, will help us very much in industry applications.
In other areas, we can rely on our broad offering in the field of integration. We are a supplier who has a full line of hardware, from PC to mainframe, a long history in networking, and we can capitalize on the broader spectrum of the Siemens family for the telecommunications or networking fields.
So three things, basically: product differentiation, expertise in packaging, and more options by combining our Siemens Nixdorf product portfolio with some Siemens expertise into one integrated offering.
What do you foresee for the future of IT? What are the technologies to watch?
Hass: I won't pretend that I can look into the year 2005 and tell you what will be done then, but I do see some major trends. One, obviously, is increased communication between people and the widespread usage of database pockets around the world. Making all kinds of information available to everybody, anyplace in the world, by using new network facilities seems to be the biggest challenge for the next five years.
The ability for every individual to use nearly unlimited databases around the world for his personal use is technologically new, an absolutely new dimension in society. I think this development is so strong because it reflects something that is of basic interest; getting access to information from around the world is a really basic expectation of people today.
That is one thing. Another -- which is important never to forget -- is that people are always interested in quality, reliability, and good service. Every company selling for the IT market should be aware of this. If you can mix a visionary technology touch with the basic instruments for making business, then you will be successful in the future.
Finally, what are your plans for Asia, and Japan, over the next five years
Hass: Our plan is to be a $1 billion company in Asia in the year 2000, with about 10% to 15% of this coming in Japan.
My personal hopes, though, are even bigger than the plan we have made. What we saw in politics at the recent ASEM [Asia- Europe Meeting] in Bangkok, for example, shows that Asia and Europe are moving towards each other. And with Siemens Nixdorf being the number one computer supplier from Europe, I have big hopes that this movement will give us chances to achieve even more than our target figures.
Heinz-Peter Strömsdörfer
Interview with Heinz-Peter Strömsdörfer
Japan Country Manager, Siemens Nixdorf Division, Siemens KK
Heinz-Peter Strömsdörfer has been with Siemens since 1974, working in a variety of positions in data information systems and foreign sales. In 1992, he took over as country support manager for international business development of Siemens Nixdorf, and in 1993 became marketing manager for international business sales. In 1995, Strömsdörfer transferred to the Asia Pacific region, initially developing the public/telecom business, and since July 1995 has been serving as Country Manager for the Siemens Nixdorf Division of Siemens KK.
Tell us a bit about Siemens Nixdorf in Japan.
Heinz-Peter Strömsdörfer: Siemens Nixdorf is a merger between the IT division of Siemens and a German computer company called Nixdorf Computer, in 1990. Before the merger, Siemens IT did not have a large sales operation here in Japan. Nixdorf had been here since sometime in 1982 or 1983, though, mainly in three areas: PBX systems for in-house telephone systems, POS (point-of-sales) systems, and minicomputers.
Especially in these last two areas, we still have many customers and an installed base. Siemens Nixdorf has added another area, which is high-performance printers.
And what are your future plans for the Japanese market?
Strömsdörfer: The decision to expand the business and to extend the operation in Japan was made only a year ago. Within the framework of SNI's direction and commitment to Asia-Pacific as a whole, we made the decision to invest into the Japanese operation and go into new business fields here.
Many of our customers have proprietary systems that have reached their limit for upgradability and performance. We meet these customers' needs by introducing modern UNIX-based midrange products and by a set of tools that will enable them to change the hardware, get better performing open systems for a much better price-performance ratio, and -- at the same time -- take the applications as they are today with them, so that the transition is as smooth as possible. Then as the next step, they can go on to think about new solutions -- whether their own applications or standard packages like R/3.
R/3 is a focus for most of the countries in the Asia-Pacific, and also for Japan. We are a unique partner of SAP -- SAP has many partners -- and we hold worldwide sales rights for R/3. We are active in all the sectors that make up the typical R/3 business: the product R/3 as such, the platform for R/3 (like midrange UNIX systems or PCs with Windows NT), and services including management and IT consultancy, and IT realization and implementation, plus the services after.
I think the success of SAP as a relatively young company in Japan proves that this is the right area to go into. It is one of our major focuses in the near future in Japan.
How big is Siemens Nixdorf in Japan?
Strömsdörfer: Siemens Nixdorf is an independent company, 100% owned by Siemens, but here in Japan we are a part of the Siemens organization. Until about a year ago, we were concentrating on maintaining our customer base, while doing active sales and marketing in the high-performance segment through partners. The total organization was very small, about 10 people.
We are now expanding. We will have 25 to 30 people by the end of our fiscal year, in September, and thereafter we'll grow according to market developments.
Do you have a headquarters operation in the Asia-Pacific?
Strömsdörfer: The answer is "yes" and "no." We have headquarters-type functions, but they are not located in one country. Axel Hass, regional manager for Asia-Pacific, has his desk in Hong Kong, but the marketing and communications manager sits in Kuala Lumpur, the head of the personnel department sits in Singapore.... This is true for many corporate functions in the Asia-Pacific. I have a number of people working for me, supporting me in Japan, for example, who sit elsewhere in the region.
Within the Asia-Pacific, we are one team. My first responsibility, of course, is mainly Japan-related, but still I consider myself as a member of the team for the Asia-Pacific region. So, on a daily basis, we keep in contact, we help each other out.
You're relatively new to Japan. Have you found anything about doing business here different than what you expected?
Strömsdörfer: Two things. I expected Japan to be much more of a closed market than, from my perspective after half-a-year here, it actually is. I find the people, the customers, much more open.... I can still see signs of a closed market, or a tendency to not really open it enthusiastically, but I don't find the country nearly as closed as I considered it before I came here.
Surprise number two is very much linked to Japanese basic attitudes. I am amazed by people insisting, from my point of view, on minor issues; the attitude is to be as precise as possible, by any means possible. We have meetings that last for hours when I think, "My god, we should be able to do this in 30 minutes." People tend to go into the details -- but it is absolutely useless, from my experience, to try to bypass this. You cannot do this in a meeting; the issue will not be forgotten, and it will come up again next time.
This was a big surprise, because it is so different from what I learned in Germany and in my international career. In Germany, the meeting goes very quick sometimes, and when it is over you think that everyone has the same understanding. But when you walk away, everybody does something different, and at the next meeting you have to spend time to bring these different opinions back on track.
In Japan, it's the other way. The meeting takes much more time, and it's sometimes annoying to me, the level of detail we go into. But when you take the time and you go through all this, people walk away and they stick to the decision. So it takes some time to convince, to discuss each and every detail, but the big advantage is that once you've done this, you are through with it. The time investment is worthwhile because everyone understands and follows through.
Why did SNI decide to send you, a German, to run the organization rather than hire a Japanese manager?
Strömsdörfer: We considered this issue from the very beginning. My job is not to come here and stay forever. We don't think, "This is a German company, so it has to be somebody from Germany running it." What I have is a kind of kickoff job: use my insights of the company, and our strategy and products and services, to set the scene and create a frame which can be filled with local people. That comes later, and then I will disappear. We don't think that non-native management and staff is a viable long-term option.
How do Japanese customers react? Do you face any special obstacles being a foreigner?
Strömsdörfer: The answer to this is related to your previous question. The serious obstacle for a non-Japanese is to not have the connections, to not have the relationships that are so important to business success in this country. This whole society is built upon personal relationships. This is one reason you can be a foreign company with an international flavor, but in Japan you must be a Japanese organization. If you have the right people on board here, then you will also get the acceptance from Japanese accounts. It is a major issue.
Do you find differences in Japan's IT market compared to Europe or the US?
Strömsdörfer: In the IT business, as in any other business, the important factor is how to get access to customers. In Japan, more than any other market I know, this is dependent on the relationship, on trust and personal values, rather than the business itself. You have to carefully consider this when hiring your staff, setting strategy, etc.
Is it harder for a new player here than in other markets?
Strömsdörfer: To a certain extent it is more challenging, yes. But I think you can convince Japanese customers by providing good services, good products, and by the honest way you do business. Maybe it takes a bit more time here to convince people, but the advantage is that once you have achieved that, you have established a relationship that will last. The entry might take more time, but the benefit comes later. It requires a lot of hard work, but it is worth it.