Japanese Business Software Maker Embarks on Rare U.S. Foray

  • Works Applications challenges industry leaders Oracle, SAP
  • Company is biggest Japanese human-resources software vendor

Works Applications Co. became the biggest Japanese vendor of business software for payroll and human resources by taking on Oracle Corp. and SAP AG in its home market. Now the company is adopting a more ambitious plan: breaking into the U.S.

So what’s the big deal? Simply put, no Japanese software maker has been able to replicate the success that Toyota Motor Corp., Sony Corp. and other manufacturers have enjoyed outside the archipelago. While theories abound -- from the government’s focus on industrial prowess in postwar years to an educational system that doesn’t encourage creative thinking -- the fact remains that the only “soft” breakout industry from Japan has been video games.

“We are completely followers,” Masayuki Makino, Works Applications co-founder and chief executive officer, said of Japanese information-technology providers, speaking through a translator. “I don’t think many companies have been able to enter the American market -- Japanese IT has been very delayed. How many software makers do we have in Japan first of all? Not many.”

Makino is seeking to change that, with a product aimed at the U.S. market that will debut in January. The software, called AI Works, makes use of machine-learning technologies to automate tasks such as data entry, and is being introduced Monday at a conference in Las Vegas. The Tokyo-based company will start taking orders this month, and some U.S. subsidiaries of Japanese companies have already expressed interest, Makino said.

Time, Diligence

Works Applications, which isn’t publicly listed and counts Mitsubishi Chemical Corp. and Yamaha Motor Co. among its clients, says it has passed Oracle and SAP in terms of share in the Japanese market by offering lower prices. Works Applications is the biggest vendor in payroll and human capital management software in Japan, according to IDC. It had 36.6 billion yen ($307 million) in sales for the year ended in June.

“To really make a go of it, it’s going to take time and require diligence,” said Chad Eschinger, an analyst at Gartner Inc. Having Japanese multinationals who may want to use Works Applications software at their U.S. operations will help, he said. “They have a better shot in some regards, but they have to build out a sales force, a channel and certify and educate a broader American market on the value proposition they bring.”

Works Applications software costs 30 to 50 percent less to use than SAP and Oracle because its products include features that other companies have to procure from other vendors, according to Makino. Globally, cloud-based business software makers have been chipping away at Oracle and other traditional vendors, which have been slow to get into Web-based computing. Works Applications considers U.S. cloud companies such as NetSuite Inc. and Workday Inc. as competitors, Makino said.

Cultural Divide

Bringing software designed for Japanese businesses comes with its own challenges. Differences in U.S. law and practices in accounting and human resources required tweaks to the software, Makino said. For example, U.S. employers don’t ask job applicants for their age and gender, while a Japanese job seeker would be expected to put that on a resume, the CEO said. The company also needs to build its sales network in the U.S. and plans to hire more salespeople.

Entering the U.S. market is uncommon and challenging for Japanese software makers, said Makino, who couldn’t name any others that have tried.

“No one has been successful -- well someone told me that 19 years ago,” Makino said of the time when he first started the business. “People said ‘why are you even establishing the company? SAP and Oracle are here. We don’t need another one.”’

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE