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Finnish business environment favours small players like Allied Telesis 12/2006

Formed in 1987, the company is part of the overall Allied Telesis Group, with headquarters in Tokyo. The group aims to provide high-quality end-to-end networking solutions to organisations of all sizes, ensuring them a reliable source for their communication requirements.

The company has been consistently profitable since its inception and records annual global revenues of about $600 million. All revenue growth has been organic, apart from the acquisition of US telecommunications translation equipment company, Teltrend. It has offices in over 60 countries and over 3,000 staff worldwide. The company invests 17% of its global revenues in research and development and boasts over one million customers worldwide.

Because of Finland’s traditional early adoption of new technology, Allied Telesis began selling its networking products here in Finland as far back as 1988. Around the turn of the millennium, however, the company began finding that selling through sometimes unmotivated, unknowledgeable distributors was not the best way to get the most out of the market. Allied Telesis Country Manager, Teemu Paussu, explains: "By the year 2000, our sales in Finland were at a level that we needed somebody from our own side to be present to guard them. At the same time in other areas, there was great potential to increase sales, so that too was a consideration.”

Need to devote 100% to business development

The decision to establish an office in Finland was taken by the head of the company’s UK organisation in 1999. Between 1996 and 1999, a single agent had been taking care not only of Allied Telesis’ business, but that of other vendors too, so it was felt that 100% effort on business development was not being applied. According to  Paussu, when the office was set up in 2000, the first incumbent ran the business from his home, until Paussu took over and was authorised to move into office premises in 2002. Now the office has grown into a two-person operation.
How did the company get things properly up-and-running in Finland? "It was all on my shoulders", explains  Paussu. "Because the owner was foreign, the procedure for setting up was slightly different from normal, and I had to find everything out for myself. I didn’t use any external consultants in the process, but the local authorities were a great help.”

And how have things been going? "Quite nicely", he says . "We've been maintaining the sales and, in certain areas, growing quite a lot. We’ve benefited from recent major infrastructural change in the IT sector in past years. At the turn of the millennium, there was a change in the company’s product portfolio, so it was vitally important to have a local presence here in Finland to effectively introduce the new products. That we have successfully done, so that the products that formed almost 100% of our sales as recently as 2001, now only occupy 30-40%. This really shows the benefits of having local expertise at the customer interface.”

Co-operation with SM Networks

In February this year, Allied Telesis signed a co-operation agreement in Finland with SM Networks, the latter becoming Allied Telesis’ systems integrator in Finland, and in return receiving delivery rights for all Allied Telesis’ products. This arrangement has proved to be a major boost for Allied’s fledgling Finnish operations. SM Networks delivers the company’s products for operators' and service providers' broadband, fibre-to-home and triple-play solutions.

The companies are targeting telecom operators and communities that offer operator services, such as municipal alliances. SM Networks is also offering consultative sales, maintenance and support services. The companies can offer triple- play solutions for a model that carries all voice, image and data traffic through the same subscriber connection.

So has Paussu encountered any particular problems? “Head count could be bigger”, he says with a wry smile. “A two-person operation is the minimum. I worked alone for the first three years, but very soon now we will have to expand. The future is looking bright, particularly in the second generation of broadband networks, which is now our main growth area.”

A small operation up against major competitors

A question that springs to mind is how a small two-man operation can compete in such a competitive environment. After all, Allied's two main competitors in Finland are such global luminaries as Siemens and Ericsson, both of which employ 1,000 – 2,000 people in Finland alone. “The strange thing is”, muses Paussu, “we actually are gaining market share from them, at least in the areas in which we specialise. This is mainly through hard work and having better products. But this is of course another reason why it is mandatory now to have a local presence in Finland, so that we can directly approach the operators and show them in person that our products actually are better".

It could also be, of course, that the Finnish business environment is favourable to small companies, giving them more of an opportunity to compete with 'the big boys'. "Yes", agrees Paussu. "Finland does seem to offer more of a level playing field for companies of all sizes. Another peculiarity of Finland is that, in the ICT business in particular, it’s an engineer-driven country where the main negotiations are done by technical rather than commercial people. That’s another reason why a local presence is mandatory as agents rarely have the technical know-how effectively to convince customers to buy the products they represent. A further reason for local presence is that Finland is just so geographically huge and there are so many places need to be covered from a marketing point of view”.

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