The high cost opportunities

High costs don’t mean a business can’t compete.

It’s often said that Australian businesses can’t compete and the nation can no longer support manufacturing or high tech industries.

With the high Australian dollar, many economists, business leaders and politicians have said industries have to adapt to being an expensive economy. Interestingly, few of these experts explain how businesses should, or can, adapt.

At the recent Kickstart forum I had the opportunity to meet two Australian companies succeeding with high tech products and using the high dollar to their advantage.

David Jackman of Pronto Software, a 30-year-old business intelligence company, is proud of the fact the business he leads does most of its development in Australia. As a business owned by its employees – Pronto had an employee buyout in the late 1990s – he sees his role as building the business to last centuries, like some European businesses.

Linus Chang developed his Melbourne based business, Backup Assist, when he discovered the data backup tools built into Microsoft Windows weren’t very good. Taking the basic Microsoft products, he added the features that made these tools usable at a fraction of the cost of bigger companies’ data backup software.

Today Backup Assist is sold in 124 countries with the US as the biggest market.

Both Backup Assist and Pronto find keeping the bulk of the software development in house in Australia makes sure they are producing high quality, effective products.

Software development isn’t the only sector dealing with the high cost environment, David Jackman says Pronto has many customers in the Australian manufacturing industry who have adapted to a high cost environment with niche and high value added products.

One of the interesting things with Backup Assist is that Linus and his team identified a weakness with the market incumbent’s product and were able to build a business around it.

There are similar opportunities in our domestic markets as well, where many sectors are dominated by cosy duopolies with conservative, insular managements.

Identifying these opportunities is where the challenge lies: What do our businesses do well that customers are prepared to pay for?

We also have an advantage in being a relatively open economy with first world standards. This is another reason why investment in new infrastructure like the National Broadband Network is important.

One thing is for sure, selling low priced commodity products with small margins is not where the future lies, even if the Aussie dollar collapses.

Paul travelled to the Kickstart forum courtesy of Media Connect.

Business Tech Talk explores how technology is changing our companies, markets and society. Business owner, blogger and broadcaster Paul Wallbank looks at how we can use the net, computers and smartphones to make our businesses more profitable and competitive.