Despite recession fear, Japan-based tech unicorn Sansan plans to expand its business across Southeast Asia. The cloud services company especially sees the needs for cloud invoicing solutions and it is expecting a stronger growth as it enters into additional markets.
“The Asean region is set to become the fourth largest economic zone in the world. Especially as global supply chains diversify, Southeast Asia welcomes an influx of business operations,” Edward Senju, Regional CEO of Sansan based in Singapore, told TechNode Global in an interview. “Its whirlwind migration to the online economy the past two years saw businesses scrambling for digital transformation in order to remain competitive.”
He said the company noticed many companies from Japan and Singapore that are looking to expand into Southeast Asian markets who want a technology partner on that journey. “Sansan would like to be one of the technology partners for companies expanding in the Southeast Asia region,” he said.
“We saw the need for a solution that helped companies digitize invoices, allowing employees to work remotely while improving ESG credentials at the same time,” he said. This would include reducing paper, improving data governance, and improving employee wellbeing.
“Currently our company-wide sales growth rate is at 23-26 per cent, and we foresee our overseas growth exceeding this rate as we expand into additional Southeast Asian markets,” Senju added.
Since its founding in 2007, Sansan has been focused on providing alternative and original contact management solutions using business cards as building blocks.
With its B2B product, and later with its B2C equivalent, Eight, Sansan said it has been leading the way in cloud-based contact management in Japan. Sansan now has over 7000 corporate customers, including the Japanese government, its Linkedin profile showed. Sansan went public in 2019 on the Tokyo Stock Exchange after reaching unicorn status the same year.
“In addition to our regional headquarters, Sansan has also established a scanning center in Singapore of which we are in discussion to build out across the region as we expand,” Senju said. “Sansan is planning to hire more employees to expand our business in Southeast Asia and double the number of employees, including staff at scan centers.”
He also said its cloud invoicing solution will be able to help meet the needs of businesses in the region as they see a national push towards digital modes of invoicing for higher productivity as governments of top economies in Asean have already adopted, or have plans to adopt, e-invoicing processes as a solution to increase transparency and efficiency.
“Despite an overall digital migration that Southeast Asia has enjoyed, traditional sectors like construction, real estate, and maritime have not experienced the same pace of innovative change,” he noted.
In the interview, Senju also shared his views on the opportunities and challenges he sees in Southeast Asia. Below is the edited excerpt:
Where are the opportunities Sansan sees in Southeast Asia? What are these factors?
The Asean region is set to become the fourth largest economic zone in the world. Especially as global supply chains diversify, Southeast Asia welcomes an influx of business operations.
Its whirlwind migration to the online economy the past two years saw businesses scrambling for digital transformation in order to remain competitive.
We also see many companies from Japan and Singapore that are looking to expand into Southeast Asian markets who want a technology partner on that journey. Sansan would like to be one of the technology partners for companies expanding in the Southeast Asia region.
A recent poll by The Straits Times in Singapore found that plenty of local businesses plan to expand into new markets over the next 12 months, with most of them investing in digital technologies to do so, noted a new survey.
It also found that the coronavirus pandemic is still having a significant impact on firms’ digital strategies, which created a great opportunity for Sansan – digitalizing invoices.
Our cloud invoicing solution Bill One offers a simplified invoice management hub to help corporates digitalize invoices and streamline their business processes.
There are estimated to be more than 70 million small and medium-sized enterprises (SMEs) across the region, representing 99 percent of operating firms, all of which send and receive dozens if not hundreds of invoices each month.
With the “Great Resignation”, companies which relied on cutting-edge cloud technologies have benefited, allowing employees to work remotely, and showing greater business resilience.
We saw the need for a solution that helped companies digitize invoices, allowing employees to work remotely while improving ESG credentials at the same time (reducing paper, improving data governance, and improving employee wellbeing).
Any particular market/countries Sansan preferred/priorities? And why?
Sansan is looking to expand our reach in Southeast Asia, but we are unable to disclose specific countries as of this moment – we expect to be able to share more specifics in the coming months.
Please share more on Sansan’s expansion plans in Southeast Asia. Could you share more details on the capital expenditure allocation and hiring plans?
In addition to our regional headquarters, Sansan has also established a scanning center in Singapore of which we are in discussion to build out across the region as we expand.
Sansan is planning to hire more employees to expand our business in Southeast Asia and double the number of employees, including staff at scan centers.
Any particular products from Sansan that it thinks businesses here will want/need? Why?
Our cloud invoicing solution Bill One will be able to help meet the needs of businesses in the region as they see a national push towards digital modes of invoicing for higher productivity.
Governments of top economies in Asean have already adopted, or have plans to adopt, e-invoicing processes as a solution to increase transparency and efficiency.
Following Singapore and Indonesia, Philippines and Vietnam are the next to implement mandatory business-to-government (B2G) e-invoicing as of this year.
The Philippine Department of Finance introduced the Comprehensive Tax Reform Program which implements a new e-invoicing system that is planned to roll out to all B2B transactions by 2023 in phases.
Similarly, Thailand, although not mandatory, has implemented its Thailand 4.0 policy since 2016 where VAT parties in Thailand are able to send e-invoices and receipts on a voluntary basis using the country’s e-tax system.
Are there any particular sector(s) Sansan focused on in its expansion in Southeast Asia? Are all the products can be easily used by all sectors/businesses?
All of Sansan’s products can be used by businesses in all sectors, providing new productive solutions for essential workflows.
Despite an overall digital migration that Southeast Asia has enjoyed, traditional sectors like construction, real estate, and maritime have not experienced the same pace of innovative change.
Data compiled by McKinsey found broad agreement among construction companies that digital and innovation are vital to their long-term prosperity.
Yet, [these companies] have not spend enough on their transformation efforts despite the advantages it brings. As we emerge from the pandemic, they must now look to catch up as part of their post-pandemic recovery strategies .
We also saw the strain on finance departments, with many staff having to go into the office during the past two years of the Covid outbreak to process paper invoices, potentially exposing themselves to Covid.
[As an example they can] start moving the finance department’s invoice processing from paper to digital, cloud-based alternatives.Many foreign companies would opine that the Southeast Asian region is complicated, with different cultures, income levels, and regulations. What’s Sansan’s view on this? What kind of strategy Sansan uses to to tackle these different markets? Will Sansan enter these markets simultaneously or one market at a time?
It’s true that every market has its own unique challenges and opportunities, but we do see consistency in each government’s approach to the adoption of e-invoicing.
Given the priority digital invoices are taking on the national agendas of all these economies, it’s important that businesses big and small get behind the push and start preparing for the shift as part of their own internal strategies.
In the short term, this means investments into new digital and cloud infrastructure that can support their move away from paper and formats such as PDF, towards truly modern digital standards.
Over the longer term, with governments’ support, these investments will pay for themselves by delivering real cost savings, reducing carbon footprints, and increasing resiliency in the face of unexpected future economic shocks.
Based on our own research, businesses who have made the transition to fully-digital invoices on average save hundreds of man-hours per month by using a mixture of cloud, AI, and OCR technologies to automate processing.
At Sansan, we plan to enter several Southeast Asian markets over the next six to 12 months, but the exact timing of each is not yet decided – it could be simultaneously or one at a time.
What other challenges Sansan sees in its expansion in Southeast Asia? How would Sansan address these challenges?
The developing digital infrastructure in Southeast Asia will be a challenge that all tech companies need to manage. Although the region is experiencing rapid digital growth, Southeast Asia still lags behind other regions in this aspect. Further improvements and investments are still required to ensure that uniform high-speed internet connectivity is accessible across all localities to drive further digital inclusivity and minimise business entry barriers.
Would you be able to share some of the financials of Sansan? (latest net profit and revenue.) Do you have any target for the Southeast Asian region?
We have released our fiscal year 2021 third quarter financial report in mid-July, which showed our annual recurring revenue (ARR) has achieved a 23.0 per cent year-on-year (y-o-y) growth to 18,831 million yen.
Our operating profit also enjoyed a 170.2 per cent y-o-y growth this financial year, and despite COVID disruptions our net sales remained steady and increased 24.6 per cent y-o-y.
Currently our company-wide sales growth rate is at 23-26 per cent, and we foresee our overseas growth exceeding this rate as we expand into additional Southeast Asian markets.
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