As part of the MindTouch open source best practices survey, we asked European open source companies how non-European companies can effectively penetrate the European market.  Since the questions were not part of the main best practices survey (which will only be published to the participating companies) we can share with you our findings.    

For an additional perspective, I recommend you read Ian Howell’s (Alfresco) earlier blog on US and European open source differences. 

First Law: Don’t treat Europe as one entity 

According to the European open source respondents, every country needs its own entry strategy.  One highlight in particular, you can get away with selling English versions of their product to Germany, Austria, Netherlands, and the Nordic countries (unless it’s a consumer oriented product).  Countries like Spain, France and Italy do require language localization of product and documentation.    We recommend you work with local Value Added Resellers (VAR’s) or System Integrators (SI) to help understand the local market and to help translate the documentation to save on the expense. 

Tip: Leverage your open source communities for localization support via an external knowledge base then reward them for it.

Second Law: Entry strategy through a VAR channel is essential

Thinking of entering Europe with a direct sales force?  According to our research the answer is a resounding no - don’t do it.  In Europe, local partners matter – they matter a lot.   Hire one local employee focused on European channel development and strategically select channel partners that understand your business model.  Don’t waste time with SI’s or VAR’s that don’t have either open source or industry experience (both is best). 

Tip: Mash-up your community user base with Google Maps to determine your concentration of customers, then recruit channel partners in the nearby areas. 

Third Law: Don’t do territory exclusivity contracts

Unless you have a strategic and financial reason to do so, avoid exclusivity of any type.  Respondents have shared stories about channel partner resistance to investing in marketing and sales activities.  Some simply wait for leads from you before taking any action.   Remember that a monopoly is never a good idea for business unless you’re the monopolist. 

Tip: Exceptions can be made for exclusivity tied to performance.  Tread carefully here however due to complex laws that vary by country. 

Fourth Law: Share your channel partner success stories

Quickly build channel partner references that are successfully generating revenue and advertise it within the European community.  Because of the 5th law below, you’ll need to convince most channel partners that your solution has the potential to create significant profit. 

Tip: Develop a business strategy for partners that clearly illustrates at least  a 1:7 € Euro ratio of your product/solution to their packaged offering (e.g. for every € Euro spent on your company’s solution, they can make 7 with a customer).

Fifth Law: Educate the European market about open source

According to our respondents only 10% of the corporate IT staff in continental Europe are buying open source products.  In Germany, France, and the UK the figure may be as high as 15% – 20%.  Shockingly, corporate IT staffs in Europe still prefer and trust Microsoft products over Linux.  Clearly, the need for additional open source evangelism in Europe is needed to educate European decision makers on the advantages of open source.  Plan on spending additional time marketing open source along side your product/solution. 

Tip: Work with other open source companies in country to promote the benefits of open source solutions. 

Sixth Law: Find niche and local markets without the big proprietary players

For higher European revenue returns, find niche geographic markets that your larger proprietary competitors can’t afford to operate in.  It’s too expensive for most large companies to operate in the tier 2 and tier 3 cities so setting up shop in these areas will pay off.  Become dominant in these areas to lock out the competition.  Remember Europe is still dominated by local players that need local support. 

Tip: Europeans are still not used to the idea of webinars and webcasts.  Having local channel partners that can demo onsite is a competitive advantage.