Companies - September 11, 2018 | 01:03 pm GMT+7

Software exports achieved, FPT sets sights on bigger goals

"We do not know how to make software, we won’t stand a chance, were some of the things they said." - Truong Gia Binh

At 10 p.m. on July 12, 2018, FPT chairman Truong Gia Binh was waiting calmly and patiently in front of a screen at the company’s headquarters in Hanoi.

Halfway around the world in Atlanta, the U.S., an FPT team was wrapping up a deal that Binh had pinned very high hopes on – acquiring Intellinet, a management consulting and Microsoft-centric technology services firm.

“From this day we can say proudly that the Vietnamese people and Vietnamese companies can acquire American firms on American land,” Binh would say later.

“FPT will make a dramatic improvement and contribute more to Vietnamese software exports.”

This has possibly been the best thing to happen in the 20 years since Binh first plotted to take FPT’s software to the world.

The strategy of “being friends with giants” has helped FPT sit at the high table with Airbus, Siemens, GE, Nissan, Microsoft, and AWS, something that even Binh had not dreamed about. These giants already considered FPT an important partner for developing solutions and services based on Internet of Things platforms such as Skywise, Predix and MindSphere.

FPT has truly grown into a tech firm. Software export has been the crucial pillar for the company’s tech division, accounting for 56 percent and 94 percent of its revenues and profits, respectively.

The company’s bosses no longer have to feel uneasy like they probably did seven years ago when trying to prove to the Ho Chi Minh Stock Exchange (HOSE) that FPT was not a retail firm though cell phone sales accounted for 70 percent of its revenues.

FPT aims to earn $1 billion from software exports in 2020, and this target has been the motivation for its more than 14,000 staff.

Last year, it generated VND6.24 trillion ($268 million) from exporting software and aims to raise VND7.7 trillion in this sector this year.

It has dozens of offices in major markets around the world, including the U.S., Japan, China, and Europe.

It has dozens of offices in major markets around the world, including the U.S., Japan, China, and Europe.

But it has not all been very easy for Binh and FPT.

In 1998 the chairman received uniformly negative opinions from other board members when he put forward the idea of exporting software at a meeting held to look back at 10 years of FPT.

“We do not know how to make software,” “We won’t stand a chance,” were some of the things they said.

“The rest of them thought my idea must be a joke.”

But Binh remained adamant the company would go ahead with the plan, citing the examples of Indian companies, and asked for $500,000 to start the project. In the event, he got $1 million.

FPT was the biggest company in Vietnam and had executed a number of major IT infrastructure projects for the tax, customs, finance - banking, and public finance sectors. But as an insider, Binh knew that exporting software was the only way to make the corporation fly really high.

He said: “Leaders have to be concerned when the company is successful and have to see opportunities in crises. Being satisfied with the present will kill the future of a company.”

For the very first step of his master plan, Binh went to what was then Bangalore, the capital of the Indian state of Karnataka.

Why Bangalore?

Silicon Valley in the U.S. houses tech giants such as Intel, Oracle, Cisco, and Apple, while Hsinchu in Taiwan is the global hub of electronic devices and information-technology, but Bangalore is the biggest software processing center in the world.

Nguyen Thanh Nam, former CEO of FPT, during his trip to India in 2000.

Binh said: “Bangalore is the land of Tata, Infosys, Wipro – corporations that create jobs for tens of thousands. From here, software is exported to the U.S., Europe, Japan and used by companies in the Fortune 500 list. It is an advanced and modern world.”

What he witnessed in Bangalore encouraged his belief in the bright future of FPT.

Having zero experience in exporting software, FPT had to find a way to learn from its predecessors. During their time in Bangalore, the FPT bosses put themselves through a lot: Former CEO Nguyen Thanh Nam had to delve through trash cans to find papers thrown by Indian programmers while Binh met with Indian authorities, companies and tech gurus.

“I asked them everything I could think of,” Binh said.

The trip to India strengthened his determination and his colleagues knew they would not be able to change his mind. Quickly, software exports became the mantra in the company’s top echelons.

But it is always easier said than done, and Binh and FPT suffered failure in their first try.

First failure on U.S. soil

Speaking about the decision to shut down the office in the U.S. in 2002, Binh admitted he had been very “silly” to recruit students majoring in English and teach them programming.

“We just had one simple thought: If we want to sell products to American customers, the first and foremost condition is that our sellers have to be fluent in English.”

When U.S. President Bill Clinton visited Vietnam in 2000, FPT bosses saw a once-in-a-lifetime opportunity to promote the image of the company. They sent their staff to all restaurants the U.S. delegation had made reservations at to spread name cards and put up the FPT logo at hotels and main streets the delegation stayed in and traveled through.

They also tried to set up meetings with leading newspapers and other media outlets such as the New York Times, Reuters, CNN, AFP, and BBC. As a result, the company’s name was mentioned more than a few times in statements by the U.S. delegation.

“Maybe the strong desire to export software blinded us and made us indiscreet,” Binh said later in a book on FPT’s history in 2001.

But in the end the American dream that FPT built based on such machinations lasted just three years. The impressive departure by an FPT team with 1,000 balloons flying up into the summer sky in Hanoi in June 1999 ended with their quiet retreat from the U.S. in the spring of 2002.

The media had been merciless, describing FPT’s idea of exporting software as “crazy” and “romantic,” pointing out that Binh had to fire two senior officials and shut down two subsidiaries for the cause of software exports and telling the firm “haste has made waste.”

FPT chairman Truong Gia Binh at a company's meeting.

Binh realized it was a mistake to have appointed a Vietnamese as the head of the U.S. team without providing any guidance, and only a cryptic order to “find partners and customers to sell FPT software.”

“It was like taking someone into a jungle, giving them a knife and asking them to build an airport,” he would say later.

To fix the mistake, FPT hired an American as sales director, but it was too little too late.

From those difficulties Binh came up with a new strategy of targeting the “Big Guys,” an important turning point for FPT.

Winning over big boys to gain others’ trust

"When we have no credibility, the best way is to rely on the reputation of others. If we can convince big customers, then we can reach small and medium-sized ones,” Binh explained.

“You buy one from me and I will buy 1,000 from you.” That was the offer Binh made to two major partners, U.S.-based IBM and Hewlett-Packard (HP).

“All we needed back then was to sell our products, and if the customer was big that would be perfect.”

As part of the deal, IBM took Binh to France, where he faced 20 IBM executives all by himself. He finally convinced IBM France and struck a deal to process software for that office.

The deal with IBM led to a series of contracts, and FPT started to expand to other markets from the U.S., with Japan next on the list.

Le Truong Tung, chairman of FPT University (L) and FPT chairman Truong Gia Binh greet Nicholas M. Donofrio, executive vice president of innovation and technology, IBM Corporation, in 2007.

But Japan was again a difficult story.

The most frequent answer Binh got from Japanese customers was: “We will buy your software, but since we can’t speak English, you will have to wait until we can and then return with your products.”

He realized the Japanese were saying “No” with a “Yes.”

Gradually, Binh also understood that the Japanese did not just require their partners to understand their methods and thinking, but also wanted them to follow their standards at work and in communications.

"They do not just demand a good product but also the perfect production process," Binh said.

Japan proved a hard nut to crack for FPT.

Its staff had to learn the Japanese language and work culture.

During those days stories of FPT engineers spending sleepless nights making something for Japanese customers and their bosses then showing up just to get complaints from customers often did the rounds.

But in the end the efforts paid off. After the first successful deal with Nippon Telegraph and Telephone, FPT’s software sales grew rapidly.

FPT's office in Japan

Now FPT has truly spread its wings and gone to many other markets, but Japan remains the major one with sales of $163 million last year, or 58 percent of total revenues.

“Now, looking back, I see we took the right path. If there are no software exports, Vietnam will never have hundreds of thousands of engineers specializing in software, and we will not be able to catch up with new technological trends or sit at the same table with big guys that are deciding those trends in the world,” Binh said.

And yet what FPT does now is not its final goal.

Its financial report last year showed FPT's revenues from digital transformation services grew by over 50 percent, accounting for 21 percent of the total revenue of its technology division.

Its chairman expects earnings from digital transformation services to jump from $100 million now to $1 billion in five years’ time, accounting for 40 percent of FPT’s total revenues.

Digital transformation is not necessarily about digital technologies, but about the fact that technology, which is digital, allows people to solve their traditional problems.

Binh said: “Today, FPT is in a different position. In our hands is a list of about 500 customers that are all global corporations and important partners of the leading firms in aviation, industrial and energy sectors such as Airbus, Siemens and GE.

“The acquisition of Intellinet is a crucial milestone in FPT’s journey to becoming the world's leading digital transformation service provider.”

Story by Thanh Binh

Photos by Ngoc Thanh, Giang Huy