Global Startups are Tackling Social Issues in Japan through Automation

December 2022

As the world shifts to a post-pandemic economic system, Japan’s growing economy is changing as it grapples with social issues. Foreign startups are coming to Japan to take advantage of its large market, technological knowhow and skilled workforce. In 2020, Japan logged its highest volume of foreign direct investment since 2014. Foreign startups looking to take advantage of the benefits of the Japanese market can learn from other companies that have established themselves in Japan and succeeded.

Workato is a work automation startup that was established in 2013 in California. It provides Integration Platform as a Service (iPaaS) allowing companies to automate routine processes, integrate data from various apps and platforms and use their resources more effectively. Cofounded by CEO Vijay Tella, Alexey Timanovskiy, Dimitris Kogias, Gautham Viswanathan and Harish Shetty, Workato is part of a 100 billion dollars market for enterprise automation in the U.S., and has attracted significant fundraising, collecting over 360 million dollars in backing including 200 million dollars in its series E round in 2021.

In November of the same year, Workato decided to establish a base in Japan, aiming to grow business it had had there since 2018. Workato had several reasons for setting up a Japanese subsidiary. For one, it believed that Japan’s prowess in manufacturing automation has made enterprises more open to automating their own tasks with DX tools. The startup also saw a big opportunity in the Japanese market. Since the 1990s, many Japanese companies had relied on large system integrators that helped business with their operations. Workato provides powerful resources to change that model and streamline costs.

“Workato aspires to become a tool that really transforms this business structure. We want Japanese businesses to become less dependent on system integrators while having more agility and less cost,” says Hiroyuki Suzuki, the founder of Workato Japan. “What’s unique about what we are offering is that users in every sector can use this software as a service. It’s democratized, with a higher rate of so-called in-house production, as opposed to the past when people were reliant on IT experts and system integrators to do the same thing.”

Establishing trust, understanding the business culture, and working with local partners is key for success in Japan. Workato has been working with various Japanese enterprises to streamline their operations and has already landed major Japanese brands as customers. One is online marketplace Mercari, which is using Workato’s tools to improve its agility, productivity, and IT investment in order to maintain rapid business growth. Another client is Yokogawa Electric, a measurement equipment manufacturer, that is working with Workato to explore various DX projects to create new business models.

Meanwhile, as a relative newcomer to the Japanese market, Workato is partnering with long-established brands such as NEC, Hitachi and NTT DATA to enhance its trustworthiness in the eyes of potential users. By doing so, Workato is meeting client needs and trying to penetrate the conservative Japanese market, according to Suzuki.

“It’s very important to respect the business culture and customs in Japan, and to put the success of the customer's business first. That’s why we value the partnerships we have in this market as we try to continue to grow here, since those long-established companies understand that.” says Suzuki. “We have seen great success among foreign IT companies that have come to Japan, such as Microsoft or Google, and they have achieved great brand recognition and trust. Establishing that sense of trust in our brand and business is one of our initial targets in order to grow in Japan.”

Workato is now focused on expanding its business in Japan. Demonstrating its commitment to Japan and how much it values the market, the company is investing 100 million dollars to grow its local business, with goals including the establishment of a local data center, acquiring certification for the Information System Security Management and Assessment Program (ISMAP), a cloud services assessment run by the Japanese government to ensure appropriate security, as well as localizing Workato services and documentation, and boosting staff numbers to 100.

Workato CEO Vijay Tella sees Japan as a strategic market because of three reasons: the demographic-driven need for workflow and process automation, the shift to cloud from legacy systems, and the fundamental shift happening around the world including in Japan, towards low-code/no-code platforms. He notes that the country is one of the fastest growing markets in the world in terms of growth of software as a service (SaaS) and other cloud-based technologies.

“Given the enthusiasm and support of our 50-plus customers and partners in Japan, and with Workato being a major player in all three of these major platform shifts happening in Japan, we are excited to invest in this market” says Tella.

Suzuki says his experiences with Workato in Japan can translate into lessons for other startups entering the country.

“It’s critical to get the right people involved who really understand the market for your product or service,” Suzuki says. He has high hopes that Workato’s early success in partnering and working with major Japanese brands can translate into other markets outside Japan.

Suzuki believes that in light of the unique aspects of the Japanese market, both Workato’s products and documents as well as its work environment culture need to be adapted. The company’s U.S. headquarters agreed that it’s not realistic to pursue business in Japan rooted in the U.S. way of doing things.

“Because of this background,” Suzuki says, “we believe that if we can create best practices in Japan, we can establish a culture within the company that allows us to consider strategies and tactics with a flexible approach to global expansion, rather than adhering to U.S. ideas and strategies, thereby accelerating globalization.”