Totvs experience 4 en us

EXpErIENcE

E X p E r I E N c E #4

#4

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world Lessons from South Korea, where the “miracle� of development was achieved through heavy investment in education and structured planning Beacons To seduce consumers, retailers are counting on new digital experiences applied to the physical world

time

noT eVen The sKY Is The lImIT Growth prospects from cloud computing are driving a variety of offers of storage solutions and applications in the cloud

f or a dJ u stments

How to harness economic challenges to adjust processes and improve productivity

TOdAY iS A gOOd dAY

tO Optimize yOur prOjecT reSuLTS.

Our management, prOductivity and cOllabOratiOn sOftware sOlutiOns can transfOrm yOur business tOday.

Your company can be more efficient, profitable and competitive.

Our technology solutions put you in control of your projects and ventures, giving you more assertive budgets and precise cost management.

At the same time, they facilitate your contract management and make your everyday routines simpler and more connected.

Let TOTVS think about your business together with you.

TALk TO uS. by thinking tOgether, we can dO better.

www.totvs.com

THINK TOGETHER

WELcome We are facing a crisis of resources – less power and less water – that is encouraging us to be more productive with what we have”

E X p E r I E N c E #4 w w w.tot vs.com /experience

Achievement

PUBLISHER FLAVIO ROZEMBLAT CHIEF EDITOR ELIS MONTEIRO ART DIRECTOR DANIELA BARREIRA PROJECT MANAGER DANIEL RAZABONE SPECIAL INTERVIEWS GABRIELA MAFORT REPORTING TEAM CARLOS VASCONCELLOS / CESAR BAIMA / GABRIELLE NASCIMENTO / KAREN FERRAZ / RODRIGO CARRO PHOTOGRAPHERS ANNA CAROLINA NEGRI / MARIA DO CARMO TRANSLATION ALCANCE CONSULTORIA DE IDIOMAS TOTVS CEO LAÉRCIO COSENTINO TOTVS EXECUTIVES RODRIGO CASERTA / LÉLIO DE SOUZA / FLÁVIO BALESTRIN Marketing Team

DIANA RODRIGUES / CRISTIANO CUNHA / ALINE LUIZ The authors are responsible for the signed articles, which do not represent the views of the magazine, editor, or TOT VS S.A. The reproduction of materials and articles will be permitted only with previous written authorization from the publisher and with the acknowledgement of source credits.

All rights reserved.

TOTVS Experience magazine is not for sale.

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Operations Office – Rua Ministro Jesuíno Cardoso, 454, Itaim Bibi, SP.

Access www.totvs.com/experience to read the digital version of this edition.

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We believe there are great growth opportunities in difficult situations. That is how we see 2015, as a year of many possibilities. We are optimistic because history shows us that during moments of crisis (political and financial, among other kinds), we are more creative, more innovative and bolder. We find means to overcome problems and nearly always discover much simpler and more efficient ways to do things we have been doing for a long time.

For us, adversities stimulate breakthroughs. They lead humanity to make great leaps of development. This is the moment we are in. Brazilian businesspeople now have the challenge to do much more with less. We are facing a crisis of resources – less power and less water – that is encouraging us to be more productive with what we have.

It is time to adjust processes, review expenses, remove what is superfluous and ensure operational efficiency in our businesses. That is what TOTVS believes and proposes to do for its clients. There are many ways to be more productive, and this edition of TOTVS Experience is dedicated to reflecting on this.

We looked for examples in other countries, we talked to market specialists and successful entrepreneurs, and we listened to companies, clients, research institutes and consultancies. Our reporting work was aimed at showing that it is possible to find ways of working more profitably and that 2015 may be remembered much more for its achievements and efficiency gains than for its losses or problems. This moment is crucial and it depends on all of us. By thinking together, we can do things better.

Enjoy!

Laércio Cosentino, CEO of TOTVS

08

06 PROFILe Germán Quiroga, a man who helped construct e-commerce in Brazil, talks about enterprise spirit as a competitive advantage.

08 WORLD Lessons from the East: how South Korea – now an emerging economic power – transformed itself.

14 INTeRVIeW Futurologists Mike Liebhold and Salim Ismail talk about how to take advantage of revolutionary technologies that are affecting the way we plan, produce and think.

20 COVeR Challenges that companies in Brazil are facing in 2015 to improve their productivity and efficiency.

14 30

28 INFOGRaPHIC Investment in planning and choosing the right technology can reduce losses and enhance productivity. How to improve results by adopting social tools.

30 BeHaVIOUR We explain how beacons work – digital systems now being used at physical points of sale to enrich consumers’ experience of brands and products.

36 CURReNTS Software as a Service (SaaS): there is growing interest in the market for new models for selling and distributing software by signing up for services.

38

38 SOLUTIONS Cloud computing is no longer merely an option, and is now seen as one of the possible solutions to transform IT costs into variable costs.

42 OPINION Supply chain: specialists gives essential tips on how to adopt strategic cost control to face ever more competitive markets.

44 COmPeTITIVeNeSS A practical way to think about incremental, everyday innovation: leaders’ role in engaging and motivating employees to “think outside the box.”

46 IN FOCUS Why Brazilian companies should consider expanding abroad and what the requirements are for a foreign venture to succeed.

52 SUCCeSS STORIeS

46

How IBM and Della Via Pneus sought out and implemented TOTVS integration solutions to shift their businesses.

56 SUSTaINaBILITY Projects to hire, include and qualify people with disabilities can generate cultural change, greater commitment to others and a paradigm shift.

56

P R O F I L E 6

animal spirits E

Who exactly is Germán Quiroga, the businessman who helped build e-commerce in Brazil, and what does he think?

by Carlos Vasconcellos

Engineer Germán Quiroga embodies like few others the animal spirits of

erate higher returns for its customers, shareholders,

the entrepreneur – that spontaneous optimism described by economist

employees and partners,” he says.

John Maynard Keynes that drives the economy. After graduating from

Entrepreneurs play a fundamental role and can

Brazil’s Military Engineering Institute (IME) in 1991, young Quiroga em-

help Brazil to overcome its difficult economic mo-

barked on a series of ventures that helped construct e-commerce in Brazil – an

ment, he says. “Above all, entrepreneurs have a

industry with sales of more than R$35 billion in 2014.

dream of building their own business. This desire,

The holder of an MA in digital systems from the University of São Paulo, Quiroga

when well administered and supported in a struc-

founded TV1.com and Americanas.com, a company that came to account for 55%

tured manner, is capable of generating surprising

of electronic commerce in Brazil. He is a former CIO and CMO of Cyrela Brasil Real-

results. It transforms our realities and creates wealth

ty and he founded Pontofrio.com, which later became Nova Pontocom and finally

to overcome our adverse situation”.

CNova, which recently floated on New York’s Nasdaq stock exchange. “That was my latest challenge,” says Quiroga.

disruptivE sOLUTIONS In the IT sector, the opportunities are even

SMALL BUSINESSMAN

greater. “The emergence of new technologies, the

His business career doesn’t stop there, however. While at university in Rio de

spread of mobility, the growth of devices’ com-

Janeiro, his animal spirits were already lurking. Quiroga says that he developed

puting power, ever cheaper and faster internet ac-

management software for car rental companies, clothes manufacturers and

cess, the arrival in the consumer market of children

small retailers, among other clients, and he set up a microenterprise with his

who were born connected, and the simplification

classmates. This small business was sold when Quiroga moved to São Paulo in

of interfaces,” lists Quiroga. “All this creates a rich

1992 to do his MA.

environment for the emergence of new disruptive

“In this new phase I participated in a startup, this time a web producer, which

solutions; the best context for entrepreneurship.

made the first websites for many companies in Brazil, including Antártica, Sadia,

Proof of this is the number of new companies that

TAM, Pão de Açúcar and Volkswagen. At the time, we had to sell projects to com-

are transforming our everyday lives and generat-

panies’ IT areas, because we were at the start of the corporate internet in Brazil,”

ing wealth in the process”.

recalls the executive.

Despite the difficulties for entrepreneurs, Quiroga is optimistic. For him, conditions have im-

corporatE LEVER

proved since the time when he took his first steps

Quiroga highlights the importance of entrepreneurial spirit as a lever in the cor-

as an entrepreneur. “Brazil now has a series of sup-

porate realm. “Having enterprise executives makes a company stand out, satisfy

port mechanisms,” he says. “Endeavor is a great

its customers in a deeper way, create new markets, have better results, and gen-

example of this”.

However, could this environment be enough to awaken animal spirits in society? Quiroga believes that encouragement is possible and desirable. “It certainly is,” he says. “Some effective examples include promoting the importance of entrepreneurship, stimulating initiatives, supporting creativity, structuring ways for people who want to set up a business to have their own suitable location for this, generating funding for the most outstanding ideas, giving prizes for the best cases, permitting mistakes, and attracting people with an entrepreneurial profile”.

The new conditions mean that Quiroga, who is also the vice-chairman of TOTVS’ board of directors, believes in the emergence of a new generation of entrepreneurs. “Fortunately, and I can prove this with my team and the trainees I am hiring, we have an intake of people who are much better prepared and who were born in a much richer and more dynamic environment than back in my day,” he says. “As a result, we will soon see a lot of good things involving these young people”.

Photo for disclosure

AWAKENING E N T R E P R E N E U R S

And where will the new Quirogas come from to construct the future of the technology market in Brazil?

“Although we have some notable centers such as Rio, São Paulo, Ceará, Minas Gerais and Paraná, I’ve been pleasantly surprised by talented people from all over Brazil. I think connectivity will definitively remove geographical barriers,” he concludes. So bring on the new animal spirits!

Quiroga points to the establishment of various incubators, the expansion and growing maturity of different funding options and success stories as important new facilitators. “A range of public initiatives such as Simples, Sebrae and special funding lines for entrepreneurs provided by the national development bank, BNDES, are also promoting a better environment,” he adds.

Having enterprise executives lets a company stand out and satisfy its customers in a deeper way”

W O R L D 8

south korea’s confident miracle The extraordinary progress made by the country in six decades has been the result of investment in education, human capital development and careful planning.

by Cesar Baima

D

evastated by a civil war in the early 1950s, South Korea is now one of the emerging global economic powers, a manufacturer

and showcase of technological innovations that spread across the world through its easily recognized brands. This leap taken by the country in little more than six decades has been called “the miracle on the Han River,” but there is nothing divine about it. The outcome of dedicated investment in education, with encouragement for careers related

The modern architecture of Dongdaemun Design Plaza in Seoul

W O R L D 10

to science and technology, and careful planning of infrastruc-

between Brazil and Japan, South Korea and China. “The main

ture, industrial development policies and the promotion of a

foundation of Korean socioeconomic development has been

business-friendly environment. There is nothing secret about

education, more education and even more education – some-

it, offering lessons that specialists say can and should be fol-

thing that is perfectly replicable. However, education alone is

lowed by Brazil.

no use. Examples of this are provided by Argentina and Cuba,

“Practically everything that Korea has done can be adopted

both of which are in difficult situations. In Korea, investment in

by Brazil,” says Gilmar Masiero, a professor of business admin-

education has been associated with an industrial development

istration at the Economics, Administration and Accounting

policy to absorb the more educated and qualified manpower”.

Faculty of the University of São Paulo (FEA-USP), where he coordinates the Asian Studies Program (ProAsia) and carries

STIMULATION OF SciEncE AND technology

out research about the political and economic relationship

The Korean revolution started before the war, when Syn-

Education’s proportion of Korea’s total budget rose from 2.5% in 1951 to 17% in 1966 and 23% in 1995

Average years of schooling (population aged 15 years and over)

DEVELOPMENT OF qualifiED manpower The private sector accounted for the bulk of education spending, providing two-thirds of resources. In addition, stimulation for training in the areas of science and engineering was expanded.

14 12 10 8 6 4 2 1950

1960

1970 Brazil

1980

1990

2000

2010

Korea

gman Rhee, the first president of the country, reconstituted

“It is hard to isolate just one factor behind Korea’s success,

following the end of the Japanese occupation, and made basic

but they include investment in human capital development,”

education compulsory. At the time, Korea was an agricultur-

says Mauricio Canêdo, a researcher at the Brazilian Economics

al nation and one of the poorest in the world. This situation

Institute at the Getulio Vargas Foundation (Ibre-FGV). “The out-

worsened due to the North-South conflict that, until today, di-

come was that in terms of average years spent in education,

vides the Korean Peninsula, to the point that in the early 1960s,

Korea’s population made great progress in the last 60 years,

the recently established World Bank stated that Burma’s future

while in Brazil this indicator rose slowly and practically leveled

would be brighter than that of Korea.

off for 20 years. This helps explain the difference between the

However, as Masiero emphasizes, heavy investment in ed-

two countries’ per capita GDP growth rates in the period. At

ucation was not left solely to the government. Stimulated by

the start, we were much wealthier, until Korea overtook us in

the industrial policies of the first five-year development plans

the 1980s”.

of the government of Park Chung-Hee, the general who took power in South Korea in 1961, the private sector – anchored in family conglomerates called “chaebol,” which bear globally recognized names such as Hyundai, Samsung, Daewoo and Lucky Goldstar (now known as LG) – actively participated in the project. Thus, education’s proportion of Korea’s total budget rose from 2.5% in 1951 to 17% in 1966 and 23% in 1995, but just onethird of this money came out of government coffers, with the other two-thirds funded by the private sector, further boosted by stimulation for training in science and engineering areas.

In Korea, investment in education has been associated with an industrial development policy to absorb the more educated and qualified manpower”

W O R L D 12

Hyundai Motorstudio in Seoul, the company’s main showroom, seeks to involve visitors and communicate the brand’s future direction

Hyundai Motor, which was established in the late 1970s, sold 8.1 million vehicles last year, compared to around 7 million by Brazil’s entire auto industry”

SELF-SUSTAINING indUSTRIES

dustrial policies are thought of as an eternal emergency room

Another factor identified by specialists as fundamental to

for inefficient companies and sectors. Our auto industry, for

the Korean “miracle” was the industrial policy model adopt-

example, is like a 60-year-old man who receives an allowance

ed – very unlike the Brazilian one. While in Brazil, the model

from his father. Consequently, we have not developed a com-

featured protectionism and reservation of markets, giving us

petitive industry or resolved its structural problems”.

among the most expensive vehicles in the world and hin-

On this point, specialists say, Korea’s education and indus-

dering our access to technological goods, in Korea the focus

trial policies were combined with another essential process

is on efficiency and economies of scale. As a result, Hyund-

for the country’s development, which Canudo sums up as

ai Motor, the car-making arm of the Korean conglomerate,

total factor productivity – the set of elements such as invest-

which was established in the late 1970s, sold 8.1 million vehi-

ments in infrastructure and services, elimination of red tape

cles in 2014, compared to around 7 million by Brazil’s entire

and the building of a business-friendly environment, with

auto industry, which was set up in the 1950s and consists of

clear, well-defined rules and a stable currency. Here, they say,

more than 20 companies.

also lies another Brazilian failure: the lack of long-term plan-

“Protection of markets, subsidized credit and tax incentives –

ning and strategies. “Brazil is thought of and described as the

everything we have done and continue to do in terms of indus-

country of the future, but nobody has said what future this

trial policy in Brazil, Korea also did, but there this framework was

will be,” says Masiero.

designed with an expiration date in mind,” notes Canêdo. “In

Academics also say that Brazil does not have long-term

Korea, protection and subsidies were reduced and withdrawn

horizons and goals to allow the government to coordinate

over time to make the industries walk on their own feet, with

and orchestrate policies for the private sector to successfully

gradual exposure to foreign competition and participation in

implement. The lessons learned in the Far East demonstrate

global value chains. If the companies didn’t become efficient

the feasibility of Brazil reviewing its trajectory and, like Korea

and competitive enough to withstand the pressure, the gov-

did, implementing fundamental changes for its present and

ernment let them go bankrupt. In Brazil, on the other hand, in-

future development.

Bongeunsa Temple, in Gangnam District, Seoul

research leads to development Another strong point of South Korea is its innovation-focused culture, which made the country the most innovative in the world in 2015, according to a ranking of 50 nations produced by financial news and information agency Bloomberg. Six tangible factors were taken into account when drawing up this ranking: investments in research and development; efficiency of industrial processes; presence of high-tech companies; higher education; proportion of researchers in the economically active population; and the number of patents obtained. Of these factors, South Korea came first in three – investments in R&D, higher education, and number of patents – and high up in the others.

Like education, starting in the 1980s investment in research and development took off in the country thanks to partnerships with the private sector. Korean investment in R&D was then around 1.5% of GDP, split roughly half-half between the government and private sector. Today, this investment is now around 4% of GDP, with approximately 75% provided by companies, and the goal of the current government of President Park Geun-Hye is to raise it to 5% by 2017. As a result, Korea stopped merely copying technology and began to produce its own innovations.

Meanwhile in Brazil, investment in science and technology is currently around 1.2% of GDP, more than half of which is provided by the government – a worse situation than Korea was in back in the 1980s and far below the targets established since the first Lula government. During Lula’s presidency, they aimed to raise the total to at least 2% of GDP – a figure considered minimal for a developed nation, according to a study by the Organization for Economic Cooperation and Development (OECD) and the European Union – and to raise the private sector’s share of this investment. Thus, Brazil finds itself in 47th place in Bloomberg’s ranking of the most innovative countries.

I N T E R V I E W 14

the era of combinatorial

i n n o vat i o n According to an American futurist, various technologies, used together, will impact productivity and business formats over the next 10 years.

by Gabriela Mafort photos by Chris Maluszynski / Photo for disclosure

profile Name: Mike Liebhold FROM: Rural Illinois, USA RESUME: Leading technologist at the Institute for the Future, specialist in ubiquitous computing, mobile internet and immersive media, international speaker, and science fiction fan

ne of the world’s biggest names in corporate foresight, Mike Liebhold draws up scenarios projecting the impacts of technological discoveries on business.

Having worked at major corporations such as Apple, Intel, Atari and Times Mirror Publishing, Liebhold is the leading technologist at the Institute for the Future (IFTF), an organization that brings together a wide range of futurists who work in mobile collaborative groups. The themes are multiple, but the goal is the same: to orient companies, governments and society along the often tortuous path of longterm planning.

Looking to the horizon, Liebhold predicts that technological breakthroughs will increasingly take place in a combined manner in various areas, and he offers this advice: “Companies need to establish goals and invest in training their executive leaders”.

In an interview given to TOTVS Experience, Liebhold chartered a strategic map that should be used by companies as a survival kit for the 21st century.

When a company is facing a difficult period, such as a productivity crisis, investing in certain kinds of technologies tends to be the solution to handle a bad tide. Accordingly, what type of advice would you give to companies that are dealing with these challenges?

I would highlight two areas of solutions: the use of technology in itself and management practices. I have seen companies increase their productivity incredibly by offering their employees the right tools, such as easy-to-use collaborative programs and ad hoc teams* – in general initiatives that give employees a sense of ownership in projects. However, often you provide people with all kinds of technological updates and even so productivity doesn’t improve. In this case it becomes a management problem, to make employees feel part of the game. So, my second piece of advice is to invest in training. Try to better understand your team members and give them the skills they need to grow. This means new kinds of instruction, such as teaching the basics of the digital world, showing the functioning of systems, the architecture of digital files, and database analyses (analytics), among other things. Take care of your employees as a *adhocs teams: The adhocs teams are groups who do not work full time for the same company but for various projects, such as three types of business at the same time.

I N T E R V I E W 16

A company’s digital assets can be combined in a very simple way to create new products”

resource needed for expansion and treat them as integral

decision making by all teams would be supported by

people, not just cogs in a system. For me, low productivity is

powerful databases produced by supercomputers. Any

also a team motivation challenge.

task we can imagine would be based on data analysis, with intelligent machines filtering the data.

You mentioned some aspects of the digital era and said we are in a unique moment for the creation of more effective organizations. To make this transition, companies need to rethink the design of their businesses – something that isn’t easy, but is necessary. Where should people start this journey of change, which will involve service-oriented architecture (SOA) as one of its major pillars?

The Internet of Things, or iBeacons (see article on page 30) and augmented reality will transform retail in the near future, with a strong impact on sales strategies.

How do you rate the future of retail, modified by technology?

My first recommendation is to start using software that adds to

they provide contextualized information about products

the talents of teams, in other words internal social networks in

as you move through stores. Based on this technology,

which people’s abilities and interests are documented. This is

the shopping experience will be renewed in the next 10

what we call multidisciplinary organizations, which use their

years, even before the effects of augmented reality are

talents in a cross-functional way. You mentioned some other

seen. HoloLens – holographic glasses that project a screen

important infrastructure, service-oriented architecture, which

ahead of you, showing multimedia information – will

makes it possible to offer digital micro-services. Through SOA,

also change the sector’s productivity in the years ahead.

all of a company’s digital assets, such as marketing, financial

The challenge for retailers will be how to deal with

and logistics data, and information about its customers

privacy, as it is increasingly possible to create a tailored

and suppliers, are available and can be combined in a very

experience for each person. Storeowners will have to

simple way to create new products. I also recommend close

administer their customer database very well to walk the

collaboration between teams. It isn’t necessary to make a

tightrope between convenient and intrusive offers. In

radical change from one day to the next. Organize internal

addition, a store will have to be a friendly, attractive and

experimental groups that work together on the same project in

digitally comfortable place.

I believe that iBeacons are an important tool because

a collaborative manner for a short period. Afterward expand this collaboration.

If you had to describe the new company format of the digital era, a company of the future, what would it be?

What would its role be?

In these times of web semantics and ubiquitous computing, what disruptive technologies are on the horizon in the next 10 years?

Nowadays, the combination of various areas, i.e. combinatorial innovation, is what causes disruptions.

Well, it would be a network company, without any

I believe that this list features robotics, intelligent

hierarchies. Team members would collaborate not only

machines, immersive media, open-data ecosystems, cloud

among themselves, but with other teams. Moreover,

supercomputing, ubiquitous low-cost broadband, high-tech

LEGENDA 1: Epudaestiis que renis aut et fugitat.

Os nis etur? Mo ex eum que comnis adio. Sed molor aut voluptatur (110c)

low-cost mobile devices, nano-manufacturing, material

take all the decisions, but that they control the planning,

science, synthetic biology and bioscience in general. These

budget, schedule, goals and deliveries. However, the

are all core technologies that, when combined, will impact

creative decisions are taken by the team. All of us have to

productivity and business formats over the next 10 years.

manage this new automated world and not be a victim of

To make the transition, I recommend that companies look

it. I have the feeling that if you do not automate yourself,

at these trends, set major long-term goals and then break

you will be automated.

down these goals into the technical competencies that will be needed to achieve them. Having long-term objectives and being motived by them is what I recommend, in any line of business.

IFTF believes that the digital network economy is the result of convergence between self-organizing groups and systems on the one hand and cooperative practices and principles on the other. Based on it, new forms of production and management are arising. What toolkit is there to deal with such changes?

In this transition to a digital world, what would you do to enhance global regulatory policies to create an efficient business environment?

Look, we have a digital economy worth one trillion dollars, which is based on monitoring people’s digital behavior. I think there is a need for international recognition that access to business security is the same thing as the right to personal privacy. In Europe, there is a movement for the right to be forgotten, to have one’s data

Step number one is to have respect for humanity, respect

erased, which I believe is a wrong policy. I believe we must

for your colleagues. It’s no longer that mental model that

have the right to always be invisible first. We ought to be

“I am superior,” but rather “we are all collaborators,”

capable of carrying out invisible private transactions. In

and this mental shift requires executive leadership. So,

other words, if I want to give you a purchase order, then

empowering leaders’ vision is step two. Everyone at a

that is between you and I. For business transactions,

company has to develop new competencies. Let’s take an

privacy is a critical item. This is the biggest technological

example: at IFTF we take turns as project leaders. When

challenge of the present day: to build our systems for

someone becomes a leader, this doesn’t mean that they

secure private transactions.

I N T E R V I E W 18

ambitions

exponential

According to one of the founders of Singularity University, companies need to have “transformative purposes”

by Gabriela Mafort photos by Maria do Carmo

N

ew companies in the digital world are 10 times better, faster and cheaper than traditional ones. This emphatic statement and precise calculation come from American entrepreneur Salim Ismail, who calls such “novices” Exponential Organizations.

One of the founders and ambassadors of Singularity University (a Google and NASA-based university in the USA), Ismail issues a warning: if today’s companies do not quickly become organizations with the same profile as digital ones, they run the risk of going extinct.

During a visit to São Paulo, Ismail talked to TOTVS Experience.

What should a traditional company do to become up to date and turn into an exponential organization, which grows at a much faster pace?

To adapt to this new world, two fundamental steps are necessary.

The first is to guarantee that senior management are aware that this phase of technological breakthroughs is occurring and that this requires understanding of exponential technologies, as well as some sense of

how business models are being radically modified. The second

mission like “We will deliver superior search technologies and

step is the following: you shouldn’t aim to take a traditional

optimize results for our customers and partners to make them

company and transform it into an exponential organization

highly effective”. They certainly wouldn’t attract talent of the

all of a sudden; it would be very radical. However, you can

same caliber. Furthermore, at the majority of companies, most

and should create new companies that are offshoots of the

employees do not have the slightest idea what the company’s

parent organization and that look for new areas to innovate

mission is.

in. This is Apple’s great innovation. They are strong on design and the technology supply chain, but Apple’s real innovation is organizational. What the company does is use a small and innovative team, which operates at the organization’s edges, remaining very discreet, with the aim of creating technology breakthroughs in other sectors. They started with music, then phones, tablets and now watches, payment means and perhaps even cars.

We are living in an environment that generates gigantic databases every day, from which unique opportunities are arising to create new technologies. In addition, improving business productivity is closely related to data administration. What is the best way for companies to deal with Big Data and transform it into economies of scale?

Extraordinary insights can be extracted from all this data collected by companies. However, it is not being harnessed. The easiest way to deal with this, in the case of large companies, is to permit data scientists working on platforms such as Kaggle* to analyze their data and extract insights. For example, Jeremy Howard, a well-known data scientist, is doing this work with algorithms at a large telecommunications company. He identified savings worth more than one billion dollars in a single day.

You have said that to manage a business in the digital era, a company needs to have a consistent transformative purpose.

This is the highest purpose of a company, generating a cultural movement around it. Why do you think it is so important to have this kind of “goal” today and how does it differ from a company’s mission?

As one of the founders of Singularity University, how do you see the university’s role today in terms of preparing people for the job market? We know that on-demand work, meaning workers providing services for a variety of companies, is the future. How should the education system be adapted to this situation?

Our education system needs to be completely revamped. The idea that we should educate people in their early twenties to become productive members of society is totally outdated. We do not know what a job will mean five years from now, so what

What I call a consistent transformative purpose is a company’s

should we teach people? We need to migrate from education

highest aspiration. For example, in Google’s case it is “organize

systems to learning systems. Instead of pushing algebra down

the world’s information”. This statement creates an atmosphere

people’s throats, people will download real-term knowledge

of excitement and attracts highly talented people interested

packages to do the day’s tasks. Today, when doing a job, most

in working at the company. Imagine if Google had a standard

people use almost nothing of what they learned in college.

* Kaggle: online platform that gathers data scientists.

C O V E R 20

focus on efficiency To tackle current economic challenges, companies are pursuing alternative ways to improve their productivity

I

t is unlikely that the year 1982 is looked back on positively by many Brazilian economists: by the end of December inflation was close to 100% and the coun-

try’s economy had grown just 0.9% during the year, while an external debt crisis was erupting. Despite the discouraging macroeconomic conditions, the year saw the first investment by the Garantia Group – led

by Rodrigo Carro

by Jorge Paulo Lemann, Beto Sicupira and Marcel Tell-

Photo for disclosure

C O V E R 22

Lojas Americanas has become a successful example of business culture

es – outside the financial world, with its acquisition of Lojas Americanas. Two years after purchasing control of the retail chain for a “mere” US$23 million, the investment had already paid itself back thanks to management that, among other changes, improved productivity by 25% in the period.

If our workers had the same education as South Koreans, we would be producing between 40% and 60% more”

Thirty-three years later, with a market value measured in billion of Brazilian reais, Lojas Americanas is a successful example of the business culture that led Lemann to become Brazil’s richest person – a model that combines meritocracy

remained practically the same. How then can it be improved at

and productivity goals. In times of above-target inflation, ris-

an unfavorable moment when government and private sector

ing interest rates and falling worker income, the mantra “do

investments are on the decline?

more with less” has gained ground on companies’ agendas.

The good news is that improving productive efficiency in the

In the last two years, the productivity of Brazilian workers has

country – one of the Brazilian economy’s biggest bottlenecks –

depends a lot less than one might imagine on the stock of equipment and facilities used to produce goods and

EDUCATIONAL SHORTFALLS IN BRAZIL

services. “If Brazilian physical capital were equal to that of South Korea, we would produce 18% more. However,

Between 1950 and 1980, output per worker – the average productivity of manpower – practically quadrupled in Brazil, growing 3.8 times (4.5% per year). After this, between 1980 and 2003, average productivity fell by 0.7% per year.

A recovery then took place from 2003 to 2011, with output per worker expanding at an average annual rate of 2.1%.

From that point onward, productivity weakened again. In addition to educational deficiencies, which restrict improvements in productivity, other factors such as the high and confusing tax burden, excessive red tape and poor regulation also have a negative impact on the indicator, explains Pedro Ferreira, a researcher at the Getulio Vargas Foundation. “The barriers we have in international trade and the dreadful business environment in the country also harm productivity,” he says.

if our workers had the same education as South Koreans, we would be producing between 40% and 60% more,” says Pedro Cavalcanti Ferreira, a researcher at the Getulio Vargas Foundation’s Growth and Development Unit.

Compared with other emerging countries, Brazil has a low level of investment as a proportion of its gross domestic product (GDP). World Bank figures indicate that over the course of the 2000s, the Brazilian investment rate was an average of 17% of GDP, well below that of China (39.7%) and India (28.6%) during the same period.

“Brazil’s investment rate is low, but we are not so far from the United States, where the indicator is around 20%. It’s just that our productivity is one-fifth of the Americans’ level,” says Ferreira, who is the author of a recent study

Barriers to international trade harm productivity

on the theme.

In the case of a technological gadget such as the iPad, the weight of the manpower factor goes far beyond the technical capacity to assemble components in line with an innovative design. Ferreira notes that just 10% of the added value of an Apple tablet – the difference between the device’s cost and the price paid by consumers – comes from the assembly process and the components used. The other 90% is added by the apps, operating system, design and marketing.

As challenging as Brazil’s economic and educational shortfalls may be, the cost to companies of remaining in the so-called “comfort zone” may be high. “The biggest hind the adverse scenario projected for 2015 lurk opportunities – and many of them are already being seized by large Brazilian companies, argues Edmund Amann, head of economics at the University of Manchester.

Photo for disclosure

risk is not taking any risks,” Lemann is fond of saying. Be-

C O V E R 24

COUNTRY HAS ISLANDS OF productivity

ing to Manchester was a research fellow at the University

According to Amann, Brazil is capable of improving its effi-

of Oxford Centre for Brazilian Studies. “They also supply

ciency based on knowledge accumulated in islands of high

high-quality inputs to local companies”.

productivity that exist in the country. As examples, the aca-

The economist does not see Brazil’s heavy dependence

demic cites agribusiness and deepwater oil exploration. “Rep-

on raw materials for its exports as an obstacle to increas-

lication is possible in some sectors, but this requires certain

ing productivity in the country. Amann argues that com-

conditions”. Among the necessary factors to make productiv-

modities are an increasingly high-tech sector. Exports of

ity “spill over” from one sector to another, Amann lists long-

fruits and vegetables, for example, can last longer thanks

term commitment by companies to invest in research and de-

to the use of ionizing radiation, which preserves food

velopment, the existence of technology facilities that can be

without posing any risk to consumers. “Brazil already has

developed, and consistent, well-designed public policies able

a reasonably diversified export base. Appropriate public

to encourage the transfer of innovation. “It is also necessary to

policies and private sector commitment can guarantee

commit to training and personal development,” he adds.

success. Raw materials constitute a base on which one can

Within this line of reasoning, large innovative companies

diversify and add value,” he says.

– such as South Korea’s Samsung and Germany’s BMW – are seen by him as essential to improving productivity. “They are

investments IN innovation AND PEOPLE

extremely important [within their countries], as they drive up

It is precisely during an unfavorable economic moment

average levels of industrial productivity and exports of add-

when it makes all the difference to discover simpler and

ed-value products,” emphasizes Amann, who before mov-

more efficient ways of producing. And one of the most

Photo for disclosure

80% of Brazilians aged 18 or over did not complete high school

traditional recipes, when it comes to doing more with less, is to cut costs. However, this kind of strategy is far from being a panacea, warns Hugo Tadeu, a professor at the Dom Cabral Foundation. “Relentless cost reduction is great in the short term, but questionable in the long term,” he says. In an efficient management model, cost equilibrium results in

The most long-lived companies are those at which productivity is the result of good processes and investments in innovation, technology and, crucially, people”

good margins, products, growth and, fundamentally, process alignment between business areas. Figures from the Innovation and Entrepreneurship Centre at the Dom Cabral Foundation suggest that the most long-lived companies are those at which productivity is the result of good processes and investments in innovation, technology and, crucially, people. “If this does not happen, cost cutting on its own will not generate effective results,” argues Tadeu. “Periods of crisis are especially opportune for the technology and services sectors,” he adds.

After all, whether inside or outside the corporate environment, adversities stimulate us to innovate and be bold, generating breakthroughs that open the doors to the new. So bring on the rest of 2015!

bottleneck in elementary education Identified as a key factor for boosting productivity in Brazil, public spending on education reached 6.6% of GDP in 2013, R$360 billion per year nowadays.

As a proportion of the economy, Brazil now exceeds the average for the 34 member countries of the Organization for Economic Cooperation and Development (OECD). The most recent available figures show that these nations – most of them developed – spent 5.6% of their GDP in 2011 on teaching. “Brazil doesn’t spend little, but it needs to

spend more,” argues Ocimar Alavarse, a professor at the University of São Paulo’s Education Faculty.

To give an idea of the size of the country’s challenge, Alavarse notes that 80% of Brazilians aged 18 or over did not complete high school. Moreover, the net enrolment rate among 15 to 17 year olds has remained stable at 50% since 2007. This rate indicates the percentage of the population enrolled in elementary school, high school or university, in line with their age group.

As well as being behind in relation to the grade they ought to be in, many students have problems progressing to the next year: in 2013, one out of every four Brazilians in their first year of high school failed the year. “The bottleneck lies in elementary education. Students’ progression to high school is low,” says Alavarse. “We must improve the system’s efficiency, but there are no miracles. Until we have met all the existing demand, we will have to spend”.

C O V E R 26

A TECHNOLOGICAL SHOCK IN agriculturE A highly competitive sector of the national economy, agriculture

an open-air factory, without risk indices – an activity that in Brazil

is going through a radical transformation thanks to the populariza-

still takes place empirically,” says Bonamini. In the midst of a water

tion of Big Data – real-time analysis of enormous amounts of data.

crisis affecting a large part of the country, the benefits provided

In the United States, thousands of weather stations spread across

through monitoring using electronic sensors connected to a serv-

the country supply data to help farmers make decisions, provid-

er via mobile data lines has sparked the curiosity of rural produc-

ing precise, real-time measurements of temperature and humidity

ers. After all, it is possible to rationalize the volume of water used

conditions, as well as other variables. The volume of data generat-

in irrigation, cutting it by up to 60%. Not bad, considering that

ed is so large that it has attracted companies from Silicon Valley, the

according to figures from the United Nations Food and Agriculture

global epicenter of innovation. A meteorological database is being

Organization (FAO), 70% of the fresh water consumed in the world

used to develop applications aimed at agribusiness.

is assigned to irrigation.

One of the pioneers in this field in Brazil, São Paulo state-based Olearys has developed mathematical models that simulate bio-

WATER SAVINGS

logical processes. Using these algorithms, it is possible to accu-

It was precisely the growing appreciation for an increasingly

rately predict the occurrence of crop pests or the need to irri-

scarce natural resource – water – that motivated the creation of

gate a given crop more or less. “Asian soybean rust is a disease

TaKaDu. Established in 2009, the Israeli startup uses artificial in-

caused by a fungus that develops at a temperature of 23ºC, when

telligence to help companies save billions of liters of water. The

the plants are wet for 12 hours a day,” exemplifies Tiarê Bonami-

company is present in eight countries, including Brazil, where it

ni, Olearys’ Solutions Manager, referring to moisture left by rain.

has signed two contracts with private sanitation companies. It all

More than just a simple curiosity aimed at technology enthusi-

started when Amir Peleg, an entrepreneur with a degree in math-

asts, the use of digital tools in the fields can bring about a major

ematics, computing and physics, decided to investigate the most

increase in productivity. Asian soybean rust, for example, results

common water distribution problems.

in an average loss of three 60-kilogram sacks for each hectare of

In researching water supply in large cities, Peleg discovered

planted soybeans. In the 2013/2014 harvest, this crop occupied

that the pipes are often equipped with sensors that measure the

30.1 million hectares, according to data from government agricul-

liquid’s flow, pressure and quality. The system generated a large

tural research organization Embrapa, meaning – at least in theo-

amount of raw data but there was no way of making use of it.

ry – a potential loss of more than 90 million sacks, or 5.4 million

Based on this information, the entrepreneur created a software

metric tons of soybeans.

program to enable companies to identify leakage points in the network and even predict (and avoid) ruptures in the pipes. The

OPEN-AIr FACTORY

main objective of the complex algorithm developed by Peleg is

“On a car assembly line, it is possible to know the productivi-

to reduce water losses – naturally improving water companies’

ty of each worker, every hour. On the other hand, agriculture is

productivity and usage effectiveness.

Above: Software developed by TaKaDu to reduce water losses Alongside: The company’s stand at the Amsterdam International Water Week in 2011

HUNTING WASTE

save a volume of water equivalent to 1,100 Olympic swimming

In Brazil, where 37% of treated water is wasted due to leaks,

pools over the course of three years – worth approximately

theft or poor use, the potential for rationalization is enormous.

US$5,000 per day.

“The gap between supply and demand is where the risks are

A “serial entrepreneur,” Peleg had already founded two com-

concentrated. The potential for water savings comes into play

panies before TaKaDu – the latter of which was sold to Micro-

when you can close this gap,” says Peleg. As water demand

soft for an undisclosed sum. He attributes Israel’s position as a

continues to increase, whether due to population growth or

global center for startups to its heavy investment in research

expanding food consumption, and supply falls due to climate

and development. “Israel spends 5% of its gross domestic prod-

change (California, for example, is experiencing strict rationing

uct on R&D, not including spending on military technologies,”

due to a drought), the gap continues to increase. “In the next

says Peleg.

20 years, the gap [between supply and demand] is expected to

The executive also notes that Israel has scarce natural resources,

grow by 40%,” estimates TaKaDu’s founder and CEO. Just at one

and that the government has injected a lot of resources into R&D

public service concession-holder in Australia, Yarra Valley Water

related to warfare innovations, which has boosted the country’s

in Melbourne, the algorithm developed by Peleg has helped to

defense sector.

I N F O G R A P H I C 28

I leap in PRODUCTIVITY

ndustry and retail are facing a historic opportunity to benefit from economies of scale if they opt for the right kind of technology. This strategic decision making requires investment in vocational training and education.

PRODUCTIVITY IN SALES: great opportunities

FEWER THAN

25%

of companies

let their strategic partners have access to relevant sales materials.

3 out of every 4 comp a n i es

do not engage cross-functional teams in their sales initiatives.

70%

companies allow their salespeople to have access to sales materials through mobile devices.

Just

one in

BELOW AVERAGE

in terms of their sales teams’ knowledge of available materials and how to find them.

ten Sales processes are not reflected in

CRM

(customer relationship management)

of companies are

HOW TO IMPROVE PRODUCTIVITY AT SMALL AND MEDIUM ENTERPRISES

AT SMALL AND MEDIUM ENTERPRISES

at 6 out of every 10 companies

Source: Savo Sales Enablement Benchmark Survey / EUA

PRODUCTIVITY IN INDUSTRY Impact of industrial internet on businesses (by 2028)

MAIN BENEFITS:

reduction in operating costs and fuel consumption Optimization and integration of real-time processes and mobile equipment

Source: GE Estimates/Postmedia

1 2 3 4

Reassess processes

Motivate your team

Reduce the number of meetings

OIL AND GAS

US$ 90 bi

ELECTRICITY

US$ 66 bi

HEALTH

US$ 63 bi

AVIATION

US$ 30 bi

5 6 7

RAILROADS

US$ 27 bi

8

Value planning Use digital tools Create strategies to tackle volatility Invest in training Improve internal and external communication

Tasks

SOCIAL TECHNOLOGIES

Increase in productivity (%)

IMPROVE ENGAGEMENT AND RESULTS

Reading and answering emails

Added value (% time per week)

Ler ee responder a 30 % Ler25 responder emails emails

7,0 a 8,5%

Time spent on tasks (% average per week)

30 a 35 %

28%

Looking for and collecting information

19%

Communicating and collaborating internally

5,5 a 6,5%

25 a 35 %

3,5 a 5,0%

14%

10 a 15 %

39%

4,0 a 6,0%

100%

Specific work tasks TOTAL

PRODUCTIVITY * (output per hour worked)

4.4 4.4

Source: Cavalcanti/FGV

(2) (6,5)

chile

(5,8)

colombia

(13,4)

china (4,8)

india

3.1 3.1 2.9

BRAZIL WOULD BE

2.2

GDP/worker

40%

MORE PRODUCTIVE IF ITS PEOPLE HAD THE SAME LEVEL OF SCHOOLING AS SOUTH KOREA

25,000 20,000 15,000 10,000 5,000 0

Brazilian productivity Brazilian productivity with South Korean level of schooling Source: Cavalcanti/FGV

2004

*Average growth per year between 2002 and 2012

1950

Source: CNI

infrastructure (% of GDP) Brazil

6.7 6.2

1.3 1.1 0.8 0.6

20 a 25%

BRAZILIAN PRODUCTIVITY REFLECTS LOW INVESTMENT IN:

Global

South Korea Taiwan Singapore United States Japan Spain Germany France Australia Canada Italy Brazil

20 a 25 %

Sources: IDC e Mckinsey *Social technologies: platforms for information sharing and collaborative work.

B E H A V I O R 30

the virtual world of physical stores How small transmitters based on proximity technology will redefine the consumer experience in the offline world and drive omnichannel strategies

by Karen Ferraz

B E H A V I O R 32

Beacons may change the way companies interact with their customers at points of sale

Photo for disclosure

C

arlos strolls through the shopping mall after lunch. When he passes

activated on the device in question, whether it is

in front of a department store of which he is a regular customer, he

a smartphone, smart watch or smart bracelet – or

receives a text message with an exclusive offer for a TV he has previ-

any other device equipped with Bluetooth 4.0 or

ously looked at on its website. Meanwhile, his wife Larissa is walking

higher. Apple has already been using this technol-

through the footwear section of her favorite store when she receives a notifi-

ogy since 2013 in its stores in the United States,

cation on her smartphone telling her she has been given a discount coupon to

which have gained transmitters developed by the

buy the pair of shoes she tried on a short time ago.

company itself (“iBeacons”). They make it possible

This scene is already possible thanks to a small device that can be plugged

to identify, for example, when a customer enters

in to a variety of surfaces. The novelty, based on a proximity system for indoor

an Apple Store or when they are in the tablets

environments, like an indoor GPS device, is called a beacon. It is capable of

section, allowing push notifications containing

detecting and determining when a mobile device approaches and precisely

information about products and special offers to

identifying its location. This hardware may change the way companies interact

be sent.

with their customers at points of sale.

As well as having Bluetooth turned on, users

In a connected world, in which we spend practically the whole day with our

need to have the establishment’s app installed on

smartphones close-by, beacons can complete the jigsaw puzzle, integrating

their device. Accordingly, when identifying the de-

mobility with marketing and sales strategy in physical stores.

vice within a certain radius, the beacon transmits a signal, which is recognized by the device’s oper-

INVITATION TO NEW EXPERIENCES

ating system, and an interaction may then be initi-

Beacons communicate via a Bluetooth Low Energy signal, which needs to be

ated. When downloading the app, users authorize

New generation of beacons in sticker format

the company to access their personal information and location, enabling highly personalized communications to be sent.

By working well in indoor environments, where GPS does not have a very stable signal, beacons enable the creation of interactive experiences that will bring disruptions not only in retail, but in a variety of environments, such as stadiums, show director of Accenture’s digital strategy practice, Ricardo Chisman, these transmitters are ideal for places with heavy flows of customers or workers.

“The technology itself is maturing and we now have more suppliers and beacon options on the market, such as smaller,

Photo for disclosure

venues, museums, schools and hospitals. According to the

d e c i p h e r ing b eacons Understand the small sensors that will transform the way retailers’ interact with consumers at points of sale

technology

possibilities

Proximity system in indoor environments: enables devices to be located with precision

Make use of moments when customers are near or inside a store

Interaction with mobile devices (smartphones and smart watches) Communication via Bluetooth Low Energy (Bluetooth 4.0 or higher) In Brazil, beacons need to be authorized by Anatel APplicaTIONS Hotels, shopping malls, stores, museums, hospitals, stadiums, companies, trade shows and schools, among other places

Send highly personalized messages based on the consumer’s profile and location, such as product tips, special offers and promotions Multimedia content: images, push notifications, coupons with discounts challenges: Bluetooth needs to be enabled on the customer’s device App must be installed on the user’s device

B E H A V I O R 34

portable and industrial models. However, it is a new technology and the market is still learning how to use it. The challenge probably lies in educating teams on how to apply them to achieve business results,” he says.

In this context, retail is at the forefront of the main pilot projadvanced markets, such as the USA. Besides Apple, American department store network Macy’s has been one of the pioneers with beacons, starting with experimental projects at stores in New York and San Francisco in 2013, and now installing 4,000 beacons at all its stores across the country.

Project at MorumbiShopping that involved installing beacons to allow customers to interact with the Christmas decorations

According to Chisman, there is growing interest in beacon projects, including in Brazil, which is set to experience a rise in the number of initiatives this year. “Last year we had some pilot projects here, and this year companies are starting to think about structuring projects on a larger scale,” he says.

IN THE CUSTOMER’S POCKET The year 2014 was marked by one-off initiatives mainly carried out by shopping malls and trade shows, and the startup market is heating up and looking at the potential of beacons.

They include DNA Shopper, which began testing the technology more than a year ago, since then it has developed projects with clients such as MorumbiShopping in São Paulo (see details in the box).

With contracts signed and projects planned by the end of the year, the startup sees great opportunities, driven above all by retailers’ growing need to offer ever more integrated experiences, whether in physical or virtual stores. According to the company’s CEO, Mário Almeida, the mobile strategy precisely allows this integration to occur, making the omnichannel reality. “Consumers are already in the mobile realm and companies need to be there too, offering value for them in this channel. Retailers must understand mobile as a way both to reach these customers, who spend practically 24 hours a day with their cell phone in their hand, and above all to get to know them better,” says Almeida.

Based in São Paulo, DNA Shopper was chosen by TOTVS Labs, TOTVS’ laboratory dedicated to innovation in America’s Silicon Valley, as its partner to launch its new offering designed to boost companies’ entry into the world of beacons, called TOTVS LOCL.

INTERACTIVe STORE WINDOWS Last year, the Christmas decorations at MorumbiShopping, a mall in São Paulo, gained some extra features to help tell Santa Claus’ story. The project involved installing a beacon in each of six animated store windows. Using an app, as customers passed by a window, they received the story related to it on their smartphone, as well as a message encouraging them to continue to the next window. According to Katia Ardito Gandini, MorumbiShopping’s marketing manager, the initiative was an important way to test the use and acceptance of the technology and content, and it should pave the way for future experiments.

Gandini says that the installation and programming of the devices was simple, and customers viewed the messages positively. “We learned that this kind of technology is well accepted and other activations may be created, provided they involve interesting content. If they are used properly, beacons will be good allies of retail. The important thing is not to be invasive and repetitive, to avoid turning this technology into spam,” she explains.

In a similar project, the RioMar shopping mall in Recife used beacons to set up a “magic itinerary” and let customers interact with their Christmas decorations. An app specially produced to interact with the beacons was downloaded by more than 500 customers. “The challenge found related to the technology itself. Due to its innovative nature, it was necessary to carry out various tests to arrive at a satisfactory result. We confirmed how transmedia works in practice and we managed to align all the technologies with the same goal,” says Denielly Halinski, RioMar’s marketing manager.

Photo for disclosure

ects and initiatives involving beacons, especially in the most

Accordingly, TOTVS clients will be able to implement these

From a technological perspective, the transmitters are

transmitters at points of sale completely integrated with the

already advanced and ready to be adopted, says Goetten,

company’s solutions, raising the level of the experience offered

who mentions the emergence of a new generation of bea-

at their stores.

cons starting to enter the market, in the form of small stickers,

Interaction takes place via an app and is defined through

equipped with more sensors, produced by American manu-

a management platform, both supplied by TOTVS, enabling

facturer Estimote. Using this solution, it is possible to know the

campaigns to be managed and content to be sent in a per-

exact moment when a customer picks up a shoe containing

sonalized manner. “The great advantage that retailers have is

one of these stickers and send them a notification.

this vertical integration: a player that offers everything, from

However, argues DNA Shopper CEO Mário Almeida, the suc-

the beacon to the mobile device and platform, which is funda-

cess of this strategy depends on the development of relevant

mental for the final experience to be high quality,” says Vicente

content. “Sending an offer to a customer that is the same as

Goetten, director of TOTVS Labs.

an in-store offer is not attractive; it has to be something that generates value. In retail, around 80% of customer decisions at

A (digital) ONE-WAY STREET

the PDV are emotional, so talking with a person who is in front

As happens with all technology, the adoption of beacons

of your store is much easier,” he says.

is going through a maturity curve that essentially involves

The adoption of beacons on a larger scale also depends

understanding the impacts and benefits brought by them.

on some other factors, such as the need to have the specific

“E-commerce started with the largest companies and then

app installed on the customer’s smartphone. Customers also

the small ones adopted it, and that’s why I see beacons as a

need to be encouraged to turn on Bluetooth – many users do

one-way street. Today, physical stores are challenged to offer

not know, for example, that Bluetooth Low Energy consumes

an experience as interactive and good as in the digital world,”

very little battery power. “You’re only going to download an

stresses Goetten.

app, keep it on your cell phone and provide information if you can see benefits. Consumers have to feel comfortable Beacons manufactured

by U.S. company Estimote

about giving their data and they will do this in exchange for a distinctive benefit, such as exclusive discount coupons”, says Vicente Goetten.

As much as beacons are a simple and easy-to-integrate solution, their adoption demands a shift in the mindset of retailers and companies about how to use a virtual tool to improve their physical relationships. The first experiments and pilot projects to take place this year will provide valuable clues as to the best way to use this technology and promote relevant rather than invasive interaction, and to overcome the obstacles.

“The outcome of this is a great secret. A project that involves beacons only makes sense if it has a business objective and is an integrated project, encompassing sales, marketing and technology. Only then will you have sustainable results and succeed in taking advantage of the technology,” says Accen-

Photo for disclosure

ture’s Ricardo Chisman..

C U R R E N T S 36

buy or subscribe?

There is growing interest in the market to adopt Software as a Service (SaaS) – a way of signing up for software programs.

by Elis Monteiro

A

time ago – that software programs may be seen merely as services rather than products to be acquired – corporations are now assimilating, thanks to the supply of cheaper and simpler solutions.

The trend to adopt SaaS was identified some time ago by specialist consultancies. According to IDC, customers are increasingly looking for business models in which they pay for the resources used, and this is set to redefine the software industry’s future paths. IDC predicts that by the year 2016, 25% of software revenues will come from the subscription model.

The situation going forward is even more promising. A study by Goldman Sachs published in January 2015 showed that the rising trend should be sustained in the coming years: in 2016, global SaaS model-based sales will reach US$106 bil-

fter getting a toehold in the domestic consumer mar-

lion, up 21% from the projected level in 2015. Spending on

ket, Software as a Service (SaaS) is now arriving with

cloud computing infrastructure and platforms will be 30%

full force in the corporate world. What users of services

higher than recorded in 2013. Meanwhile, specialist research

such as Gmail, Basecamp or Dropbox already realized some

consultancy Forrester Research is even more optimistic, be-

lieving that SaaS’ global revenues will expand by 21% between

the acquisition of an important asset, so we will not discard this

2015 and 2016, making this year the best ever for the segment.

option,” says Balestrin.

The subscription model may not be ideal for all company profiles.

Cloud computing AND SaaS: A GREAT COMBINATION

With this in mind and aiming to serve all kinds of clients, needs and

Specialists say that the heightened increase in software sub-

company sizes, TOTVS offers different software sales models.

scriptions is closely related to the exponential growth of cloud

In the traditional sales model, the client defines the number

computing. IDC predicts that by 2020, 25 trillion gigabytes of

of licenses for its immediate use and acquires additional licenses

new data will be generated in the world – and the majority

whenever necessary.

of it will be hosted in the cloud. Accordingly, new models are

In the corporate model, clients have unlimited access to

coming for selling what was until recently seen as a company

TOTVS software, without any user restriction. This model is

asset – software licenses.

based on the TOTVS’ philosophy that adopting management

In Brazil, SaaS is becoming more popular with every passing

software helps clients to grow and make more profits. As a

day. The market now realizes the advantages of migrating to a

result, the payment is agreed upon between the client and

subscription model: cost reduction, optimization of resources,

TOTVS, following metrics linked to the client’s growth.

and faster implementation. In addition, as the implementation,

A new option recently launched by TOTVS is aligned with the

maintenance and updating of systems is the supplier’s responsi-

new cloud and SaaS world – a subscription and cloud-based

bility, IT areas are no longer tasked with supporting all the kinds

contract modality.

of applications demanded throughout the company. At many

Through this modality, which TOTVS calls TOTVS Intera (a

companies, there is no IT infrastructure in place, while at others,

name inspired by the root of the word “Interaction” in many

there is a lack of manpower trained to provide specialist sup-

languages), clients have access to all of TOTVS’ proprietary man-

port. And hiring entire technology teams can demand resources

agement software and collaboration and productivity tools,

that companies do not want to spend and/or do not have.

and can use what they need simultaneously and on multiple

According to Flávio Balestrin, vice-president for marketing,

devices. TOTVS Intera subscriptions also include cloud space

alliances and business models at TOTVS, another benefit of

required to use their solutions, as well as unrestricted and un-

SaaS is the reduction in time between the period of hiring

limited access to all TOTVS e-learning courses.

the service and its implementation: “SaaS is a growing trend.

“TOTVS Intera modality clients also have a ‘copilot’ – a fixed

The cloud and SaaS are progressing together, complementing

person at TOTVS who is there to support their experience and

each other and changing the culture of the IT market,” he says.

use of our management, collaboration and productivity software,” explains Balestrin.

DIFFERENT SALES ModaliTIES

According to Lélio de Souza, TOTVS’ commercial director, an-

Adopting a subscription policy does not mean that the soft-

other advantage of the subscription model is its lower initial in-

ware license purchase model is being or will be discarded.

vestment, making it possible to direct resources to implement

“Many companies still view buying software and licenses as

solutions more quickly, generating faster results and greater perceptions of a return on the client’s investment in its man-

The world is becoming a world of services rather than products”

agement tool.

According to the executives, SaaS ends up serving as a catalyst for service quality at software houses: “The world is becoming a world of services rather than products. In the subscription model, client loyalty and satisfaction dictate the rules of the game,” says Balestrin. So, are you going to buy or subscribe?

S O L U T I O N S 38

cloud saves crops Hybrid cloud modality arrives as a way to accelerate strategies for optimizing resources

I

n a context of uncertainty and more cautious investment, cloud computing or just the “cloud” is no longer merely an option, and is now seen by companies as one of the possible solutions to transform IT costs into variable costs.

Cloud service growth prospects in Brazil are promising, say analysts and providers

in the market. For Amazon Web Service, the pioneer in offering cloud infrastructure as a service and the owner of the largest share of this market, the cloud is “the new normal,” a more rational path that makes businesses more dynamic and flexible, especially in adverse conditions. The market’s positive expectations are endorsed by strategies being devel-

by Karen Ferraz

oped by the government, major TV stations and even banks.

“In this moment of uncertainty, the cloud allows you to spend money only if you make money, if a crisis is diagnosed internally, such as declining customer engagement,” says AWS’ marketing

a c c ele r a t e d pace

director in Brazil, Herman Pais.

MASS MigraTION In Brazil, Amazon, whose global cloud-related revenue was US$5 billion in 2014, has major clients that have taken critical applications to its cloud, as well as others that have moved entire businesses there. Other businesses have been born in the cloud environment, such as startup Easy Taxi.

More and more companies are betting on a hybrid approach.

They include clients such as retailer Magazine Luíza, which now runs e-commerce and Big Data systems in its provider’s cloud.

This strategy is starting to be considered by traditional sectors.

Companies that previously did not invest in this area and did not even have a static website for end users are now moving forward with hybrid cloud, virtualization and infrastructure outsourcing strategies.

SECURITY BENEFIT According to Eduardo Carvalho, president of Equinix, a data center interconnection company, “these days, factory floor companies are looking for us to outsource IT cloud and infrastructure solutions. A few years ago, this was unthinkable, because the same company that invested on the factory floor would produce a data processing center for it”. This is happening at a moment when end clients perceive benefits such as security. “Large data centers and cloud computing companies are surrounding themselves with certifications, ranging from the professionals who take care of equipment to protection practices,” says Carvalho. “As a result, security is no longer a problem, but is a strong benefit”.

“Most companies do not apply security fixes and do not have a well-defined and audited policy. We can increasingly say that if an organization wants security, it should go to the cloud, as it will be more secure there than in most environments,” says Cezar Taurion, former technical evangelist at IBM and the new CEO of Litteris Consulting, which provides consulting services on new digital technologies.

The global market for cloud computing is set to generate US$118 billion this year, up 20% from 2014, and should exceed US$200 billion in 2018, according to estimates by consultancy IDC. “We aren’t such a mature market and we are a little behind in terms of adoption,” explains Pietro Delai, IDC Brasil’s enterprise research manager. This delay explains the accelerated pace of growth, which should exceed 50% in 2015.

“When we adopted the cloud, we embraced it intensely. This evolution is leading organizations to view the cloud as a fundamental step for their IT area to move forward and offer a distinctive advantage called information. It’s a path to enable Big Data, mobility and social projects,” says Delai.

According to research carried out by Frost & Sullivan, the cloud is now a reality for 41% of companies in Brazil, while for another 42%, the year 2015 will be ideal to sign up for cloud services.

S O L U T I O N S 40

In the coming years, the very term cloud computing will

and the company aims to prepare solutions and services

cease to exist, predicts Taurion, evolving to become the natu-

to support clients to run applications in TOTVS’ new hybrid

ral computing environment: “It will be the mental model. And

cloud. With this new offering, the provider reinforces an ag-

the longer you delay things, the more you will lose by not

nostic approach by providing a platform that is integrated

being agile and having the opportunity to launch new things”.

with authorized public clouds.

More than ever, the economic situation makes it necessary

“We are working with all our applications and ERP systems

to prepare companies to participate in a digital context, which

to adjust their frameworks and architectures to guarantee ap-

will give rise to ever more business deals and sales, even for

propriate performance in the cloud, and to make them elastic

companies in the offline world.

applications. This means we will offer TOTVS applications in a

Therefore, the journey to the cloud is a means of grasp-

modality to be billed by consumption – all this in a high-secu-

ing these opportunities, says Paulo Pichini, CEO of Go2Next,

rity environment,” explains Marilia Rocca, the company’s plat-

a company that specializes in integrating and constructing

form and cloud computing vice president.

cloud computing environments. “More than a strategy led by

Thus, for example, a company will be able to sign up for an

the CIO, the cloud is now an important subject for CFOs and

ERP system for a given period of the day when the solution

CMOs, as a way to rapidly take a company closer to customers

is most used, avoiding costs at moments when the system is

and innovate in products and solutions”.

idle. In addition, the platform will permit greater autonomy and environment management, with the possibility of doing

THE CLOUD’S THIRD WAVE

things like cloning environments and creating a testing envi-

The advance of the hybrid modality brings the possibility of

ronment in just a few minutes.

integrating private clouds with public cloud-based service providers. The cloud movement in Brazil began with virtualized

For now, AWS’ cloud is the first one approved by TOTVS, but new partners are expected to join the hybrid cloud.

environments rather than clouds themselves, which evolved into private clouds. After this came the rise of the public cloud,

YEAR OF GROWTH IN BraZil

driven especially by small and medium enterprises. Now the

The cloud is a one-way street, guided by the growing num-

country is entering what Pichini characterizes as the cloud’s

ber of success stories in the market.

“third wave,” mainly adopted by large companies with a large

With IT areas ever more overloaded due to growing de-

IT area and a private cloud, which are starting to integrate this

mands associated with companies’ strategic projects, add-

private cloud with public cloud service providers.

ed to the situation of restricted credit and interest rate rises,

Consulting firm IDC forecasts that in 2015, private and pub-

many companies will be likely to analyze the return on invest-

lic cloud modalities will grow by 35% and 25%, respectively,

ment of a cloud option. The cloud is strengthening as an op-

while it expects hybrid environments to expand by 50%. The

tion for the continuity of specific projects, thanks to consump-

hybrid cloud-related figures draw attention to a movement that makes it possible to integrate the private cloud with public cloud service providers, enabling the use of solutions based on flexible billing models, to run applications in testing environments or even to support business applications.

TOTVS Cloud PLATFORM IS “agnOSTIC” The cloud is one of TOTVS’ fastest growing business areas,

Projections of evolution in the cloud market are driving supply and the adoption of a hybrid model”

Photo for disclosure

STOLLER DO BRASIL ADVANCES WITH CLOUD STRATEGY Being able to count on a high-availability ERP system, accessible anywhere, and business-focused IT was what drove the cloud migration strategy of Stoller, a multinational specializing in plant physiology and nutrition that has been operating in Brazil for more than 40 years. Predicted power outages due to the World Cup and climate change, among other possible occurrences, accelerated the process which begun in 2012. For the company, these factors were a way to remain ahead in providing innovative solutions to its customers.

Installing infrastructure at its administrative head office in Campinas, São Paulo, capable of serving its plants in Cosmópolis, São Paulo, and Rio Grande do Sul would mean high costs, as well as the need to have dedicated people, stresses José Donizete dos Reis Silva, the company’s ERP coordinator. “At first, our objective was to

achieve availability, optimize costs and enable business-focused IT. In addition, the cloud represented a great leap for us in terms of infrastructure, and the responsibility for all the maintenance, monitoring and tuning was transferred to TOTVS’ team of specialists”.

Stoller do Brasil now has mission-critical solutions hosted in TOTVS’ cloud, such as its ERP and BI systems, as well as its sales web portal (for orders, consultations and delivery planning). “We are now looking to turn fixed processes (dependence on desktops, email and work posts) into mobile processes (use of Fluig),” he explains.

According to Silva, the cloud has allowed the company to disseminate information and accelerate business opportunities, for example when a supervisor visits a customer. “We see a very large opportunity at Stoller to optimize processes through the cloud. Our ERP and BI systems are available anywhere, and now with Fluig for the social side and processes (currently being implemented), we will be able to support our business anywhere and from any device,” he concludes.

tion-based pricing models. “This is a year of growth for the

will mean that companies will accept increasing their IT costs

cloud in Brazil, stimulated by budget restrictions, which lead

when their businesses are growing, but if it is necessary to

to great efforts to avoid long-term commitments,” says Barros.

shrink activities for a time, they will be able to shrink these

According to Pietro Delai, IDC’s enterprise research manager,

costs as well. “The cloud is one of the possible solutions to

companies are now looking to make IT a variable cost. This

make this work,” says Delai.

O P I N I O N 42

SUPPLY C H A I N:

DON’T TURN OF THE FURNACE

How to cut costs intelligently and get your company prepared to resume of economic growth

The same should apply to cost cutting in a company’s supply chain.

measures must be surgical.

Unfortunately, this does not always happen. In order for spending reduction to be effective, you need a

I

sions, and so the precision of these

global PERSPECTIVE AND GOOD NEGOTIATION SKILLS

strategic vision to avoid the risk of

Best supply chain practices in-

cutting a cost that ends up reduc-

dicate that inventory optimization

n times of low economic growth, the pres-

ing the value of the product and/or

can reduce the capital taken up in

sure to cut costs increases. This movement

service offered to the market.

finished products by 15% to 30%.

has been the main theme of 2015 and it is

Good supply chain manage-

However, for this optimization to

affecting all sectors of the Brazilian econ-

ment will point to the right path.

work properly, you need good de-

omy. Having cost efficiency is fundamental to

In the economic conditions of

mand planning, which will make

handle ever more competitive markets with low-

2015, this means taking measures

it possible to work with leaner

er margins. However, care and intelligence are

that have an immediate effect on

stocks without creating operation-

also necessary when cutting expenses.

your company’s financial results

al problems, as well as a strategic

At this moment, it is worth remembering

and that help it to get through

vision in the purchasing depart-

the example of steelmaking companies. Even

the turbulence, while improving

ment. You need to look at the total

in periods of low growth, steel mills seek to

long-term operational efficiency.

cost of any product or service in the supply chain.

maintain their blast furnaces running, because

There are basically three key

starting up this equipment once again is an ex-

elements to strategic cost control

The present moment calls for

pensive and complex process. As a result, other

in the supply chain: demand man-

carefully evaluating operations and

than in the case of scheduled maintenance, the

agement, stock management, and

negotiating with suppliers. Which

decision to switch them off is only taken as a

logistics. These are areas in which it

ones are essential, and with what

last resort.

is possible to make the wrong deci-

volume? Which ones can be re-

duced? Is it worth diminishing the

to serve your customers.

tegic purchasing system, combined with demand

added value of some purchases or

The path to cost reduction in

reducing the package of services

logistics is more about wisely using

added by the supplier of a given

the existing network than shrinking

A partial reform of your logistics system,

product? Are there other suppliers

it. One feasible strategy, and with

prioritizing strategic operations, will have posi-

with spare capacity in the market?

positive short-term effects, is to take

tive effects on your results in three months. Be-

This kind of strategic evaluation

over the management of the logis-

sides helping you to get through 2015 in good

will make it possible to cut non-es-

tics system, even if the fleet contin-

financial health, such measures may generate

sential expenses and help to create

ues to be outsourced. This solution

efficiency improvements over the next five or

a more efficient supply chain. Poor-

depends on the nature of your busi-

even 10 years.

ly planned cuts could dismantle a

ness, but it may bring about signif-

Therefore, if cost cutting is unavoidable,

network of suppliers. Also, when

icant benefits. One of the world’s

think hard before doing it, to avoid turning off

the economy revives, if your supply

largest retail chains used this strat-

your “blast furnace” by accident. Your subse-

chain is not prepared, you could

egy and reduced its total logistics

quent headache could be very bad.

lose out on the recovery.

costs by 8%.

Finally, management of de-

The good news is that reformu-

mand and stocks has a direct im-

lating the supply chain does not

pact on logistics, another sector

need to be done in a single go and

that can be optimized to reduce

it may be limited to key operation-

costs. Be warned: reducing your

al points. The results will be felt in

logistics network can be a risk. Af-

the short term. Stock optimization,

ter all, when the economy starts to

for example, generates visible ben-

grow once again, you will not be

efits in three months. On the other

able to rebuild the network quickly

hand, the gains provided by a stra-

management, are captured in a period of two to four months.

ALEXANDRE FURIGO is TOTVS Consulting’s operations and supply chain director.

C O M P E T I T I V E N E S S 44

INNOVATE AS A ROUTINE

TO CONTINUOUSLY IMPROVE

To become stronger, companies should pursue constant evolutions in their practices

by Renato Fonseca

I

nnovation: a word derived from the Latin term innovatio,

In the economic field, this meaning is associated with the mar-

expressing a sense of novelty, something different from pre-

ket. When something new is commercialized, generates reve-

vious patterns, renewal.

nues and has tax invoices issued for it, it is no longer an invention

Nos meios econômicos esse significado é associado ao mer-

– it becomes an innovation, improving business competitiveness.

cado. Quando algo novo é comercializado, gera faturamento e

Innovation now takes place ever more frequently and at a very fast

tem uma nota fiscal emitida, deixa de ser uma invenção, trans-

pace. When it comes to the more traditional micro and small enterpris-

formando-se em inovação, aumentando a competitividade

es, and perhaps large ones too, most innovation is incremental and

empresarial.

everyday, modifying something for the better. A practical way to think

innovation, who create the necessary environment

CONTROL OF OPERATIONS IS A COMPETITIVE ADVANTAGE

Photo for disclosure

Being a businessperson during an economic slowdown is a challenge, but to avoid being among the two out of every 10 micro and small enterprises that close down before reaching their second birthday (source: Sebrae-SP), it is necessary to look for competitive strategies. Betting on technology and tools to professionalize management and facilitate decision making is an assertive path. With this in mind, TOTVS established a partnership with Rede, Itaú Unibanco’s payment systems company, to offer Fly01, a tailored solution for small businesses.

Using this tool, businesspeople can integrate their e-commerce operations with their physical store operations. There are three different offerings: the first is a platform for creating an online store in just a few minutes; the second adds a management app to e-commerce in order to organize and control processes; and the third, the most complete, enables companies that have e-commerce and physical stores to integrate information from their two operations and work with a single point-ofsale software program, making their business more mobile, agile and transparent.

for good ideas to flourish.

A culture of innovation is also the result of a mix of organizational characteristics, including the following: the existence of relationships of trust, a multidisci-

Photo for disclosure

temperature is kept high by leaders focused on

plinary approach, the pursuit of customers’ perspectives, a willingness to take risks, knowing how to deal with mistakes, being attentive to transformations in the sector, and recognition. However, it is the existence of a process – however simple it may be – and discipline to practice it constantly that produces the fruits of innovation.

colLeCtivE SEARCH FOR solutions An example of this is a practice that may be carried out at all kinds of companies, of any size: it is called “the solution to the week’s problem”.

Renato Fonseca, Innovation and entrepreneurship specialist Renato Fonseca is Sebrae-SP’s innovation and technology access manager, the author of “Conexões Empreendedoras” (“Entrepreneurial Connections”), and the co-author of “Educação Empreendedora” (“Entrepreneurial Education”) and “Empreendedorismo Inovador” (“Innovative Entrepreneurship”)

It works like this: every week, the leader chooses an important problem to be solved. It may be related to processes, services or products, but it must be something significant.

After this, the leader formulates a question related to the problem and writes it on a board set up in an easy-to-access location, where employees, suppliers and customers can write their responses. At the end of the week, the leader collects the contributions and analyzes them, deciding whether to implement them, and potentially carrying out recognition actions, and so on. At the end of the year, there will be more than 50 strategic questions with the scope for implementation.

about this kind of innovation is to consider the dimen-

This practice mirrors the so-called funnel, demon-

sions of cost, quality and time. When we do something

strating the importance of an initial purpose to be

that improves one of these dimensions without alter-

open to ideas and a selective filter. This process

ing the other two, we have incremental innovation.

may be more or less complex, but its essence lies in

It seems simple, but the difference lies in doing this all the time, without stopping, involving a lot

capturing a wide variety of impressions about the given focus, to then verify their viability.

of people – employees, suppliers and customers.

These are some perspectives on how innovation

This is what is called a culture of innovation – a

may take root at a company, making it stronger and

type of kettle that must be forever boiling to gen-

more vigorous, ready to face the turbulence of a

erate creative pressure. And without a doubt, the

global world.

FIND OUT MORE: http://www.sebraesp.com.br

I N 46

F O C U S

MOVING INTO FOREIGN

MARKET

Why Brazilian companies should consider the possibility of expanding abroad and what precautions they should take when it comes to making decisions

by Carlos Vasconcellos

W

hat leads Brazilian companies to start

internationalization process – the level of participation by Bra-

up operations abroad? Metalfrio Solu-

zilian firms is low. “If we compare, we don’t even have half the

tions, one of the country’s leaders in

number they have in Mexico, for example,” says Cretouiu.

terms of overseas expansion, accord-

According to Antonio Corrêa de Lacerda, a professor of eco-

ing to the Dom Cabral Foundation’s

nomics at PUC-SP, Brazilian companies’ low level of participa-

latest ranking of Brazilian multinationals, says that one of

tion in the global production chain is partly explained by the

the reasons is to seek improvements in competitiveness.

complexity and power of attraction of the domestic market

This is what happened to Metalfrio: in a context in which

itself. “Brazil is a country of continental dimensions, so serving

Brazilian industries face difficulties from global competition,

the domestic market is already a major challenge,” he says.

the company has become one of the world’s three largest manufacturers of commercial plug-in refrigerators.

Added to this is the large distance separating Brazil from most of the major international consumer markets. “This cre-

Metalfrio Solutions’ international expansion began in

ates a limitation that often makes exporting an expensive pro-

2006, after an administrative restructuring. The following

cess, requiring investments and ultimately making foreign sales

year, after a successful IPO, the company managed to assem-

unfeasible,” explains Lacerda.

ble a global operation, with three foreign plants, in Mexico, Turkey and Russia.

One of the strategies for overcoming this distance, both geographic and cultural, is to look for more familiar destinations

One of the secrets of the company’s international success

when taking the first step abroad. “Internationalization is a pro-

lies in its business model. Metalfrio not only sells fridges and

cess with a learning curve,” says Cretouiu. “As a result, a large

freezers, but also offers efficient equipment maintenance

share of companies choose the Americas as the destination for

services. It also innovates, providing technological solutions

their initial international expansion”.

such as a system capable of remotely monitoring equipment temperature – ideal for conserving products that depend on

Argentina IS FIRST INTERNATIONAL STOP

low, steady temperatures, such as vaccines.

The main gateway to the international market is Argentina:

When Metalfrio started its international expansion drive,

more than half of Brazilian multinationals opened their first in-

the Brazilian economic context was very favorable. The Bra-

ternational branch in the neighboring country. In addition, of

zilian real was strong, making foreign investment cheap, and

the 13 countries with the most Brazilian company operations,

the heated-up domestic market strengthened the compa-

eight are in South America.

ny’s cash position. Today, with the Brazilian economy going

The choice of country where a company will open its first sub-

through a rough patch, Metalfrio’s international presence is a

sidiary may also be related to the prospects for opening other

valuable asset, reducing the company’s risks.

doors in the international market. By having operations abroad,

“There are many benefits of opening operations abroad:

a company can benefit from advantageous bilateral or multilat-

proximity to customers, diversification of your geographical

eral trade agreements. A company that sets up in Mexico opens

base, access to new technologies and trends, new markets,

doors to the USA and Canada, through NAFTA. From Colombia,

and new funding means,” says Sherban Cretouiu, a professor

you have access to Chile, Peru and Asian countries.

at the Dom Cabral Foundation’s International Business Center.

According to the Dom Cabral Foundation, outside the Americas the country that receives the most Brazilian companies is

DOMESTIC MARKET IS ALREADY A GIGANTIC CHALLENGE

China, while Portugal – gateway to the European market, with

Despite this, few Brazilian companies are developing strat-

the advantage of the Portuguese language – and the United

egies in this direction. Even in exports – the first step in the

Kingdom stand out in Europe.

I N 48

F O C U S

AN INHOSPITABLE ENVIRONMENT FOR BUSINESS However, what are the requirements for a foreign venture to be successful? “If your company manages to be competitive in Brazil, which is an inhospitable business environment, with onerous environmental, tax and labor laws, you can cope with the environment in other countries,” says Cretouiu.

In terms of corporate culture, organizations should not resist change. This means, among other practices, giving managers

You should think of the opportunities of international expansion as a way of building fortresses.

There’s no point only opening one branch” Marcelo Cosentino, director of TOTVS International

autonomy. “If an operation’s administrator needs authorization from the head office to buy a coffee maker, the business won’t about large investments, and the venture needs to be carefully

succeed,” argues Cretouiu.

planned to avoid becoming an adventure”.

Venture OR Adventure

To reduce the risk of cultural shocks that could harm a busi-

According to Marcelo Cosentino, the director of TOTVS Inter-

ness, Marcelo Cosentino recommends opening an internation-

national, a company’s internationalization must not be a per-

al operation in well-defined stages. “In this way, you can adapt

sonal movement by its leader, but rather a strategy of the orga-

your more global culture to the culture of the target market,

nization as a whole. “You should think of the opportunities of

reducing the venture’s risks”.

international expansion as a way of building fortresses. There’s no point only opening one branch”.

This means offering exactly what customers demand in each market. “Latin American markets demand solutions in

This is what Cretouiu calls the difference between venture

line with the local business culture and laws, and the prod-

and adventure. “Shareholders, managers and executives have

uct has to consider this, with local day-to-day support,”

to think in a joint manner,” he says. “We are often talking

says Cosentino.

a r t e c o l a : a success stor y It all began in 1997, with a distribution warehouse and two expat Brazilian employees in Buenos Aires. Today, Arte Cola is one of Brazil’s most international corporations. This puts the Rio Grande do Sul-based group in ninth place on the Dom Cabral Foundation’s 2014 ranking of Brazilian multinationals, and second place on its list of Brazil’s most international companies with revenues of up to R$1 billion.

Established in 1962, the Arte Cola group, which specializes in industrial plastics, glues and adhesives, how has 13 plants in Brazil and seven in other countries. Last year, the

company intensified its global expansion by taking control of Pegatex, Colombia’s largest adhesives firm, and by making its first investment in Asia, through a joint venture in the Chinese market.

The group’s initial objective was to gain scale in raw materials and develop production. Its first target for expansion was Latin America. As the region was economically and politically unstable, this deterred European and North American players.

While it was opening plants and distribution centers on its own abroad, Arte Cola also

entered into partnerships with foreign companies such as Switzerland’s Forbo and Italy’s Flexibord to strengthen its product range and increase its innovation capacity.

The group’s strategy is meticulous. Arte Cola works to implement its culture in each new international operation. The company’s financial results reflect its successful international expansion. Even in a year of strong decline in Brazilian industry, Arte Cola posted a 67% rise in its net revenues in 2014, to R$1.07 billion, exceeding the most optimistic forecasts.

Photo for disclosure

TOTVS’ operations in Mexico (left) and Argentina (right)

T O T V S e x pands across the americas According to Carlos Graef, CEO of Ediciones B, a Mexican publisher, TOTVS’ presence represented a major improvement in the quality of the company’s management. “There are no successful organizations with an obsolete technology system. And with TOTVS’ system, we are in the first division,” he says.

“When we signed the contract, we knew it would be a long-term marriage,” says Graef. He explains that the company’s migration to the TOTVS platform should be completed in the second half of 2015, and that the TOTVS tool has made it possible to integrate management, purchasing, foreign exchange and tax management information, which was previously dispersed across multiple systems.

Ediciones B’s story is another chapter in TOTVS’ expansion across the Americas, which began with the opening of an office in Argentina in 1997. Eighteen years later, the technology company is completing another phase in its international growth cycle. By the end of 2015, it will be present in all Latin American countries except Venezuela, the Guianas and some Caribbean countries, with sales channels in place in the major cities of each market.

TOTVS now serves clients in 39 countries. It has two branches in Mexico and one in Argentina, as well as Development Centers in Querétaro, Mexico and California.

As a result, TOTVS is able to accompany the international expansion movement of its own portfolio of clients, as well as harness the potential of other markets.

“It is important for us to offer this distinctive advantage,” says Marcelo Cosentino, the director of TOTVS International. “When a client want to internationalize, it can count on us to take its

management and accounting system with it, reducing the possibility of tax and regulatory problems”.

The strategy involves establishing local partnerships, which help the company to best exploit the potential of each market. These partners have a better grasp of the business culture of their countries and already have an established network of commercial contacts.

The focus of these partnerships is on two kinds of regional ventures: consulting firms that do not have software in their portfolio of services, which want to increase their margins; and local application providers or channels for small enterprises, which want to offer alternative options to larger companies.

In this way, it has been possible to establish TOTVS’ presence across a geographically diversified base, quickly and for a relatively low investment. “By the end of the year, we will be in another two countries and we will have arrived in all the regions on the continent where we want to be,” says Álvaro Cysneiros, TOTVS’ Director of International Operations. “Afterward, growth will come from the development of business in the regions we already occupy”.

The seeds have been planted. TOTVS’ international operations currently make up 2% of its business, and the aim is to expand this share in the coming years. The company considers its foreign presence strategic, to mitigate its business risks, create synergies and add value for its clients in future.

“We created TOTVS Labs in California in order to understand what is happening in the technology market and prepare to develop solutions that meet these new demands”, says Cosentino. “We are developing proofs of concept there, packaged and developed for our Development Center”.

F O C U S

Photo for disclosure

I N 50

WINDOW OF opportunity For companies seeking to grow internationally, 2015 may be a favorable year for this kind of investment. While the Brazilian economy is experiencing problems, other Latin American countries such as Colombia, Peru, Mexico and Chile are improving their business environments. They are red tape and enacting regulations to stimulate enterprise, such as by improving access to credit, expanding power grids and enhancing protection for minority investors,

Enrique Martinez, CFO of GA.MA Argentina

says a World Bank report entitled “Doing Business: Going Beyond Efficiency”. Therefore, investing in other countries

improve in order to oper a te a bro a d

in 2015 means preparing the ground for a resumption of

The effort is worth it, creating a virtuous cycle. To meet demands in foreign markets, companies need to raise their quality standards and improve their processes and productivity. “Consequently, their products tend to become more global and better than they were before,” says Marcelo Cosentino.

pansion. “This is a strategy that ought to be thought about

The advantages of globalization are also evident when one looks at multinationals based outside Brazil. Present in more than 60 countries, Italy’s GA.MA. is a good example. “Our global exposure has enabled us to expand our client portfolio and therefore increase sales. It has also improved our brand’s visibility, our business’ prestige and our competitiveness, while strengthening the company’s finances,” says Enrique Martinez, CFO of GA.MA Argentina.

growth starting in 2016. According to Cretouiu, Brazilian companies should think about long-term international excontinuously. Many organizations think: we can lose now, shrink a bit, but rather than acting in a futile manner, let’s apply our talent to a different growth strategy,” he says.

“The idea is to dedicate time and intelligence to open up new areas and recover this investment afterward”.

BraZil ALSO PROFITS International expansion is also beneficial to the home country. “An active process of internationalization favors Brazil’s participation in the global production chain and expands its presence in the global market, especially in

Setting up and maintaining a large international structure is no simple task. “It is a very tough test for a company. If it succeeds, it emerges stronger,” says Martinez. “You need to know the demands in each country and maintain a schedule of frequent visits to your branches”.

higher added value sectors,” says economist Antonio Cor-

Evidently, good technological support and an integrated, accurate information management system helps. In GA.MA’s case, the integration of its five Latin American operations is TOTVS’ responsibility. “You need to have a global vision of the business and knowledge of each market, with motivated teams to exploit the opportunities in each country,” adds Martinez. All this needs to be underpinned by a global product and brand communication strategy, combined with appropriate local and international funding channels and continuous improvement of processes.

he says.

rêa de Lacerda.

He stresses, however, that this movement should not be a simple transfer of industrial facilities abroad. “The ideal thing is for domestic production to rise or stay the same,” Competitive exchange and interest rates favor Brazilian companies as they expand abroad. Hence the importance of having a state rather than government industrial policy.

“Companies should not be prisoners of circumstances, only exporting when things aren’t good in the domestic market, and thinking of expanding overseas only when internal options are limited,” says Lacerda.

game

for small pla y ers

“International expansion is not restricted to certain sectors of the economy – it can extend to all areas,” says Antônio Corrêa de Lacerda, an economics professor at PUC-SP. And although large companies have a bigger presence on the global stage, small and medium enterprises also have a part to play in this game. “This can take place through consortia or cooperatives, as one sees in Italy, with the experience of industrial clusters”.

According to Míriam Ferraz, an analyst at the Rio de Janeiro branch of the Brazilian Micro and Small Business Support Service (Sebrae), thinking in global terms is a necessity for small companies, even if they have no intention to expand abroad. “Any company that wants to survive has to think about this. You are now competing against the world rather than your neighbor,” she says. “Those who don’t know how to interpret this trend will have problems. And this applies to all companies, regardless of their size or economic conditions”.

Ferraz explains that technology has made business cycles ever shorter and so innovations circulate more quickly, and they are readily absorbed by the market and competitors.

For this reason, small and medium enterprises need to deal with this phenomenon in a strategic manner.

In practice, international expansion requires the development of a new business plan, setting out all the stages, objectives, targets and performance indicators. To this end, entrepreneurs must know how to ask the right questions before taking their first step.

Ferraz lists a series of such questions: “Does a company have a solid international expansion strategy or is it merely taking advantage of a favorable exchange rate window?

Will it be a tactical or strategic movement? What benefits can an international presence bring about? What is my strategy for it? What should I export and import in my production chain? Do I really know my product or service’s competitors on a global level? What is my capacity to fund this investment? Is my workforce trained? Is the price I offer competitive? Is it compatible with the value I offer?

Do I know the legal, regulatory and cultural aspects of the market I want to enter?”

Ferraz draws attention to the importance of social and environmental variables in planning. “International expansion demands efficient sustainability management,” she says.

“It’s not enough to have the best product or service when setting up in a country. You need to be concerned about the conditions around the location where you are setting up”.

According to Ferraz, before investing abroad, exporting may be a good first step to participating in the international production chain. And in the phase of researching opportunities, taking part in trade shows is important. However, everything should be done in line with your company’s overall objectives.

“This may result in economies of scale and cost reduction, as well as generating improvements for your brand, making it an asset of greater importance for your business,” says Ferraz. “However, the important thing is to be clear about where you want to arrive in the short, medium and long term”.

TAXES ARE STILL A HANDICAP

few foreign double taxation agreements, and overseas sub-

According to Cretouiu, Brazil still has some obstacles to

sidiaries often end up paying tax on their earnings twice.

overcome if it wishes to stimulate internationalization. Not-

Despite everything, the Dom Cabral Foundation researcher

withstanding some useful initiatives, such as the holding of

is optimistic. “The isolationist mentality is changing in Brazil,”

trade missions, the work of the Brazilian Trade and Invest-

he says. “In the most dynamic sectors, the business cycle is

ment Promotion Agency (Apex-Brasil) and the funding lines

ever faster, and the new generations have a clear notion that

of the national development bank, BNDES, the country has

their market is the world, and not just Brazil,” he concludes.

S U C C E S S 52

S T O R I E S

Branch of Della Via Pneus, a leader in the auto market

The right software

at the right time Renowned companies explain how they have optimized their processes through TOTVS solutions.

A

utomated integration of information contributes to secure decision making and fast establish-

ment of strategies, as well as promoting excellence in customer service. As a result, companies such as IBM and retailer Della Via Pneus have looked for TOTVS solutions to help shift their businesses. And the results were not slow to appear.

by Gabrielle Nascimento

Della Via Pneus, a leading tire company, has 60 branches spread across the Brazilian states of São Paulo, Rio de Janeiro, Paraná and Bahia. A 100% family-owned company with around 1,000 employees, Della Via has been writing its history for 55 years, and TOTVS has played a part in it for the last 10 years.

“In 2004, we felt the need for a software program that would support the company’s growth. We had 38 stores and operated with an internally developed tool,” recalls Marcos Paulo Corrêa, CIO of Della Via Pneus. “Without integration between the stores and working completely offline, we started to have difficulties”.

He says that he did extensive market research to find an

The company has gained information flexibility and greater clarity. TOTVS is now my main technology supplier and we are content with this partnership” Marcos Paulo Corrêa, CIO of Della Via Pneus

ERP tool to meet the company’s needs. The decision to acquire TOTVS’ solution was made in February 2005. Today,

systems’ implementation, we have worked with a cul-

Della Via’s whole mass of information is worked on using

ture of having intelligent CRM. As a result, the compa-

TOTVS’ system. “We have acquired 27 product modules. We

ny has gained information flexibility and greater clarity.

have invested a lot in the tool’s evolution over the years,”

TOTVS is now my main technology supplier and we are

says the executive.

content with this partnership, which will certainly last

The client has also gained from these investments, given

for decades”.

Photo for disclosure

that the software used for customer service and relationships is Assisted Sales, customized by TOTVS to meet Della Via’s needs. “It is totally integrated with the system’s other modules: cash, stocks, accounting and tax,” says Corrêa.

Thus, when customers arrive at a store and identify themselves, a thorough analysis is made: the vehicle’s type, model, year, mileage, and so on. The system compiles the data and gives suggestions for the salesperson to offer the customer. “After this, a budget is generated and automatically sent to the cash register, where the payment will be made.

Service and product tax invoices are separated out and sent to the municipal and state finance secretariats, respectively,” says the executive.

Corrêa reaffirms his commitment to quality in customer relations and the fundamental role of this technology for his success: “We have 10 years of experience with structured customer information. Starting with the

Della Via Pneus’ branch in Sorocaba, São Paulo

S U C C E S S 54

S T O R I E S

EVERYTHING OK FOR IBM A recent TOTVS client, IBM is one of the world’s largest information technology companies. Operating for 98 years in Brazil and present in more than 170 countries, it is globally integrated and employs around 400,000 people.

IBM is currently experiencing a new phase, based on the vision that technology can and should be used to create a more intelligent planet. In line with this ideal, its partnership with TOTVS brings agility, cost reduction and information quality to billing and tax invoice issuance processes.

We have benefited not only from a reduction in manual effort, but also in terms of tax exposure risk mitigation and improved client satisfaction” Luciano Faustinoni, applications leader for Latin America at IBM

TOTVS has developed a service billing center for IBM, enabling integration between TOTVS’ system and IBM’s

ipal governments where IBM has branches to issue ser-

billing request systems. “Using the information received,

vice tax invoices and sends back the tax invoice details

the cloud solution connects electronically to the munic-

to IBM’s systems for accounting, accounts receivable and

Photo for disclosure

reporting purposes,” explains Luciano Faustinoni, applications leader for Latin America at IBM. Faustinoni says that information quality is extremely important to IBM, guaranteeing that billing takes place correctly and at the right time, “especially during periods at the start and end of months, when large volumes of transactions are processed”.

Before the solution was implemented, the process was supported by IBM’s legacy systems, which required continuous improvements to adapt to business areas’ new needs and changes in legislation. In some cases, users needed to intervene in various parts of the chain, increasing the risk of errors.

The main advantage of the integration achieved

by TOTVS has been the implementation of electronic tax invoices for clients, allowing the costs of printing and issuing tax invoices and bank payment slips to be eliminated. “Other benefits have been increased speed IBM unit in Hortolândia, São Paulo

through the processing of real-time transactions, the ability to consolidate billing, and cost reductions in

Photo for disclosure

IBM’s office in the city of São Paulo.

The cloud solution connects to the municipal governments where IBM has branches to issue tax invoices

maintaining internal systems and complying with legal

maintenance to other projects”. He adds: “We have

requirements. In addition, as I mentioned, we have ad-

benefited not only from a reduction in manual effort,

opted a cloud solution, aligned with IBM’s strategies,” ex-

but also in terms of tax exposure risk mitigation and im-

plains the executive.

proved client satisfaction”.

Faustinoni emphasizes that TOTVS is responsible for supporting and updating the ERP system, leaving only first-level support to IBM, “making it possible to redirect our efforts from

S U S T A I N A B I L I T Y 56

GoinG far beyond

Quotas

Professional inclusion for people with disabilities may be an opportunity for companies to find talent

by Gabrielle Nascimento

M

ENTERING yOUR drEAM proFESSIoN

ariana Grecco wakes up early every day. She gets to the company at 8 pm to perform her activities as a people management analyst. She

“Professional experience needed”. This phrase is part of the nightmares of many young people looking for their first job. The situation is even worse for the low-income population, who in addition to lack of experience, often lack academic qualifications as well. according to the international Labor Organization (iLO), there is a “youth employment crisis,” with 73 million young people who are unemployed across the world and another 200 million whose work does not generate enough income to get them out of poverty.

has projects, achieves targets and knows that her performance is being evaluated constantly. Grecco is blind in her right eye and has only 50% sight in her left eye. However, like any other individual, she has well-developed skills and areas for improvement.

“Here I am treated the same as any other employee. I don’t have any privileges,” she says.

anderson Mariano, 19, has a positive story to tell: a participant in the Company-School integration Center (CiEE)’s young apprentice Program, he recently landed a job at Sebrae-SP. His future plan is to go to university and follow the steps to build a career. it was in his everyday activities as an apprentice that he decided upon the area he wants to study at university. “i am working in the people management area and i discovered i have a lot of affinity for it. it’s very serious and strategic work,” he said.

Grecco is an analyst at the São Paulo branch of the Brazilian Micro and Small Business Support Service (Sebrae-SP), which has a structured inclusion project for people with disabilities. The institution employs 58 people with disabilities, including analysts and consultants.

“I’ve been here three years and I’m very grateful and happy, because the inclusion isn’t just done because of the

Bruna Lacerda, 17, is also enthusiastic about her first job opportunity.

She is an apprentice at the Retail Labor union and studying in the iOS apprentice Program. “it’s been an incredible experience for me. i’m very grateful to iOS. That’s where i learned to cope with my shyness and i now have better prospects. i’ve already started university and the next step is to get an internship”.

Quota Law – we were hired to add to the team that received us,” she says.

More than merely complying with the Quota Law, which sets a minimum number of employees with disabilities in the workforce of companies with more than 100 people, a project of this kind can be an opportunity for

Nêusa Gallego, Sebrae-SP’s recruitment and selection coordinator, says that companies stand to gain many benefits from projects that provide an opportunity for young people who are starting their career: “Groups of people who have this experience end up praising their companies and develop a relationship of gratitude. it’s also a real social contribution, helping them to become better people and genuine professionals”.

companies to find talented professionals. A recent study carried out by i.Social, in partnership with Catho, identified that for 81% of companies, legal compliance is the dominant reason for hiring professionals with disabilities.

In other words, at first glance, managers think about all nical qualifications among candidates, integration difficul-

Transform challenges into opportunities: that should be the goal of any company that wants to grow and withstand market instabilities”

Photo for disclosure

the project’s possible obstacles, including a lack of tech-

Anderson Mariano works at Sebrae-SP and plans to go to university

S U S T A I N A B I L I T Y 58

ties and the need for adaptations. However, there may also be opportunities, explains Sérgio Sério, an institutional relations executive at TOTVS. “Besides complying fully with the law, companies are able to access qualified manpower. In addition, a well-structured inclusion project guarantees strategic social investment, generating concrete results for the company and society”.

Ana Paula Peguim, accessibility coordinator at Sebrae-SP, agrees and emphasizes that Photo for disclosure

people with disabilities are well-qualified and experienced employees, “who bring new ideas and are committed, regardless of their disability. In addition, inclusion projects promote a cultural change, commitment to others and paradigm shift”.

Sério explains that, when thinking about social programs to be implemented at a company,

people who have less access to job market opportunities, while supplying trained manpower to partner companies.

managers need to be very careful. “Social invest-

IOS has so far trained nearly 30,000 people and achieved a significant

ment is not welfare. There must be an effective

job market inclusion indicator: approximately 70% of its students succeed

connection with the business, otherwise it will be

in getting a formal job within 12 months of completing their training. In its

the first thing to be cut in a crisis”.

customized programs for people with disabilities, the employment rate is as

proMotING A MorE EQUAL SocIEty According to research by the Dom Cabral Foundation, 91% of companies experience difficulties hiring professionals, especially to fill vacancies for buyers, technicians, administrators, project managers and manual workers.

Sério says that this gap is even larger for IT companies, given that they work with highly specialized manpower.

A good example of a strategically planned social project is provided by the Social Opportunity Institute (IOS), TOTVS’ social responsibility arm, which was founded 17 years ago. The entity has the mission of identifying, promoting and monitoring the employability of young and disabled

high as 95%.

Mauricio Cardoso uses a wheelchair and recently landed his first job. He is now a TOTVS employee, but it wasn’t easy getting his first opportunity: “I am 23 and I’ve been looking for a job since I was 18. I always wanted to work, but my lack of qualifications made it hard. As a result, IOS was very important for me. I left there trained and with a job. I’m very happy”.

For those looking to structure a project of this kind at their company, the TOTVS executive has some advice: “You need to prepare to receive these people and work with the teams and managers who will receive them, in order to optimize this manpower. You need to be careful not to underuse them, but rather to give them an effective chance at career development”.

FIND OUT MORE www.ios.org.br

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