E X P E R I E N C E #5 w w w.tot vs.com /experience
SHARING
ECONOMY
What services such as Uber and Airbnb can teach the B2B market
DIGITAL RETAIL
DIGITAL WORKPLACE
IT AT SCHOOL
Technologies integrate real
Single comprehensive
Computer classes start to appear
and virtual worlds and boost
platform stimulates productivity
in school curricula and programming
sector’s competitiveness
and collaboration
courses prove big hit
welcome NOW IS THE TIME TO MAKE YOUR COMPANY MANAGEMENT OPERATIONS MORE INNOVATIVE
EXPERIENCE
#5
www.totvs.com/experience
It is time for reinvention and we will be together on this journey”
Produced by
PUBLISHER Flavio Rozemblat CHIEF EDITOR Elis Monteiro ART DIRECTOR ALEXANDRE ROSSETTO illustrations ALEXANDRE ROSSETTO SPECIAL INTERVIEWS Gabriela Mafort REPORTING TEAM Andrea de Lima / Carlos Vasconcellos / Fernanda da Escóssia / Gabriela Mafort / Gabrielle Nascimento / Karen Ferraz / Renata Malkes translation ALCANCE CONSULTORIA DE IDIOMAS PHOTOGRAPHERS Anna Carolina Negri / Maria do Carmo
Publicity photo
Transformation is the perfect word to sum up what TOTVS, and all other companies large or small, tech or not, are experiencing or will experience in the future. At the end of last year, TOTVS announced our merger with Bematech to strengthen our portfolio and our presence in physical and virtual retail. In terms of the market, I believe that the internet, the heart of the tech constellation, continues to provide corporations with opportunities for reinvention.
CEO Laércio Cosentino EXECUTIVES Lélio Souza / Flávio Balestrin Marketing Diana Rodrigues / Cristiano Cunha / Aline Luiz The authors are completely responsible for their articles, which do not represent the views of the magazine, publisher or TOTVS S.A. Materials and articles may only be reproduced if the publisher authorizes this in advance, and acknowledgment of the source must be given. All rights reserved. TOTVS Experience magazine is not for sale.
OUR MANAGEMENT, COLLABORATION AND PRODUCTIVITY SOFTWARE SOLUTIONS WILL TRANSFORM YOUR BUSINESS.
TOTVS Avenida Braz Leme, 1631, Santana, São Paulo, SP. TOTVS Private Rua Ministro Jesuíno Cardoso, 454, 9º andar, Itaim Bibi, São Paulo, SP
With our solutions, your company will become more efficient, profitable and competitive. Out software puts you in control of your business, optimizes your inventory, boosts sales and makes your everyday routines quicker, simpler and more connected. Let TOTVS think about your business with you.
New concepts are emerging such as the sharing economy – the idea to share access to goods and services with their usage. This is the age of Uber, Airbnb, Netflix, Spotify and a culture of sharing. The market is rapidly transforming and we are continuing to specialize in a variety of segments, offering the most modern, specialized and personalized solutions for our clients, who remain at the heart of all our planning and everything we do. We have been analyzing new economic trends in an attempt to understand the impacts of the “crowd economy.” We have also been thinking about what work will be like in the future in order to understand how new technologies in general and the internet in particular will affect professional relationships. Our job is to anticipate trends. As a provider of business solutions, TOTVS seeks excellence in the products and services it offers to its clients. And with so many sensational changes taking place, we continue to believe that through ethics, transparency and responsibility, we can overcome any challenges. It is time for reinvention and we will be together on this journey.
Visit www.totvs.com/experience to read the digital version of this edition.
BE MORE COMPETITIVE WITH TOTVS. BY THINKING TOGETHER, WE CAN DO BETTER.
www.totvs.com
Laércio Cosentino, TOTVS CEO
THINK TOGETHER
6
12
22
06 PROFILE
A legitimate representative of Generation Y
32 OPINION
Going digital is a huge challenge and a great
and a “card-carrying geek,” Pedro Franceschi explains
opportunity for companies of all sizes.
how, at the age of 19, he already runs a company
How digital transformations should be incorporated
valued at more than US$200 million
into corporations’ strategic planning.
08 WORLD
How the Spanish city of Santander became one of
34 COMPETITIVENESS
In a constantly changing world with unprecedented
the greatest examples of the good use of technology
circulation of information, corporate reputation
to reduce spending and improve people’s quality of life.
is becoming even more valued.
12 COVER
How the sharing or collaborative economy works,
38 STRATEGY
As consumers grow ever more mobile and demanding,
what its main impacts will be, and how it is migrating
the future of retailing retailing means going digital.
from B2C and C2C markets to B2B. 42 SUCCESS STORIES
The examples of Unigel, Schmersal and Harley-Davidson
20 INFOGRAPHIC
Projected growth of the sharing economy sector
demonstrate how investment in management software
compared with more traditional areas. Ten years from
brings about gains in productivity, accuracy and quality.
now, the market will be 10 times its current size. 44 IN FOCUS
Multichannel retailing: the integration of physical
22 BEHAVIOR
Around the world, schools are providing computing
and digital sales channels has become a strategic
classes and getting more students through hands-on
imperative, and the main decisions about the subject
experience. At the same time, online classes,
now take place at board level.
democratizing education, have been a huge hit. 48 SUSTAINABILITY
The number of people in the world who
26 NEW DEVELOPMENTS How changes in technology and more specifically,
are over 60 years old is set to double by 2050.
the internet, are affecting the job market,
What can we do to absorb “third age” professionals
and what we can expect in future.
in the job market?
28 SOLUTIONS
In the pursuit of productivity and agility, companies
are counting on digital workplaces and seeing
new opportunities by stimulating collaboration using
mobile devices.
28
38
48
PROFILE 6
CARD-CARRYING
GENERATION Y, YES SIR
geek
Alongside his business partner, Henrique, Pedro Franceschi runs a team of 40 employees, aged 16 to 42, and what could have generated a clash of generations has instead produced a flexible hierarchy, working hour freedom and commitment to results. At Pagar.me, the secret to retaining good employees is au tonomy. “Firstly, we want to hire people who are better than us; secondly, we give them autonomy. If someone is better than you, they are capable of replacing you, and by giving them autonomy to do this, you can do other things at the company and make room for newer recruits,” explains Pedro.
He started to program at the age of nine, and he taught iOS’ voice assistant, Siri, to speak Portuguese well before the official version was launched. Who is Pedro Franceschi, the founding partner of Pagar.me, a startup valued at US$200 million?
Regarding the members of his generation – “Generation Y” – Pedro believes they grew up surrounded by technology and practice a lot in order to deliver good results. These young people, known as “Millennials,” have ever higher aspirations and spare no effort to achieve their dreams.
by Karen Ferraz
H
His team members are a source of pride to him. “They are exceptional at what they do. They work many hours a day, study and are very dedicated.”
acker, geek, nerd, genius… All these terms have been used to describe Pedro Franceschi, the 19 year old who founded startup Pagar.me, an online payments-focused company valued at US$200 mi llion and already dubbed the “Brazilian PayPal.” According to Pedro, however, such labels labels are limited.
For someone long known as a nerd, studying hard is more than an obligation – it’s a pleasure.
“I don’t know any geniuses, I only know people who work very hard. People who work harder can generate better results, and people ‘on the outside’ then call them geniuses.”
blocking iPhones to his schoolmates. Not satisfied with this, he gai ned notoriety by launching two programs that enabled Linux to be installed on an iPhone. The repercussions of this in the free software community ended up getting him an invitation to give a talk at TEDxSudeste, a local version of the famous TED conferences, at the age of 12. His talk went down so well that he was lauded in specialist magazines and even in the national media. In 2011, Pedro had the idea to teach Siri, the iPhone’s voice assis tant, to speak Portuguese. He was very successful in this endeavor, but Apple wasn’t too happy. They only released a Portuguese version four years later in April 2015!
His precocious programming talent has allowed him to ex perience the everyday life of tech companies from a young age – as an apprentice, when he was too young to be formally hired. He has received offers from some of the world’s most renowned universities, MIT and Stanford, but for now he will remain in Brazil and pursue his dream to make Pagar.me a multinational.
SIRI IN PORTUGUESE Passionate about technology, he taught himself to program in computer languages at the age of nine, hunting the internet for information and driven by his desire to control computers. What started out as a hobby grew serious. So serious that at one point he seriously disturbed technology giant Apple: in 2006, Pedro was given an iPod and he began to hack the device. Happy with the results, he started to sell the “service” of un-
FROM PROGRAMMER TO EXECUTIVE
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After Siri came Pagar.me, an online payments company that arose from an idea devised by Pedro and his business partner Henrique Dubugras, who is the same age. They met each other in an unusual way: in an argument on Twitter about the best text editor to write
computer programs. The discussion, which ended without agree ment, gave rise to a friendship and then a company. While participating in a technology marathon in the United States in 2012, Henrique developed an app for flirting called “Ask me out,” which he considers a forerunner of Tinder. The boy won the com petition and returned home with US$50,000 in his bank account and many ideas in his head. Having encountered problems in implementing a charging sys tem for his app, he had a talk with his “sparring partner,” Pedro, who at the time was working at the mobile payment company M4U, acquired by Cielo in 2010. From then on, the two dived into the world of online payments and decided to set up Pagar.me with the aim of simplifying the lives of virtual storeowners. As they were not yet 18 years old, they needed to become legally emancipated to open their business.
HARVARD PRIZE Pagar.me has received an investment of US$1 million from invest ment funds ArpexCapital and Grid Investments, and it was rated one of the most innovative players in the payments sector in a Harvard University awards scheme. According to Franceschi, 2015 was a special year for the company: Pagar.me’s revenues expanded 10-fold and it expects to have processed payments worth more than R$500 million. These days, Pedro is no longer able to program software. He has become an executive, but he uses the lessons learned from techno logy to run the company, which has 37 employees. “We have com petitors of the same size with more than 100 employees,” he says. In 2014 the partners were accepted to study at Stanford Univer sity, but they decided it wasn’t yet the right moment and they put their study plans on hold in order to dedicate themselves to the company. They have until September 2016 to take up their places at Stanford, if they should so decide.
OFF THE INTERNATIONAL MARKET Pedro and his business partner now want to make their company a large multinational. To do so, they are counting on an offering that combines the ease of sub-acquirer platforms – which broker pay ments and enable clients to accept credit card payments – with the high conversion rate offered by gateways, which directly con nect credit card companies and banks, but are harder to install. The company’s structure eliminates bureaucracy for those need ing to receive payments on the internet and ensures a high pay ment approval rate: Pagar.me approves 92 out of every 100 attem pts, on average. This handy business has filled a significant gap in the market. Regardless of his age, Pedro had the right idea at the right time.
Shutterstock
WORLD 8
Santander EYES WIDE OPEN Located in the Spanish region of Cantabria, this city provides an example of using technology to reduce spending and improve the quality of life. by Renata Malkes
T
he dazzling blue waters of the Atlantic Ocean delight visitors to San tander, in the Cantabria region in the far north of Spain. Few of the people who come to this city of 180,000 inhabitants are likely to notice the constant, all-encompassing surveillance that goes on there. This moni toring is for a well-intentioned purpose. Six years ago, an investment of nearly €9 million made Santander one of the world’s smartest cities. Public services are automated and controlled by a network of more than 12,000 sensors linked to a computer center, in order to optimize time and money, and help preserve the environment. The ultimate goal is to facilitate the lives of the city government and residents, putting an end to the waste of resour ces. Thanks to technology, it is possible, for example, to avoid garbage trucks passing by locations where the trash cans are empty, and to stop lights being lit unnecessarily. The initiative is part of a project funded by the European Commission. The sensors are spread across a six-square-kilometer area in downtown Santander. These small “eyes” are concealed in little gray boxes, attached to street lights, vehicles
WORLD 10
asphalt. They measure everything that can be measured: light, pressure, temperature, soil moisture, pollution and even the move ments of cars and people in a given area. Using these devices, city managers know in real time where buses and traffic jams are, which places need garbage collecting and public lighting, and what the air quality is like. Noise above levels permitted by European legislation is also captured by the sensors.
INTERNET OF THINGS IN PEOPLE’S EVERYDAY LIVES “We have managed to bring what is called the ‘internet of things’ into people’s every
day lives. The internet itself has been known to everybody since the 1980s. Now, in the 21st century, we are experiencing a second revolution, which is to make the most of the network to improve our urban system, city management and quality of life,” explains Luis Muñoz, a professor at the University of Cantabria’s Department of Communications Engineering, the brains behind the project. All the collected data is transferred to Muñoz’s laboratory at the university, which works in partnership with a telephony compa ny and several public entities. Processing all the information occupies a 12-person team, at a cost of around €8,000 per month. Every few minutes, buses, taxis and police cars transmit their geographic location and speed.
The internet has been known since the 1980s. Now, in the 21st century, we are experiencing a second revolution, which is to make the most of the network to improve our urban system” Luis Muñoz, University of Cantabria
25% REDUCTION
high. The lamps’ level of brightness can be
IN POWER USE
reduced if there is nobody in the street. We
Sensors in public plazas relay information that allows power to be saved in places where there are no people. Actions such as sprinkling of public gardens depend on soil moisture levels, measured by these devices, of course. So far the city has cut its electricity bills by 25% and its garbage collec tion costs by 20%. “We have gained an overall vision of our needs. Previously the city government Publicity photos
and trash cans, and even burrowed into the
needed to send out maintenance teams on patrols to check utility poles, but now these teams know directly where to go. In addition, the sensors’ level of precision is very
need less lighting during a beautiful full moon than during a storm,” explains the professor. These savings for the public coffers have been very welcome, while residents have benefited from better public services. Citi zens interact with the smart city through mobile apps and websites. If someone wants to report a pothole to the municipal govern ment, for example, they only need to take a photo of it with their cell phone. This image is then sent to the authorities, together with the location captured via GPS. The notice doesn’t just go to the people responsible for street maintenance, but also the politi cians who are responsible for overseeing it.
TECHNOLOGY WANTS users
SMART CITY PLAN IN SANTANDER
Santander’s strategy has impressed the rest of Spain, leading to the creation in 2011 of the Spanish Network of Smart Cities, which now encompasses 65 municipal governments, which are working to share experiences in order to create a model for sustainable management capable of improving their citizens’ quality of life. However, this “positive version of Big Brother” has also faced resistance: many Spaniards have feared that this surveillance means an invasion of privacy. Trust in the system has been increasingly gradually.
Around 12,000 sensors :: are installed on walls, lights and poles, and even under sidewalks. They measure indicators such as light, noise, traffic flows and congestion. Taxis, buses and police cars :: equipped with sensors record their location in real time and transmit data collected around them. Parks and gardens :: use technology to adjust lighting, save power and control sprinklers. Problems :: are automatically reported to the municipal authorities.
CITY GOVERNMENT
Garbage trucks :: only collect full trash cans. Smartphone users :: can use the Smart City app to notify the authorities of the need for street repairs. The app also offers tips for tourists. Civil servants :: use the information collected to compile an overview of the city in real time.
GARBAGE COLLECTION
POLice
According to the University of Cantabria, minor repairs such as street resurfacing, which used to take weeks to execute, are now performed in a few days.
APPS FOR EVERYTHING Apps let users do many things, such as find parking spaces or check offers by using their smartphone in stores participating in the
The person responsible for the project, Professor Luis Muñoz, of the University of Cantabria’s Department of Communications Engineering, notes that despite all the technological apparatus, it is incapable of making the city “smart” on its own. People are also needed. One of the remaining challenges is to increase the number of users of the system’s mobile apps. Of Santander’s 180,000 inhabitants, only around 30,000 actively use the “SmartSantander” and “Pulso de la Ciudad” apps. The first one lets users know practical information about the city, parking spaces, public transport, parks, shops and tourist attractions. The second app was created especially to allow citizens to inform the city government of problems such as water leaks, holes in sidewalks and public lighting defects.
project. The possibilities for innovation seem
“Big Brother is something from the TV, right? People are gradually realizing that we are talking about co-creating a smart city. Technology is accessible to citizens, but they need to get involved in order to make improvements to the city. Like any change, it takes time,” Muñoz says.
who is there, for privacy reasons, but we
endless. As the internet spreads beyond personal computers and increasingly inva des the streets, new business opportunities arise for a cleaner, more efficient, transpa rent and digital future. “Imagine a company is advertising a new product on posters at bus stops. Through sensors, we can detect how many people actually look at the poster. We don’t identify can count them. This kind of thing would be fundamental to evaluate the penetration of a product or advertising campaign,” says Muñoz.
COVER 12
sharing ECONOMy
New trends, which have already revolutionized the hotel service and transport sectors, are starting to take their first steps in the B2B world by Fernanda da Escóssia
Hi,
how much is an espresso, please?” asks a girl.
“You decide,” responds the guy behind the counter.
“I want to pay, how much is it?” insists the girl, not understanding.
“It’s collaborative, you pay what you want,” explains the barista, and the customer, surprised, leaves R$5.
This surprised reaction is repeated several times a day. Many of his customers don’t know this, but Rômulo Martinez Cordeiro de Souza, a 27-year-old barista, has a degree in business administration from Ibmec, an
elite university in Rio de Janeiro, and since 2012 he has been one of the three partners of Curto Café in Rio’s downtown, where the idea is that each customer pays whatever they want. The café is just one of many
examples of the so-called sharing economy, or collaborative economy, or gig economy, a phenomenon that is changing the way we travel, work, eat, take a taxi, listen to music and, yes, make money. The key to understanding the concept of the sharing economy is the replacement of ownership of goods and services with their usage, even if this means sharing them with other people. Hard to imagine? It can start as an exercise: instead of having a car, you can rent one for an hour; rather than renting an
COVER 14
IN SEARCH OF CUSTOMER DIVERSITY
office and paying all the bills, you can use a room now and again, sharing the costs with other tenants. Instead of paying for a hotel, you can find someone who wants to rent out their own apartment in the summer and perhaps share their knowledge of the city. Work is also transforming, with fewer formal employment contracts, fewer rights and less regulation. And a lot of questions.
The sharing economy did not appear out of nowhere. It is a phenomenon of the inter net world, accelerated by the explosion of social networks. It is based on a basic prin ciple, namely to cut costs, but it goes beyond this: it is uniquely able to offer consumers what they cannot find in the traditional economy. “These enterprises understand that they need to add value and understand the diversity of customers – whether they want a hotel or apartment, whether or not they have children or pets. The idea is to put consumers first. If they want to interact with the owner, they can, but if they don’t, they don’t have to,” says Professor Marcos Caval canti, the director of the Center of Reference for Business Intelligence (Crie) at the Federal University of Rio de Janeiro. According to Cavalcanti, the sharing eco nomy is not a fad, but a permanent pheno menon, as demonstrated by the success of ventures like Uber and Airbnb – which with
USING RATHER THAN OWNING
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The amount of wealth produced in the world of sharing was recently estimated. “The Sharing Economy – Sizing the Revenue Opportunity,” a report by Pricewaterhouse Coopers, calculates that this type of business accounts for 5% of total revenues in 10 sectors in which the sharing economy exists, from DVD rental to hotels. In 2025, it will represent half of revenues, or US$335 billion. This date is not so far off – just 10 years from now.
out owning their own fleet or hotel network have turned into world leaders when it comes to taking a cab or looking for accommodation. At both Uber and Airbnb, the internet is the pillar of success, as it facilitates connections between people. Airbnb is present in 190 countries and it offers more than 2 million accommodation options. It has been used by 60 million people. During the 2014 World Cup, 120,000 people of more than 150 na tionalities stayed at Airbnb accommodation in Brazil. Created in California in 2008, Airbnb is a marketplace, a kind of electronic commerce that administers a space on the internet in which people advertise, discover and reserve accommodation – whether an apartment for a day, a castle for a week or a villa for a month. In the modern world, where informa tion is the most valuable asset, people offer what they have to offer, people who need so mething use it, and someone else administers the whole set of information and needs. A modern Bible, “What’s Mine Is Yours: the Rise of Collaborative Consumption,” by Rachel
Botsman and Roo Rogers, helps explain the collaborative economy’s different formats: it may be a system that allows participants to share products and services, like Airbnb and Uber; a redistributive market, to enable the reuse of goods, such as fairs to reuse miscellaneous materials; or the shared use of space, time and talents. There is also an environmental argument: if we spend less and reuse things, fewer natural resources will be consumed. However, some aspects differentiate the sharing economy from experiences in the times of our grandparents, such as renting a bedroom in a relative’s house, or the lives of alternative hippy communities. There are two basic principles: the use of the internet and social networks; and the capacity to become profitable. Uber is now valued at US$40 billion, while Airbnb is worth around US$10 billion.
SMALL BUSINESSES AND CROWDFUNDING At Curto Café, boards on the wall explain the establishment’s idea and the cost of in gredients for each cup of coffee (R$0.50 for an espresso and R$1.00 for a double espresso or cappuccino) and the cost of a 300g packet of coffee beans (R$9). The customers can see how much revenue the owners need to ge nerate to cover their fixed operating costs (rent, bills and staff) and it is up to them to decide how much to pay. Last month, after deducting the costs of ingredients, there was R$45,000 left, of which R$37,500 went to pay the rent, machines, staff and partners’ dividends. The surplus is used to invest or build up savings. “One person thought it was so cool that he paid R$50 for an espresso,” recalls Rômulo Souza, explaining that he and his two friends started the business based on a traditional
model, but they discussed whether it was fair that the mother of one of them couldn’t afford a cappuccino, which at the time cost R$4. They soon opted for a collaborative for mat. Their initial investment came from the partners’ savings of R$6,000, plus R$40,000 crowdfunded from their Facebook friends. Another way to reduce costs, explains Sou za, was to invest in organic products, which come from a single producer in the state of Espírito Santo. As the café does not serve food, partners are invited to display their products. As with the drinks, customers decide how much they will pay. “The essence of the collaborative economy is that everyone benefits. The traditional eco nomy looks at the world from a perspective of scarcity, but we see things in terms of abundance; each link in the chain has some thing to offer, without thinking only of ma ximizing profits,” says Rômulo Souza.
CO-WORKING REDEFINES WORK Unbeknownst to passersby, a house in a street in the neighborhood of Botafogo is one of the most sought-after spaces in Rio for coworking – the shared use of workplaces. At Templo, it is possible to rent a meeting room or the swimming pool for an afternoon cocktail party. Spaces like this have been spreading across the country in recent years, and of the different aspects of the collaborative economy, coworking is one that has already proven successful. A survey carried out in January 2015 through a partnership between Ekonomio, B4i and Coworking Brasil showed that Brazil has 238 spaces of this kind, 40% of which are in São Paulo. Herman Bessler, the Rio-born 27-year-old founder of Templo, says that he had the idea to rethink the way people work, educate, produce and consume. His proposition reflects his background, which includes studying administration and economics, as well as time spent at a kibbutz in Israel and at a coworking space in California, which inspired him to open a similar facility in Rio. According to Bessler, Templo’s houses in Botafogo (see the photo) and Gávea have 10-year leases, and they currently host 70 companies. There are contracts starting at R$750 per month. The company’s annual revenue is R$2 million. Fernando Aguirre, 28, one of the founders of Coworking Brasil, says he started his business following his experience in 2011, when he wanted to share a space to work as a freelance designer without dealing with the costs and bureaucracy of having his own office. He looked for someone to share a space with, and discovered coworking. “When I started, I didn’t have much of an idea about what I was doing. I just wanted to create something cool. In a way, it reflected a little of the collaborative economy’s philosophy, but it wasn’t intentional. Over time I studied the concept and adapted the business to make it ever more collaborative,” he says.
COVER 16
Publicity photos
The essence of the collaborative economy is that everyone benefits. The traditional economy looks at the world from a perspective of scarcity, but we see things in terms of abundance” Rômulo Souza, Curto Café
Above, Curto Café’s counter and boards explaining the business’ proposition. Below, a customer relaxing.
At small and medium enterprises, the most popular type of financing at the moment is crowdfunding, which raises money from an audience itself. It is like having a whipround, as our grandparents used to do, but using the internet to boost the number of contributors. Whether for a CD, a news portal, a social project or a foreign course, funds can be raised for practically anything. Rather than passing your hat around in your neighbor hood only, you do so on the internet. Crowdfunding platforms such as Benfei toria specialize in highlighting projects that are looking for funding. The owners submit a proposal, Benfeitoria analyzes it, guides the campaign’s development, and does not charge any mandatory commission. The collaborative logic is that everyone pays what they can afford. The model has worked: 81% of the funded projects achieved their targets in 2014. Claudio Goldberg, a professor of e-com merce at the Getulio Foundation Vargas (FGV), dates the flourishing of the collaborative economy to 2008, together with the Web 2.0
IN TE RN E T M O DE ON In the collaborative economy, adopting the way the internet works in a pervasive manner is the key to success. This is the argument of Clay Shirky, the author of the book “Cognitive Surplus.” Considered one of the world’s leading experts in digital culture, he is a researcher and professor at New York University who analyzes the economic and social effects of internet technologies. In this interview with TOTVS Experience, he talks about the need for companies to establish more direct – and transparent – channels with their customers. In your book “Cognitive Surplus,” you describe millions of connected people, producing and sharing information, as being a resource of the digital age. What are the impacts of this cognitive surplus for companies? Companies need to understand two things: first, there is unbelievable value to be gained from letting customers participating in designing and testing your products and services; and second, these people are not your employees. If you approach users with the intention to access their ideas or receive feedback, you can do extraordinary things. This is a dilemma for many companies, which aim to extract as much value as possible from users’ participation, but want to do this without having to alter the way they work. In this new collaborative model, institutions are seen as problems, as real obstacles. How can we guarantee a smooth transition to this emerging reality? The balance between the problems that institutions create (bureau cracy) versus the problems that they solve (organize the workforce) has changed, because there are now new ways of organizing human effort. One clear opportunity for new companies is to create a platform for people to organize themselves on. The majority of successful companies these days create value by connecting people, to help them do something together, rather than simply selling something to these customers.
How can we stimulate this openness among companies? How can companies create effective channels for collabora tion with one another and with customers? It doesn’t matter what sector a company operates in. If there is a competitive advantage to be gained from involving user participa tions, the companies that do this best will stand out from the others. We need companies that understand the value of what Eric von Hippel calls “user innovation.”* You argue that the source of value in the digital age is experimentation. How can we manage this experimentation in the business environment? When the internet appeared, the companies that made the most money were not those with years of experience in producing media. It was the companies that said: “This internet thing… what will happen if we assume that this will be the normal channel from now on and we ignore everything else?” Two of the greatest innovations by Chinese company Xiaomi concerned its business model: it fully adopted e-commerce and made all its retail sales online only. It also used social media as the center of its marketing campaigns. In theory, Samsung, Huawei and HTC could have done the same thing – all three had much greater revenue flows, employees and customers than Xiaomi. The only thing they did not have was the ability to adopt a new mental model rapidly and pervasively. This is what makes all the difference: assuming that this is the new normal and rejecting everything that might conflict with the way of working demanded by this new technology. This ability is more characteristic of young companies than old ones.
* Note from TOTVS Experience: In 1986, MIT researcher Eric von Hippel coined the term “user innovation” to explain the types of innovations created through the contribution of end users, which according to him have high social impacts and so ought to be stimulated.
In B2B, collaborative practices still take place in the internal environment, involving the sharing of experiences, processes and best practices” Cláudio Goldberg, FGV
and the explosion of social networks. “The more you share, the stronger your business gets. This is the value of the concept of possession but not ownership,” he explains. However, Goldberg states that crowd funding is not yet completely mature in Brazil. “I see technological and cultural difficulties. Brazilians in general do not have the availa bility and mentality for this. The level of pro fitability is low. I consider initial investment from an investor to be important for a business to become solid,” he warns. He also cautions against an excessively romantic vision of the collaborative economy: “There is no such thing as a free economy, nor a free lunch. In the end, someone has to pay the bill.”
LARGE COMPANIES: CRISIS OR REINVENTION Another topical point in the debate raised by the collaborative economy is its coexis tence with the old economy, involving the traditional delivery of products and services. Uber has been banned in the city of Rio de Janeiro and Airbnb is hated by hotel owners. Companies used to having a monopoly on the supply of content, goods and services
are experiencing an unprecedented crisis. Making waves is also part of the concept of the collaborative economy, which tends to use disruptive technologies, capable of shifting paradigms. “A clear example of this is provided by the communications market: the major news papers are no longer a reference for the new generation. Young people have abandoned print media and they refuse to pay for digital content. Companies do not understand that the more they share their content, the more relevant it becomes. These companies have been unable to change their funding model,” says Crie’s Marcos Cavalcanti. Large companies’ response to the colla borative economy is the topic of the paper “Adapting to the sharing economy,” by Kurt Matzler, Viktoria Veider and Wolfgang Ka than, at the University of Innsbruck, Austria. This article summarizes a two-year study of executives conducted by the University of Innsbruck in order to identify how large companies can adapt to these changes. Major companies have strong brands, which they can use to their advantage, the authors argue: “Consumers prefer the lower costs that the leading companies in the sharing economy tend to provide. That’s good news for companies looking for novel opportunities within the sharing economy.” The article points out ways in which large companies could survive and even thrive in the collaborative economy. The first rule is: sell usage, not the product. In Liechtenstein, a construction supplier overcame its decli ning sales by offering its clients the option to lease its machines and tools for a monthly charge, including any repairs. An automaker joined forces with a car rental company to provide a “car2go service,” allowing customers
to rent a car whenever they need it, rather than buying it.
SHARING ECONOMY IN B2B Other ways are to encourage the reuse of products and facilitate maintenance and repair services, without charging exorbitant prices – like that day your fridge broke and the repair would have been so expensive that you preferred to buy a new one. Seeking new markets and creating business models based on collaborative consumption are effective options. According to FGV’s Claudio Goldberg, the collaborative economy, already strong in the B2C market, may now develop further in B2B. He says that for now, collaborative practices are still taking place more in the internal en vironment, involving the sharing of expe riences, processes and best practices, but they are starting to happen in B2B as well. One example he mentions is the possibility of Uber entering the truck logistics sector, i.e. making deliveries.
COLLABORATIVE FLEET: CUTTING SPENDING AND IMPROVING EFFICIENCY In search of improvements and greater efficiency in its deliveries, PepsiCo collabora ted with its stakeholders: the company has its own fleet of 3,000 trucks and 300 smaller vehicles, responsible for 70% of its deliveries; the other 30% are carried out by 36 logistics firms. After starting to hold bimonthly and monthly meetings with retailers, to jointly discuss exclusively logistics-related subjects, a collaborative truck fleet model was deve loped. To reduce its costs, in 2015 the company entered into collaborative transport partner
Publicity photo
COVER 18
IN SEARCH OF TRANSPARENCY Yes, sharing is today’s buzzword. But do you really want to connect to any one? This question is posed by Sam Ransbotham (in the photo to the right), an associate professor at Boston Colle ge and the data and analytics guest editor for MIT’s Sloan Management Review. According to Ransbotham, trust and reputation are the secret ingredients of collaborative enterprises, and it is a two-way thing: on the one hand, this allows business leaders to know their audience and every consumption possibility; on the other hand, it makes it easier for consumers to get to know their service providers. It’s that mo ment when you buy a book and the website immediately recommends another one, or when you find out that the beautiful apartment you have ren ted in Lisbon is up a hill on a pedes trianized street. Hence the importan ce of evaluation systems. Ransbotham advises companies to make their data systems more transparent, to help users feel a bond of trust. “Individuals and comp a nies will have ever fewer choices about whether or not to be transpa rent. So, our choices should be about how we deal with the consequences of ever greater transparency,” he says.
ships with Ambev, Unilever and Procter & Gamble. The system works more or less like this: on a route between city A and city B, PepsiCo may only need to take products from A to B, while Ambev, for example, may need the opposite: to take products from B to A. In such cases, the manufacturers join tly hire logistics providers. Through this stra tegy, PepsiCo has reportedly cut its trucking costs by 20%. As there are no certainties in the disruptive world, some people have spoken of the early death of the collaborative economy and its inability to stand up to the power of large companies. Often facing a loss of revenues, the giants of each sector are forced to look for alternatives and persuade consumers that it is possible for their products and ser vices to be used collaboratively, adding to their brand power the capacity to innovate amid the hurricane.
Our choices should be about how we deal with the consequences of ever greater transparency” Sam Ransbotham, Boston College
Collaborative and crowdfunding loans
i n fo 20
MULTIPLYING
GLOBAL REVENUES OF COLL ABORATIVE ECONOMY VS. TRADITIONAL SECTORS COLLABORATIVE ECONOMY
TRADITIONAL SECTORS
us$ 15 billion
Collaborative and crowdfunding loans
2013
us$ 240 billion
Equipment rental
Hiring online teamsx
Hostels and bed & breakfast accommodation
Collaborative accommodation
Book rental
us$ 335 billion
2025
+63% COLL ABOR ATIVE ECONOMY’S MAIN RE VENUE MODELS
SHARING MEANS
New business opportunities expand and market will be 20 times larger in 10 years
1 :: Commission service commission for successful exchanges between buyers and sellers 2 :: Fixed subscription/ association fixed monthly or annual charge 3 :: Tailored subscription subscription plans, in line with customers’ consumption profile (frequency of use and products that are desired) 4 :: Association + usage fee fixed annual fee, with additional fees based on use of services 5 :: No brand (white label) / licensing platform or product that is licensed by other companies 6 :: Freemium basic services are free, while exclusive items and additional benefits are paid for
+37%
Collaborative accommodation
+31%
Shared cars
Projected revenue growth Collaborative sectors
+23%
Traditional sectors
PROJECTED GROWTH OF COLLABORATIVE ECONOMY VS. TRADITIONAL SECTORS, 2013-2025
Music and video streaming
Equipment rental
Source: PWC
Hostels and bed & breakfast accommodation
DVD rental
+17%
Car rental
Book rental
+5%
+4%
+3%
-5%
+2%
7 :: Hybrid non-profit services are combined with for-profit services Source: Collaborative Lab
THE COLLABORATIVE ECONOMY’S LIFE CYCLE, 2015-2025
us$ 335 billion
Life cycle curve based on sector reports and companies’ revenue data
Car rental
Car sharing
Hiring of online teams
Source: PwC
Music and video streaming
Source: PwC
DVD rental
Niche
Rupture
Normalized
Maturity
Decline or renewal
BEHAVIOR 22
L
eonardo de Paula Dysarsz is an eighth-grade student who won a bronze medal in the 2015 Brazilian Olympiad in Informatics. This feat, which made his parents proud and garnered praise from his friends, is the result of a pio neering initiative: around two years ago, the Bertoni School in Foz do Iguaçu, Paraná, where Leonardo studies, decided to offer logical reasoning classes as preparation for programming. “This project is recent, but we have already felt a large impact on students’ performance. They concentrate more, identifying the root cause of problems. As if that weren’t enough, they have also been taking part in healthy competitions like the Brazilian Olympiad in Informatics and doing well in them,” says Amaury Pontieri, a partner of the Bertoni School and an IT teacher. Leonardo confirms his teacher’s im pressions: “When I don’t know the answer to a question, I use logic. I did a test in which logic helped me to eliminate several options that weren’t right.”
PROGRAMMING AT
SCHOOL
Schools across the world are offering computing classes and winning over students through hands-on experiences. Online course platforms are proving a big hit and democratizing teaching. by Gabriela Mafort
EDUCATION IS VITAL Pontieri is enthusiastic about teaching programming. In 2016 he plans to start teaching languages such as C++ or Java to his most advanced class. “We arrived at the conclusion that this skill is desirable throughout academic life. As the famous astronomer Carl Sagan said, we live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology.” The teaching of computing at schools has far-reaching impacts. Rosana Gomes, the Scalable Game Design Brasil project’s edu cational consultant – and also a computer science teacher at COLUNI, a school run by Fluminense Federal University in Niterói, Rio
Photos: Luciano Cruz
Students in Rio de Janeiro learning to program with support from Code.org
PROGRAMMING OLYMPIAD The Brazilian Olympiad in Informatics is held every year by the Brazilian Computing Society, at the Unicamp Computing Institute in Campinas, in the state of São Paulo. The aim is to stimulate students’ interest in this science, which is an important item in people’s education nowadays. In 2015, no fewer than 15,000 students from across Brazil took part in the competition, which includes “Initiation” events (only featuring logical reasoning) for the youngest elementary school students and “Programming” events for older students at elementary and high schools. The third type of event is “University,” for first-year university students. In addition to gold, silver and bronze medals, the best students also win a week of courses at the Unicamp Computing Institute, where they attend “Introduction to Programming” or “Advanced Programming” courses. The students who stand out the most in the advanced course are chosen to represent Brazil at the International Olympiad in Informatics, an annual event that brings together people from more than 70 countries. In order to popularize the teaching of computer science, Unicamp has developed an online learning environment called Saci, designed for beginners. In this environment, students can solve logic puzzles, develop their own programs and keep a record of all their activities.
de Janeiro – describes its positive effects: “I had a student who was apathetic in his regular math classes, but he perked up in games classes, discussing the rules enthu siastically and becoming more engaged.”
INITIATIVES IN BRAZIL
GAMES AS AN EDUCATIONAL TOOL Scalable Game Design Brasil is the Bra zilian arm of a project run by the University of Colorado, USA, which by giving classes about the development of computer games, identifies requirements for computer science programs at schools. “Computational thinking favors students’ cognitive development, helping them get on in society, with three main areas of focus: improvement in language, self-expression and logical inferences. When students explain how a game works, they are learning to express themselves,” says Gomes. According to the coordinator of Scalable Game Design Brasil, Clarisse Sieckenius de Souza, programming is an increasingly im portant style of social communication. She sees advantages in officially including this skill in the school curriculum. “Knowing how to produce this kind of technological speech,
Bring programming closer to the everyday lives of Brazilian youth: this is the mission of Programaê! On this platform, people can learn to program and also teach it. A Lehman Founda tion initiative in conjunction with a network of partners, Programaê! comp iles and offers courses from several similar platforms, such as Codecademy, Proggy and Code.org. Programaê! also provides support in Brazil for Hour of Code, an initiative created by brothers Ali and Hadi Par tovi and backed by figures including U.S. President Barack Obama and Fa cebook’s founder, Mark Zuckerberg. Hour of Code urges participants to spend an hour programming in con junction with peers around the planet. Besides helping students, the project is also preparing thousands of edu cators to organize meetings to run “Hour of Code” sessions.
ENGLISH SCHOOLS MOVE AHEAD England was the first country in the G20 to include programming as a regular ele mentary and high school subject. The goal, according to the British education minister, Michael Gove, was not just to teach com puter science to children, but to empower them to develop their own programs and make “computers work for them.” The British government initially worked in partnership with several institutions that teach programming, to supply resources and prepare teachers, in pilot projects spread across various schools. In Rio de Janeiro, the Di Maggio Education Center is following the same steps, although computer classes are not mandatory at Brazilian schools. Since 2014, the center has offered optional programming classes, through a partnership with Code.org, an online computer teaching platform based in Seattle, USA. (Read our interview with its CEO, Hadi Partovi.) “We
70 65
Source: Dancing with Robots Human Skills for Computerized Work, Levy and Murnane, 2013
60 Growing need for problem-solving skills among all types of work
55 50 45 40
Work with new information Solving of unstructured problems
35
Routine manual tasks Non-routine manual tasks Routine cognitive tasks
30
1960
1970
1980
COMPUTER PROGRAMS ARE THE ELECTRICITY OF THE 21ST CENTURY
1990
2000
2006
2009
Knowing how to speak a programming language is a way of accessing full social participation in our age”
want to demystify computer science while offering up-to-date, future-oriented classes,”
The Code.org platform was created as a hobby by Iranian investor Hadi Partovi and his twin brother Ali Partovi, to democratize the teaching of computing. An investor in Dropbox and one of Facebook’s board members, Code.org’s CEO talked to TOTVS Experience. You argue that all students, at all schools, should learn computer science. Why? Because in the 21st century, all areas are impacted by computers, from architecture to zoology. Just 5% of students become computer scientists or programmers, but 100% of students need to know how the world around them is changing. Our schools teach students about photosynthesis and electricity. Computer programs are the electricity of the 21st century. The Code.org platform is a great success, with more than 5 million subscribers. In your opinion, what changes occur in Code.org students’ lives?
CHANGE IN WORK TASKS IN THE AMERICAN ECONOMY, 1960-2009
Index Value: 1960=50
The platform also provides access to Clube do Código Brasil (“Brazilian Code Club”), which supplies teaching materials to a group of volunteers working on computer-related activi ties. Programaê! has also launched Makers Educa, a network of teachers, researchers, entrepreneurs and artists, who work collaboratively to construct educational proposals.
using a programming language suitable for the profile of whoever is speaking, is a way of accessing full social participation in our age.”
Publicity photo
BEHAVIOR 24
More than anything else, these students acquire the confidence that they can create technology. All of them play games on their cell phone or use the internet, but nobody before has shown them they could develop programs and be entrepreneurs. Giving this kind of confidence to students, especially girls, can change their life forever.
says Bruno Di Maggio, who is responsible for the project. According to him, the longterm strategy is to involve students’ parents and the whole community, to reinforce the concepts at home and in students’ social environment.
ADVANTAGE FOR JOB-SEEKERS Di Maggio notes that computational thinking is an advantage in the job market, with its four steps: decompose the problem, identify patterns, abstract out things that will not be useful, and provide final ins tructions, i.e. construct an algorithm. “In future, students will use these same pro cedures at a company, in the administrative area, in a marketing campaign – in all kinds of activities.” The need for professionals with these skills is growing, in a world where work is
How do you see the future of education? How should a school work in the 21st century?
increasingly computerized. The graphic on
In the long term, all education ought to be more personalized. Classes should be based on projects, using the tools of the 21st century. However, most schools have not updated their curriculum yet and they lack technological equipment. As a result, it is easier to start to do this type of thing in computer science classes. The whole curriculum for these classes is based on projects and the use of technology.
the United States, from the 1960s until now.
the previous page shows this evolution in These days, the challenge is to solve pro blems quickly, given the enormous flow of new information. Hence the clear advantage of obtaining extensive knowledge in the field of information technology.
NEW DEVELOPMENTS 26
WORK
WILL NEVER BE THE SAME AGAIN
people communicate, collaborate and work. This phenomenon affects how companies organize them selves, eliminating “old” functions and creating new ones. Transaction costs are rapidly declining. As a result, everything we learned in the last century about the management of large corporations needs to be revisited.
A CHALLENGE FOR COMPANIES
Disruptive technologies are revolutionizing the way people communicate, collaborate and work by Cezar Taurion
T
he idea that having a good job means being employed by a company originated in the 19th century. The Industrial Revolu tion demanded armies of workers, which destroyed the then predominant position of inde pendent professionals. Artisans were transformed into manual laborers, and production shifted from an individual to a collective effort. Despite criticism at the time, that the creation of armies of workers would culminate in poor treatment, history proved otherwise. Before the end of the 19th century, productivity grew 8-fold, average salaries rose 10-fold and life expectancy doubled. Industries introduced job stability, a hierarchical organizational command and control structure, and new functions and careers. Unions and labor legislation arose. A distinction was created between “blue collar” workers on production lines and “white collar” administrators and managers. For many decades, this model prevailed.
LARGE CORPORATIONS ARE BORN The traditional type of organization that we are familiar with follows the principles of Ronald Coase, a Nobel prize-winning economist at the University of Chicago. In a paper published in 1937, he said that ”a firm will tend to expand until the costs of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction by means of an exchange on the open market or the costs of organizing in another firm.” This model generated large corporations and their hierarchies, with many levels of management. Starting from the 1970s and 80s, and accelerating after the fall of the Berlin Wall and the consequent expansion of globalization, the exponential advances of computing and the dissemination of the internet, cracks began to appear in this model. Economic crises forced companies to rethink the model of doing every thing in-house, and from then on, with outsourcing and automation, they started to transfer work to ex ternal service providers, sometimes even in other countries. Part of the United States’ workforce was exported to India, while robots took over factory production lines. The most recent innovations of the internet age, such as mobility, big data, analytics and social net works, are causing disruptive changes to the way
We have both the need and the opportunity to produce a new form of economic organization and a new science of administration that can deal with the dizzying reality of changes in the 21st century. It is a great challenge, especially in the transition phase, before emerging technologies have been fully disse minated and absorbed. A quotation credited to William Gibson, the science fiction author who coined the term cyberspace, is emblematic: “The future is here, it´s just not evenly distributed yet.” Perhaps it is now time to discuss whether the or ganizations we currently have and the professions we follow will be the same in the coming decades. Technological advances and disruptive innovations are tending to make established professions obsolete. They may destroy entire sectors of industry, but also create new modalities, business models and professions. Important changes are already occurring in many countries. A recent article in The Economist magazine, “There´s an app for that,” addresses the subject in an interesting way. According to the article, the use of mobile technologies is creating new business and work opportunities. The idea behind many startups is to use new technologies to bring customers and contractors together, without the need for a traditional middleman company. We can call this model “services on demand,” which is the base of the sharing economy. It is the phenomenon of “uberization.”
Nothing prevents us from looking ahead and seeing that, due to technologies such as the internet of things and 3D printers, we may expand this model, arriving at even the creation of products. We have begun to think about an on-demand economy and there has been a clear cultural shift where we now devalue the idea of working at the same company for a lifetime.
20,000 YEARS IN 100 As physicist Niels Bohr said, “It is hard to make pre dictions, especially about the future,” but discussions about scenarios are important to enable us to design our strategies. Futurist Ray Kurzweil, the founder of Singularity University (backed by Google and NASA), calculates that in the next 100 years we will experience advances equivalent to 20,000 years of our current knowledge. The speed of technological development allows us to see that the work and organization of companies as we know them today will be greatly impacted in the coming years. Companies will have to be faster than they are today. Although we continue to see a few large corporations, there will be ever more room for smaller, more agile, specialized organizations, working in a network, complementing one another. In fact, what limits us is that we are extremely familiar with the old model and we distrust new ones, precisely because they are new. One thing is clear, however: the emerging model will be more like the market and less like the corporations of the past. The model will need to be more flexible, agile, adaptable to changes and relentless in allocating resources to new opportunities. This will change the concept of jobs and probably require the appearance of numerous other professions. Perhaps, 25 years from now, nobody will celebrate their 25th anniversary working at the same company. And most likely they will not have spent 25 years in the same profession.
Cezar Taurion is the CEO of Litteris Consulting and ThinPost Smart Terminals. He is the author of six books about open source, innovation, cloud computing and big data.
sol u tio n s 28
I
management
AT YOUR FINGERTIPS In the pursuit of productivity and agility, companies are counting on digital workplace projects and finding new opportunities by stimulating collaboration through mobile devices by Gabrielle Nascimento
n a not too distant past, it was common for companies to prominently featu re their office address on their busi ness cards, to convey confidence and solidity to their customers. Today, this information would not make any sense, given that home office working is wide spread and companies create policies and develop technological infrastructure to ensure that people’s physical presence in an office is not necessary for decision making. In the mobile age, the world looks for fluid solutions that make it possi ble to move while remaining connected and productive. According to a study released by con sultancy Gartner Inc., “Digital Business 2015,” joining the digital economy is mandatory for those who wish to remain competitive in the market. The company says that the proportion of leaders of companies with annual revenues of at least US$250 million who manage digi tal businesses grew from 22% in 2014 to 32% in 2015. The study interviewed 304 executives at companies in the United States, United Kingdom, Germany and Australia between May and June 2015. The aim was to under stand how companies and institutions capture, identify and explore the oppor tunities that digital businesses offer.
INTERNAL CHANGE The digitalization of business starts inside companies, with the revision of processes, functions, technology and the
behavior of “collaborators” – a very apt term at this moment. It refers to the idea that being a good employee isn’t just doing your basic tasks – you need to collaborate and be proactive by sharing information. This context gives rise to the concept of digital workplaces, using a set of technolo gies to enable collaborative work without physical space limitations. People can work anywhere (at home, in an office, in the street or at an airport), accessing their work tools, whether email or management systems, any time, and using any mobile device. “It is an evolution of solutions involving corporate portals, intranets, extranets and social intranets. The digi tal workplace means the digitalization of operations and processes, as well as relationships with customers, suppliers and employees. The more you manage to digitalize, the more you gain in speed and operational efficiency,” explains Gilmar Hansen, fluig’s product director. According to Hansen, this is a natural evolution driven by the modernization of technology platforms, which are now much easier to implement and use. “Be fore, companies ended up implementing isolated solutions. Now, the trend is to use a single, comprehensive solution, that provides everything in an integrated way, adopting solutions in line with their level of maturity.”
MEASURABLE BENEFITS For companies, there are many, easily measurable benefits, meeting strategic demands and promoting collaboration and productivity. “More than a concept, the digital workplace represents a revolution, as an essential tool for the competitive ness of any company. As a result, the task
of implementing it should be headed up by the IT area together with the whole company, involving the HR and legal areas, and with the support of managers in all departments,” says Marilia Rocca, a TOTVS executive. The majority of companies already use some kind of tool that fits the world of the digital workplace. Often, however, they end up not achieving the expected results in terms of agility and productivity. The answer may lie in the coexistence of some old solutions, which are not integrated like an intranet and no longer meet employee needs or adapt to new internal demands. “You need to know how to consolidate the digital workplace as a strategy and not just as a one-off implementation. You should replace what hasn’t worked and adopt solutions gradually, at the com pany’s pace, always seeking to solve internal problems,” says Hansen, who also recommends working with project sponsors inside the company. “People who are clear about how to apply the tool and the benefits it will bring for the business.” According to Hansen, collaborators, partners and customers engage more
sol u tio n s 30
“CORPORATE WHATSAPP” MAKES ONLINE COMMUNICATION SECURE AND AGILE
readily with digital workplace projects when platforms featuring interaction, community and instant messaging solutions are used. “If it is practical and intuitive to use them, they are adopted quickly, without the need for a bureaucratic implementation process,” he says.
In order to spread the experience of a digital interaction and communication tool to companies, TOTVS developed fluig Messaging, in partnership with Moxtra, a Silicon Valley startup. “The app is like a corporate WhatsApp, with all the security controls needed at companies, as it lets you create new rules for conversations, which may be individual or in groups,” says TOTVS executive Marilia Rocca.
SIMPLICITY AND SAVINGS FOR BUSINESSES
The more you manage to digitalize, the more you gain in speed and operational efficiency” Gilmar Hansen, fluig’s product director
FTD Educação, a publisher that is part of the Marista group, realized the importance of digitalizing its processes to gain competiti veness in its market. In order to improve its commercial efficiency, it implemented fluig, TOTVS’ productivity and collaboration plat form. All its manual processes have now been eliminated and commercial consultants can use a tablet to access the company’s entire up-to-date portfolio, which remains available offline. There are 196 collections, more than 750 books and over 1,000 authors available via the fluig app for mobile devices. Previ ously, the content was organized in printed brochures. Fluig has provided the ability to register clients and make sales any time, anywhere. Furthermore, managers can access business information in real time, track visits via geo location data, and generate graphics to evaluate the evolution of each visit to a client. All this is integrated into the ERP and CRM systems used by the company. “In terms of just the printing of business schedule forms, we’ve reduced our con sumption by more than 150,000 pages a year. By automating the sales force using fluig, we’ve saved a lot of paper, ink and postage. We have also been able to give our salespeople and managers access to important information about clients and the market via tablets or laptops, facilitating the planning process and assisting our sales
The instant communication tool allows interaction between two or more people through text messages, audio conferencing or video conferencing. Participants can share screens, and there is also a resource for making live graphical annotations on shared documents, making communications much more effective. “When ending a meeting, users can also choose to save the conference call within fluig (if they have this solution), allowing them to consult it later,” says Gilmar Hansen, fluig’s product director.
of products and services,” says Márcio Nagy, FTD’s IT manager. “FTD is a good example of how mobile technology can help with the efficient ma nagement of a business, in a simple, agile way,” says Hansen.
UNIQUE INTERFACE AND LOGIN NAME Mobility, integration and accessibility are the three pillars of a digital workplace pro ject, but other characteristics are needed to successfully implement this innovative work model, says Marilia Rocca. “You should offer a single interface, with just one login. Maximum customization and a corporate social network are also essential to delight users,” she recommends. Gilmar Hansen stresses that “everything you do manually is slower and more expen sive.” The digital workplace brings about competitiveness, efficiency in relationships, and control of operations. “Each automated process makes your company more fluid and faster.”
Fluig is accessible from both desktops and mobile devices, and companies can use the free version, without needing to have it as a platform. If they identify the need for additional functionalities, there are two paid versions, which permit a larger collaboration capacity in terms of meeting time and number of people involved. “To get an idea of the effectiveness of using fluig Messaging, we started to use it within TOTVS itself, and in just three weeks we already had 12,000 active users, without carrying out a launch campaign or any communication about the app’s availability. It was adopted instantly among employees, partners and distribution channels,” says Hansen.
DISCOVER THE DIFFERENT VERSIONS OF Fluig Messaging FREE
PREMIUM
Number of participants per meeting 3 participants Unlimited Meeting minutes limit 15 minutes
Unlimited
Accessible chat history 2 months
Unlimited
Recording of meetings (PDF and video) Yes Yes Phone calls / dial-in No dial-in option
Yes
Capacidade de armazenamento 1GB/indivídual per month Unlimited People per group 20 participants
Unlimited
UNDERSTAND THE MAIN FUNCTIONALITIES OF A Digital Workplace project We can now invite remote colleagues to our meetings through video conferencing.
Flávio, partner
We can show our projects to contractors whenever we need, now that we can access our documents on the intranet from anywhere, using a laptop.
It’s simple to have virtual meetings with partners and I can share my presentations on the screen.
Eduardo, geographer Ricardo, engineer
If there is Wi-Fi at the camp, I can connect to the office, and I can make video calls from home as well.
Carlos, maintenance professional
I can check my email from my iPad at home, without needing to have my company laptop with me.
Marcos, HR
The company and three of its shareholders are working on the same audit, at the same time, through the new intranet.
Sara, auditor
opi n io n 32
NO WAY BACK Your company’s digital transformation is not a simple matter of choice. Those who do not incorporate the digital variable into strategic planning will be left behind. by Charles Hagler
I
t is no use standing still, waiting to find out for sure which way the wind will blow. Preparing your boat’s sails is a task for yesterday. Consumers have already embarked on this voyage and they won’t wait for you. This is a tremendous challenge for companies. After all, organi zations have barely begun to understand the internet environment, yet the revolution of mobile technologies and social networks has already shaken things up once again. As a result, there is definitely no going back from the digitalization of companies. Of course, this does not mean that companies should set off on this journey without the aid of a compass. More than ever, we need to plan. However, whereas the IT area’s planning used to be a separate process, seen as a support function for an organization’s main activities, today it must be integrated into the strategic planning of the company itself.
TIME TO RETHINK YOUR BUSINESS How may disruptive technologies affect your industry? What new digital businesses are there to develop? Which units may be discontinued because they have become obsolete in the digital world? Which businesses in the physical world should be incorporated into the digital environment, and what synergies may be created
from this? There are many questions that require answers at companies’ highest decision-making level. This is the level we call digital business transformation. Seeing the future from a digital perspective is fundamental. Without it, it will be impossible to prosper in this new business environment, in which some markets may simply disappear. Thanks to the evolution of artificial intelligence technologies, for example, a large share of level 1 call center customer support may be replaced by machines in the next five years. This is already a reality in the most advanced markets, and the trend will inevitably come to Brazil. Accompanying this process of permanent mutation is exhausting, but absolutely necessary. New technological disruptions will arrive, such as the internet of things (the integration of software and hardware in everyday equipment), which is certain to radically change the business world in the coming years. This technology will soon leave the experimental phase, to definitively take over the streets, trans forming consumers’ habits and companies’ strategies.
TRANSFORMATION OF BUSINESS PROCESSES To depart on their digital voyage, companies need more than a map of technological threats and opportunities incorporated into their strategic plans. After all, all this talk of transformation doesn’t just concern where we want to arrive, but how we will do so. We then arrive at the level that we at TOTVS Consulting call business process transformation. This is a fundamental step to take advantage of the productivity gains provided by the digital transformation of companies, because there is no process that cannot be modified within a company. This, however, creates a new dilemma: what to change? In fact, there are so many possibilities that it is very easy to get lost among the options available in the technology market. One good path to take the right decision is to not forget your organization’s strategic perspective. The company’s ultimate goal is to make its transition to the new situation, so the first step is to map the processes that will have the biggest digital impact within its plans. After all, this is not about change for change’s sake. What is fundamental for one organization may have little impact on another. That is why this strategic filter of processes is so important. In the end, technological transformation should make sense for your company, your business and your customers, else it will merely be badly inves ted money. Having chosen your priorities, you need to make a careful analysis of the investments and timeframes associated with digitalization, as well as the potential cost reductions and revenue increases to be generated by the digital transformation. This analysis is accompanied
NEW RELATIONSHIP Amidst all this digital transformation, we should not lose sight of customers. We recently led the digitalization of the Estácio university group’s customer service and customer relationship management (CRM) system. Automation reduced the company’s costs and made the process more agile. Students – members of a generation born and raised among digital media – prefer to use cell phone apps to deal with a series of tasks that used to be done face to face or by phone. Estácio’s reform has also improved its customer service quality. The institution has invested the resources it has saved in counseling for its students. This case shows that the object of digitalization should not be only to reduce costs and increase productivity. You need to do this while upholding quality for consumers. I will conclude by recounting a personal experience: I prefer to fly with an airline that has a mobile app-based check-in system. This innovation has created value for people who travel frequently. So, companies should pay attention. Consumers in the Digital Age are well informed and unyielding when they discover digital alternatives that facilitate their life. Thanks to viralization, the impact on business is almost immediate.
by a survey of products and services available in the market to meet this specific demand. This cross checking will determine the ideal solution with the best cost-benefit ratio for the company. Despite all the difficulties in this transition, we should view it with optimism. There is an enormous window of opportunity for gains of scale, productivity and revenue generation in the coming years for companies willing to embark on this transition and change their business models. And the good news is that all this change is just beginning. Many companies, even giants in their respective sectors, are still lost in this ocean, without knowing exactly where they will arrive. And this is not only happening in emerging markets, like Brazil and other parts of Latin America. This is a phenomenon that even affects organizations in countries at the technological forefront, such as the United States. Therefore, whoever moves ahead will have the advantage of exploring the new possibilities of digital culture.
* Charles Hagler is director of TOTVS Consulting.
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(fair treatment of owners and other stakeholders) and corporate responsibility. Governance agents should strive for the sustainability of organizations, aiming for their longevity and incorporating minimizing negative externalities.
Volkswagen was recently accused of fraud, after the United States Environmental Protection Agency revealed that the German automaker had broken the law by installing a device to tamper with pollution emission results in 11 million diesel cars across the world, of various brands. The case has resulted in not only the resignation of CEO Martin Winterkorn, but also a recall of millions of vehicles throughout the world, unmeasured environmental impacts, and penalties of up to US$18 billion.
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SCANDAL
IRREPARABLE DAMAGE
MORE TRANSPARENT AND ETHICAL
B E H A V I O R The growing circulation of information is making the market more demanding by Andréa de Lima
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he combination of a lack of transparency, poor accountability and inefficient mana gement is capable of dealing a knockout blow to any company’s reputation, market value and confidence among its consumers and other stakeholders. The occurrence of serious flaws in corporate governance, sometimes combined with negligence in
the compliance area (internal control programs and procedures) can lead to crises, which are always hard to overcome. We have seen some prominent examples of this in recent months. Corporate governance is the system through which organizations are directed, monitored and incentivized, involving practices and relationships between owners, the board of directors, executive officers and oversight bodies. The principles of governance are accountability, transparency, equity
This kind of problem does not start or end with Volkswagen, and it goes beyond the auto sector. Two other recent high-profile international incidents have led to multi-billion-dollar losses, cost lives and caused irreparable harm to the environment. BP will have to pay more than US$20 billion in fines and compensation to the United States federal government and five American states for its oil spill in the Gulf of Mexico in 2010. The second incident happened with the mining company Samarco ( a joint venture between Brazil’s Vale and Australia’s BHP Billiton) when two of their dams caused a torrent ofmud to descend on the district of Bento Rodrigues, in the Brazilian state of Minas Gerais. The flood of mud and mining waste reached the Doce River – which was officially declared dead – and the neighboring state of Espírito Santo. To mitigate cases like this, we need to rethink business models and production processes, and not just in the mining and oil sectors, says Paulo Durval Branco, the deputy coordinator of the Getulio Vargas Foundation Center for Sustainability Studies (GVces) in São Paulo. “If we still depend on iron ore and petroleum, for example, to make essential goods, the respective companies in these sectors that are truly responsible ought to invest in research and replace raw materials in order to extract less natural resources, especially finite ones, and to eliminate harmful processes that generate waste and high levels of emissions, rather than merely being content with continuous improvement in unsustainable models. Companies need to be regenerative,” he argues.
ACTION AND REACTION Facts associated with lack of transparency, corruption, bullying, fraud, environmental impacts and other compliance failures ought to lead regulators, investors and society in general to pay more attention and to demand good corporate practices aimed at complying with regulations, following codes of conduct and fostering positive relationships. Unethical and criminal conduct may lead to litigation, fines, regulatory restrictions and reputational harm. According to Branco, we need to remember that companies are given a license to operate and they must be held accountable for their actions. “The majority of companies look at the concept of accountability from a perspective of obligation, and fail to see it as a symbol of innovation and creativity to generate solutions, something decisive to achieve competitiveness,” he says. Accountability, he argues, is a starting point to construct social dialogue, featuring a variety of perspectives among stakeholders. “It isn’t a moral or punitive issue.” Regarding the recent cases of Volkswagen and Samarco, Branco states: “They are coherent cases, involving organizations that have made efforts to implement best practices, but they feature an acid test for the governance and accountability of both of them.”
Contemporary businesses need to put innovative perspectives on the table” Paulo D.Branco, FGV
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REASONS TO TRUST Marta Viegas, a partner of law firm TozziniFreire Advogados and a member of the board of the Brazilian Corporate Governance Institute (IBGC), notes that the term accountability is directly linked to trust. “It is about accounting for myself to society, to my shareholders, explaining what I am doing.” According to Sabrina Kindlein, a partner of law JCMB Advogados Associados and a member of the IBGC State-Owned Enterprise Governance Commission, a lack of transparency is one of the reasons behind a loss of trust among the market and investors, who are staying clear of companies that do not explain themselves clearly. “An atmosphere of transparency and trust makes business less costly for the parties involved. Omissions or distortions in reported information delay investment and make it more expensive and bureaucratic,” she says. Kindlein notes that due to the enactment of Brazil’s Anti-Corruption Law (Law 12,846/2013) and the establishment of all the penalties provided for by this legislation, companies have been forced to adjust more quickly to good governance practices. She has noticed a strong movement to implement compliance programs, which were previously overlooked because of the investment required. “The first steps taken by companies are the establishment of codes of ethics and conduct, the creation of compliance areas, the establishment of an anonymous reporting channel to facilitate complaints, and the monitoring of risks and controls through more efficient software.” Kindlein has also noted “efforts by senior management to gradually transform the organizational culture, through training and incentives for managers to participate in institutions aimed at spreading corporate governance.”
As a global company that seeks global clients, we must look for the best standards” Sérgio Sério, da TOTVS
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COMPETITIVE ADVANTAGES “It isn’t enough to take a stance; a company needs to prove its high level of governance through actions and commitments,” says Sérgio Sério, TOTVS’ institutional relations manager. “Good governance practices are in our DNA and we enhanced them when we listed on the stock exchange. Since then, these practices have greatly strengthened us. We have also decided to take a forceful position regarding our culture of integrity and ethics in relations with the government, launching an effective compliance program in terms of public commitments, with internal standards and rules.” TOTVS is a signatory to the Ethos Institute’s anti-corruption global and business pacts. According to Sério, “this reflects our commitment to governance and ethics – values aligned with our organizational culture. As a global company that seeks global clients, we must look for the best standards.” Sério leads TOTVS’ Institutional Relations and Social Opportunity Area, which aims to promote innovation, competitiveness and social responsibility at the company, in line with its strategy, anticipating scenarios, enabling opportunities and minimizing threats, through cooperation with the public authorities and trade associations. The area also manages the company’s social investments and its policy to support the community. Although the adoption of good governance practices requires investments, transparency is increasingly becoming an expectation of society. This is the opinion of Sabrina Kindlein, who believes that a company’s success is related to the admiration and trust that it generates. This in turn is reflected in its brand, values, reputation, and capacity to attract internal clients, external clients and investors, and to get on well with its stakeholders. “The adoption of good governance practices enhances a company’s value, makes it long lasting, and facilitates its access to capital,
generating competitive advantages. In this context, a company that is not transparent will not only become uncompetitive in the market, but will in a short time be annihilated by it,” she says.
ANTI-CORRUPTION MEASURES In the turbulent moment that Brazil is going through, of economic, political and institutional crisis, the corruption investigations involving individuals and institutions in the public and private spheres have grown ever more prominent. As a Brazilian multinational, and given its size in Brazil and other countries, TOTVS must be seen as a leader when it comes to good governance. “We invest heavily in mobilization, especially internal, and to promote best practices, focusing on ethics. It isn’t enough to issue reports and sign agreements. When we took this decision, we held internal meetings to explain what this means, not only to the company but to society, and we have been very well received,” says Sérgio Sério. In its interaction with the public sector, the information technology sector has decided to establish a different kind of relationship. TOTVS, for example, does not donate to any political campaign and it has a structured policy based on principles aligned with Brazil’s Anti-Corruption Law. According to Sério, with regard to corruption it is important to be proactive and show that it is possible to be different. “There is a part of Brazil that is successful and alive, and we will soon see it again in full swing. All of this will pass by, and we will emerge stronger,” he believes. Marina Martins Ferro, the Ethos Institute’s public policy coordinator, explains that thanks to Brazil’s Access to Information Law, public transparency has improved a lot, as has the transparency of assets, showing who the real shareholders are (beneficial ownership). “We understand there is strategic, confidential corporate information, but why not make it public for the common good? This generates less spending, increased competitiveness and a positive impact for society,” she says.
COMMITMENTS The Global Compact is an initiative developed by former United Nations Secretary-General Kofi Annan, with the aim of mobilizing the international business community to adopt, in its business practices, fundamental and internationally accepted values in the areas of human rights, labor relations, the environment, and anti-corruption measures, through 10 principles. This initiative involves United Nations agencies, companies, labor unions, non-governmental organizations and other necessary partners for the construction of a more inclusive and egalitarian global market. It now has more than 5,200 signatory organizations, coordinated through 150 networks across the world. In turn, the Business Pact for Integrity and Against Corruption was established to unite companies in favor of a more principled and ethical market, and to contribute to the eradication of bribery and corruption. Launched in June 2006 by the Ethos Institute, public relations firm Patri, United Nations Development Program (UNDP), the United Nations Office on Drugs and Crime (UNODC), the World Economic Forum and the Brazilian Global Compact Committee, it is also designed to promote ethics in business by preventing and combating corruption.
total RETAIL Regardless of a company’s size or area of activity, the future of its commerce involves digitalization. And we are not just talking about e-commerce. by Carlos Vasconcellos
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he world’s largest online retailer, Amazon, has begun an unusual adventure for a company known for leading the e-commerce re volution over the last two decades: it has opened a physical store. Opened in Novem ber, Amazon Books is in Seattle, home to the company’s head office. It has a small in ventory, based on bestsellers and customer ratings. The collection of 6,000 titles is closer to those found at the thousands of bookstores that have closed their doors in the United States due to virtual competition. The prices are the same as in Amazon’s online store, and the books are exposed on the shelves in a different way to normal, with the covers facing outward. According to the company, they take up more room on the shelves, but make it easier for customers to identify titles.
ONLINE AND OFFLINE TOGETHER Amazon says that its store in Seattle will not be the only one. The idea is to combine
the benefits of online and offline sales at a single point of sale. In fact, this bookstore is not Amazon’s first foray into the physical world. In February 2015, the company opened a facility in Indiana containing code-operated lockers, where people can pick up products and place orders. Amazon’s move is the symbol of a new era in which retail frontiers are dissolving, increasingly leading companies to construct multichannel strategies – or even strategies for all channels (see “Omnipresent retail”). One of the main factors helping to elimi nate these distinct boundaries is mobile apps. Retailers are increasing their productivity through apps to manage their inventory, sales teams, databases and other systems, which can be controlled remotely, in real time. They also allow consumers to buy directly at a store, place orders for home delivery, search in a physical store, comparing prices at online and offline points of sale, and use geolocation to find offers in nearby places, among other things.
“Mobile technology has arrived and shuffled the deck. Mobile first is now the mantra of the retail sector,” says TOTVS executive Marcelo Cosentino. However, it is not worth trying to impose a particular option on customers. “There is no use trying to force a sales channel. It is consumers that will choose the most convenient one.” Whichever path is chosen by retailers, however, it involves digitalization. And this phenomenon is much broader than the simple establishment of an e-commerce channel. Cléber Morais, a Bematech executive, notes that retail investment in information tech nology has been increasing, but is still well below other sectors. “Retailers’ investment in technology is 3.5% of total investment, but in telecommunications, for example, this pro portion is 10% of revenue.”
DIGITALIZATION IS STRATEGIC According to Haroldo Monteiro, the Gra duate Course Coordinator in Strategic Retail Management at Ibmec, a business school in Rio de Janeiro, digitalization is strategic for the sector. “First, it makes it possible to ge nerate a mass of data to analyze consumers’ behavior, a key element for retail,” he says. By capturing data about customers, it is possible to construct strategies to attract and retain them. And as the database grows, data analysis technology can be used to anticipate consumption trends. “This is important not just to align supply with public demand, but also to manage the quantity and mix of stock,” says Monteiro. Inventory management is in fact one of the biggest challenges for a retail operation. “Starting in the 1990s, when inflation was brought under control in Brazil, having lean inventory became a matter of survival for retailers,” he says. Managing stocks well also means having exactly what consumers need. In some cate
gories, the process is so complex that digi talization becomes even more urgent. This is the case with clothing retailers. “In a single product category like jeans, you need to manage sizes, colors and models. You will obviously need a more robust system to deal with this,” notes Monteiro. Here we arrive at the second driver for the digitalization of retail: the efficiency of mana gement and processes. This rise in quality may be decisive for the sector, especially at a difficult moment for the economy. “It’s time to look for more efficiency at all stages of retail operations,” says Eros Jantsch, a Bema tech executive. “And digitalization has every thing to do with this.”
CONCERN FOR CUSTOMER SERVICE Transformation is unequal, however. Some segments are more advanced than others, and each one has its own priority. Building materials stores and home appliance chains, for example, are focused on integrating sales
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“Mobile technology has arrived and shuffled the deck. Mobile first is now the mantra of the retail sector” Marcelo Cosentino, TOTVS executive
COMPLETE Sinergy TOTVS’ reorganization of Bematech, which has 500,000 clients and 5,000 service channels in Brazil and other countries, has created the first company in Brazil to cater to all retail sub-segments with a complete portfolio of technology solutions. “We are the first one-stop-shop provider of technology solutions for retail,” says TOTVS executive Marcelo Cosentino. “Our tools range from the point of sale to the back office,” says Cléber Morais, a Bematech executive. Cosentino considers the acquisition a unique opportunity. “If you want to attack such a large base – 2.5 million retailers – you need to have people on the ground. Bematech has brought us a base of 500,000 clients that we can attack from the very first day,” he says. “The process makes a lot of sense. We really believe that retail will go digital.” The executive also stresses that this local presence is vital to serving small retailers. “The smaller the company, the more important this personal contact is. Another advan tage is that there was no overlap in the portfolio offering, not even in the areas where both companies work.”
Before, the gap was 10 years for such a transformation to reach the Brazilian market. Today the lag is much shorter
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Eros Jantsch, Bematech executive
channels and the opportunities and threats of e-commerce. In food service, on the other hand, the main concern is customer service. In this segment, the digitalization process has advanced more quickly. Jantsch mentions the case of Ameri can sandwich and salad chain Panera Bread. Through a solution that combines e-commerce and a cell phone app, consumers can order and pay using their phone, while GPS is used to indicate the nearest store. The app then sends a message saying where the customer can collect his order and when it will be ready. “The kitchen interacts with the service channel. This demands operational as well as techno logical integration,” he notes.
UNITED STATES IN THE LEAD Brazil is still behind the USA, which is leading this process of transforming retail in the digital world. The technological gap is diminishing, however. Although electronic commerce is just the tip of the iceberg, it serves as an indicator of this process of transformation. In 2014, Brazilian online retail sales grew from 18% to R$39 billion (equivalent to US$13 billion at the exchange rate at the end of 2014). This makes Brazil, with its 106 million internet users and 60 million online consu mers, the ninth largest market out of 98 coun tries analyzed by consultancy AT Kerney. The most important thing, however, is the speed of evolution and the way digitalization is spreading through the retail value chain. “Before, the gap was 10 years for such a trans formation to reach the Brazilian market. Today the lag is much shorter,” says Jantsch. This is partly the result of the democratization of technology in the country, and the digitali zation of retail is following in its wake. Easy access to smartphones and tablets is in creasing consumers’ pressure on companies. Morais explains that consumers are now much better informed. They research things
Omni-Channel, OMNIPRESENT RETAIL The wall that used to separate physical retail from online retail has fallen. Be fore, the boundaries were very clear. Online shopping was something for young people, who bought low-value, small products. Following improve ments to the security of transactions and, more recently, the widespread diffusion of smartphones with internet access, this has started to change. The key concept in this new context is omni-channel retailing. More than multichannel or cross channel, stores need to be in all channels and establish perfect communication between them to serve consumers. E-commerce, social commerce, mobile commerce, TV commerce, catalogues, phone sales, door-to-door sales, and sales in physical stores – all possible me thods enter the equation. The variations are numerous. Consu mers research product prices and characteristics online and finalize their purchase in a physical store. They directly buy products using their computer, to be delivered at home. They place orders on their cell phone and collect the products at a store. To consumers, what matters is not the means of shopping, but rather the experience they have with the brand. Therefore, an omni-channel strategy demands complete integration, from the production of the strategy to the operational execution phase. Find out more about Omni-Channel sales in the article on page 44
on the internet, and then – if they don’t buy online – they at least go to the store knowing more about the product than many sales people. “This is a disruptive transformation for physical retail. Employers need to invest heavily in training vendors to serve these new consumers,” he says. Cosentino, in turn, notes that Brazilian con sumers are traditionally quick to adopt new technologies, which could stimulate retailers to enter the digital world. “Mobile payment technology will certainly catch on here, al though we still have a major banking inclu sion challenge to overcome in the country.” Cheaper technology facilitates participa tion by micro and small enterprises. These days, it is possible for small traders to have mobile solutions that let them access sales data stored in the cloud wherever they are. “At a time of crisis, people who don’t have an e-commerce channel open one quickly on Mercado Livre or E-Bay,” says Cosentino.
SMALL RETAILERS’ CHALLENGE This all provides a great opportunity for retail solutions suppliers. According to Brazil’s national statistics agency, IBGE, there are around 4.6 million companies active in the country and approximately 54% of them are in the retail sector. Of them, more than 80% have annual revenues of between R$120,000 and R$250,000 but only 30% of them could be considered automated. According Cosentino, technology will grow faster than GDP for a long time. And the spending will come from small companies. “These micro and small enterprises will need to go through the digitalization process, they need to be efficient, they need back office systems integrated into the point of sale.” He notes that processes at small Brazilian companies are still nearly always manual. “You go to a pet shop or hairdresser and there is
a payment system, but behind it, to connect with inventory, with cash, with payroll, it’s all a mess,” he says. The conclusion is logical. “When you look at the profile of companies in the country – mostly small – and see that the majority of them are in retail, and you know that IT’s share of GDP is set to grow, you look for an overlap of these three things and realize that retail will go digital.” Despite its potential, this market still needs to be convinced of the advantages of the digital world. In Monteiro’s view, small com panies, mostly family-run, look at spending on technology as a cost rather than an invest ment. This may be a serious mistake. “They focus on growth without thinking about structure, which will cause losses in future,” he warns. However, the wheel of progress continues to turn. One of the factors driving digitalization is the sector’s consolidation. Mergers and acquisitions are forcing companies to pro fessionalize their management and conso lidate their accounting data. In some areas, such as pharmacies, the three largest com panies hold just 30% of the market. “The grandfather who owns the store stands at the counter, charming the customers, but there’s no way to scale up the business,” says Morais. Another important factor is generational change at small businesses. “As heirs take over, small retailers become more inclined to enter the digital world,” says Monteiro. All these transformations oblige physical retail to change, adapting itself to new con ditions. These changes are aimed at trans forming in-store shopping into a special ex perience. To this end, retailers may use music, decoration, aromas, layout – everything possible to engage consumers. “Traditional retail stores will never end,” concludes Morais. Amazon would seem to agree.
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The grandfather who owns the store stands at the counter, charming the customers, but there’s no way to scale up the business” Cléber Morais, Bematech executive
SUCCESS STORIES 42
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Left, Unigel’s technical facilities; above, Schmersal’s head office
TECHNOLOGY
custom made Investment in specialist software generates instant results for companies in different sectors
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by Gabrielle Nascimento
rom the factory floor to the end customer: success stories show how investment in management software can im prove productivity, accuracy and quality at companies in different sectors. One example is provided by Unigel, one of Latin America’s leading manufacturers of specialty che micals, fertilizers, plastics and packaging, which adopted TOTVS’ management software to enhance its control of its international operations. TOTVS’ ERP solution is used by eight companies in the Unigel group. In the past, each company executed a different version of the same system. In order to optimize management, the solutions were uni fied, offering a single environment, with totally integrated records
and standardized processes. This movement was facilitated by the migration to version 12 of TOTVS’ ERP system. In addition to Brazil, the group’s Mexican operation also uses the company’s system. Using the new version, accounting and tax data is only inputted once and is replicated automatically in all application modules. The tool has also simplified accounting and inventory processes which needed to be integrated. “As one company depended on another, the process ended up generating bottlenecks. With the new version of the system, we can close the accounts by company, saving a lot of time. The closing process at some larger companies takes around four hours, while at others it takes roughly 30 minutes,” explains Cláudia Anania, Unigel’s IT manager.
INTERNATIONAL EXPANSION A Plastiglas, Unigel’s Mexican operation, which is a leader in the production and sale of acrylic sheets, adopted TOTVS’ ERP solution at its four plants and six distribution centers soon after it was acquired by the Brazilian group. The implementation, carried out over two months, has reduced operating costs and improved performance. It is now easier to integrate operations, giving the Brazilian ones complete access to information in Mexico, and making it faster to take decisions based on reliable indicators and data.
AUTOMATED FACTORY FLOOR Schmersal, a global leader in security systems for machines and equipment, also decided to automate its processes to improve productivity and quality. The solution it chose was the TOTVS Manufacturing Execution System (MES). The German company develops and produces approximately 25,000 different mechanisms and devices. Around 6,000 of these components belong to its injectable parts manufacturing unit, the area where MES has been installed. By adopting this technology, Schmersal managed to eliminate a work shift at this plant, avoid the need to acquire two new machines, and also raise its pro ductivity, while keeping up with average annual revenue growth of 20%. “Thanks to TOTVS MES, we have managed to get through our queue of production demands, be more efficient and get the most out of our machines. Through effective control, we have a managerial vision of our production capacity, improving our decision-making power, allowing us to solve and even avoid problems during processes,” explains Álvaro Augusto de Freitas, Schmersal’s IT manager. Schmersal has a long-running partnership with TOTVS, having first implemented the company’s management software in 1987. Since then, there have been many evolutions, guaranteeing more consistent
information and improved internal processes, tax compliance, and analytical and managerial visions.
SEARCH FOR GREATER AGILITY AT HARLEY-DAVIDSON Harley-Davidson has used TOTVS management software since 1998. At the start of 2014, the company implemented a new version of the system to receive all the support and updates offered by TOTVS. To further improve the results obtained by using the new ERP system, the project involved Harley-Davidson professionals in the United States, at their Brazilian plant and in their commercial area, which mapped the processes and defined the flow of routines and the scope of software before implementing it. The redesign of process flows and the implementation of the solution’s new version brought numerous benefits to the company. The biggest impact was felt on the factory floor. In a short time, the system enabled higher productivity for the operation and enhanced relationships between the company’s different areas in Brazil. In order to further improve Harley-Davidson’s production mana gement, TOTVS customized an innovative tool for the company, called Doctor Report. All goods that arrive from the United States go through an inspection before entering the plant. If there are any product flaws, the goods cannot enter. Doctor Report has simplified the checking of materials and production control, by recognizing shortages of parts and making it impossible to use goods until they are compliant. “The alignment between TOTVS’ ERP solution and the needs of the Brazilian market and the company’s deep knowledge of the country’s legislation and its complex business environment influenced our decision. The long partnership between our two companies also made a difference to our choice,” says Celso Ganeko, Harley-Davidson’s industrial director.
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AN EVOLVING
JOURNEY Integration of physical and digital channels has now become a strategic imperative by Karen Ferraz
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s of now, no, no omni-channel best practices have been es tablished; everyone is learning as things advance, but no body has the luxury of being able to wait.” Paraphrasing one of his clients, C. Dwight Klappich, Gartner’s research VP, describes the present moment of companies’ journey tow ard integ rating physical and digital sales channels. One sign that the concept has gained strategic importance is the fact that decisions about omni-channel have happened top down, and often initiated in the boardroom. With an eye on this evolution, Natura, whose business was originally based on direct sales, sustained by 1.7 million con sultants spread across Brazil, has taken an important step forward in its omni-channel strategy. By creating the Rede Natura digital platform in 2014, it has been possible to unite consultants and consumers in an environ ment where each reseller has his own virtual store. There are now 70,000 little stores, enabling the essence of the business model to be maintained: sales based on recommen dations. “This is a first step toward convergen ce of two business models, which in future will only be one,” sums up Agenor Leão, Na tura’s CIO.
LESSONS LEARNED FOR THE TRADITIONAL MODEL The lessons learned and the tools of the digital environment have also been incor porated into the company’s traditional di rect sales model, in order to improve the shopping experience and eliminate gaps. This initiative, called “Você Conecta” (“You Connect”), already has 100,000 consultants engaged in an app, through which they ma nage their business and their relationship with the company.
“Much more than creating a digital business, the company is looking to integrate all this in a large business, using this digital information in both direct sales and digital direct sales,” says Natura’s CIO. The omni-channel approach has also gui ded Kalunga, an IT supplies retailer, which has integrated its consumer service channels (a demand generated by e-commerce and physical stores) and unified its purchasing department to permit similar pricing and in ventory management practices. It also offers an integrated experience for customers. It is now possible to find out on Kalunga’s website at which store a certain product is available, and to buy a product on the website and exchange it if necessary at a store. The digital sales channel, combined with telesales, now accounts for 15% of Kalunga’s revenues. The company is also looking to have a com plete vision of its consumers, storing records of their in-person and virtual purchases, which may be consulted by their CPF or CNPJ Bra zilian taxpayer number. “Without physical stores, e-commerce doesn’t make sense. What proves this is that when we open a physical store in a city, our e-commerce sales increase a lot. People start to trust us more and know that if they have any pro blem, they can go to the store,” says Felipe Algazi, Kalunga’s business intelligence and web manager.
NEW PARADIGMS Due to the development of digital channels and the evolution of mobility, the way people consume has changed, and there is no going back: the only option is to offer a single ex perience across channels and to use all possi ble points of interaction between users and brands. This vision has been put into practice by companies such as Apple, Nordstrom and Macy’s, which stand out as international examples of omni-channel adoption.
You need to have dialogue with new consumers, enriching their shopping experience, guiding them through communication channels to products, and having the good sense not to stalk customers, sending them unwanted notices” Rodrigo Reis, GS&MD’s business director and a professor at ESPM, Rio de Janeiro
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SPECIALISTS POINT OUT THE MOST COMMON omni-channel MISTAKES According to Gartner’s C. Dwight Klappich, the biggest mistake that can be made by companies that decide to follow an omni-channel strategy is to not adopt an agile approach that permits adjustments along the way, given that processes and models should be constantly revised and adapted. André Bretas, a TOTVS executive, says it is also common for companies to install an omni-channel solution but to fail to appraise the efforts that will be necessary. “Companies that acquire a software solution need to believe that the sales process starts when they sign the contract, not when it ends. The investments aren’t only associated with what they spend on software,” he says. This includes assigning employees to accompany the process, who will have to be taken off other activities to help make the new system work smoothly. “Performance will suffer temporarily, so it gives the illusion that the system has just arrived and is hindering things.” From consumers’ point of view, Rodrigo Reis, GS&MD – Gouvêa de Souza’s business director and a professor teaching on the “New OmniChannel Consumers” course at ESPM in Rio de Janeiro, says it is fundamental to have a team that can dedicate itself to understanding consumers, in line with the vast quantity of data generated today. “These are essential areas that know how to subtract outputs in accordance with their core product and thereby develop their marketing plan.” Here are some examples: IT to generate data (big data); customer insight to analyze and generate all information and statistics; operational marketing to execute actions; customer marketing, to interact with customers at different moments; and finally digital marketing, which can develop content and identify targets.
As yet, no omni-channel best practices have been established; everyone is learning as things advance, but nobody has the luxury of being able to wait” C. Dwight Klappich, research VP, Gartner
According to Rodrigo Reis, the business director of GS&MD – Gouvêa de Souza and a professor at the Higher Education School of Advertising and Marketing (ESPM) in Rio de Janeiro, eliminating physical and tech nological barriers between channels poses challenges that demand close involvement across the company, as well as major invest ment. “And in the case of Brazil, we also have specific factors that make this journey even harder, such as tax law.”
IT’S THE CUSTOMERS THAT MATTER Even so, he recognizes some great exam ples of companies that are making progress in this area, such as Polishop, Livraria Cultura and Magazine Luíza. This movement goes beyond retail, encompassing sectors such as finance, with banks playing an important role in the digital evangelization of customers. Consumers are at the center of this new world, they are already aware of their power,
and so they increasingly demand individuali zed treatment. Knowing your customers well, as well as their shopping journey, is basic. “You need to have dialogue with new consumers, enriching their shopping experience, guiding them through communication channels to products, and having the good sense not to stalk customers, sending them unwanted notices. The important thing is to seize the moment to educate the public on how to use your channels,” says Reis.
COMPLETE INTEGRATION Each approach needs to be relevant and, in this context, one sales channel comple ments another, making it possible to capture the exact purchasing moment. “People have talked a lot about countering showroomers and webroomers, but when we think of an omni-channel experience, we know that consumers have done research on the inter net, and when they arrive at a physical store, through a mobile point of sale integrated into the back office, I can serve them standing
up in front of the product, take their order, receive the payment, complete the purpose, hand over the product, and let them leave the store without having to wait in a check out line,” explains André Veiga, the director of TOTVS’ retail segment.. Integration is also occurring in e-commerce, so that the same piece of information available in the physical sales ERP system is provided in the virtual store through TOTVS’ Fly01 solu tion, whether the sale takes place on a desk top or cell phone. The company also offers the opportunity for integration with market places, such as that of retailer Cnova, making it possible to extend the reach of products. “All this provides the possibility of capturing the purchasing moment, and retailers can only make this sale when they are prepared to serve, regardless of the channel,” says Veiga. TOTVS executive André Bretas says it is also common for companies to install an omnichannel solution but to fail to appraise the efforts that will be necessary. “Companies that acquire an omni-channel tool need to bear in mind that the sales process starts when they sign the contract, and that the necessary investments go beyond what they spend on software,” he says. For example, this includes assigning employees to accompany the pro cess. “Performance will suffer temporarily, as you will have employees working to make the system run smoothly. So, it gives the illusion that the system has just arrived and is hindering things.”
EVOLVING STRATEGY While the need to change people’s mind set to deal with “omni-consumers” seems more palpable – largely due to the evolution of e-commerce over the last 10 years – Gart ner’s C. Dwight Klappich believes that the biggest challenges lie in the way the omnichannel is operationally organized, aligning
each company’s strategies with its business climate and technologies to support its ope rations. So what is the best path to follow? The first imperative, he says, is to understand con sumers’ needs. After this, companies should map shopping models for their retail area. For example: buy online and pick up at a store; buy in a store and send online; or buy in one store and deliver the product to a different one. Finally, a financial analysis will be ne cessary to document the impact of these changes on the business. “Unfortunately, while many retailers are for ced to follow standards stipulated by compe titors, such as free shipping, each company should carry out its own analysis to understand the impact on its finances,” says Klappich. Can products be delivered for free or will this cause profits to erode? This information may not change the approach, but it makes it possible to get a better understanding of the impacts and come up with alternative options. “Finally, companies have to start this journey knowing that things are likely to change, and they will need to take quick decisions regarding their omni-channel strategy and make adjustments along the way.”
THE FUTURE IS ALREADY REALITY Omni-channel approaches are evolving ra pidly, but they are far from reaching maturity. According to Rodrigo Reis, omni-consumers are already a reality. “On the one hand, mo bile devices empower consumers with unpa ralleled levels of information, and on the other hand they have raised the level of demand. These consumers will be more civic-minded, more ethical, and they will demand that com panies have a higher purpose, with a focus on doing good, respecting their neighborhood, city, society and, of course, customers. Profit will become a consequence,” he says.
THE REVOLUTION IN SHOPPING SHOPPING EXPERIENCE 25 billion devices connected by 2020:
Wearable devices
Interface based on voice and gesture
Sensors
49%
of users agree to have their data collected
62%
of companies plan to implement an omni-channel system
90%
of consumers use multiple channels
43%
of consumers prioritize products,
27%
prioritize prices, and
67%
of department stores prioritize relationships
S U S TA I N A B I L I T Y 48
Retail clerk
the future is now What role will elderly people play in the job market? by Andrea de Lima
Maria do Carmo
B Retired since 1992, Alcides Gaspar Branco continues to work into his 70s, and he advises people to never stop.
razil has an enormous challenge ahead of it: to overcome age discrimination, both in the world of work and in everyday life. The demographic boom predicted in a recent World Health Organization (WHO) report supports this thesis. According to this document, the number of people aged over 60 years in the world is set to double by 2050, and this will require a radical social change. The report also says that governments must establish policies to permit elderly people to continue to participate in society. Margaret Chan, WHO Director-General, says that “Today, most people, even in the poorest countries, are living longer lives. But this is not enough. We need to ensure these extra years are healthy, meaningful and dignified. Achieving this will not just be good for older people, it will be good for society as a whole.” The proportion of elderly people is growing faster in Brazil than the global average, and by 2050 it is expected to triple from the current level of 12.5%. In other words, we will soon be considered an elderly nation. The World Health Organization gives this classification to countries where more than 14% of people are elderly, as is currently the case in Canada, France and England. According to the United Nations, the so-called third age is the phase of life that begins at the age of 60 in developing countries and 65 in developed countries. This phase is cha racterized by physical changes throughout people’s body, altering its functions and causing
He has experience in the financial markets, foreign currency and sales, but he has now been working for two years at Pizza Hut at the Eldorado shopping mall in São Paulo. Retired since 1992, he wakes up at 4 am and works eight hours a day, doing every thing at a fast food restaurant. He serves customers, takes payments and makes pizzas. “I know my customers’ CPF tax payer number by heart. I get along well with them and my colleagues.” He says that if he could, he would eat pizza every day. He stays healthy by going to the gym every day, where he walks 6 km on a treadmill. “My cell phone has everything, Instagram, Facebook, I send messages, I have fun. In fact I joke around a lot, with both young and old people, employees and customers. I am respected and I receive praise. Nobody calls me by my name, but ‘Véio’ (old man). I’d get mad if anyone called me young.”
changes to behavior, perceptions, feelings, thoughts, actions and reactions. There are also alterations in social roles that result from aging-related biological and psychological changes. While the Brazilian Constitution mentions the third age as starting at 65, the Penal Co de refers to 70, while the National Policy on Elderly People uses the age of 60.
BENJAMIN BUTTON SYNDROME Notwithstanding the nuances regarding when the third age begins, as well as socio economic differences (which permit more or less dignified aging), there are many names given to this group of people. Supposedly
SOCIAL RESPONSIBILITY A large share of Brazil’s economically active population (51%) is aging, life expectancy has increased to 74.9 years (according to Brazil’s national statistics agency, IBGE), the social security system is broken, future projections indicate that some professions will die out, entrepreneurship is on the rise, and techno logical innovation is transforming the way we interact, produce and care for our health. Considering all these factors, what should the elderly expect in terms of work? Some people see in this situation an oppor tunity to harness people’s experience, the overcoming of anxiety, the contagious energy of interaction, the possibility of continuous learning, the benefit of the doubt, and the inexorable certainty that as long as there is life, it is worthwhile continuing.
Leonel Poltosi, 55 R&D manager at Elo Sistemas Eletrônicos, and professor of engineering at Unisinos University He has an undergraduate degree in electrical engineering, he studied at military school, joined a public uni versity, and now lectures at a private university, where he did an MA ma joring in artificial intelligence and communication networks. He says that at the age of 41, he learned there are many types of algorithms. Some of them, such as neural networks, involve biomimetics, i.e. the imitation of natural phenomena. “We shouldn’t worry and try to compete with the new generations. I have ama zing relationships with young people, including in my team and in the class room. If they are lacking vision regar ding business, management, relations with customers or shareholders, then I come in, as I have built up a lot of know ledge and experience.” He has 32 years of continuous work experience, at 10 private companies, including in Europe and the United States. “I don’t think I will ever stop,” he says.
Personal archives
Alcides Gaspar Branco, 71
enjoying more free time and resources. Shouldn’t this be a fun phase? Some people ask themselves in their 20s, 30s and 40s what things will be like for them a few decades from now. The famous time machines of 20th-century movies made projections, which extolled both youth and maturity, through telepor tation. This dream crossed generations, and posed a dilemma: shouldn’t work be consi dered something that gives us pleasure and achievement, and not just income and an occupation? As the writer Eduardo Alves da Costa said: “I am amazed by what is coming, the quantity of things I do not know. The truth is that my little world has been left behind. Getting old doesn’t just mean reaching the age of 70; it is when you start to not recognize the reality in which you live.” The author of one of the most famous poems in Brazilian litera ture, “No Caminho, com Maiakovski,” Costa notes that “when we grow old, we become invisible,” drawing attention to the danger of not including elderly people – a danger that will affect all of us.
THE APP THAT CHANGES EVErYTHING AND COSTS NOTHING HAS ArrIVED
S U S TA I N A B I L I T Y 50
By hiring older people, there are management gains, including in relationships. They have good ideas” Daniella Oliveira, HR and training manager at Pizza Hut São Paulo
DEMOGRAPHIC BONUS “Brazil is experiencing a population transi tion phase, known as the demographic bonus, which may turn into a window of economic opportunity for job and consumer markets, or a burden for society and the social security system,” says businessperson Melissa Castilho Diamantino. The founder of HR website Sábio Aprendiz Recursos Humanos Especializados and the owner of project and event management firm Hadamantine, which was established in 2011, she hires people over 60 years old. At the start, this group accounted for 20% of her production team, but it is now 40%. “Old people have stories, knowledge and experience. They are an asset that we need to respect and appreciate for all the potential they still have to offer.” We are older today than we were yester day – because we age from the moment we are born. Not a long time ago, to suppose that in 2015 we would already be living with big data, artificial intelligence, and mobile communication involving data and voice could have been a bet, but it is now a reality. What else lies in store for us? It doesn’t matter very much, because whatever happens will be a novelty for the majority of us, even if many prototypes are already under deve lopment.
Reinaldo Bulgarelli, 54 Managing partner of Txai Consultoria e Educação, coordinator of the Continued Education Program at FGV/SP, and a professor at Unicamp, the Palas Athena Institute, Sustentare (Joinville) and the Dom Cabral Foundation According to this educator, who spe cializes in sustainability, human rights and diversity, people’s careers last for 25 to 35 years in the Brazilian market. “We imported from the USA a con versation about generations, a kind of X, Y, Z taxonomy, in which technology is the thread.” Bulgarelli says elderly people are excluded from the workforce by HR departments that claim the need for physical strength: “We haven’t adapted to the Brazilian profile, which is so diverse. We shouldn’t let these cut-off elements hinder recruitment. What ought to matter is how we guide cul ture, recruitment and relationships.” According to him, in most companies’ HR area, youth is also synonymous with beauty and productivity: “This message of not employing women, the elderly or people with disabilities is schizophrenic. Intelligence and achie vement ought to be the factors used. There are countries where five genera tions work together in the workplace. Here we have just four, involving the most senior levels. We need to adopt an equitable age distribution, as well as models for mentoring and dialogue to share information between genera tions,” he concludes.
WHAT AGE GROUP ARE YOU IN? From a biological perspective, geriatricians divide people’s ages as follows: + First age: 0 to 20 years; + Second age: 21 to 49 years; + Third age: 50 to 77 years; + Fourth age: 78 to 105 years. There is another classification that divides elderly people into three groups: + Young elderly: 66 to 74 years; + Old elderly: 75 to 85 years; + Personal maintenance: 86 years and over. Population aged over 60 years in Brazil in 2015: 23 million people
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In 2050: 64 million people
Modernity
Safety
Global population aged over 60 in 2015 900 million people (12.3% of total population) By 2050, elderly people are expected to account for 21.5% of the global population
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Sources: Brazilian Geriatrics and Gerontology Society (SBGG) and World Health Organization
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