Jose Ruy Antunes Issue: Global-ICT 2002
Article no.: 9
Topic: E-business E-xpectations for Brazil
Author: Jose Ruy Antunes
Title: Managing Director
Organisation: SAP Brazil
PDF size: 48KB

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Article abstract

In Brazil, companies are investing in e-business forewarned by the “dot.com meltdown” experience abroad. Many large companies are investing in e-business and e-procurement, but turning theory into reality is not simple. Solutions often require integrating technologies and systems from different vendors – a task for highly qualified specialists. Participation in the e- marketplace calls for integrating internal systems with the e-marketplace. Success depends upon planning, logistical infrastructure, the regional services e-markets provide to participants and building strategic networks with trading partners.

 

Full Article

I have been questioned frequently if companies here in Brazil are, in fact, prepared for e-business. Yes, of course they are and many of them have already mobilized their operations for e-business. The industrial and technological providers agree that using the Internet to make deals is fantastic:the Internet promotes agile communications and reduces costs. The Internet question can no longer be considered new; despite advances, there have not been any true novelties for a while. Nevertheless, many industries still cautious about this new wave? In Brazil, companies are moving forward with their plans for the Internet and e-business but, since they have the advantage of seeing and analyzing the mistakes made during the “dot.com boom” in other countries they are not likely to make the same errors as the pioneers through out the world. According to International Data Corporation (IDC), the Internet is growing strongly in Latin America as we can see from their projections; they expect Brazil will have 36 millions web users by 2005. In addition to the growth of traditional, wired, Internet usage there are great expectations for new, wireless forms of access and the applications it they will make possible called “mobile commerce” or “m-commerce”. The cellular phone has evolved. The current generation of cellular equipment is prepared to handle electronic transactions using cellular handsets or palmtops with wireless modems. Several operators have begun to offer these services in the Brazilian market. Notwithstanding the slow start of these services, the use of mobile commerce will create a commercial revolution within the next few years. Business to Business, “B2B,” revenues should total 9,4 billion dollars this year, according to Forrester Research. In 2003, this market might well double and generate more than 20 billion dollars in revenues. By 2004, this market is expected to grow to almost 60 billion dollars per year. The Yankee Group’s projections are conservative. In 2003, the revenues of B2B market will be 30 billion dollars but will only grow grow roughly 30% in the following year. Talking about projections, International Data Corporation (IDC) claims IT investments in Latin America grew only 1.9% last year, but it expects a 7,8% growth rate for 2002. According to their figures for the year 2000, Latin America spent more than 30 billion on hardware, software and IT services. We agree with the finding that a good part of these investments will be spent buying hardware and software for e-business’s projects. The scenario for Internet businesses has changed considerably since the NASDAQ crashed. At the time, business-to-business (B2B) was not expected to be a prominent segment given the advantages of the Electronic Data Interchange (EDI) systems, that have been used quite effectively for years. The companies who had first begun to globalize their operations, though, started a quiet migration to the world of e-business. Many organizations have been unobtrusively migrating all their purchasing systems to the Internet and are now investing in e-procurement projects. In Brazil many large companies are moving in this direction including the Votorantim Group, one Brazil’s largest industrial conglomerates, Aracruz Celulose, Banco Itaú and Petrobras among others. These companies understand that they need more than an impressive web site. They recognize the need for robust technological solutions to handle their electronic transactions securely and efficiently. The e-business / procurement conversion projects produce some very interesting results; essentially, they tend to optimize a broad series of processes, open entirely new distribution channels and reduce procurement costs. In terms of e-business, Brazil’s companies, for the most part, still need time to consolidate their systems and put them on a solid footing. This, though, is only a question of time. The companies who are investing in these systems now are doing so to anticipate, and get ahead of, their competitors. These companies understand the importance of conceiving and implementing an organic, operationally and economically functional, e-business strategy. Generally, when companies begin to implement their e-business strategies, they find it is not simple to turn theory into reality. There are many vendor and many systems with many technologies that function in different environments. Choosing the best solution is often much more difficult in practice than in theory. Often, the functions that a given company needs to implement cannot be found in a single system and multiple systems – from multiple vendors – might be needed to execute a single process, a single business task. Successful integration of the diverse systems involved requires in-depth knowledge not only of each system and technology involved, but of the business process itself. Integrating solutions from different vendors can be quite complex but standards for integrated business solutions to simplify the process do exist, and companies specialized in this area can be found to help. The key to the success of these solution providers is often their proprietary technology and solutions for open e-business integration. The infrastructure has to be flexible and enable change without raising costs. Such technology makes it possible to manage heterogeneity from a business perspective. There is a strong tendency to adhere to e-marketplace strategies by launching vertical portals. Recently, some of the portals launched in Brazil by companies during the last two years have failed. Despite this, projects such as Tradecom’s (an association between the Brazilian private bank Unibanco, the telecommunications company Portugal Telecom and the Argentinean bank Galícia) continue. E-business and procurement systems, such as Tradecom’s, go forward because they promote tight integration between the users and the e-marketplace and meet real company needs. Making this happen is the fundamental issue for software vendors and the systems industry. The electronic marketplace is neither useful nor economical if businesses do not invest in the integration and interface of their internal systems with the e-marketplace. The e-marketplace may be a virtual market, that exists only in “cyberspace, nevertheless, it is open to the world and its impact on daily business is real. Customers are no longer limited by practical consideration to dealing withlocal suppliers, but can work with companies wherever they can be found in the world. Suppliers, too, will find that the market they can economically reach and compete in is worldwide. The Gartner Group’s has published their analysis of the future of e-business technology. According to their analysts, since SAPMarkets and Commerce One’s solutions are among the most advanced in the market, they will be the world’s infrastructure leaders through 2002. Conclusion Many e-marketplaces have not survived. The generalized e-marketplace concept has not yet conquered the market. The challenge now faced by the e-marketplace, is to offer value-added services, so that companies will no longer need to intermediate their negotiations since negotiations will become an automatic, structural, given of the marketplace and of the electronic community. It is important to clarify two fundamental points. The success of the e-marketplace projects depends upon business planning, the logistical infrastructure and the regional services they provide to its participants. The importance of building strategic networks with trading partners cannot be stressed strongly enough, if today’s pioneers in the e-marketplace are to survive the competition and generate a return on their investment as quickly as possible. When that happens, the real e-business revolution will occur in the Brazilian market. The results will certainly be much more far reaching than we can now imagine.”