 | Issue: | Latin America I 2003 |
| Article no.: | 8 | |
| Topic: | Keeping the Promise of Technology – Digital Inclusion for Small Businesses | |
| Author: | Paulo Roberto Bergamasco | |
| Title: | Chief Technology Officer | |
| Organisation: | Alcatel Telecomunicações, Brasil | |
| PDF size: | 120KB |
About author
Paulo Roberto Bergamasco is currently the Chief Technology Officer at Alcatel Telecomunicações, Brasil. Mr. Bergamasco received his degree in Electrical Engineering from Brazil’s ITA – Instituto Tecnológico de Aeronáutica and received his Masters degree from Western Ontario University, Canada. Prior to joining Alcatel he served as Telesp’s Switching Manager, as Services Director for Proceda, as Marketing and Business Development Director for AT&T and as a Regional Director for Embratel. Mr. Bergamasco currently lectures at the graduate school of the FGV- Fundação Getulio Vargas in São Paulo.
Article abstract
Small businesses employ 54% of all workers in Brazil, most of them outside the formal economy. By using modern digital technology to increase their productivity and leverage their growth, they will be able to compete with larger businesses that, in turn, will be forced to use technology better and increase their productivity. Creating such a virtuous cycle should be a state priority since the road to the digital inclusion will require strong, focussed government programme supported by the private sector.
Full Article
In all forums, articles, conversations amongst the “Digitally Included” one can find a constant and genuine concern to foster the universalisation of Digital or Broadband Access. It is commonly thought that, by doing this, it is possible to bridge the divide and bring the “Digitally Excluded” into the fold. Perhaps it is time to ask a tough question: foster universalisation of digital or broadband access . . . to what? Finding the answer to this question is the key to tackling digital inclusion. The difficulty is that there are many, many answers… one per segment or sub-segment of our entire society. Let us take one of these segments, Small Businesses – the world’s leader in job creation – as our example and try to answer the question: digital or broadband accesses . . . to what? Small business’ basic problems Mr. Roberto Dias runs a 3 person shop. He makes necklaces, earrings, bracelets and other fashion accessories using Brazilian stones and seeds. He sells his jewellery, as he calls it, regionally to a few traditional shops he has known for a long time. Like his mother, from whom he inherited the business and the creativity, Roberto seldom formally invoices his clients. One fixed telephone line and a prepaid mobile phone carry all his conversations and negotiations with his customers and suppliers. This is one cost item he maintains under close control, because the bill can just explode. His first priority is paying the 2_ base-salaries (R$ 500,00 = US$ 140,00) each of the three workers cost monthly and to pay business school tuition for his son, who will graduate shortly. Roberto Junior’s graduation is both a relief and a nightmare because Junior wants to change things, to expand the business and, well, expand the business . . . He is right when he says: “Father, your jewellery is unique. See how women flock in to buy them every time you deliver a new lot to your friends. Of course you cannot flood their neighbourhoods with the same model because the ‘uniqueness’ will disappear and so will the interest of customers. But, father, the world is not only what you can see with your eyes, touch with your arms and reach by a half day bus trip.” An overwhelming chain of question fills his mind each time he thinks about Junior’s ideas: where are these new shops I can sell to? It took me years to settle on the few shops I sell to now… and they are friends, what would they think? How can I reach new shops to deliver the products? Hire a sales person? The last one was a thief; he kept robbing me. How can I collect the cash or check if I am not the one who delivers? What if a shop does not pay or honour the checks? I had many problems in the past until I settled upon the current group of shops – all honourable clients! How about showing the pieces the first time? Will I have stones and seeds enough? How am I going to stock them if volume grows? Endlessly, Roberto Dias plays the questions back and forth dreaming of a magic counsellor that would come to advise him and answer all his questions. He prays for this magic advisor to come. A magic advisor would have to: First, appear spontaneously: o That is, it must be a pro-active magic advisor, much different from the jinni in the lamp that waits and waits until someone summons and then, when the summons comes, crosses his arms over his chest and asks, “what is the problem?” Second, already know what the basic problems are; o The advisor must have already done his home work and produced a simple “tool kit,” “process library” or “application library” that addresses the basic questions of: o Production: including raw material, inventory, production processes and the financial aspects of this portion of the value chain. o Creation: including reference information, current colour/shape trends, and creative techniques for aspects of this portion of the value chain. o Distribution: including shipping alternatives, third-party wholesale, hot spot localisation and financial aspects of this value chain. o Marketing / sales: Shop (customer) selection, events, pricing and financial aspects of this portion of the value chain. o Cash collection: Including banking alternatives, credit card, guarantees, collection cycle management and related impact on other portions of the value chain. Third, use the right language to communicate the answers; o The advisor must speak the language of the small entrepreneur and of his market segment. There is no “one language fits all” as schools and government tend think. One confused and scared small businessman will be willing to listen to someone talking a language, which is familiar. “Operating working capital” won’t do: better try a multinational corporation with this language! Fourth, stay close and assist until his answers produce results and confirm the route taken; o At least one work / review visit per month during the first year. Last, share the risk of change. o This means, among others, financing, guarantees against bad payers, taking part of the responsibility for the technology required. When all this happens, we can, finally, talk about “digital inclusion”. The magic advisor must have, in his arsenal, technological weapons to give to the small entrepreneur. Basic Technology for Small Enterpreneurs Mr. Roberto Dias does not need much to start expanding his business. A database for the specific segment The magic advisor must have a specific database that can list and help select the shops that sell fashion jewellery. Of course, since the location of the shops – the neighbourhood -matters to avoid overlapping and overselling, the database must allow some simple map based simulations. Also, in the stones and seeds supply side the same applies. It cannot be a list of generic sites that, given to Mr. Roberto, will scare him to death and will take all of his, and of his son’s, time to scan through. It must be specific to his business segment. They need a tool to find shops, suppliers, regional events, trade magazines and fashion magazines. They need a specific, simple, tool that is reasonably priced to stimulate usage. A one-year grace period, for instance, combined with usage based charges, might be a pricing scheme that a small business could live with. An access device Any good old desktop microcomputer / printer will do. It only needs to interface with the telecommunications network have user-friendly audio / video capabilities plus basic office and Internet tools. The magic advisor must offer preferred financing, with one-year minimum grace period, and manufacturer assistance. An access channel Again, any medium speed circuit will do for the access to the database or to the bank or to the mailbox of shops and suppliers. The same channel must be the vehicle for the magic advisor’s entrepreneur coaching and training communications. The magic advisor must offer variable cost solutions for communications and database access and zero cost for bank connections. Training and coaching It is a must for this magic advisor to train and coach, not only Mr. Roberto Dias and his son, but other employees that can be trained and to expand the circle of familiarity with the simple and basic technology installed. In a short period, a few people will become addicted provided the proper coaching happens. Of course, this “magic coaching” can be provided virtually, using the same access equipment and channels used to take care of business. What the magic advisor has to do is clear. It is now time to make it come to life. The magic advisor To do all that is required, the magic advisor must have a very strong sense of purpose. It must have a mission and be fully empowered to carry it out. The advisor must also be very well organised and understand the business segment, the value chain of each segment, production, operations, marketing and sales, finance, psychology, training, technology and risk analysis. Moreover, one must be able to finance it. In short, it must be an affordable, powerful, organisation in a box! Mission and empowerment 54% of all jobs in Brazil are in micro and small businesses. Consequently, it is a national priority to stimulate these businesses to grow and be more productive. It is likely that our sister nations in Latin America are in a similar situations. Dealing with the enormous number of enterprises spread throughout the country makes effective action difficult, and often disconnected, as one organism tries to include companies digitally, others try to train them and still others to finance them. What is needed is: focus, focus, and focus. The government cannot do everything; it must select segments to support. It may be any sector- our jewellery case, textiles, personal services, food, etc. It would make sense to select those sectors that have a greater impact on the economy overall and greater potential to create jobs. A government mission to “digitally include” selected small business segments should become a top national priority. A combination of government agencies and private entities will be necessary to accomplish the mission and a powerful drive needed to give the effort focus and continuity. Delivering results In Brazil there are a number of organisations such as SEBRAE, BNDES, FUNTTEL, FIESP/ABINEE, CNI, SESI/SENAI, FEBRABAN that have programs dedicated to helping business enterprises. Effective coordination of their efforts, perhaps by the government, would greatly increase their effectiveness. Similar agencies and organisations exist all through Latin America; the efforts and programs called for would also apply to these. Conclusion Digital inclusion of small businesses can only be achieved through focused, government driven, programs. To insert small businesses in the “new economy,” business assistance, technology and financial support will be needed. The universe of small businesses is very large. Accordingly, the government must exert its will and power, carefully select specific business segments to apply carefully thought out policies. This is the way to go so, hopefully, Mr. Roberto Dias can benefit from today’s technologies and grow. By growing, he becomes part of the formal economy and helps to perpetuate society’s growth. As he grows, he will force the medium sized companies in his sector to become more productive by using technology better. This virtuous circle at work can create a real opportunity to bridge the digital divide in the business world. Small businesses need a magic advisor tha can perform the functions in the tables above.
