|Issue:||Latin America 2005|
|Topic:||Net impact in Latin America|
|Title:||Vice President Latin America|
Carlos Carnevali is Cisco’s Vice President for Latin America. He is in charge of all Cisco operations in Latin American countries, from Mexico to Argentina. Mr Carnevali, previously Managing Director of Latin American South (Brazil, Argentina, Chile, Peru, Uruguay, Paraguay and Bolivia), brings more than 11 years of experience to his current position. As the first Cisco employee in Latin America, he began Cisco’s operation in Brazil and then integrated Cisco’s South American operation into a single region. He began his career in England, with Plessy Telecommunications, where he rose through the ranks to assume responsibility for the Asian, African and Latin American markets. Carlos Carnevali earned his degrees in Electronic Engineering and Administration at Mackenzie University, in São Paulo, and in Marketing from the University of Stanford.
Organisations that have sophisticated network and technology infrastructures and use network-enabled applications tend to do better than organisations that do not. Businesses see technology as a way to improve customer satisfaction, reduce costs and boost revenues. Latin American companies lag in broadband usage and tend to introduce administrative systems prior to automating customer service functions. Investments in ICT increase productivity, but Latin American companies invest only 1.38 per cent of the GNP, compared to 5.25 per cent in the USA, and this hobbles growth.
The conditions for accelerated and sustained economic growth in Latin America over the next few years are in place, and success will depend on the intelligent cooperation of governments, the business community, labour, academia and the citizenry at large. The economic security and well-being of the region will rise rapidly over the next decade as governments maintain macroeconomic stability, and pursue deregulation and global integration, while removing barriers to productivity. To enrich the debate about the strategies that will make this growth possible, we commissioned a wide-ranging study of connectivity in the region, Net Impact 2005 Latin America, from Momentum Research. The study provides valuable information and insights about the current state of technology and connectivity of businesses in the region. It analyses their investments in the area, and examines what they expect to gain from increased connectivity. The study also sheds light on urgent course corrections needed to improve connectivity in the region. The guiding assumption in Net Impact 2005 is that organisations that use network-enabled applications have more sophisticated network and technology infrastructures and align business processes with their technology investments, will see better operating results than organisations that do not do so. In addition to tracking Latin American organisations’ adoption of previously identified best-practices, Net Impact 2005 also seeks to understand: (i) the business conditions leading Latin American organisations to invest in technology to enhance productivity; (ii) perceived barriers to technology adoption and future productivity growth; (iii) current levels of achieved improvements in business outcomes. One of the key results of this study is not only the ability to compare best practice adoption rates across Latin America, but also to make industry-level comparisons with adoption rates in the USA and Europe where possible. In this way, Latin American organisations will have several reference points to benchmark their progress against consistently identified productivity best practices. Among the many significant findings in the report, several deserve special attention: A majority of organisations report improvements in last 12 months Overall, most organisations feel that technology has had a positive impact on their operations in the last 12 months: – 70 per cent of organisations report technology has helped improve customer or citizen satisfaction by an average of 32 per cent; – 45 per cent of organisations have seen a reduction in operating costs by an average of 15 per cent; – 32 per cent of organisations have seen an increase in revenue by an average of 11 per cent (Figure 2). Increasing satisfaction the leading driver of technology investment The desire to improve customer or citizen satisfaction was the most frequently cited driver of technology investments (52 per cent), followed by the desire to be more competitive (46 per cent). Unlike the USA and European studies, there is no dramatic drop-off in the frequency between the top five drivers identified by Latin American connected organisations. This suggests that the need for achieving competitive advantage by accelerating organisational speed, improving customer satisfaction or lowering costs is more universally felt in the Latin American market. Latin American organisations lag behind USA companies in bandwidth The majority (62 per cent) of Latin American connected organisations report an average connection speed of 128-768 kbps. Latin America organisations lag behind USA companies in the bandwidth investment needed to handle a greater flow of data. From an industry perspective, Latin American financial services organisations are the most likely to have true broadband connections with approximately 26 per cent having E1 or greater average bandwidth. Latin America shows waves of application adoption Connected organisations in Latin America tend to focus first on introducing back-office applications such as finance and accounting, human resources and inventory management tools before shifting to front office or customer-facing applications. Across industries, Latin American connected organisations have adopted network-enabled applications at relatively consistent levels. Applications in Latin America are generally web-enabled Approximately two-thirds of network applications in connected organisations in Latin America are web-enabled. This figure does not include web portals that, by definition, use Internet technology. Primary technology focus is internal The majority of organisations (62 per cent) are focusing their technology investments to provide or automate services within the organisation. One possible explanation for the low number of organisations automating services outside their firewall is that the technology infrastructure and business/consumer attitude toward technology may not yet have the critical mass to justify efforts in that area. Majority provide external network access to employees Sixty per cent of Latin American connected organisations report that they provide external network access to internal users such as off-site employees and staff members. Employee access lower in Latin America compared with USA Financial services organisations provide the highest level of access (68 per cent) for their employees when compared with other sectors. Public sector organisations provide access to fewer employees (52 per cent), but are still somewhat ahead of connected organisations in manufacturing (42 per cent) and retail (46 per cent), which probably have more employees who do not require daily access to a computer or organisational data. Security technology important in Latin America, but not ubiquitous The networking technologies adopted most by Latin American connected organisations are focused on network security, 81 per cent report they have server-based virus protection and 72 per cent report using network firewalls. While these are healthy numbers, they also suggest that 20 to 30 per cent of Latin American organisations have no basic network security infrastructure in place. Voice over IP is accessible in Latin America Adoption of Voice over IP technology among Latin American connected organisations (32 per cent) is well ahead of where USA companies were two years ago (18 per cent adoption), suggesting that several of these technologies have become more mainstream and more accessible at a reasonable cost. Customer satisfaction is the first goal for technology to achieve in the next 12-months Improving customer or citizen satisfaction is the most frequently identified technology goal, with 58 per cent of all connected organisations reporting it as a goal for the next 12 months, followed by reduction of operating costs (50 per cent). Lack of worker training is perceived as the leading obstacle Like their USA counterparts, 44 per cent of Latin American connected organisations consider the lack of employee training the most frequently encountered obstacle to implementing new technology. The lack of worker training was most frequently cited by Latin American manufacturing organisations (48 per cent) and least frequently mentioned by financial services (33 per cent) companies. This variation undoubtedly reflects the different skills required in the two areas. It is no secret that investments in information technology (IT) have been partially responsible for increases in productivity – defined as the amount of production per unit of labour, equipment and capital – in the USA economy over the last decade. Companies with higher-than-normal investments in IT have reported productivity increases of up to four times those of companies with below-average investments in this area (Economic Report to the President, January 2001). In Latin America, IT investments lag far behind those in the United States and other parts of the world. While they represent 5.25 per cent of Gross National Product in the USA, 3.50 per cent in Europe and 2.40 per cent in Asia, in Latin America they represent a mere 1.38 per cent of GNP. This hobbles the region’s growth. If both businesses and governments of Latin America were to invest in information technology at an accelerated rate, they could quickly build up their business by automating their processes, decentralizing their structure, improving their teams and increasing their productivity while generating growth. This would inevitably improve the quality of life for millions of people. This improvement in productivity would have a direct impact on Latin America’s overall standard of living. According to the US Bureau of Economic Analysis (BEA) and the US Bureau of Labor Statistics (BLS), an annual increase in productivity of 1 per cent would cause a given country’s standard of living to double every 77 years. If productivity increased 3 per cent each year, the standard of living would increase with every generation. If productivity increased 5 per cent annually, the standard of living would double every 14 years. An improved communications infrastructure, together with increased broadband, can enable great improvement in the quality of life in Latin America by driving its economic growth. Latin America will be a region of rapid growth over the next few years and studies such as this will help to better understand the impact of technology investments on the productivity and growth of our businesses and countries.