|Issue:||Latin America I 2003|
|Topic:||The Big Challenge of Small Business Solutions|
|Author:||Carlos Francisco Ribeiro Jereissati|
|Organisation:||Tele Norte Leste Participações|
Carlos Francisco Ribeiro Jereissati has been the Chairman of Tele Norte Leste Participações’ Board of Directors since November 2002, a position he had previously occupied between July 1998 and September 2000. He is also the main executive of the Grupo Jereissati (La Fonte/Iguatemi) and a member of the Advisory Board of SECOVI (the association of the companies dealing in the purchase, sale, rental and management of residential and commercial real estate in São Paulo). He has also been a Director on the board of the Sao Paulo State Stock Exchange, the Vice-Chairman of Cia. Vidraria Santa Maria’s Board of Directors (Grupo Saint Gobain) and President of the Deliberative Board of ABRASCE (Brazilian Shopping Mall Association). He graduated from Mackenzie University, Sao Paulo, in 1968 with a degree in economics.
Small to medium sized companies account for 98% of Brazil’s businesses. Only 20% of these use advanced telecommunications that provide cost effective ways to improve their businesses. Two factors– cultural and financial – hinder their acceptance of technology. The problem is often not the cost, but the cultural perception of it. Small companies often lack the know-how to select and implement technology projects. They need consulting support from their suppliers to effectively use technology and make their businesses more efficient and competitive.
Small and medium-sized companies account for 98% of all the companies that exist in Brazil. More than one million of them, alone, operate within Telemar’s original area of activity, which covers 16 states across the Southeastern, Northeastern and Northern regions of Brazil. However, only a little over 20% of these companies utilize advanced telecommunications services, and even then they do not fully exploit all of the services and products available that can, potentially, meet their necessities in terms of security and provide greater agility for their businesses as a whole. On the one hand, this fact reveals the fragility of these companies regarding their ability to compete in a globalized high-technology world, but on the other, it shows the potential for the supply of telecommunication products and services. Two factors in particular – cultural and financial – hinder faster acceptance of technological projects by these companies. Despite the reduction in technology costs, users still look upon technology as a very costly investment. Notwithstanding the fact that Brazil is a country that is characterized by income distortions, the combination of cultural factors and ingrained perceptions is a much harder barrier to overcome than the cost barrier of the project itself, bearing in mind that many of these services carry a zero entry cost and offer substantial capacity for reducing costs and adding value to the business. Thus, the need to cut costs is, quite often, no excuse for small and medium-sized companies not to enjoy the advantages that technology can offer. A study by the Brazilian Institute of Geography and Statistics (BIGS) demonstrates this resistance: only 27% of companies with 49 employees or less showed an interest in technological investments, compared with 76% of those companies having at least 500 employees. It also indicates that 77% attach more value to the acquisition of equipment than to expenditure with technology, which is indispensable in the opinion of only 25%. This stance contrasts with the reality, in which the ease of access to information has brought about marked social and economic changes in both Brazil and the world as a whole. These transformations have meant that businessmen have been forced to adopt new strategies, since the changes have been substantially re-defining an extremely dynamic market. In this environment, in order to be competitive, small companies need technology, as much or maybe even more, than the large corporations do. The major corporations are already well equipped and provided with technology and other related services and often have their own highly qualified technical staff. As a result, they do not need as much help from those who are selling technology. Smaller companies, on the other hand, are rarely able to count on the physical and human resources, or the level of infrastructure, that larger companies have. Smaller companies, too, often lack the time to get to understand in greater depth the technical aspects of technologies such as telephony, IT networks, software, information technology, etc. They often need not just the program or service, but also backup, maintenance and even specialized consultancy services – to study their needs and suggest which equipment and facilities would best suit the needs of their businesses. Therefore, in order to bridge the gap between small and medium-sized companies and bring them the latest telecommunications solutions available, we need to offer a differentiated, priority, customer service. The small and medium-sized companies are in search of competent support of the telecommunications services they use, affordable prices as well as consultants capable of offering solutions tailored to the specific needs of each type of business and of each type of market. Telecommunications operating companies work to supply products and services that are aimed at adding value to clients’ businesses, with emphasis on Internet access, data communication, integration of branches, as well as advanced telephony solutions. The challenge faced by those who offer products and services to clients in this segment consists of being able to spot their needs. This is not an easy task, especially in a country with the range of cultural and geographical diversity that Brazil has, not to mention the country’s enormous disparity in income levels or its diverse regional customs. The process of widening the technological inclusion of thousands of companies does not depend, however, merely on the capability to develop solutions and adapt them to fit client profiles. The adoption of technology is no longer merely a question of advertising strategy or the acquisition of modern equipment. Today, technology is responsible for a significant part of a company’s competitive capacity, its ability to innovate, to produce and its ability, not just to expand, but also to continue to operate successfully within the market. The search for quality and increased productivity is rapidly becoming a top priority concern for corporations seeking to maintain or expand their market share despite the increased international competition to which they are exposed nowadays. The groundwork that must be put in place to enable companies to incorporate new technologies includes a huge effort to train the entire staff. Currently, due to the complexity and cost of some of the new technologies, government action is also required in order to create an environment that stimulates and helps its implementation. Given the current economic situation, investments in services and improvements tend to be aimed at resolving specific, limited, problems. Companies that sell corporate services have come to realize that it does no good to push products more sophisticated, with a broader range of capabilities, than needed or expected by this type of client. The buyer wants a simple, cheap solution – adapted, if that is necessary, to fit his necessities. In the telephony sector, this means voice and data transmission service packages that are simple. It may be a solution that allows the company to receive or place a great number of high-quality calls simultaneously, in addition to accessing the Internet at high speed and being able to rely on an alternative, a backup, for data and image transmission. To overcome both the cultural as well as the financial resistance of this segment, the solutions offered to them have to be simple, relevant and be entirely trustworthy as far as these companies are concerned. Simplicity, in this case, translates into quick installation, ease of use and technical support as well as training for the end user. In fact, guaranteeing this simplicity is one of the most important steps in winning over companies and overcoming the conviction that the investment is unnecessary and that it would demand large-scale adaptations – including behavioral ones. Another important point that must be borne in mind, is that the client must be convinced of the necessity, the relevance, of the product or service, in such a way as to arouse his interest in learning about the technology. It is not enough that the technology is simple; its application must be perceived as crucial to the improved performance of the business. For instance, many entrepreneurs are often unaware of the fact that it is possible to host a web page without having to resort to an Internet provider. This sort of capability can result in gains in agility and improve the ease of offering value-added services, such as Business-to-Business and Business-to-Consumer on-line transactions. Yet another example is frame relay solutions, which translate into agility and savings: the company’s units can carry out short-term remote consultations of databases, share clients’ records and other types of information reliably and at low costs. Finally, it is an important challenge to gain and maintain the trust of small and medium-size companies; this requires us to truly meet their expectations – a rule of thumb that can actually be applied to all business segments. Many entrepreneurs, for example, are still afraid of utilizing the Internet due to security and privacy concerns. However, this technology represents a solution that not only allows businesses to expand their limits, but also an efficient and highly effective way by means of which they can carry out their daily activities.