Q&A: Enabling Latin American E-Commerce

MIAMI, Mar. 13, 2000 — Microsoft this week hosts its seventh annual Enterprise Solutions Conference, designed to bring together customers and partners from the Latin American region to talk about how technology can enable their organizations to be more agile, to operate and compete effectively under rapidly changing economic and business situations and, in the case of governments, to effectively provide services to citizens.

This year’s conference features keynote addresses from a variety of Microsoft executives including Chairman and Chief Software Architect Bill Gates, as well as technology leaders from companies in the United States and throughout Latin America. To better understand the potential of the Latin American technology industry and Microsoft’s role in serving customers in this region, PressPass spoke with Mauricio Santillan, vice president of Microsoft’s Latin American region.

PressPass: What does the Latin American market represent for Microsoft?

Santillan: Microsoft sees Latin America as one of the most promising regions in the world. Microsoft’s Asian and Latin American subsidiaries are the two fastest-growing parts of the company. We are very optimistic about the future, because the region’s countries are rapidly increasing their investment in information technology infrastructure and modernization of government and educational systems throughout the region. Going forward, we will continue to invest in human resources, marketing, technical support and services; develop closer relationships with the education, health care and government sectors; and work closely with the banking and telecommunication sectors — all in the role of consultant and promoter of technology.

PressPass: There is much talk of the prominent role the Internet is going to play in the coming decades. Is Latin America prepared to take advantage of these opportunities?

Santillan: There is still a severe infrastructure problem. The number of Internet users is low. We don’t think that there are more than 7 or 8 million Internet users in Latin America, and almost 50 percent of them are concentrated in Brazil. And there are still several structural problems, mainly in telecommunications that limit the capacity for companies to move towards a totally digital strategy. Nonetheless, as always, Latin American businessmen are striving to take advantage to these innovations, and we see interest from the region’s businesses on how to get into e-commerce, but mostly oriented at business-to-business more than business-to-consumer.

Private companies are expanding much faster than governments in this regard, but we’ve found some very positive surprises from governments — especially as a result of Y2K preparations. Going forward, we expect to see more governments revamping their infrastructure and becoming more equipped to take advantage of this growth.

PressPass: Could this lack of readiness be an opportunity rather than a disadvantage? Does Latin America benefit from starting with a “blank slate”?

Santillan: It is definitely an opportunity. In the United States, many companies can afford to lose money for several years to justify a business model, but in Latin America, businesses need to establish from day one how information technology can provide specific benefits. I don’t believe that the Internet is going to expand in the region at the same speculative manner that it did in the United States; in Latin America it will expand in a way totally oriented towards productivity, efficiency and cost reduction. We’ve seen some interesting surprises, in practically all countries and in all sectors, where business models are aimed not towards consumer markets, but towards seeking efficiency and productivity.

PressPass: How has the Latin American region grown so far?

Santillan: It has grown tremendously fast. The growth curve is one of the largest, largely because the user base is still low. But we expect that in two or three years the Internet market in Latin America can reach more than 20 million users, probably by 2002 or 2003, with a more distributed balance between the largest countries, such as Brazil, Mexico and Argentina. Then volume-oriented business models will be justified and surge, as in other countries.

PressPass: There is a lot of talk of the large gap between developing countries and industrialized ones. But even in the region there are its differences: Brazil and Mexico are way out in front of the other countries, and also within each country, there is a gap between small and medium-sized companies and large enterprises. How can those small and medium-sized companies close that gap and better compete with large enterprises?

Santillan: Large companies in Mexico, Brazil, Argentina and almost all countries are very oriented towards the Internet, and they are developing projects and new ways of doing business. Where business-to-business is concerned, they are as advanced as in any part of the world. But today, there is little focus on small and medium-sized businesses, and that is where an important opportunity exists. It’s important for us to help small and medium-sized companies better understand how they can use the Internet. Its value has to be tangible and concrete, and it should have a clear impact on the company’s efficiency and revenue. We cannot expect companies to be online just to keep up with current trends. If they do it, they will simply be spending money without realizing any benefits. We think that this evolution will be oriented towards the integration of services that will allow a company to be more efficient: send less messengers, less paper; to better connect with their clients or with its value chain, allowing it to make processes more efficient. That is where I think the technological gap can be reduced.

This requires plenty of work across several sectors. The banking sector needs to provide financing, the telecommunications sector needs to offer connectivity at reasonable cost, and, obviously, companies like Microsoft need to offer the technology component. Fortunately, Microsoft has lots of experience understanding the needs of small and medium-sized companies.

PressPass: What does Windows 2000 represent for Microsoft in Latin America?

Santillan: Windows 2000 represents an opportunity for Microsoft and the software industry to increase their economic activity in the region. In the second half of 1999, when many businesses and governments were focused on Y2K, many other projects were left behind. Many of these projects have now resumed, and we think Windows 2000 will play a fundamental role in supporting the technological modernization and expansion of many of the region’s companies. It is a very solid platform, largely oriented at increasing productivity in businesses with a very low management cost. The Windows 2000 launch has special significance for Latin America — for each dollar spent on Windows 2000, the region will generate six dollars in related services. This will create a dynamism that the industry didn’t have last year, due largely to Y2K. Also, the reduced costs associated with running Windows 2000 will enable more companies to acquire technology and accelerate their Internet activities.

PressPass: What e-commerce opportunities do you see for companies in Latin America?

Santillan: Again, for business-to-business e-commerce we expect very positive results. In fact, there could be greater benefits for this market in Latin America than in more developed countries. Transport and regulatory barriers, as well as lack of infrastructure, have always made it difficult for goods and services to circulate among countries in this region. We think the Internet can help change this. If someone were to ask me how much productivity levels can rise in Latin America compared to the US as a result from the use of the Internet in businesses, I would say that in this region the impact should be larger because there are more barriers and problems that businessmen have to deal with on a daily basis. If we can provide a way for them to run the same processes in a digital environment, which allows systems to communicate more easily, the impact will surely be larger. That is why the regions enterprise community is seeking to get the best on the Internet.

PressPass: What is Microsoft doing specifically for the business-to-business market in Latin America?

Santillan: First, we continue to support activities that large corporations are demanding to connect themselves with their value chain, and Microsoft is working hard with all organizations to ensure that systems can exchange information efficiently and securely. Second, we’re working to make it easier for small and medium-sized businesses to do business on the Internet. Finally, we need to make it easy for companies of all sizes to use the Internet to do business on a global scale.

PressPass: What sort of future growth do you see for the Latin American region?

Santillan: With the continued economic growth and expansion of the technology sector, we could see more low-cost technologies and solutions directed at smaller companies and end users. Similarly, we will see new business models that enable companies to offer these things profitably. The academic sector is growing in importance every day, as is the installed base of PCs in the home — which is growing at a rate of more than 50% annually. Also, we’re seeing the rapid adoption of Encarta, which has exceeded all our expectations in Latin America. I would say that the future offers clear benefits for both businesses and end users, as a result of the industry’s efforts to achieve rapid adoption of these technologies.

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