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The 500 biggest tech spenders: the exclusive Latin Trade annual ranking of the region's technology investment leaders

Latin Trade, June, 2003 by Greg Brown

Here's a reality check: Business technology is getting so simple that it's pumped over the Internet like water through a pipe, yet so complex that some corporate info-tech managers are outsourcing the job of even understanding it.

Just getting a brand name in the door means counting on a series of messengers, a sort of idea middlemen. Corporate tech managers, instead of researching products and making choices, simply vet all the possible answers to a problem then ask third-party explainers to come make presentations for the CEO, who makes the spending call, says Mario Wagner Okuno, founder of Brazilian technology distributor Tablett.

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The presenters get a commission, of course, but it's never clear at the outset whose product will be bought, so a conflict of interest--it's assumed--is less of a problem. "It's like the trade show is knocking on their door every day," says Okuno. "I think there's so much out there these days [companies] have to rely on the outsiders to tell them."

Welcome to the weird world of influencers, the consultants, systems integrators and, often, professional peers of corporate tech buyers who can make or break a new technology with their recommendations. Looking for a trustworthy source of information, tech spenders increasingly rely on these informal experts for the insight they need to make complicated choices.

The influencers have their work cut out for them: Budgets are tight, although tech managers from government to banks are still in the buying game, they say. Of the LATIN TRADE Top 500 Biggest Tech Spenders this year, 246 are Brazilian companies, while 129 are Mexican and 59 are Chilean, the top three spending countries. Fourteen percent are educational institutions, 11% are government agencies and 7% are banks, the three largest groups by sector.

Guiding buyers to the right technology is quickly becoming central to the sale. As direct sellers like Dell Computer eat into the market, for desktop computers and servers, IBM and Hewlett Packard are shifting their strategy to higher-margin, longer-term outsourcing deals. Both have closed multibillion dollar, multi-year computing contracts with global operations American Express, Ericsson and Procter & Gamble (P&G). Dell is gobbling up personal computer market share, for example, from No. 1 HP, shooting up 51% to 468,000 units in 2002, overtaking IBM in the process. HP'S personal computer sales fell 31% to under 1.2 minion in the same period, according to Gartner Dataquest.

Buying a near-commodity like office computers and even servers is a no-brainer for tech buyers now; they're simply replacing old infrastructure as business gear wears out. Meanwhile, the services market is on the rise. IDC sees a worldwide market of US$490 billion by 2007, growing at a compound annual rate of 6.7%, although 2003 growth is now pegged at 4% as the global economy struggles.

Open doors. An obvious influencer are the companies that make a business of installing new technology and training buyers on complex new software applications--global systems integrators like giants Accenture, Bearing Point, Cap Gemini Ernst & Young and EDS, as well as HP and IBM. Equally useful for a software manufacturer is having a good relationship with hardware makers, such as Internet router giant Cisco Systems. "Those are the partners who are going to open the doors for you, more so than hiring some big ad agency in New York," says Jacqueline Price, public relations manager for software company Concord, which makes software that automates technology management.

Even smaller systems integrators, like Chile's Sonda, see a booming market ahead. Sonda CEO and Chairman Andres Navarro says his $250 million annual revenues company soon will expand its 4,000 employees beyond South America. Already, Sonda has an office in Costa Rica, and Navarro expects to enter Mexico by the end of the year.

That's because tech buyers are looking for someone who can not only install hardware and software but help them make informed decisions. Navarro says his company takes no commissions for selling products. Instead, it negotiates prices on parts and software with the big vendors and then marks up the fully installed, operating product. "We speak directly to the manufacturers and they try to convince us to use their products, and our answer is always the same. Give us the best possible terms and conditions, and we will try to convince our customers to buy what is best for them," Navarro says. "I think what we do is quite transparent."

As giants like IBM and HP continue to swallow up the largest contracts, the dozens of smaller integrators like Sonda are focusing on niches. Private pension funds, a fairly advanced sector in Chile now, has been a good market, says Navarro, and one that should grow across the region. "We're trying to grow, no doubt, but we have no chance to get to even one-tenth the size of our competitors," he says. "So we have to create good solutions in areas where we can compete."

Business Services Industry

The 500 biggest tech spenders: the exclusive Latin Trade annual ranking of the region's technology investment leaders

Latin Trade, June, 2003 by Greg Brown

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