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

Author:Brown, Greg
Position:Technology spending, Latin America

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.

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."

Influencing tech buyers comes in all forms. Okuno, at Tablett, which he describes as a "value-add" hardware distribution company, is itself a kind of influencer. Okuno helps tech sellers get their products through Brazil's formidable customs process, then markets technology to resellers, what Okuno calls "demand creation." "I attack the end-user by means of direct mail, e-mail, trade shows, special events, demonstrations, that sort of thing," Okuno says.

Web-credible. E-mail and trade shows might sound more like marketing work, exactly the kind of effort that gets whacked when budgets are tight. But getting customers excited about your company pays dividends, if you can convince them the excitement is for real. "People, if they like a product, talk about it. That's valuable," says Price, at Concord.

Generating that buzz is sometimes a matter of offering something of real value to independent technology installers and their clients at corporations, the info-tech managers--training. American Power Conversion Corp., a maker of protected power supplies for corporate networks, cements the relationship with its integrators by staging what it calls city expos, training seminars throughout Latin America where managers take classes on installing and using products. "We put a lot of effort on training, on evangelizing these influencers," says Fernando Garcia, general manager in Latin America for American Power.

In a training session in Bogota in November 2002, American Power "certified" 15 companies to install its products, Garcia says. There are side benefits, of course, to providing free training--instant market research. Whoever takes off work to show up for training is almost certainly trying to get a project off the ground. "Two months after the presentation, we know every data center being built in Colombia," says Garcia.

Reaching influencers also means beating the bushes for trade press coverage, but the Internet is playing an important role--it's where tech customers spend their time, and it's very time- and cost-effective, says David Safeer, Latin America general manager for Iomega, a maker of data storage equipment for small, home office and medium-sized businesses. "The credibility of being online is using the medium they are talking about, and it spreads very quickly in that environment," says Safeer.

Getting current customers talking among their peers, turning them into unconscious influencers, is a big leg up for new products unfamiliar to tech buyers. "In network-attached storage, we find our first one or two customers are key customers, because they are going to influence [sales]," Safeer says. "Those first half a dozen customers in any country are definitely influencers."

As the tech world imploded at the beginning of the decade, disappearing companies and evaporating products became so common that distributors often needed to be reminded that tech suppliers continue to do business--witness the explosion in tech public relations, now somewhat on the wane. In the new world of quickly moving contracts and sometimes unintelligible software, however, decisions are moving from the CIO out to the middlemen. Reaching them, and their customers at Latin America, Inc., is the key to building the new tech fortunes.

500 BIGGEST TECH SPENDERS RANK COMPANY COUNTRY 1 Correios do Brasil (Rio de Brazil Janeiro) 2 Luz y Fuerza del Centro Mexico 3 Centrais Eletricas de S. Brazil Catarina 4 Seguros Monterrey New York Mexico Life 5 Scotiabank Inverlat Mexico 6 Diario Clarin Argentina 7 BCP Telecommunicacoes Brazil 8 Banco Santander Serfin Mexico 9 Merkafon de Mexico Mexico 10 Connect Argentina 11 Banrisul Brazil 12 Banco de Occidente Colombia 13 Procuraduria Fed. del Mexico Consumidor 14 Citibank Brazil 15 Univ. Federal de Santa Maria Brazil 16 Ministerio do Trab. e Emprego Brazil 17 Coelba Brazil 18 Ericsson Mexico 19 Flextronics de Mexico Mexico 20 Cerveceria Cuauhtemoc Mexico 21 Prodemge Brazil 22 Cia. de Informatica do Parana Brazil 23 Universidade Fed. de S. Brazil Catarina 24 Banco Agrario de Colombia Colombia 25 Prefeitura Municipal de S. Brazil Andre 26 Editorial El Sol Mexico 27 Banco Santander Brasil Brazil 28 Procergs Brazil 29 Inst. de Investigaciones Mexico Electricas 30 Universidade Fed. de Brazil Uberlandia 31 Industrias Alen Mexico 32 Procempa Brazil 33 Infotec Mexico 34 Telegoias Brasil Telecom Brazil 35 Wal-Mart de Mexico Mexico 36 Cia. da Saneamento do Parana Brazil 37 Universidade Federal de Vicosa Brazil 38 Universidade do Vale do Itajai Brazil 39 Trib. de Justica do R. Grande Brazil do Sul 40 Folha da Manha Brazil 41 Volkswagen de Mexico Mexico 42 Reforma Mexico 43 El Mercurio Chile 44 Viacao Aerea Sao Paulo Brazil 45 Banco de la Rep. de Colombia Colombia 46 Univ. Fed. do R. Grande do Brazil Norte 47 Universidade Paranaense Brazil 48 Universidad Veracruzana Mexico 49 CNPq Brazil 50 ITS do Brasil Brazil 51 CVRD Brazil 52 Univ. Catolica de Pernambuco Brazil 53 Carvajal Colombia 54...

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