TOTVS Experience 6 en us

EXPERIENCE

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E X P E R I E N C E #6 w w w.tot vs.com /experience

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DIGITAL TRANSFORMATION

How and why this phenomenon is changing all the rules of the corporate game

ARTIFICIAL INTELLIGENCE

SILENT REVOLUTION

Technology is approaching the human way of thinking and is already present at companies

The number of machines connected to the internet and to one another already exceeds the world’s population

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WELCOME EXPERIENCE

Discovering, developing and leveraging new solutions for our clients are the narratives that drive us every day.”

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PUBLISHER FLAVIO ROZEMBLATT ART DIRECTOR JULIANA SIDSAMER EDITING OF ARTWORK AND IMAGE PROCESSING APOENA HORTA REPORTING TEAM ANDREA LIMA / CARLOS VASCONCELOS / CESAR BAIMA / GABRIELA MAFORT / MARCELO CABRAL / ROBERTA PRESCOTT

CEO LAÉRCIO COSENTINO MARKETING FLÁVIO BALESTRIN/ DIANA RODRIGUES / ALINE RIVAS GOMES

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“Revalidate.” We looked at this word and the attitudes arising from it, and we then saw the extent to which it is related to everything to do with digital transformation.

On the one hand, there is a world of opportunities for all market players, and on the other hand, those that do not adjust to new social behaviors or at least revalidate their business models face the risk of vanishing.

In the external and global context, we are facing new disruptive technologies that have enormous transformative potential, which are consolidating, gaining new uses and becoming popular ever more quickly. They alter the normal, balanced process that used to govern the business environment. They are sometimes viewed skeptically and even ignored, or their implementation is delayed, as they generate discomfort, which we do not want to experience. Especially given the uncertainties and instability they provoke.

The fact is that a new era has arrived. Major transformations in contemporary societies do not happen unless enormous adaptation efforts and processes also provide the innovative and creative energy of new paradigms and models. What may arise as a result of this clash of forces?

Artificial intelligence, the Internet of Things, data science, machine learning and blockchain are some of these disruptive forces that we address in this edition, with the aim of showing that it is the combination of them that is transforming businesses and entire sectors.

TOTVS already knows that the future is now. Anticipating and being prepared for these changes is part of our company’s DNA. Researching, exploring and innovating are our business’ assets. Discovering, developing and leveraging new solutions for our clients are the narratives that drive us every day.

Accordingly, more than ever, as entrepreneurs, citizens and members of society, we feel called upon to take big decisions. As a result, here at TOTVS, we are accelerating our work to make 2017 productive and we urge everyone to do the same. Make the most of this edition’s content to refresh your ideas and outline your digital transformation strategy.

Enjoy!

Laércio Cosentino, TOTVS CEO

06 !"#$%&'

Mikkel Svane, a Danish entrepreneur based in the United States, explains how he has revolutionized customer service through his Zen spirit.

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How Japan, the country and society that is a global leader in technology, is trying to regain its lost pioneering spirit by investing in nascent entrepreneurship.

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Get to know the new reality in which you will operate and find out whether your company is ready to take off or whether it will become a dinosaur waiting for its extinction.

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Intelligent algorithms and advances in robotics. In an exclusive interview with Martin Ford, the futurist and businessman tells us how smart machines will radically shape the world of work.

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Preparing for the “WFM� generation is not a matter of choice. Find out why in this article written

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by MĂĄrio Almeida, TOTVS head of mobility.

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Artificial intelligence is here to stay. It is part of the exponential technologies that will transform companies and people, giving them a creative role never before imagined.

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Numbers regarding the future mass entry of smart robots into the economy. Demand for new professional skills will not make up for the estimated 20 million jobs that will be replaced.

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The Internet of Things is heading up the next big revolution, in which everything will be connected.

At the same time that the IoT poses challenges, it also opens up a range of opportunities for companies to seize.

38 ,'(1)'+'&#!5',-3 By allowing the decentralized recording

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and storing of assets, blockchain looks set to unleash transformations in many industries.

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In a world that is highly connected through digital platforms, the power of data science has become a strategic imperative for companies.

46 %,1$#*63

As part of its digital strategy, TOTVS is changing its commercial model and aligning its management vision with the new market economy.

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Small enterprises are adopting the Bemacash solution and taking their first steps in the digital control of their business.

54 36**'3313-#"%'3

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How AES and the Costa do Sauípe hotel complex boosted their productivity and efficiency using TOTVS’ CMNet tool.

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TOTVS’ new head office caps off a bright stage in the company’s history, based on sustainability and cultural transformation.

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PROFILE 6

THE CEO

WHO READS

CONSUMERS Focused on bringing a Zen spirit to consumer service, a Danish entrepreneur is revolutionizing the sector

Zendesk publicity photo

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ccompanied by his two business partners, Mikkel Svane risked literally everything he had when he left Copenhagen, Denmark, his hometown, and crossed the Atlantic to move to San Francisco, in pursuit of a more favorable business environment.

His plan was to found a startup with an ambitious goal: to democratize customer service software, making it easy to use and available for any kind of business, and letting organizations focus on their consumer relationships without get ting bogged down in complex processes and technologies. Just four years after moving to California, TechCrunch.com rated Zendesk the “sexiest” startup in Silicon Valley, due to its simple software program for keeping consumers happy. The name Zendesk reflects the company’s desire to bring a Zen spirit to the chaotic world of customer service. In the entrepreneur’s

view, consumers are the king of the digital era.

“Consumers now have more power and a louder voice. They can share good and bad experiences on social media. Anyone who is creating a company today needs to understand this dynamic, offer an immediate, transparent response capacity, and build long-term relationships with consumers,” says Svane.

This formula attracted Twitter as a client right from the start, creating a buzz around Zendesk and multiplying its traffic four-fold. Zendesk now serves thousands of companies in more than 150 countries, including Foursquare, Groupon, Vodafone and TOTVS, and it has 13 offices in Europe, Asia, Australia and the Americas, including Brazil.

GETTING ALONG WELL WITH EVERYBODY IS ESSENTIAL As well as being good-looking and intuitive, the web-based software developed by Zendesk makes it possible to communicate with consumers via multiple channels, such as email, social media, phone calls, text messages, and online chat. It also enables personalization and integration with other systems. “It is a flexible platform that gets along well with everyone,” the company says. This combination is the result of Svane’s years of experience. As a customer support software salesman, he noted that the products on the market were designed more for companies’ in-house reality, demanding a great deal of investment and time. “What motivated me the most during the hardest moments was the idea of dealing with an annoying sector that had been neglected and forgotten. It was a chance for us to turn the customer service software industry inside out.”

Allied with Zendesk’s software is its humanized customer service. The company makes it a rule to ensure that every interaction with consumers is magical and frictionless. “As a consumer, what irritates me the most is when I need to call a company and talk to three different people, who ask me the same questions, and I have to repeat the same information several times. It seems as if every interaction becomes an effort,” Svane says.

In his opinion, good customer service goes beyond support; it encompasses a whole relationship, meaning the journey that a company and its end customers make together. “The sector is moving in this direction. Customer service has now become the center of business. It can boost or bankrupt a company.”

Svane is also attentive to the needs of his employees, and he believes that to create successful teams, people need to be given autonomy. “No matter where they are or how they are working, they need to feel they are contributing to the

company as a whole.” To adjust to the digital world, Zendesk established “no-meeting Wednesdays,” soon adapted by software engineering teams to “work-at-home days.”

INTELLIGENT ROBOTS: NEW FRONTIER Zendesk is now diving into solutions that involve machine learning and advanced data. The company ’s team in Melbourne, Australia has developed an automatic email response service, which does not feature any human employees. Part of a monitoring system known as customer satisfaction prediction, this ser vice reads consumers’ requests intelligently and responds to precisely what is asked, becoming technically smar ter with ever y interac tion.

Focused on real-time engagement, the company is also exploring customer service through new emerging channels, such as messaging.

Besides the man-machine interaction of the future, Svane reveals the universal principle he uses to create and foster good relationships, which are the foundation of his business: “Be humble and act in a way that lets people interact with you. Not all relationships are the same. Some friends like to meet in a bar, others are old friends you keep in touch with despite being far apart, and others merely nod when you walk by. The secret is to have the right relationship with each individual and to be able to talk with each person in a language that resonates with them. This requires the capacity to read people.”

When he looks at the symbol ZEN, which identifies his company on the New York Stock Exchange, Svane certainly perceives that he has achieved his main objective: to take care of consumers, employees, investors and the communit y.

According to him, this “is the only way to create a business and a rewarding life.” This teaching is from a CEO who likes to spend time with his children and enjoy the sun in San Francisco, while listening to a playlist that includes everything from David Bowie to Jorge Ben Jor.

i

FIND OUT MORE In 2015, Mikkel Svane launched the book Startup Land, in which he tells the story of Zendesk’s creation. https://www.startupland.com http://www.neighborfoundation.org/blog/

WORLD 8

NASCENT ENTREPRENEURSHIP

Far removed from the wave of entrepreneurship that is occurring in many parts of the world and going against Japan’s traditional risk-averse culture, new companies are appearing in the country to regain the technological vanguard in Asia.

Cesar Baina

Shutterstock

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onsidered for decades to be synonymous with technology and innovation, Japan saw its leadership in technology in Asia successively threatened, first by its economic stagnation, which has been dragging on since the 1980s, then by the rise of South Korea, and most recently by China’s rapid development.

However, while large Japanese high-tech corporations like Sony and Panasonic are finding it ever harder to compete with their Korean, Chinese and even American and European rivals, the country is starting to gain a business environment that is more favorable to the development of ideas in new small enterprises.

This paradigm shift, summed up by Prime Minister Shinzo Abe as the search for a society in which all citizens, whether men or women, young or old, play an “active role” in the economy, may help put Japan back at the global forefront of technology. And the biggest incentive and showcase of the system he himself dubbed “Abenomics” will be the Tokyo Olympics of 2020.

There are many ways in which the Japanese intend to enthrall their Olympic visitors, exhibiting their capital as a city of a future that is already in place. If everything happens as planned, a face recognition system will be used in airport passport control to manage the entry of tourists into the country. From there, the visitors will take hydrogen-powered, self-driving taxis to their hotels. When entering event venues, face recognition will be used once more, as an extra security measure. In addition, in the stadiums and throughout the city, smartphone apps will facilitate orientation and communication, translating conversations, street signs and labels from the (to many people) indecipherable Japanese into at least 10 languages.

“The Olympic Games are a sport festival, but also a chance to show innovation in technologies,” Toshiro Muto, the chief executive of the Tokyo 2020 Organizing Committee, said in a recent interview. “We have the potential to make these Olympics something wonderful that people across the world will admire.”

And perhaps one of the most memorable moments of Tokyo 2020 will come from a Japanese startup with a bold idea: to produce an artificial meteor shower during the opening ceremony, rather than using traditional fireworks to mark the event. Describing itself as the first “space entertainment company,” Ale (http://global.star-ale.com) plans to launch micro-satellites known as “cubesats” at an altitude of around 50 miles, where they will release hundreds of projectiles that will burn up in the atmosphere, shining like “shooting stars.” The aim is to carry out the first experiment in 2018, and to this end Ale is looking for US$9 million of funding.

INNOVATION AND POLITICS However, a large proportion of these innovations will depend greatly on the success of Shinzu Abe’s policy to stimulate the engagement of Japanese society as a whole as a way of promoting the resumption of economic growth in the country. In recent years, the amount of resources available to new enterprises in Japan has been increasing: investment by venture capital funds, angel investors and crowdfunding doubled from an estimated US$1 billion to US$2 billion between 2014 and 2015.

Japan has the second lowest level of entrepreneurial activity in the world, ahead of only Suriname, according to a study by Global Entrepreneurship Monitor (GEM).”

WORLD 10

Nevertheless, these figures are very distant from those seen in the United States, where entrepreneurs have access to up to US$75 billion per year, adding together the three aforementioned funding sources. Japan is even behind Brazil, where despite the political and economic crisis, investment in 2015 was around R$18.5 billion, or nearly US$6 billion, according to a study by the Brazilian Private Equity and Venture Capital Association (ABVCAP), which did not include the activities of accelerators, incubators and angel capital.

However, probably the biggest obstacle to the paradigm shift

planned by the prime minister lies in Japanese culture itself, which is traditionally risk averse and fearful of failure. As a result, Japan has the second lowest level of entrepreneurial activity in the world, ahead of only Suriname, according to a study by Global Entrepreneurship Monitor (GEM). In 2014, the latest year for which data is available, the so-called initial entrepreneurial activity rate calculated by GEM, which corresponds to the percentage of people aged 18 to 64 who have a startup or are planning to establish one, was only 3.84% in Japan. Furthermore, just 7% of Japanese people in this age group said they saw good opportunities in

JAPANESE MARRIAGE The CEO and one of the founders of Ayonix (www.ayonix.com), a company that is developing face recognition technology apps and solutions, Sadi Vural is skeptical regarding the effectiveness of the Japanese government’s efforts to stimulate the development of a culture of enterprise in the country. He identifies cultural issues as the main obstacles to a paradigm shift in the Japanese economy.

The Japanese government is now counting on small entrepreneurs and their ideas as a way to boost economic growth and put the country back at the vanguard of innovation. How do you see these efforts?

Changing Japan’s strategy requires many things. Changing minds, methods and the work culture will not be easy. We will need at least 40 years if we start this today.

So is it a cultural issue?

Yes, it is. Japanese students do not have an entrepreneurial spirit, and instilling this in people is very hard. The education system also needs to be improved to make students more confident.

Many Japanese people do not feel secure about starting a business because they lack skills such as English and information on other societies and cultures.

And what is the business environment like in Japan for a relatively small company like Ayonix, which has around 120 employees?

In general, while large Japanese corporations do business abroad, small companies work within Japan. There also needs to be a change in spirit at large corporations. It’s very like the

father-son relationship. If you don’t have any children, you only get older, and this is what is happening to Japan. Japanese companies get married but they don’t have any children. If they encourage people to start businesses, the economy will be born with a new spirit and the future will certainly be different.

Still, you need to have capital for this, don’t you?

In the United States, the entrepreneurial culture works because capital understands what risk is. In Japan, venture capital funds work more like banks, seeking to minimize their exposure by analyzing business’ every detail. Here, either they offer little money and a lot of demands, such as the right to shares, or they simply do not make the investment, which deters many entrepreneurs from moving ahead.

Did his occur to Ayonix?

Tech companies like ours need time for their products to mature and win over society, as face recognition is now doing. And face recognition will gain even more ground in society thanks to applications that range from security to marketing. However, this takes something like eight to ten years, and no Japanese venture capital fund is that patient. .

Photos: Shutterstock

Increasing numbers of young university students have a positive view of entrepreneurship as an alternative to a formal job.

starting a business in their area of activity, and a mere 3% said they intended to set up a business in the next three years. On the other hand, 55% admitted that the fear of failure prevented them from opening their own company. By way of comparison, in Brazil the same four indicators were much more positive: the entrepreneurial activity rate was 17.2%, 56% of people saw opportunities in their area, 25% said they intended to start up a business, and 36% said they had an inhibiting fear of failure.

“People who do not have an enterprising spirit and a positive attitude to entrepreneurship exert a negative influence on potential entrepreneurs. In Japan, there are many people like this, who do not start a business or support entrepreneurs. Tackling this social and cultural factor is a major challenge for enterprise in Japan,” concludes GEM’s report on the country.

ENTREPRENEURSHIP OPTION On the other hand, the recession and economic stagnation seen in Japan in recent decades have eroded the old notion that associated employment at a large corporation with professional stability. Thus, even though the country’s unemployment rate stands at around 3%, the lowest in more than two decades, increasing numbers of Japanese people, especially young university students, have a positive view of entrepreneurship as an alternative to a formal job and a life in an office at a large company. In fact, in GEM’s last study, conducted in 2014, 58% of interviewees stated that entrepreneurs enjoy high social status and 31% said that starting one’s own business is a good career choice.

Japan is focusing its efforts to stimulate entrepreneurship on this group. As part of this strategy, the government has invested 100 billion yen (almost US$1 billion) in four of the country’s larg-

est public universities – Kyoto, Osaka, Tohoku, and Tokyo – to encourage them to start businesses related to research carried out in their laboratories. One example is Euglena (http://www. euglena.jp/en/), a company that grows microalgae that can be used to produce either food and drink or fuel. Incubated at the University of Tokyo, it was the overall winner of the first edition of the Nippon Venture Awards, established in 2014 by the Japanese Ministry of Economy, Trade and Industry.

In 2016, the main winner of the Nippon Venture Awards was PeptiDream (http://www.peptidream.com). Founded in 2006, also on the University of Tokyo’s campus, by Kiichi Kubota and Hiroaki Suga, a professor of medicine at the institution, the biopharmaceutical company is dedicating to searching for peptides, small molecules related to proteins that have therapeutic potential. Another highlight of 2016’s awards was the venture between robotics company ZMP (www.zmp.co.jp), mobile and internet service provider DeNA (http://dena. com/intl/) and Sony Mobile Communications, which plans to put Robot Taxis onto the streets of Tokyo. These self-driving cars are expected to transport the public and athletes at the 2020 Olympics.

The Japanese government hopes that the Games’ visibility and support for creative and innovative companies like Euglena and PeptiDream will have a domino effect, from both economic and cultural perspectives. Only in this way will the country be able to overcome its current main problems – a shrinking and aging population, intense foreign competition, and the paralysis of large corporations – and indeed transform them into opportunities. Along the way, Japan may find solutions that can be used by other nations that are facing the same demographic and economic issues.

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THE ERA OF

TRANSFORMATION Rapid technological evolution is transforming industries and services, and creating unforeseen competition. Change is coming from the least expected places.

Marcelo Cabral

Illustrations: Juliana Sidsamer and Shutterstock

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lose your eyes and imagine for a moment what the world was like 10 years ago. You may remember some high-profile events, such as the Brazilian soccer team being knocked out of the World Cup in Germany by Zidane’s France. However, you will soon also realize that some of today’s biggest brands – Spotify, Netflix, Uber, and Airbnb – then had an insignificant effect on the everyday operations of executives and companies. Virtually nobody could have imagined how, in a very short timespan, these companies would create tectonic shifts in sectors that were stable and solid for decades, such as hotels, banks, television and transportation. These companies have torn up the rules of the game in an unimaginable way: Uber has turned into a leading global transportation player, despite not owning a single car, just as Airbnb does not own any hotel rooms. Likewise, fintechs, which are shaking up the financial world, do not possess any bank branches. What these businesses have in common is their use of technology to revolutionize the way business is done.

This is digital transformation, and it is changing the face of companies around the world.

From whatever angle you look at it, digital transformation (or DX) is driving a veritable corporate revolution. Suddenly, every

company on the planet needs to become a tech company. Risk aversion no longer guarantees a comfort zone; at best, there will be the calm before the storm. More technology enables the creation of new business models and new ways of engaging clients, employees and stakeholders throughout the corporate ecosystem. Digital transformation means combining the physical and digital worlds into a single reality.

The mass migration of companies to this new era is creating what research firm IDC calls the DX Economy: an economic macro environment composed of institutions that have already made their transitions to digital business platforms. This new economy is expected to generate US$2.1 trillion of annual revenue in 2019, according to IDC, and to grow around 17% per year from then on. The need for higher efficiency and competitive advantages makes the pursuit of digital transformation mandatory. By the end of 2017, two thirds of the world’s largest companies are expected to have digital transformation at the heart of their strategy, and 60% say that DX will double their productivity.

DX has emerged in response to the appearance of a new kind of customer, who is active and connected, and to whom experiences are at least as valuable as products.

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PERMANENT REVOLUTION In the corporate world, however, there is still a lot of confusion about the topic. Some still have the perception that it is enough to create a website and voila – the business “is on the internet.” Others think that the adoption of a new technology makes their company 100% up to date. Companies that are larger and have more complex systems, however, perceive right away that the hole is much deeper. New technologies need to be embedded in the roots of business strategy.

Digital transformation is not an end in itself, but merely the foundations for something greater. In other words, it is a means to achieve more productive and competitive results.

According to David Morrell, a digital specialist in PwC’s consulting arm, technology needs to be adopted throughout the value chain – supplies, manufacture, distribution and sales – in order to improve sales and cut costs. It also needs to be combined with restructuring of internal flows, management, design, decisions, and the training of manpower able to handle the new systems.

One good example of this trend is Uber, which used a relatively simple technology to revolutionize transportation around the world by changing the rules of the game. Uber continues to develop, in a state of permanent transformation. One development involves services it already provides: a new way of sharing rides, UberPOOL, has slashed individual prices. However, the company is also entering whole new areas: it recently launched a helicopter rental service, and following the arrival of driverless electric cars, it plans to make transportation so cheap that it is no longer worth owning a personal car.

Studies by the OECD show that cheap autonomous cars could reduce the number of vehicles circulating on the streets by 80%, yielding benefits in terms of pollution, traffic congestion and space needed for parking lots. This will bring about a profound change to urban planning itself. Suddenly, it is no longer just taxi drivers who are unhappy: car manufacturers and oil companies, for example, are looking at this revolution with concern. Suddenly, in the space of a few years, a company without a single car is threatening to topple the giant industries that lie at the heart of the global capitalist system.

DIGITAL EVOLUTION For many companies, however, the Era of Transformation may become an Era of Extinction. For every Uber or Netflix, there are many hundreds of overly cautious companies. As occurs in natural evolution, the survivors are not necessarily the biggest or strongest, but those that are best at adapting.

Illustrations: Juliana Sidsamer and Shutterstock

“It is an era that mixes consumers and suppliers in the same package,” says Carlos Nepomucemo, a researcher who specializes in digital media. “Organizations need to adopt the model I call Digital Curation, in which we completely change the way we produce goods and services, which are now regulated by consumers. They take on the role of service oversight.”

Digital transformation is also walking hand in hand with another trend: the so-called Fourth Industrial Revolution, a term popularized by German economist Klaus Schwab, the founder of the World Economic Forum in Davos, Switzerland. His new book, entitled precisely The Fourth Industrial Revolution, was launched in Brazil last year. According to him, this revolution is “a global change caused by the fusion of digital, physical and biological technologies. Tremendous changes are under way, in terms of their size and depth, and also opportunities and challenges. This is something that will affect not only companies, but society as a whole.” However, this revolution is mainly focused on the industrial and productive area, while the concept of DX encompasses this sector plus the areas of services, agriculture, finance and government. In other words, the background is the same: a general change, and an irreversible one.

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Once an innovative culture has been created, the transformation itself can begin. Last year, TOTVS Consulting launched a digital transformation unit. This unit foresees three stages in implementing the process at a company. The first stage involves analyzing all the company’s areas and divisions, to un-

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A company does not turn into an Uber or a Netflix overnight. Nevertheless, key decision makers need to look now at companies that have navigated this transition successfully, and try to discover what can be applied to their own business models. What is the best way to begin?

One good starting point is determining who will lead the process within your company. In the past, the emergence of new technologies left IT professionals with the task of incorporating new developments into the company’s systems. This is no longer the case.

Digital transformation impacts an organization’s business plan, and sometimes turns it on its head. Thinking about this is now a task for the business’ owner or CEO, the chairman of the board, and the directors of all its sectors, without any exceptions. These leaders should have discussions with their peers to jointly design their corporation’s digital strategy. “What you mustn’t do is let change happen when you are desperate,” says Cezar Taurion, the CEO of Litteris Consulting.

Limiting this process is not an advisable path: a single area, whether IT or marketing, does not on its own have the arms – or often the brains – needed to be the only innovators.

DX must be built collectively. (See the interview with anthropologist Nelson Bolonhini Jr. on page 21.)

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derstand whether or not they are aligned with the new conditions and to define any necessary changes.

These changes may range from the merger of different areas to the creation of new ones.

After this redesign has happened, the second step is to adjust the internal processes to digital technologies. Processes are prioritized on a scale from one to five, and they also undergo a financial viability analysis to crosscheck information on feasibility, cost and performance. Finally, the third stage consists of an analysis to find out whether the company has the digital infrastructure needed to absorb the processes that will be created. If necessary, a new support structure is designed. Altogether, this is a process that takes four to six months, on average.

Of course, various internal policies need to be changed to keep up with this whole process. HR hiring choices are a good example. For some time, different structures, policies and business models will have to coexist simultaneously until the transition is complete. It is certainly a confusing process, but it is necessary to deal with the legacy of many years of a given way of operating.

“The best thing is to continue following the old approach until the last client is willing to pay in line with the current model. At the same time, you need to maintain a kind of “external” digital curation startup, gaining new generation clients. The work takes place in two areas, and the new one will end up displacing the old one,” sums up researcher Carlos Nepomucemo.

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A study by Cisco found that up to 40% of traditional companies may be severely affected within the next five years – those that are unable to reinvent themselves quickly enough to keep up with market changes. Look at the music industry, seriously hurt by the creation of sharing services such as Napster, back at the end of the 1990s. Recording companies saw their sources of income shrink, and their situation was further worsened by the declining importance of CDs and the rise of flash drives and streaming services like Spotify. Many of them went bankrupt. Which ones survived? The ones that were able to transform themselves and catch a ride on new technologies. Partnerships with streaming companies now represent an ever-increasing share of revenues. Spending on printing and distribution, on the other hand, has tended to fall to virtually zero. Technology has meant death to some businesses, but injected new life into others.

THREE TURBINES The DX wave is driven by a long list of new technologies, which range from augmented reality and geolocation to artificial intelligence. According to research firm Gartner, however, there are three turbines that are making the concept take off.

One of them is Big Data – the processing and analysis of gigantic volumes of information generated by digital operations. Big Data alone has the potential to generate US$200 billion per year by 2020, according to IDC. This includes both new sources of revenue – by impacting clients in a more precise and focused manner – and cost savings. Why invest many millions in

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general advertising, when you can reach your exact target audience for a small fraction of this amount? In this case, the difficult thing will be to avoid drowning in the immense sea of numbers. The secret: to use analytics and artificial intelligence in an integrated way to “filter” the most important insights amid this ocean of information. The winners of DX will be the companies that manage to create clear, focused data flows, in real time and integrated with their operating model, in order to monetize these channels.

Another factor that will push DX into all corners of the economy is the Internet of Things. Cisco estimates that by 2020, there will be 50 billion connected devices in the world. In 2015, this number was less than 10 billion. For every person on the planet, there will be six devices connected to the web. Of them, at least 20% will be acting as sensors, directly linked to other machines. (See article on IoT on page 34.) Being prepared to explore the depth that these connections will offer may redefine the way companies interact with their suppliers, distributors and customers. After all, it is the joint operation of these sensors that will allow companies to transform their business models. For example, Nike is investing in wearable technology (connected sneakers and fitness sensors) and Google is entering the area of autonomous cars. Until a short time ago, these companies acted in completely different areas – but they are now investing to create new markets out of nothing.

The third engine of digital transformation is the cloud. IDC estimates that by 2020, there will be 45 zettabytes of data in the world, or 20,000 times more than 30 years ago. “For most of this

F U T U R E

I S

H E R E

66%

of CEOs will put DX at the heart of their corporate strategy

60%

of companies plan to create an exclusive executive position to lead their digital transformation

60%

of companies will double their productivity by digitally transforming their processes

20% of employees will have digital processes and algorithms to help them take their executive decisions 75%

of companies will have digital versions of their remaining offline operations

Source: IDC study of trends for the world’s 2,000 biggest companies up to the end of 2017.

data, the cloud will be the only practical place to combine this information and manage its flows, supplying the capacity to compile and process it on a large scale,” says Roberto Prado, Microsoft Brasil’s cloud platform and infrastructure director. “This vast market will be worth more than US$500 billion in 2020, representing a great growth opportunity for business partners that are already concentrating on and investing in cloud technologies,” he adds.

Illustrations: Juliana Sidsamer and Shutterstock Publicity photo

NEW MODELS Given these new conditions, companies have been adopting different formulas to transform themselves. In the case of TOTVS, the largest producer of business solutions in Latin America, the challenge came in the form of a change in business model. The company used to only sell user licenses for its products. Then the market changed, and clients now pay subscription fees to rent its products, which are hosted in the cloud – a version of the model employed by Netflix, so to speak. A transition of this kind is not easy to execute. For example, the new model initially generates less revenue, as the subscription fees are lower than the license fees. The new format only becomes more profitable after a few years, when the subscription renewal income becomes higher than the license fees. Therefore, this change needs to be carefully planned, to ensure the company can survive during this transition.

Finally, you also need to take into account the investments required to create the infrastructure demanded by the cloud model, such as data centers. This is a process that separates the men from the boys.

The new reality has not only changed the way TOTVS’ products are consumed, but also how they are made. Rather than offering numerous software programs, the company focused its investment on a small number of platforms, which can be fine tuned to the needs of each client. CEO Laércio Cosentino compares the company’s changes with those experienced by the auto sector. He says that in the past, in order to change a car’s performance, its engine had to be altered. Now, however, the engines are sealed and they are hardly ever altered; what changes is the sensors and interfaces coupled with the machinery. A similar thing has happened at TOTVS. The company has built a fixed enterprise resource planning “engine,”

Interview_ Laércio Cosentino “Revalidate” is one of the verbs most emphasized by Laércio Cosentino when he talks of digital transformation. Find out how he sees the new trend’s arrival in the Brazilian market.

What is the impact of digital transformation on the corporate world?

The world is going through a moment in which every activity, every company and every solution needs to be revalidated. Web connections have radically changed the way people do everything. The fact that you consume a service instead of a product is already a major change. It is this change in the way people, products and services interact that is causing digital transformation. Companies need to understand the impact this will have on their everyday operations.

How is TOTVS adapting to these changes?

We have been working on digital transformation since 2009, when we started to integrate our solutions. A lot of things have changed since then. We thought first about desktops, but now mobile is the priority. We thought about closed, complex and comprehensive systems, but things today have to be open, simple and easy to implement. We thought a lot about making systems for IT users, but now we need systems for our clients’ customers. A software program cannot be developed only for a university or a hospital, for example; it needs to be developed for students and patients as well. So, what used to be a B2B business has started to resemble the concept of a B2C business. We have revalidated everything we developed and delivered to the market. And of course, we have also moved closer to the world of the Internet of Things.

How has this happened?

Within five years, we will have more things than people connected. Our acquisition of Bematech in 2015 was a step forward in exploiting this explosion in the number of connected devices. This is a company that knows how to transform software into hardware and vice versa. We didn’t have this knowledge in-house but we have now acquired it.

COVER 18

which has received a customizable layer of interfaces and functions. Called Fluig, this platform brings together collaborative tools for productivity, agility and cost reduction on a single screen. As it connects with all the ERP systems on the market, it extracts more value from investments made in IT over the years.

More intuitive and customizable, the new platform model also meets another market demand – the need for products to serve clients’ customers. TOTVS’ end consumers have changed: in the past they were the IT directors of banks and fast food chains, for example, but they are now bank account customers and hamburger fans. The new model, in a way, makes TOTVS a company that, in addition to traditional B2B – selling to other companies – also practices B2C, meaning it sells to end consumers. This implies a cultural shift within the company, including the way it designs its products. TOTVS has created new design thinking and user experience areas. It is these units, in constant contact with customers, which determine the rules that need to be followed by developers. “We used to implement things that made sense to the developers, but not necessarily to the clients. Thanks to our new areas, this has changed. It’s a completely new method of developing the interface and even the final product,” says Cosentino. The strategy seems to be working. In 2016, for the first time, TOTVS saw its cloud-based subscription fee revenue outweigh its software licensing income. The executive believes that within five years, this modality will account for nearly all its revenue.

CHANGE TO SURVIVE As we have seen, even companies that use technology heavily are not immune to disruptions. This also applies to cell phone operators, which are suddenly grappling with customers who use their phone to do practically everything – except make calls. The rise of smartphones and instant messaging apps like WhatsApp has caused a brutal change to business models. According to professional services firm Ernst & Young, last year data represented half of cell phone traffic across the world, up from less than 10% six years ago. To cope with these changes, wireless telecommunications company Vivo, which belongs to Spain’s Telefónica, has begun to invest heavily in its digital transformation.

Teams dedicated to the area have doubled in size, as employees have been hired from companies such as Google and Facebook. The decisions on which locations will receive Vivo’s annual investment of R$10 billion to expand its network are now taken by analyzing Big Data — there are already around 50 professionals working exclusively in this area.

Each innovation project now has a specific team and an “owner” in order to prevent it getting stuck due to the bureaucracy of the different sectors involved. Vivo is also increasing its investment in a new area: content production. In practice, the

Uber, Walmart and Amazon; while some companies have taken the lead in DX, others are investing to make up for lost time.

company is moving toward becoming a kind of Netflix for data. Players in the sector that do not follow this path will have ever-bigger problems.

These continuous changes to business models, according to researcher Carlos Nepomucemo, resemble a type of programmed suicide. “This reinvention is necessary, even if you lose market share today, in order to gain more tomorrow,” he says. “The concept is: ‘if somebody is going to kill me, it may as well be me.’” In the case of Microsoft, for example, this has meant giving up a market in which customers bought a version of Windows and, some years later, thought about updating their system by purchasing a more recent version. This model is now fast disappearing. Updates are now online and automatic, and as a consequence, Microsoft itself has gone from being a product manufacturer to a cloud-based service provider. More than 90% of sales of the Office package to individuals now follow this model, for example.

Illustrations: Juliana Sidsamer and Shutterstock Publicity photo

DIGITAL BUT FRIENDLY At Brazilian retailer Magazine Luiza, digital transformation is needed to maintain growth.

Online sales now account for a quarter of the group’s revenue, and it expects this figure to exceed 50% in no more than five years. The dilemma, however, is how to turn into a digital business without losing the company’s longstanding friendly identity and specific way of interacting with customers, suppliers and employees. There is a real risk of losing the brand’s identity.

In the market, many executives consider the sectors they work in to be late adopters of new technologies. Thus, they feel safe, believing that transformation will only strike after they have retired. “This is a mistake,” says Cezar Taurion, the CEO of Litteris Consulting. Many of these companies, which seemed very secure, are now going through serious crises. At this kind of company, traditionally conservative and hierarchi-

This reinvention is necessary, even if you lose market share today, in order to gain more tomorrow.”

Carlos Nepomuceno, researcher and author

cal, information flows slowly in a circular fashion, starting at the top of the organization and gradually spreading through the company. By the time it reaches the bottom of the hierarchy, it is already out of date, obsolete. The only solution is to rush to try to make up for lost time, and to pay a much higher price than would have been necessary in a controlled process of transformation.

Walmart is another example. The world’s largest company in terms of sales, it has bet for many decades on a model based on physical presence through giant stores. In recent years, Amazon’s rise has threatened this business model.

Although it still sells five times as much as its rival – more than US$480 billion per year – it now has a lower market capitalization than it. The reason: the business model of physical sales is suffering from the advance of online shopping. Amazon’s online sales are eight times higher than Walmart’s and their rate of growth is also higher. Walmart’s expected earnings have been downgraded, taking its share price down with them, while Amazon’s stock continues to climb. The market sees one company as belonging to the past, and the other as belonging to the future.

Walmart’s reaction? To invest heavily. Over the last five years, it has bought 14 tech firms. The latest acquisition, in 2016, was jet.com, one of the fastest growing e-commerce companies.

The strategy goes much deeper than establishing an online operation: Walmart has also bought app and software developers, and it has hired specialists in digital management and

COVER 20

processes. The group’s CEO, Doug McMillon, has declared that the aim of the change is to combine the company’s physical assets with e-commerce so as to “deliver a perfect shopping experience on a large scale.” Will it succeed? There is no guarantee – but we can be certain that inaction was transforming the company into a dinosaur.

EXCLUSION AND INCLUSION The changes brought about by DX will impact the whole of society, and not just companies. A study by the World Economic Forum, for example, predicts that by 2020, around 5 million jobs across the world will have been replaced by digital processes, robots and artificial intelligence. On the other hand, at least 2 million jobs will be generated by new demands created by technology, mainly in technical areas such as engineering, software development, and mathematics. Another benefit of digital transformation is that it is expected to dramatically reduce the cost of public services as government processes migrate. Specialists state that on average, the cost of a digitalized service is just 3% that of

the offline version of the same service. As a result, more people will have access to cheaper processes. This is digital inclusion at its best.

A few years from now, the trend is for digital transformation to move toward concepts that are now in their infancy, such as algorithmic trading and the programmable economy. Big Data is likely to become an everyday part of operations, directed by artificial intelligence systems that are able to learn themselves from users’ habits. Does this seem far away? Just look at what programs used on smartphones and in operating systems, such as Apple’s Siri and Microsoft’s Cortana, are already doing today. Siri was created five years ago, a very long time ago in terms of technology. Five years from now, new products will probably make the iPhone’s friendly voice sound like a tired old woman. All this will improve companies’ competitiveness. “Our ultimate challenge is to make our clients more competitive in their respective markets,” says Cosentino, of TOTVS. “Digital transformation is the great opportunity we have to do this.”

PITFALLS ALONG THE WAY There is no shortage of pitfalls along the path of companies that try to digitally transform themselves. Knowing which ones are the most common challenges and preparing to tackle them can make the difference between a smooth transition and a traumatic process.

According to Charles Hagler, the TOTVS Consulting director responsible for the DX area, it can be hard to prioritize the processes that need to be rethought first. It is necessary to create a kind of ranking, crosschecking the importance of each process for corporate results against the depth of transformations generated by new technologies, without ignoring the amount of efforts and capital that must be invested to implement the change.

Another problem is “technological pollution”: there are now more than 50 technologies with disruptive potential. How can you choose which ones make sense for each business?

Faced with this excessive abundance of options, some companies end up deciding to accept suggestions from client areas or special offers from suppliers. The correct decision, in this case, needs to take into account which of these technologies are most applicable to the processes that were prioritized in the aforementioned ranking.

Even after determining the targets in terms of processes and technologies, there is also a tendency to merely acquire and implement the technology, without paying attention to the transformation itself. This is the case when a company buys tablets and smartphones for its team of salespeople on the streets, but maintains the requirement to deliver reports on paper. The conclusion: technology in itself does not necessarily improve productivity. It needs to be incorporated into processes in order for its full potential to be harnessed.

Interview_Nelson Bolonhini Jr. Nelson Bolonhini is a corporate anthropologist who has worked as a consultant for companies that want to migrate securely to the digital age. He tells TOTVS Experience what has changed in business management due to digital transformation.

Illustrations: Juliana Sidsamer and Shutterstock Publicity photo

Companies are making the transition to ultra-connected digital environments, characteristic of the 21st century, which generate a series of changes in organizational culture.

What adaptations and change management work is involved?

The 21st century is calling for us to revisit the concepts of business missions, values and visions, which have guided companies in the past. These days, it makes more sense to promote discursive practice at companies in order to create a collective identity, by asking ourselves who and what we are, and why. Depending on the area of business, four or five generations of employees are competing for the same space. The idea is to create “contact corridors” to foster generational exchange and construct a strong brand, instead of conflicts between these different groups. The work involves developing simple ideas that create points of contact, so as to unite without homogenizing something that could be disunited.

And how can we build a strong organizational culture in current times, which are ever more fluid?

There is no point being top-down. The construction of identity has to take place in a collaborative way, involving

all company departments. In the 21st century, human relations are more volatile, uncertain, complex and ambiguous. Stopping volatility, achieving certainty, explaining complexity and removing ambiguities are the challenges of this new culture and, if they are overcome, employees and customers will be retained. What we note is that when a company’s values reflect people’s values, productivity is higher. So, the sense of belonging, shared purpose and partnership that we seek creates greater engagement in processes. A strong organizational culture gives leadership to all employees.

You talk of human relationships in digital times. How do they impact leadership?

“Homo economicus” has been dead for some time. We are already living in the “economy of experiences.” In this environment, a leader is someone who creates interconnectivity between minds.

Leaders must understand employees’ pain: what they want and what they fear. The role of leaders in the 21st century must be to minimize employees’ fears and maximize their desires.

So how can companies prepare to enter this new way of operating?

Contemporary relationships are no longer linear. There are no longer any roots. Instead, there are rhizomes. You never know where the next shoot will grow. And this is true for any discursive practice. In these fluid times, in which technology groups people together, almost like a flash mob, the agile and open world requires corporate organizations to constantly search for more bridges than pillars. There is multiple extraction of knowledge, and a kaleidoscopic and polyphonic overlapping of competencies. Knowledge is not watertight or compartmentalized. In this context of dizzying possibilities, innovative companies must also innovate in their corporate relationships. Involving talents in decision-making processes can bring about greater autonomy and a sense of belonging. If we view employees as an enormous rhizome-like collection of intellectual experiences and multiple discourses, this can promote partnerships through cells that explore, transcribe and translate the broader movement of the corporate fabric.

Opening doors beyond silos can unveil a world where organizational culture is fed by multiple sources, from job swaps to home offices, from transdisciplinary squads to multifaceted think tanks.

Photos: Personal archive

INTERVIEW 22

RISE OF THE

ROBOTS

Machines driven by intelligent algorithms are growing ever closer to human reasoning, creating numerous future business opportunities, and they will radically change the world of work as we know it today.

h

Gabriela Mafort

PROFILE

e was one of the first authors to ar-

NAME: Martin Ford FROM: São Francisco RESUME: Futurist who investigates the impacts of artificial

gue that advances in the fields of robotics and artificial intelligence could make a large share of the human

workforce obsolete, even reaching functions that demand a high level of qualification. To correct this im-

balance, futurist Martin Ford suggests that the world is already starting to face this question head-on, plan-

intelligence and robotics

ning safe alternatives for a future that may become

on the economy.

“jobless.” His latest book, Rise of the Robots: Technol-

International lecturer and keynote speaker, he has

ogy and the Threat of a Jobless Future, won the Financial Times Book of the Year award and it is on the New York Times’ list of global bestsellers. Just back

more than 30,000 Twitter

from Singapore, where he took part in a conference,

followers (@MFordFuture)

Martin Ford gave this interview to TOTVS Experience.

INTERVIEW 24

In the 1960s, robots only executed the tasks for which they were programmed. Nowadays, intelligent robots could formulate Newton’s Laws more quickly than Newton himself! As you say, robots have progressed beyond the control and understanding of the humans who originally designed them. What is the main impact of this substantial change on the production chain of companies and the business environment?

Instead of merely executing repetitive tasks, algorithms are now able to learn. This change is transformative and it will affect the whole economy: not just factories, but also offices, retailers and fast food. In the manufacturing industry, robots will become much better and they will start to replace human workers.

How can companies prepare for this avalanche and guarantee a safe transition to the new situation?

A strategy will be needed to train the workforce and make the most of this technology. At this moment, the most important area is deep learning. This is a type of machine learning research that uses neural networks – a simple model of how the brain works. The main companies that are innovating in this area are Google, Facebook, Microsoft, Amazon, and Baidu. Deep learning has a very broad range of applications, including internet search engines, translation, autonomous cars, and medical image analysis. The advances in these areas will have major implications for all kinds of industries.

In your book The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (2009), you predicted that in a decade or two, machines would start to adopt a more specialized level of intelligence. Do you agree with futurist Ray Kurzweil, who has argued that machines will become more intelligent than human beings around the year 2029?

Are companies, governments and societies prepared for this new reality?

I believe that in the foreseeable future, machines that are intelligent, especially in terms of deep learning, will be

used in specialized ways. This will have a big impact on the economy and work, as many people now perform specialized tasks. Some day this model may perhaps evolve into genuine artificial intelligence, meaning machines that can think like human beings. I think that if this happens, it will probably be much later than Kurzweil’s forecast.

Stephen Hawking has said that the creation of machines that think would be the greatest event in the history of mankind, and I think this could be true. From that point on, it becomes hard, maybe even impossible, to predict what will come next.

In your view, all types of jobs are at risk from the “rise of the robots,” including highly paid and highly skilled jobs. What will be the impact of automation and accelerated technological changes on work?

Which areas are most vulnerable and why?

The most vulnerable jobs are those that are routine, repetitive and predictable. This includes a series of highly skilled jobs. Take the example of radiologists – doctors who interpret images. This function requires many years of training, but some day it will be completely performed by machines, as they become more specialized.

So, this means that training and education alone may not be enough to get better jobs, as machines will replace even highly skilled ones. This may mean that we need to take another look at the solution to this problem.

Some day there may not be enough jobs, even for people who obtain specialist qualifications.

So what will be people’s role in this new world and the most important skills to acquire going forward?

The most important roles for people will be in areas such as creativity and jobs that require close relationships with other people. Some specialist services such as plumbers and electricians would be very hard to automate, so they are safe for now.

In fact, if we look more than 20 years into the future, even many of these jobs may not be safe from automation.

We will have to restructure our economy

We will have to restructure our economy and society to ensure that people have worthwhile things to do and also a life purpose, even if they do not have a traditional job.�

and society to ensure that people have worthwhile things to do and also a life purpose, even if they do not have a traditional job. Who knows, maybe people could have a guaranteed income and they could do voluntary work in the community, for example.

In your book Rise of the Robots, you argue that rapid technological change could radically change the economic system. Is a future of structural unemployment really likely?

Over the years, many economists have successfully predicted that investment in technology will always end up generating more new jobs than it destroys, thereby maintaining economic growth.

It is true that technology has always created new jobs, and I believe this will continue to occur. The problem is that I believe more jobs may be destroyed than created.

And the new jobs that are created may require high-level skills and capacities. So, this will not be a positive combination for ordinary people who currently perform routine tasks. What is different now is that the machines are starting to think and learn.

We are not only talking of machines replacing the power of muscles. Now it is about brainpower, intelligence.

Considering that the economic crisis faced by the world is the consequence of a loss of confidence in the ultra-high-tech financial system and that technological acceleration is a reality, are the “lights in the tunnel� turned on or off? Do you believe that learning machines will help enhance human behavior?

This will depend on how new technologies are used.

For example, artificial intelligence may be used by hackers and also to make systems more secure. There are certainly many risks. Many people may become addicted to technology. We are already seeing this with videogames.

In future, artificial intelligence combined with virtual reality will have incredible potential. So, we will have to be very careful to leverage the positive aspects of these technologies while mitigating the negative ones.

OPINION 26

THE WFM GENERATION There are no magic formulas or silver bullets. Businesses must be digital.

I

IS HERE

am 36 years old and I have three siblings, all of them younger than I. The youngest is 14 and he is my best example of how the generations have changed radically in the last 20 years. This boy has had an iPhone since he was 10, but he never uses it to make phone calls; he uses it to play games and chat via WhatsApp, Messenger and so on, and of course to hunt Pokémon. In one of these chats the other day, I invited him to have lunch, and his simple, direct response was “WFM.” I confess I had to think for 10 seconds before I realized he meant “works for me” and that this was equivalent to “what a great idea, sure, let’s do it!”

“WFM” is just one example of the new code of behavior and language or communication created by this generation born after the Millennium Bug. Soon some of the terms used by these digital natives will enter the dictionaries and become the new normal. The “WFM” generation is here, bringing with it a core of directness that borders on coldness. It is only interested in the immediate, it questions everything, and of course it is digital only. The term “offline,” already becoming less widely used, will soon be seen as an anomaly to be treated with surprise and even fear. After all, the ethos of this generation is inseparable from the concept of being connected.

This generation will be your employees, your suppliers and your customers in a few years. What do you suppose they will think when they discover that at your company there are parallel and legacy systems that do not talk to one another? What will your HR area need to do with a generation that will not clock in simply because they will consider it a waste of time? How do you think your finance department will pay them, given that their bank accounts will be based on apps at different banks from your own? How will your clients view a salesperson who cannot give an 11% discount because the system only permits a 10% discount? And what will you do when your suppliers understand that your product cycle is not mapped in real time, resulting in your inventory damage rate taking up 20% of your monthly sales? At the same time, they will be implementing predictive clone delivery systems and working with breakage and delay rates of close to zero.

We are on top of a bridge and everyone will inevitably cross it, whether their business is a neighborhood bakery, a mining company or a bank. The sun of digitalization is shining and burning all companies, regardless of their size and sector. 99Taxis and Uber have annihilated the traditional licensed taxi business in São Paulo, and they did not take 10 or even 5 years to do this – they took no more than 18 months. Bimodal IT is the name of this bridge and there is a single formula for crossing it: change, and change quickly. The assets with which your company will execute this change may include the adoption of agile methodologies, the implementation of concepts such as Lean Startup, Canvas and Design Thinking for all internal processes, and the creation of new products. Of course, your company will need to support all this on a platform.

There are no magic formulas or silver bullets. Businesses must be digital, in line with a new mental model and the development of technology solutions. These premises are well known, but little practiced: intelligent processes integrated with sensors and machines that exist in the relationship journey and the delivery of products and services, and the design of services applied to different areas, all supported by a platform. The age of application programming interfaces, software as a service and platforms as a service, available on a global scale, is the vector we call digital transformation.

The competitive advantages of 30 years ago are no longer valid.

Preparing for the “WFM” generation is less of a choice and more of a consequence, and if you do not do this, the risk is that someone will do it for you. Whenever you have any doubts about this, cast your mind back to video rental stores, and don’t let you and your company be netflixed!!

Mario Almeida is the head of mobility and Ecofluig at TOTVS

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BEHAVIOR 28

THE FUTURE OF ARTIFICIAL

INTELLIGENCE Robots that learn and future technologies are giving people more creative roles Gabriela Mafort

U

DEEP LEARNING

TOTVS publicity photo

A typical day in 2030 will have a slightly more technological air. This is because a kind of digital assistant, which knows people’s individual tastes and preferences, will give them multiple choices of activities to do as soon as they wake up. This list may contain paid tasks, selected in line with professional background and learning interests, and also suggestions for meetings and events in the personal sphere. Each individual may also be connected to one, two or three projects at companies for which they regularly provide services or that they were involved in founding.

Going to work may be a choice, depending on the kind of task, and commuting may take place using shared or even driverless cars. At the end of the day, a movie or dinner with friends may be suggested and scheduled by the digital assistant, but only after a telepresence medical consultation to check data collected via apps, involving smart diagnosis to anticipate future problems.

The fuels of these developments are computer technologies inspired by the way people use their nervous system and bodies to feel, learn, think and act, known collectively as artificial intelligence. Many of them are already part of our everyday lives, and as they are combined going forward, they will create infinite possibilities for scientific and business advances.

“Artificial intelligence is part of the exponential technologies, and the great challenge of human beings, who think in a linear way, is to understand this exponential evolution. There is no going back after we adopt these technologies, both in our personal lives and in business. And artificial intelligence will be pervasive; it will be present in every-

“Artificial intelligence is part of the exponential technologies.

There is no going back, both in our personal lives and in business.”

Vicente Goetten, executive director, TOTVS Labs

thing you can imagine,” says Vicente Goetten, the director of TOTVS Labs, in Mountain View, California. This view is shared by TOTVS Labs’ neighbor Google, which has invested heavily and made a series of acquisitions in the area. Two years ago, the search giant bought English company Deep Mind for around US$500 million. This company is developing artificial intelligence applications, meaning “software that can learn to solve any kind of problem without being taught how to do so.” In other words, this software will have the capacity to teach itself based on information it already has, and it will not need to be programmed to execute pre-established actions.

Software like this is based on algorithms that use the functioning of the human brain as a reference for their neural learning procedures, a technology known as deep learning. Combined with the high capacity of today’s computers, technological progress in hardware, and the analysis of gigantic databases, deep learning will have a wide variety of applications. These include detection of financial fraud, advanced recognition of speech and identification of streets, image searches, face recognition, specialist translation of written documents, and even spam detection, reducing mistakes in these procedures to very low rates.

“This software will rewrite its own code without human involvement, based on feedback from networks in the Internet of Things around the world, and it will steadily become more intelligent. If a problem is solved in São Paulo, then Sudan, connected to the same network, will become more intelligent at the same moment. This means that the whole world will become more intelligent together. We have never had this in our entire history,” explains futurist Jerome Glenn, the executive director of the Millennium Project, a global network of researchers who are studying future trends.

The services generated by artificial intelligence applications and their outshoots, considered a new technological paradigm, may be worth as much as US$2 trillion in the next decade, according to the most optimistic commentators.

According to consulting firm IDC, today just 1% of all existing apps feature artificial intelligence resources, but in two years this figure will be 50%. The market is being fought over by giants such as Microsoft, IBM, Facebook, Google, Apple, and Amazon, which plan to offer new

BEHAVIOR 30 products and services to add to their traditional revenues. In addition to mobile assistants, like Siri and Google Assistant, stores are now selling home personal assistants, which access the internet and meet consumers’ needs via voice command, through loudspeakers. “Websites and search engines will start to get closer to people, by becoming sensitive to their geographical location, for example. When

you go through a door, you will be able to see information available there, in line with your interests,” says Djalma Fonseca, a professor of machine learning at Uniamérica, a university in the Brazilian state of Paraná, and an IoT consultant.

WORKERS SHOULD SPECIALIZE To keep up with these changes, new competencies will be necessary. There is

6 AI STARTUPS AND PROJECTS TO LOOK OUT FOR TOTVS Experience has selected six startups and projects around the world that are innovating through the use of artificial intelligence, creating new business models, supporting a culture of innovation, and improving decision making at companies. In the first half of 2016, there were more than 250 takeovers of AI companies, exceeding the total in the whole of 2013.

Space Time Analytics: www.spacetimeanalytics.com An artificial intelligence startup that is developing analytical services to support forms of sustainable production, focusing on the environment.

ComplyAdvantage: www.complyadvantage.com This startup is using artificial intelligence to help banks and financial institutions comply with anti-money laundering rules.

MindMeld: www.mindmeld.com A platform that permits the creation of intelligent conversation interfaces, using natural voices, for different types of apps and devices.

Project Company: www.projectcompany.org A company that is developing telepresence robots, focused on the health and education sectors. It is also investing in nanotechnology and wearables.

Takadu: www.takadu.com Software that makes it possible to identify sources of leaks in water pipes, based on data generated by sensors, thereby preventing pipes from bursting.

Reactive Inc.: www.reactive.co.jp A startup that is using deep learning to analyze written documents, including in languages that use special characters such as Japanese, generating insights for innovation.

a completely new labor market on the horizon. The ghost of unemployment is appearing. Because of the replacement of routine human functions with machines that learn, 5 million jobs are expected to vanish by 2020, according to the World Economic Forum, while 2.1 million new opportunities will be created. In the United States, up to 47% of workers could lose their jobs, especially in the areas of administrative support, services and sales, according to a study by the University of Oxford. In this new context, workers who become highly specialized in fields such as computing, mathematics, software architecture and engineering are likely to thrive. Competencies like empathy, cooperation and negotiating skills in rapidly changing environments will also be crucial.

The model for companies we know today will also be transformed. “As artificial intelligence technologies come to dominate, the difference between domestic and foreign companies will disappear.

Moreover, you will be able to establish and reestablish companies all the time, and start a company for a specific purpose, for a specific period. Companies will also be crosscutting institutions, and their boards of directors will have diverse compositions, possibly including governments. Furthermore, they will not do any recruitment. Instead, workers will be attracted to businesses. In general, people will work with what they like, in an economy of self-realization,” predicts Jerome Glenn, looking at 2030 and beyond.

There are many stages to cross before we get there, starting with the organization of internal data. “We advise companies to harness their internal information, as the main difficulty is making sense of this enormous quantity of data. The work begins with collecting information from data silos, guaranteeing the quality of this

GLOS SA RY

Large-scale machine learning: Machine learning algorithms designed to analyze very large databases.

Deep Learning: Artificial learning procedures, which particularly facilitate recognition of objects in images, videos and activities.

Robotics: This is enhancing the handling of objects in interactive environments and interaction with humans.

Computer vision: For the first time, computers are able to perform visual tasks better than humans can.

Collaborative systems: Models and algorithms for the development of autonomous systems that work collaboratively.

Internet of Things: This is improving the use of data generated by devices, machines and sensors connected to the internet.

information, understanding the relationship between things, people and businesses, and finally extracting insights through artificial intelligence, using machine learning, deep learning and other tools,” says TOTVS Labs’ Vicente Goetten.

ROBOTS ARE THE NEW SMARTPHONES Opportunities are to be found in all sectors of the economy, at companies of all sizes, and also through combinations of intelligent software and mobile robots.

Bruno Haya

Machine Learning: The ability of computers associated with machines to learn without being programmed.

If a problem is solved in São Paulo, then Sudan, connected to the same network, will become more intelligent at the same moment.”

Jerome Glenn, futurist and director of the Millennium Project

“Despite their motors, robots are nothing more than smartphones in terms of software. So IT companies can create apps that develop abilities, intelligence, e, services or entertainment content ent for forms,” says commercial robotic platforms,” otics researcher Eric Rohmer, a robotics rsity of Campinas. He at the University notes the basic rules governing the human-machine relationship: the tasks executed by robots need to be useful, robots must be aware of what is happening around them, and people ed to interact intuitively with them. need He adds: dds: “That is where the business opportunities nities are – software that interacts with hardware.” rdware.”

For example, mple, a plant in the Japanese city of Saitama ma has humanoids on its production line. They do the same work that

people do, at 80% of the speed, but continuously. They even take part in the morning workplace exercises. “Robots have broken out of their cages to work freely among human beings, collaborating with them,” Rohmer says.

Rohmer is a member of a team in Brazil that is working on R1T1, a telepresence robot that can be integrated with applications for medical care, home use and distance learning. Other trends in this area include service robots and those designed for extreme environments, such as during earthquakes and other natural disasters.

It seems that the fears of Isaac Asimov, the science fiction author who came up with the Three Laws of Robotics, that robots could turn against their creators, have remained in the world of fiction. In reality, new technologies have freed people from strenuous tasks, allowing them to concentrate on higher-value-added activities. Humans assisted by the technological capacity of artificial intelligence will have more time to exercise their creativity, which is the engine of highly innovative environments. vironments.

INFO 32

ARTIFICIAL

I N T E L L I G E N C E

REAL BUSINESS CONSEQUENCES The mass entry of smart robots into the economy is ushering in a new technological era and generating an explosion of opportunities in all sectors.

CHANGING WORK

3,6 MILLION jobs will be generated by advances in robotics.

22 ,7 MILLION

SMART FACTORIES Artificial intelligence applications in production processes

jobs will be supplanted by automation Source: Forrester

Supply chain: Automated and optimized decisions are taken by machines that learn. They crosscheck suppliers’ data with customers’ demands, thereby increasing efficiency and reducing errors.

Production systems: The use of 3D artificial intelligence technologies, such as gesture recognition, cuts testing times. Sensors collect data, generate intelligent analyses and reduce human annotation errors.

Data analysis: The intelligent crosschecking of internal and external data generates strategic and tactical recommendations.

Mobile workforce: Workers equipped with mobile devices featuring augmented reality tools process information in real time.

Intelligent maintenance: Remote assistance and predictive analysis systems generate integrated maintenance.

Autonomous vehicles: Intelligent driverless vehicles transport materials.

Advanced materials: New materials such as nanomaterials improve the efficiency and quality of products.

Robotics: Intelligent robots take decisions in complex situations.

Intelligent products: Produc ts contain relevant data and communicate with each other.

On-demand manufacturing: Products are made in line with the preferences of consumers, who interact and generate strategic information.

JOBS UNDER THREAT IN THE USA IN 2033 SECTORS

Management, business and finance Services Sales and related tasks Office work and administrative support Agriculture, fishing and forestry Production Transport and logistics Source: Oxford Martin School, University of Oxford

AI BUSINESS CLIMATE HEATS UP Robots help diagnose diseases, reducing costs. Medications developed with the use of artificial intelligence take less time to reach the market and their costs are lower.

MANUFACTURING

PLANTS / ASSEMBLY LINES: Robots

BUSINESS INTELLIGENCE

HEALTH:

are able to assemble complex items, such as electronic components, cars and even houses.

ADVERTISING, SALES AND MARKETING

SECURITY FINANCE

TRANSPORT: Autonomous cars will save US$ 1.3 trillion per year in the United States between 2035 and 2050. Across the world, the total will be US$5.6 trillion.

$

HEALTH

INTERNET OF THINGS CUSTOMER RELATIONSHIP MANAGEMENT

FINANCE: Robots

use predictive analysis and market data to predict investment trends more quickly and they make recommendations.

Friendly robots that imitate humans use the patterns of real conversations to supply fast, simple and cheaper services.

CUSTOMER SERVICE:

PERSONAL ASSISTANCE / PRODUCTIVITY EDUCATION E-COMMERCE ROBOTICS Number of acquisitions: up to July 2016 Minimum

Source: Future of Work Community

INVESTMENT IN ARTIFICIAL INTELLIGENCE STARTUPS

GENERAL DATA

2011-2015 397 307

$ 2,388

196 $ 2,177

131 67 $ 282

$ 415

2011

2012

Investment declared, US$ million

$ 757 2013

Acquisitions completed

2014

Maximum Source: CBInsights

2015

Source: CBInsights

25% of work tasks in all industries will be transformed by the advance of robots by 2019.

Source: Forrester

Illustrations: Shutterstock

S T R AT E G Y 34

HYPER

CONNECTED Now that the internet has revolutionized interaction between people, the next era will involve connection between everything.

While the Internet of Things poses challenges in areas such as privacy and data protection, it also opens up a huge range of business opportunities for companies to tap.

J

ust over two decades were enough for the commercial internet to radically transform society and business dynamics.

The information age has intensified and knowledge has become global and fragmented. We are now facing another revolution, involving direct machine-to -machine links and connections between all kinds of objects – such as cars, home appliances and wearable accessories – and the internet. The Internet of Things (IoT), also called the Internet of Everything, is growing at a fast pace. It will generate profound changes while posing challenges for the privacy and protection of collected data.

As more and more objects are connected to the internet, companies can col-

Roberta Prescott lect data that, after being transformed into information and analyzed, will represent an enormous competitive advantage. The auto industry is a leader in the adoption of the IoT. Chips track the functioning of vehicles, showing when maintenance is needed, and they monitor the lifespan of parts. In addition, cars equipped with communication technologies will be able to send data to other cars or sensors installed on streets and traffic lights in order to improve traffic flows and prevent accidents.

The increase in the number of more intelligent, connectable objects is due to the reduction in the cost of sensors, connections and processors. Furthermore, the rapid evolution of technology, which is maturing in ever-shorter cycles, is di-

rectly affecting the way people interact, work and take decisions. As a result, the Internet of Things market is predicted to grow massively.

Cisco estimates that 50 billion objects will be connected to the internet in 2020.

This is a higher figure than Ericsson’s forecast of 28 billion devices connected by 2021, and also exceeds the expectations of consulting firm McKinsey, which believes the IoT will have between 20 billion and 30 billion devices in 2020. In Brazil, a study conducted by the Brazilian Association of Software Companies (Abes), in partnership with consulting firm IDC, estimated that the IoT market will be worth US$4.1 billion in the country in 2016, of which US$37 million will correspond to household devices.

Publicity photo

S T R AT E G Y 36

In the next three to five years, more things than people will be connected.”

Laércio Cosentino, TOTVS CEO

More than a web of interconnected elements, the IoT paves the way for a host of new businesses, while presenting technological challenges, including in the areas of IT architecture, security and network capacity.

IMPACT ON COMPANIES Connections between things and people have transformed the way society interacts, obliging companies to go through a process of reassessing their value propositions, operations, interfaces with consumers, and strategic and economic models, in order to understand the impact that all these changes will have on their everyday routines. “Now that society is connected, every activity,

company, product and solution needs to be revalidated at least, because these connections have changed the way people do things,” says Laércio Cosentino, TOTVS’ CEO. TOTVS is revalidating everything it does and evaluating not just the market’s evaluation, but also future trends.

“In the next three to five years, more things than people will be connected.

Equipment will increasingly replace the role of people in looking for information and transforming it into knowledge and business decisions. This is where the concept of the Internet of Things comes in,” Cosentino says.

In his view, companies that fail to revalidate their businesses and invest in innovation to deal with this new moment will be taken by surprise or they will lose ground to new concepts and new companies. In TOTVS’ case, the company’s main business line is enterprise resource planning systems, but instead of having modules aimed at certain areas, such as tax or HR, it is developing an open business solution platform, making it possible to expand the ecosystem to include Internet of Things components.

In this process, TOTVS’ acquisition of Bematech, a Brazilian company that provides comprehensive automation solutions, is significant. As well as being a leader in software in some sectors, Bematech has vast knowledge of how to transform software into hardware, an essential ability to connect things through sensors. “Knowledge of turning software into hardware and then vice versa is something we didn’t have and we have acquired this,” says Cosentino, commenting on the acquisition. Bematech’s expertise is becoming vital in building the value chain of the Internet of Things, letting TOTVS stand out from its competitors.

MORE ENGAGEMENT Considered one of today’s most profound technological transitions, the Internet of Things is creating unprecedented opportunities for companies. Initial results from research by consulting firm IDC on the Internet of Things (2016 Global IoT Decision Maker Survey) show that the market is starting to migrate from proofs of concept to the implementation of IoT projects incorporating cloud computing, analysis and security resources. Here are some of the survey’s findings:

31.4% of the surveyed organizations have launched IoT solutions, and 43% of them plan to implement systems in the next 12 months.

55% of respondents see IoT as strategic to their business, as it will allow them to compete more effectively.

Although security/privacy and costs (both initial and continuing) are the main concerns for decision makers, the lack of internal competencies is the new biggest concern for organizations that are seeking to implement an Internet of Things solution.

Improving productivity, reducing costs and automating internal processes are seen as the main benefits of Internet of Things solutions. This highlights organizations’ short-term internal and operational focus to the detriment of external benefits for customers.

IDC conducted its survey between July and August 2016. It covered around 4,500 respondents in a wide range of industries in more than 25 countries.

IN FOCUS Three market sectors are notable within TOTVS’ strategy for the Internet of Things: manufacturing, health and retail.

The company has pilot projects for these sectors, aimed at understanding the ease of implementing Internet of Things solutions and their impact. TOTVS wants to go beyond machine-machine links and explore the potential that collected data has to transform businesses.

Understanding which information is valuable for different areas and professionals makes a big difference. “It isn’t enough to have sensors; you also have to know who to pass on the collected data to, who this data will be important to, and how it will transform businesses. It is in this sense that the concept of the IoT opens up a wide array of opportunities,” says TOTVS’ vice president for hardware and micro and small enterprises, Eros Jantsch.

In the health sector, the IoT is expected to spearhead a profound transformation. As the population ages, it makes more sense to monitor patients undergoing preventive treatment than to subsequently pay high costs. Sensors also help doctors monitor patients following surgery or during treatment.

In another sphere, concern for wellness has led thousands of people to use wearable accessories, such as wristbands that monitor their heartbeat and count their steps.

The enormous database that is forming from the collection of this data may be useful for studies and analyses of the side effects of medications.

Retailers can manage their supply chain and capture data in an automated

way, making them more efficient. Sensors installed in physical stores are mapping customer flows, showing things like how many people visit the stores, at what times, the gender balance, and how they move around different aisles.

By treating data collected in stores with analytical intelligence, it is possible to identify customers’ shopping behavior, among other applications. Identi-

needs to be inputted into transactional systems and analyzed using Big Data, analytics and artificial intelligence solutions. In this way, the data will be able to generate business insights and managers will be able to get a better understanding of their operations, helping them take decisions and plan more assertively.

CHALLENGES FOR THE IOT Connected devices (billion) 25

20 15

10 5 0 2015

2017

2019

2021

15 billion

28 billion

M2M ( Machine2Machine): non-cellular

2.6

10.7

M2M and consumer electronics; cellular

0.4

1.5

Consumer electronics; non-cellular

1.6

3.1

PCs/laptops/tablets

2.4

2.8

Mobile phones

7.1

8.7

Fixed phones

1.3

1.4

Source: Ericsson

2015

2021

fying spatial patterns is of great value in planning sales, configuring store layouts and personalizing the shopping experience, providing different digital marketing opportunities in stores.

However, for the world of the IoT to make sense, all the collected data

The ecosystem of the Internet of Things is complex, involving a series of components, such as semiconductors, software, gateways and hardware. Objects equipped with sensors or inputs for capturing or generating data, provided with network connectivity, normally wireless, send the data they collect to a repository.

“No company is yet delivering a complete IoT solution,” says Jantsch, noting that the concept of IoT is still very new. By gaining Bematech’s knowhow, TOTVS is now able to develop comprehensive end-to-end solutions to meet demands arising from the IoT, and it is in the process of adding a large number of technologies.

The evolution of the IoT is under way, but there are challenges to be overcome. The lack of architectural and protocol standards could prevent further expansion of its use, by imposing higher costs on the system. In addition, there is a lot of discussion about the security, privacy and protection of collected data.

Nevertheless, all the signs indicate that there is no going back from the Internet of Things, and it is only just starting to show its potential to (further) transform society and companies.

NEW DEVELOPMENTS 38

SILENT REVOLUTION Still in the initial phase of development, blockchain permits the decentralized registration and filing of assets, and this technology is driving the transformation of many industries.

Roberta Prescott

R

ecord players demanded a routine.

People had to go in person to stores to buy vinyl records, which in the beginning contained few songs. It was also customary to leave records displayed on living room shelves, as if they were a music library.

Over time, records gave way to other kinds of media. Cassette tapes were launched, allowing people to make homemade compilations of their favorite songs. Little by little, as technology developed, the music industry gave up analog, mechanical recording, and joined the digital world.

Compact discs ruled the roost until the spread of file-sharing internet services, led by Napster, definitively shifted the parameters of digital music.

Since then, the music industry has gone through a profound transformation. There are still major challenges to overcome, such as adequately remunerating authors, from independent

artists to large recording companies. Tracking copyrights and enabling royalties to be distributed rapidly and efficiently to their proper owners is the aim of Israeli startup Revelator.

Founded in 2013 by Bruno Guez, who continues to be its CEO, the company is working to facilitate and speed up the payment of royalties for songs and other kinds of audio products, such as audiobooks. “Broadcasters need to track their assets within podcasts to be able to know how much they have to pay to the copyright owners when their podcasts are distributed or downloaded,�

Guez explains.

Revelator’s target audience is composed of companies in the music and media industries, especially those responsible for content production. The startup is betting that the fast identification of copyrights will release micropayments to the respective owners, slashing the waiting time for payment.

Montage of Shutterstock illustrations

Photo: Personal archive

Revelator (www.revelator.com), founded by Bruno Guez (to the right), is based on blockchain technology.

FOUNDATION FOR INNOVATION Revelator’s business is underpinned by blockchain, which means decentralized peer-to-peer networks based on the concept of distributed ledgers.

(Read more in the box below.) The concept became world famous thanks to virtual currency bitcoin, which was enabled by the advent of an online payment system based on open source code, independent from any central authority. Because it is a distributed transaction database, its users manage the system without the need for an intermediary.

Chris Skinner, a specialist in the finance industry and the author of many books, draws a parallel with Microsoft’s and Google’s word processing programs to explain the collaborative potential of blockchain.

“Using a blockchain, you create a database that everyone can use and share in a reliable way. It’s just like editing documents in Google Docs and Word,” he says. This is what Revelator does. “We allow people to manage their asset catalogs and information on their copyrights. We register the copyrights in a blockchain system,” the startup’s CEO says.

As part of his long-term vision, Guez believes that the real benefits will come when all copyright information is stored in blockchain. One key component, allowing information to be shared, is the connection of different systems through application programming interfaces (APIs). “There are many projects under way. When the metadata encompassing copyright information is more accessible to the public, it will be easy to understand who needs to be paid,” he says, adding that at the moment, there are delays in updating information on the owners of different assets.

Despite having appeared in 2009 together with bitcoin, the concept of using blockchain technology for other purposes only gained impetus more recently, attracting entrepreneurs and investors. In the

last two years, companies such as Revelator have been established to put the viability of blockchain to the test. One of the most affected industries, finance, has responded to the advent of this technology by forming a consortium, called R3, dedicated to learning how banks can make the most of blockchain. (See the box.)

Another example is Blockchain Foundry, created in order to provide solutions to end users using blockchain. The company’s first product, called Blockmarket, is a web-based e-commerce platform that lets online retailers, entrepreneurs and individual vendors create and access marketplaces hosted on the Syscoin network. Syscoin is a cryptocurrency (like bitcoin) that allows companies and individuals to sell goods, assets, digital certificates and data in a secure manner. Blockchain Foundry’s CEO, Dan Wasyluk, expects that the platform will facilitate the way people set up virtual environments to sell products, cutting costs for vendors while improving the online shopping experience.

ABOUT THE CONCEPT Blockchain can be defined as a decentralized peer-to-peer network based on the concept of distributed ledgers. The model’s main advantage is that peers themselves hold the ledgers, and for the whole system to work, there needs to be a synchronization protocol to update it every time an item of data is inserted.

It is believed that blockchain will generate a rupture in the model for moving assets, making it much easier and cheaper, given that intermediaries or authorities will not be needed to control the system. Instead of transactions being recorded in one or several central units that confer trust and security, transactions proposed by agents are validated by the other agents in order to guarantee their legitimacy.

To ensure security and legitimacy, the system has entities called miners, which are responsible for updating the blockchain, validating and executing transactions, and adding new blocks to the network. Miners act like blockchain librarians.

NEW DEVELOPMENTS 40

We believe that blockchain technology will transform the way we manage assets.”

START OF THE JOURNEY

Estonia and the Bitnation project already use blockchain to issue documents, official records and virtual identities.

Blockchain is a revolutionary way to register and file assets, but it is still at a very early stage.

“We are merely seeing the tip of the iceberg,” says Wasyluk. In his view, sooner or later, blockchain will impact everyone, and the technology will help some sectors develop solutions capable of radically changing the market’s shape. “In the United States – and I believe this applies to other countries as well – we have a centralized system of electronic medical records that one company is responsible for. Using a blockchain, these records could be decentralized, and only patients and doctors would have access to the data,” he says.

In line with this same philosophy, the real estate market could also benefit by managing records in a decentralized way. Using blockchain, a platform could be created to allow all players in the system to supply a single repository with information on all properties available to sell or rent. “We believe that blockchain technology will transform

the way we manage assets,” says Vicente Goetten, the executive director of TOTVS Labs. “If properties were recorded as assets within a blockchain, we could check whether or not a person owns a certain property and we could authorize or reject a payment transfer, for example.”

Among governments, Estonia’s is very advanced when it comes to digital citizenship initiatives. Besides providing notary services for its citizens, the country has implemented an e-Residency project, which offers people throughout the world a virtual identity issued by the government, allowing them to use services, sign documents and verify identities. Going even further, the Bitnation project uses blockchain technology to issue virtual identity documents, enabling citizens to record marriages, birth certificates, business agreements and other things, regardless of where they live or do business.

In order to be more widely adopted, blockchain needs to gain the confidence of the markets, starting with bitcoin’s own expansion. “Because bitcoin is a currency that is not supervised by any government, people feel confused and there are some usability problems. For example, you cannot use it to buy things on eBay, as it is not accepted. So, people use bitcoin more to transfer money internationally,” says Blockchain Foundry’s CEO, Dan Wasyluk.

In an article, Cezar Taurion, the CEO of Litteris Consulting and ThinPost, and the author of six books on IT, said that blockchain technology is in the process of creating ecosystems, and many unconnected initiatives are arising, without any genuinely mature applications operating fully.

“It will take some time for the first applications to leave the field of experimentation and grow strong in the market,” he wrote. “The technology is ready, but we do not yet have a killer app, of

Publicity photos

Vicente Goetten, director of TOTVS Labs

Virtual currency Bitcoin is taking its first steps and beginning to reshape the financial markets.

THE BANKS’ STRATEGY Looking at blockchain’s potential and the revolution already caused by bitcoin, the world’s largest financial institutions are evaluating how to develop solutions based on this new technology. Not wanting to be left behind, they established R3, a financial technology company that is working with them to understand how they can take advantage of blockchain. The R3 consortium now has slightly fewer than 70 member banks across the world, including Itaú Unibanco and Bradesco in Brazil.

Charley Cooper, R3’s director, says he expects to have a mature platform, ready to present to clients, before the end of 2017, and the consortium may launch some initiatives commercially by then. “These products will be at an early stage, and we will continue to develop them over time. I expect to see a series of commercial products launched by R3 and other companies in the next 18 months,” he states.

Bank customers are unlikely to notice prominent impacts.

Making an analogy with the development of the internet, which was improved without users necessarily knowing what was being done technically to increase connection speeds and reduce delays, Cooper explains that bank customers will perceive enhancements in their interactions with banks, and blockchain will lie behind these improvements.

One of the challenges for the concept of blockchain’s unmediated network transactions is regulation. Because of blockchain, institutions such as interbank payment clearing houses and central banks will lose their role in authorizing transactions. R3 says it is

the kind that will lead blockchain to be adopted exponentially once it appears,” says TOTVS Labs’ Vicente Goetten.

TOTVS Labs is evaluating the possibility of using blockchain concepts for artificial intelligence. To this end, it is developing a platform to solve three key problems that clients currently face: poor quality of data, difficulty in accessing data, and failure to understand data. “We have experimented with blockchain concepts, especially involving distributed processing and the decentralization of the application,” Goetten explains.

There are great expectations regarding the tech-

doing joint work to reach consensus on regulation. The company has spoken to around 100 regulatory institutions across the world to find out to what extent they feel comfortable regarding the use of this technology.

“In an industry as strictly regulated as finance, we will have problems if the regulators are not interested from the beginning and if they think this technology is not being implemented as it ought to be,” says Cooper. One of the regulators’ biggest concerns is the use of blockchain-based virtual currency to launder money.

nology’s wider adoption. The World Economic Forum has published a report stating that blockchain will play a central role in the global financial system. According to the organization, more than US$1.4 billion of venture capital has been invested in blockchain in the last three years. However, the forum argues that this distributed registration technology is not a “panacea” and it ought to be seen as one of many technologies that will form the basis for the next generation of financial service infrastructure. Despite the challenges and long path ahead, blockchain is set to unleash a major revolution in the way many industries work.

COMPETITIVENESS 42

The world is now linked through digital platforms. Everyone will be impacted by this, directly or indirectly.

Ricardo Cappra

T

he stories that reach the evening TV news and the next morning’s newspapers are already old on the internet, as everything is now live.

An ever more connected society, thirsty for real-time information, expects organizations – both private and public – to keep up with problems as they appear, but the organizational models were not built on this premise, so everything needs to be reinvented. An abrupt change of mindset is necessary. New competitors that are constructing their models based on technology and a strong analytical culture are standing out.

So, to reinvent itself, an organization has no choice but to select a digital path. A society completely sustained by information will be increasingly critical and analytical in its choices. It will always make choices while looking at the data. This means that an organization not guided by data will be going against reality and the needs of its stakeholders.

The information age has reached everything and everyone, and organizations that still do not understand this are being rapidly overtaken and even wiped out. Old models require new habits.

This is not a technological change, but a worldwide social transformation, as everybody consumes information and generates new data. The exponential growth of this data has led to a concept called Big Data, which in the technology area is closely related to storing, processing and treating the current volume, speed and variety of

available data. Big Data can be very powerful; after all, given the vast quantity of unstructured data, it is natural for amazing, unconventional discoveries to be made. However, it has been necessary to establish a specific discipline to transform this data into high-quality information.

Thus, data science arose. The result of the natural evolution of the analytical culture in society, data science is a field of knowledge that blends information science, information technology, systems analysis, and also exact sciences such as mathematics and statistics. In many countries, people are now discussing the exact role of “data scientists,” but the fact is that these professionals are already present in many kinds of organizations, helping transform unstructured data into high-quality, usable information. These professionals allow organizations to be more competitive by improving their information management.

(See the diagram to the right.)

The world’s biggest companies are those that control the most and best information. Google, Amazon, Apple, Facebook, and Uber, among many others, already control global transport systems, they are the largest media outlets, they have more information about society than could have been imagined possible, and they have access to end users, without necessarily going through “traditional models.” All this leads us to believe that refined information, resulting from data that has been collected, classified, organized and transformed for use, is an inexorable source of power. Faced with this endless uni-

FreeImages.com/Katia Grimmer-Laversanne

THE POWER OF

DATA SCIENCE

VIRTUOUS TRACKING The path taken to turn unstructured data into high-quality information is a virtuous cycle that all companies ought to follow.

DATA TECH

BEHAVIORAL TRACES

BETTER STRATEGIC DECISIONS & INSIGHTS

BUSINESS ANALYSIS

DATA

DECIDING FRAMEWORK

I0I 0I0

SCIENCE

ANALYTICAL INTELLIGENCE

DATA SCIENCE

BUSINESS HACKING

DATA PROCESSING AND TREATMENT

TRANSFORMATION

DECODED SOCIAL BEHAVIOR INFORMATION INFORMATION SCIENCE

verse of information production, storage and processing, it is worth observing how people individually generate data.

MONITORING OF HUMAN BEHAVIOR All the time, all people, in all parts of the world, are generating data, meaning records of habits, preferences, feelings, purchases, and everything else. This data is generated by all the technological devices we use in our everyday lives, in our homes and spread across our cities, from digital TVs and fridges to air quality monitoring equipment. Every day, new apps appear to help us solve problems, but when we access them, we provide some more data about ourselves. Data

on behavior, when treated appropriately, can become strategic information that helps companies create more effective products, marketing and solutions for end users, but obviously it can also help solve big social problems. Imagine anticipating a terrorist attack based on the behavior of people involved in past incidents, or predicting the risk of a serious disease spreading based on the habits of people who acted as vectors in the propagation of endemics in previously affected regions. Yes, the use of data regarding behavior can benefit everyone, and it can help companies sell more products, but it can also help solve major social issues, not only on a local level, but worldwide.

COMPETITIVENESS 44

Culture of analysis: In the control rooms, records of behaviors can be monitored constantly.

In tackling the numerous challenges that society now faces, it is common for scientists to get together to look for solutions to different problems. This applies to data scientists, who can help people and companies find logical responses to complex problems by constructing information systems. I am not only referring to software, but also the obtaining of answers from measurable and tangible elements that are present in analytical models and formulas. We call this “hacking decision making,” meaning finding systemic and scientific ways to answer important questions.

When we look at behavior-related data, there are numerous possibilities, given that the ultimate goal of all businesses and causes ought to be to solve the problems of customers or end users.

When you can capture traces and records of human behavior and transform them into information for ready consumption, this should aid all kinds of decisions. After all, if you have better information, you will consequently have better opportunities for decision making.

Information science is fundamental in this transformation, as it is necessary to have the best actionable information, meaning information that quickly answers strategic questions and effective helps when decisions are being made.

Management models have covered the desks of

executives with reports based on pre-established processes, and the majority of large companies have adopted these models, so this is no longer a competitive advantage.

BUSINESS CUSTOMIZATION I will give some examples to illustrate how it is possible to construct business strategies.

Imagine that you have a certain route to distribute your products, which was designed to cut costs and thereby enable them to be distributed to and accessed by more people. You know that the transportation method requires a type of packaging that permits mass movements, but what if this were not a premise shared by everyone? What if some customers were willing to pay more to receive the product in a “customized” form? If you record your target audience’s preferred characteristics, monitor their habits and investigate their preferences, you can create a new business strategy for a type of special delivery aimed at a group of customers willing to pay more to receive the product in a different way. This information on this group could come from many different sources, such as field research, internet data, online surveys, or social network posts. When processed in line with an analytical model, you can make this kind of discovery and then take the decision to construct a

Photos: Personal archive

HACKING DECISION MAKING

new business strategy. Obviously, it is crucial to continually measure this strategy’s effectiveness.

After adopting an analytical culture, this becomes a practice.

As in the previous example, which involved enhancing a business strategy, the same thing can happen to products. Your company offers product “X,” but one of your customers has the habit of always consuming it together with product “Y,” which you do not offer. This associated consumption enables you to create a new line of products or look for an association with partners in order to deliver the option of an “X plus Y” product basket. To discover these kinds of preferences and characteristics, broken down by regions, groups of people, or even individually, there is nothing better than real data on the profile of your customers. In addition to records of behavior available in public spaces on the internet, this data can often be found on your own website and e-commerce platform. If you look at search engine records on your website and monitor them constantly, a lot of this data could be fed into your analytical model to support decisions concerning new product launches.

THE GROWTH OF ANALYTICAL CULTURE Irrespective of your business, sector and product, at this exact moment there is someone talking about it somewhere. Digital platforms are now people’s main way of interacting and communicating. This obviously means they are the place where they exchange information on everything: products, shopping, preferences, and problems. Likewise, no matter what region, sector or social class your product is aimed at, somewhere on the internet, at this exact moment, there is a new record of your target audience, and when this record is transformed into information, it can help translate your consumers’ preferences. Again, whenever you have better information, you will also take more appropriate decisions.

Finally, it is possible for crisis management to be improved. Crises are usually generated by people who in some way tried to solve a prob-

lem they were facing, but did not find a suitable channel to talk about it, or who did not receive the attention they considered necessary from another party. Conversations reach a peak of dissatisfaction in one of the parties. Instead of this opinion remaining between two people in a conversation, today this spreads across all public spaces in which people express themselves, boosted especially by the internet. This is not in itself a form of attack, but merely a form of expression. As it is possible to monitor everything that happens within the digital world, the best approach is to anticipate or even eliminate a possible crisis. Records of behavior are available, and we just have to turn this into readily accessible information so as to permit a rapid response.

Decisions, even individual ones, are leveraged through collective intelligence. For this reason, an analytical culture is fundamental in corporate environments. Isolated decision making is extremely harmful. As well as individualizing the process, it also individualizes knowledge and intelligence. Many companies are adopting internal dashboards to democratize access to strategic information. This is a way for different decision makers to simultaneously receive stimuli, thereby eliminating “personal filters,” which tend to generate a distorted view of facts. The more integrated the decision-making process is, the greater the company’s collective intelligence will be, and this will result in monitored actions and better decisions.

In a recent survey we carried out in 2016, comparing conversations on Big Data in Brazil and the United States, we found that in the latter country, CIOs emphasize that this is the third best investment for their companies, behind only security and cloud computing. In Brazil, the main subjects are cases and examples of how Big Data is used in other countries and companies. We therefore believe that data science is likely to become increasingly relevant in Brazil and across the world, and that it will be a surefire way to align technology and innovation.

*Ri *Ricardo R car ardo ar do o Cappra Cap a pra ap a iss a d data ata sc scientist cien e tis en tistt who who spe specializes pe ecia cializ l es liz e in n business b ine bus ess analytics. chief ana n lyt lytics ics. ics cs. He He is is the the e chi h ef e scientist sci c ent e ist att Cappra Caappr pp a Data Data ta Science Data Scc enc Sci e e and and n Big Da ata Mission Mi sio Mis sion n Control’s Cont ntrol rol’s rol ’ss laboratory. lab ab bora orator t y. tor y The e cl cclients ien e ts he en hass wo worked include w rke ked ke d for for o inc ncclud ude e tthe he United United e States State St ate tess government, gove ernm rnment e , ent Coca-Cola, Whirlpool, the Coccaa-C Cola la,, Whir W h lpo hir lp ol ol, th he World Wo ld Bank, Wor Ban nk, k Rede Red e e Globo, Glob bo, o, and Itaú. an Ba Banco n It nco taú aú. ú

IN FOCUS 46

STARTUP

SPIRIT

Following examples of new economy companies, TOTVS is digitally transforming itself and applying to its own structure a new way of doing business and interacting with the market Roberta Prescott

The design of TOTVS’ new website is appropriate for any type of platform. “100% of TOTVS’ portfolio will be sold on the internet,” says Flávio Balestrin, VP of marketing, HR and channels.

C

A few years ago, it might have seemed inconceivable to buy an enterprise resource planning system directly on the internet and then download complementary apps to personalize it and adapt it to meet the needs of each industry or service. However, it was precisely this path that TOTVS decided to take in order to become leaner and more productive, with simple, effective processes. This project, which was created around two years ago, follows a management vision aligned with the new market economy, in which Uber and Airbnb are the leading influencers for a disruptive business model that features no intermediation and very fast growth.

Consequently, TOTVS has radically transformed its way of selling products and interacting with prospects and clients. Demand generation and TOTVS’ entire portfolio will also be available for

100% online procurement, in an automated manner, under the software-as-aservice model and in the cloud, and personalization will take place via apps.

TOTVS’ online store will sell its portfolio of systems through a subscription model. Some products will be sold as a service, while others will be implemented in clients’ infrastructure. “The whole of TOTVS’ portfolio will steadily become available online to clients that wish to get to know them in depth and sign up for all our products and packages of online services. Clients increasingly want convenience, low prices and a fast return on investment. As a result, these days they often opt for a standardized solution to obtain them,” says Flávio Balestrin, the company’s vice president of marketing, HR and channels.

To complement its offerings, TOTVS will dive even deeper into digital transformation. As of 2017, the company will open

IN FOCUS 48

TOTVS challenges itself all the time, always thinking of today, forever and what lies ahead. We had to change to become more agile, simpler and more essential to our clients’ lives.”

Flávio Balestrin, VP of Marketing, HR and Channels

Foto: Leandro Fonseca

application programming interfaces (APIs) for internal developers and franchisees, and then, through an app developer program, for all people interested in managing solutions for corporate, customer and market portfolios. The aim is to enable them to produce applications to personalize their enterprise resource planning system, meeting specific niche needs, such as for point-of-sale interfaces for gas stations. “Our system is the standard platform, and clients can search for and download specific apps to automatically add functionalities to boost their business,” explains Balestrin.

Accordingly, TOTVS is creating an app library containing many tools to personalize ERP packages. “Clients can download an app that automatically installs itself and talks with the server to add personalized screens and fields,” he says.

Besides following the principles of business models that have arisen with the new economy, selling through the website also meets another desire. A shift in the way companies buy software is under way. “Traditionally it was a very expensive and complex product, bought by company CEOs and IT areas. Services are increasingly fragmented and, due to the speed of innovation and falling price of solutions, IT teams do not necessarily participate in the purchase of all software programs. There is greater empowerment to take decisions readily throughout clients’ chains,” says Paulo Loeb, the founder and director of F.Biz, an agency responsible for part of the Digital TOTVS project.

A LARGE STARTUP None of this would have been possible without an internal change at TOTVS, given that the digital world poses different challenges, to which it was not accus-

tomed. New economy companies are faster, they have a different evolution process, and they launch products in shorter time intervals. “TOTVS challenges itself all the time, always thinking of today, forever and what lies ahead. We had to change to become more agile, simpler and more essential to our clients’ lives,” says Flávio Balestrin.

Two major trends – the creative economy, with products and services that simply debut, and the capacity to generate business on a larger scale – drove TOTVS to establish a work dynamic that is much more sensitive to end consumers, more agile and less obstacle strewn. “TOTVS is one of Brazil’s largest companies, but it has the spirit of a startup. So, on the one hand, it is a company with resources, a vision and the ability to do many things, and on the other hand, it is nimble. The processes are there, but they do not necessarily limit our action. It’s a large startup,” sums up F.Biz’s Paulo Loeb.

The TOTVS and F.biz teams have been working together to create the new e-commerce system for software purchases on the internet. “TOTVS wanted the user experience to be fast and smooth. The conversion funnel would have to be very well implemented, featuring well-defined relationship rules. Using content to attract people interested in TOTVS in a personalized manner has served as a backdrop for the project,” Loeb explains. The project’s principles were not just experimentation, but also customization of solutions, in line with the needs of different individuals.

When it became clear to TOTVS that it would have to look at clients’ journeys as a whole, rather than specific areas or sectors, the result was a radical turnaround and a reversal of the existing logic, which until then split clients up by industry.

ICON OF TRANSFORMATION The company’s entire digital presence strategy was impacted, and the new website, which debuts this year, is the biggest icon of this change. Based on the mobile first concept, the website has a modern look and it incorporates new technologies that make it possible to identify whoever accesses it. It is aimed at the provision of services and delivery of customized content. Through analysis tools, such as artificial intelligence and machine learning, the website knows who is navigating on it, and it establishes individualized contact. Among other possibilities, users can reconfigure the homepage in accordance with their preferences or they can let the website do this automatically for them.

The new website will give clients and TOTVS employees access to a restricted area, containing personalized services and content that match their profile and needs. This individualization takes place through user choices, but also through artificial intelligence, which identifies people’s navigation patterns and interests, and crosschecks data with the social networks and public profiles of people and companies. For example, the customer service area on the website has a “satisfaction index” radar, and through machine learning it can calculate the critical mood level of clients and generate tasks for account managers.

Thus, TOTVS is confident it will improve its client relationship management. “The project involves the creation of a cockpit for each client, which will be managed by a TOTVS professional called a copilot, to track the way clients are using the software and pro-

actively recommend ways to improve solutions and, if there are opportunities, to offer packages they have not acquired,” says Flávio Balestrin.

The new digital strategy does not alter the current distribution models. On the contrary, it complements and leverages them. For example, franchises will generate more demand via digital means and they will also spend ever more time on enhancing the loyalty of clients, showing them ways to intensify their use of solutions to become more productive and competitive in their sectors.

“The website and its restricted area will offer personalized packages of services and special conditions to let clients implement new functionalities and solution modules. There will always be a TOTVS unit physically nearby, either in-house or franchised, to liaise and execute these services,” explains Balestrin. “Our clients value the close presence provided by our channels. This is part of our model and DNA.” TOTVS recognizes that evolving and digitalizing internal, commercial and relationships processes is not easy, and demands technical and business knowledge. It also requires transforming the internal culture and a lot of training. However, these challenges are worth overcoming when one starts to reap the rewards of efficiency, results and customer satisfaction. “Our challenge was how to do this first inhouse, and then offer it to the market, helping small and medium enterprises also harness digital transformation,” says Balestrin.

SOLUTIONS 50

BEMACASH:

THE COMPLETE SOLUTION FOR POINTS OF SALE TOTVS tool integrates card machines with management software to boost small businesses.

Carlos Vasconcelos

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rancisco Silva Lima and his business partners, Henry Wall and Israel Lopes, opened their first food truck, called Crepe Voyage, in January 2015, in Brasília. Six months before, the trio had launched their business with a crepe stand, but their operation was now starting to become more complex. Lima remembers the first event they worked at. “We were prepared to sell around 40 crepes a day, but right at the beginning we sold 300,” he says.

This success led Crepe Voyage to expand six months later, by purchasing a second truck. However, the higher the sales, the more complex the company’s management and operations became. “We had a system that froze when it reached high volumes,” says Lima. “And there were always very big cash discrepancies at the end of the day.” Crepe Voyage then researched the solutions available on the market and found TOTVS’ Bemacash product.

Lima explains that as well as being an efficient payment solution, the Bemacash system is an excellent management tool for a small business. “The cashier balancing is perfect, and you can also manage stocks and track other processes,” he explains.

The productivity gains extend from cash management to the grills where the food truck staff prepare the crepes.

“I researched the solutions available on the market, and Bemacash offered the best cost-benefit relationship.”

Fábio Rosochansky, partner in baby clothing store Letiti

FLY 01: SOFTWARE SO FOR THOSE WHO WANT TO FLY HIGH The Bemacash solution is not the only weapon in TOTVS’ arsenal for small companies. Another of the company’s trump cards is its Fly01 system, designed for businesses with annual revenue of up to R$4.5 million. Subscribers to this software have access to a 100% mobile solution, compatible with tablets, smartphones, laptops and desktops, at a very accessible price. h, small The program now has versions for the retail, beauty and esthetics, health, manufacturing, and distribution sectors, among others. “Just visit our app store and ware in line add a new function,” says Eros Jantsch. Clients can customize the software with their needs, adding functionalities as their business evolves.

FASTER PROCESS “Before, the process between the placing of customer orders and communication with the cooks was not immediate.

We wasted time on this and the products took more time to get ready,” says Lima. As time is money, this represented a loss of revenue on busy days. Once again, Bemacash solved the problem.

Eros Jantsch, TOTVS’ vice president for micro and small enterprises, emphasizes the solution’s speed. “Using the Bemacash tool, you can take an order in just seven seconds,” he says.

As a result, Crepe Voyage was able to cut the waiting time for each customer by between one and two minutes, making the production line faster. “This makes an enormous difference at the end of a work day,” says Lima. “Today, I honestly couldn’t live without this system.”

People who experience the efficiency provided by digital tools never go back.

The smaller a company’s structure is, the more useful and transformative technology can be. This is especially true for small entrepreneurs, who often sell products, do the cashier balancing, pay employees, negotiate with suppliers, manage the inventory, and calculate the taxes to pay.

Fábio Rosochansky, a partner in baby clothing store Letiti, has nothing but praise for TOTVS’ tool. “It is innovative, practical, and attractive. It is small and easy to operate, thanks to its user-friendly interface,” he says.

At first, Letiti worked exclusively on an online platform. When it migrated to physical retail, it needed to find a store management tool and a solution for point-of-sale payments. “We started with a computer system, but I didn’t like it. So, I researched the solutions available on the market and I came to the conclusion that Bemacash offered the best cost-benefit relationship,” says Rosochansky.

He believes the tool will be fundamental to his company’s expansion under a franchise model. By the end of the year, Letiti will open three new stores, including one franchise store, outside São Paulo. One of the biggest advantages of Bemacash mentioned by Rosochansky is that it is 100% compliant with federal, state and municipal government tax rules in all regions of Brazil. “This makes it easier to issue tax invoices and keeps the company up to date with its tax obligations,” he explains.

SOLUÇÕES 52

Using Bemacash, you can take an order in just seven seconds.”

Eros Jantsch, TOTVS’ vice president for micro and small enterprises

At the end of the day, the program makes it possible to manage the most important information on company operations. “Without information, there’s no business,” says Rosochansky. And Bemacash has been a great help. “Inventory, sales, per-customer sales – you have all the figures needed to take the best business decisions.”

ACCESS TO DIGITAL TOOLS However, not all small enterprises have digital tools to assist with their administration. TOTVS’ Eros Jantsch notes that the only technology present in the majority of small companies is a debit and credit card payment terminal.

According to Jantsch, just 35% of micro, small and medium enterprises have some kind of management tool.

“We are talking of a group of 3 million small establishments in Brazil that could benefit from a solution like Bemacash,” he says. “They include small neighborhood supermarkets, stationery stores, groceries, bars, restaurants, clothing stores, and so on – in other words, all types of businesses.”

In practice, Bemacash is a complete point-of-sale solution for small business

people. As well as being a point-of-sale device, based on Bematech’s high-quality hardware, and compatible with leading card operators, it also incorporates TOTVS’ Fly01 management system.

“Our aim is to offer a complete solution, integrated and 100% mobile,” says Jantsch. The management software is hosted in the cloud. As a result, entrepreneurs can monitor their company’s numbers any time, anywhere, using a tablet, smartphone, laptop or desktop.

You only need an internet connection.

It is also simple to install. A TOTVS reseller takes a box containing the equipment to your company, and after just one phone call, you can start to use the tool.

When a company acquires this product, it also gains a storage space in the cloud, in line with the kind of subscription. This makes data more secure, as

business owners do not lose managerial information, even in the event of a robbery or accident. “If something bad happens, the company can resume operating quickly,” says Jantsch.

The Bemacash solution is also versatile and suits different types of businesses. The tool is offered in four versions: general retail, bars and restaurants, food trucks, and clothing stores. “Each kind of operation has different needs,” Jantsch explains. “An IT store is very different from a bar or clothing store.”

In turn, the cloud-based software model reduces the need for local data storage, which would be a limitation for people accessing the program from mobile devices, with lower memory capacity. It also allows TOTVS to offer Bemacash for a highly competitive price, without the need for a large initial investment.

LOWER COSTS In the past, small businesses would invest up to R$3,000 in hardware plus R$150 per month for management software. In general, business people had little or no knowledge of technology. So, they would consult their accountant – an important figure among small enterprises – to find out which software to use.

They would then negotiate with the software company. After this, they would look for the necessary operating equipment in stores, and they would have to select from between different brands, but without knowing enough to make the best choice. When their system finally started running, the business people would pray for no problems to occur. One defect could bring everything to a standstill and require further investment if the equipment was no longer under warranty.

It was also necessary to manage relationships with several suppliers.

An integrated solution avoids these kinds of headaches, especially if it is competitively priced. d. “We We have eliminated the initial inin vestment ent and developed a product that small business people can afford,” summaantsch. “Now, for as little as R$10 per er rizes Jantsch. hey can use a much more versatile and an day, they efficient nt tool, which can enhance their comco veness.” It is a seemingly modest st step, petitiveness.” fo but it may represent a big leap for small entrepreneurs.

IMPROVING CUSTOMER LOYALTY: THE NEXT STEP IN THE DIGITAL REVOLUTION The take-up of digital technologies by small enterprises in Brazil is still low. Whether for lack of resources or lack of information, most do not use the available tools to improve their management and competitiveness. “However, this investment is rewarded by enhanced quality of management and processes,” says Eros Jantsch, TOTVS’ vice president for micro and small enterprises.

More than a matter of choice, the use of technology has become a survival factor for small entrepreneurs. “The first phase is awareness raising, when business people discover the benefits of investment in technology,” says Jantsch. “This is already fully established in more mature markets such as the United States.”

After this phase, companies should invest in what is called omnichannel retailing.

This means having a presence in multiple channels and providing a consistent experience for customers, letting them access the company’s products or services whenever and wherever they want. This happens because the digital revolution and mobile connections have completely changed customers’ attitudes. They have become more demanding, and they are not willing to give up the convenience provided by digital means.

According to Jantsch, the next step is to use digital tools to improve customer loyalty. This entails identifying the most profitable consumers and concentrating efforts on maintaining them, based on information generated by digital management solutions. “This applies not only to retail, but to companies in all sectors,” he says.

By lowering costs, technology can help small entrepreneurs face more competitive circumstances, as it reduces the inequalities in relation to large companies. Accordingly, it is possible to be more agile in exploiting market niches and developing new business models. And all this can start with a small box of solutions.

SUCCESS STORIES 54

DIGITALIZATION How AES Brasil and the Costa do Sauípe hotel complex improved their productivity by using TOTVS solutions Carlos Vasconcelos

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the digitalization of business is an inevitable process and companies’ transition to this new situation is a long journey that is made step by step.

Each measure adopted represents an improvement in productivity that brings a company closer to the future. This is the case of AES Brasil, which has been present in the Brazilian power generation and distribution market for 19 years.

The group, which serves 24 million consumers, found TOTVS’ solutions to be perfect for managing its 65 lawyers and the

STEP BY STEP more than 400 partner law firms of its legal department.

In the past, this structure did not have a database to track the daily flow of lawsuits involving the group’s companies. To monitor pending lawsuits, for example, AES Brasil relied on external law firms. The most important ones were handled by in-house professionals, and this required detailed and time-consuming analyses to avoid the possibility of failures that could cost millions. Other lawsuits were administered manually, giving rise to the risk of missed deadlines or other human failures.

FROM THE ARCHAIC TO THE MODERN Technology has radically changed this situation. “Our system was archaic; we used Excel spreadsheets to track lawsuits,” says Fábio Vilares, AES Brasil’s legal coordinator. Now, he can find out in real time the stage of any lawsuit involving the group in the country. “By immediately receiving all this information, we can take strategic decisions more quickly and with greater precision.”

AES Brasil’s legal department also needed a tool to help it deal with the large volume of documents related to lawsuits. To give you an idea of the size of this challenge, the group’s backlog of closed lawsuits contains around 70,000 documents.

As a result, the group acquired TOTVS’ Enterprise Content Management (ECM) tool, which digitally files all lawsuit-related documents. This solution facilitates the management of internal and external users’ files, and displays content in a practical, easy manner.

The mobility of TOTVS’ systems is another attraction, in Vilares’ opinion. “We can access data from a tablet or smartphone, any time and anywhere. Life is therefore much easier,” he says. “Now that we have all the numbers to hand and TOTVS’ support, we are sure we will grow a lot more.”

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Legal management: ECM tool is user friendly and practical.

By immediately receiving all this information, we can take strategic decisions more quickly and with greater precision.”

Fabio Vilares, AES Brasil’s legal coordinator

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CASES DE SUCESSO 56

The Costa do Sauípe hotel complex in Bahia invested in TOTVS CMNet technology to improve its profitability. In 2015, the company created a revenue management area and started to use this TOTVS tool to efficiently administer its points of sales through an external channel manager. As a result, the complex’s online sales via its website grew 300%.

This solution allows revenue managers to have immediate access to past and future sales indicators. One of the most important indices for the hotel industry is “booking pace,” which means the difference between reservation date and check-in. For internet sales, the average gap is 45 days, while for sale handled by travel agencies, it is 90 days.

With this data to hand, Costa do Sauípe can make special offers at the right time. If the aim is to increase the occupancy rate in November, for example, it can launch a campaign

at travel agencies in August. Thus, promotional actions have become much more successful, helping raise the business’ occupancy rate.

1 MILLION GUESTS In 2015, Costa do Sauípe’s five hotels and five bed and breakfasts received 1 million guests and maintained average occupancy of 56% despite Brazil’s economic crisis. Last year, revenue expanded at a projected rate of 18%.

The complex also uses technology to help manage its large volume of customers. Its front office platform integrates a real-time sales channel manager. Accordingly, sales at travel agencies, on the company’s own website and on hotel booking websites are immediately recorded in the system, blocking off rooms for the respective dates, without any manual work and avoiding the risk of overbooking.

Fotos: Divulgação

300% RISE IN SALES

Profitability: A TOT VS package allows the Costa do Sauípe hotel complex to monitor the performance of all its business units.

Thanks to this technology, we are not dependent on any one sales channel, we control our prices, and we maintain our competitiveness.”

Gustavo Syllos, Costa do Sauípe’s chief marketing offi cer

“Thanks to this technology, we are not dependent on any one sales channel, we control our prices, and we maintain our competitiveness,” says Gustavo Syllos, Costa do Sauípe’s chief marketing officer.

The front office also helps manage guests’ spending throughout the hotel complex. At Costa do Sauípe, regardless of which hotel or B&B they are staying at, guests can visit all the site’s other facilities, including its shops and restaurants. This makes the work much harder, as the complex has different levels of accommodation: B&Bs; all-inclusive resorts; and premium resorts, which also include unlimited food and drinks, including imported ones, as well as pool-side waiters and other services.

EVENT MANAGEMENT A large proportion of the hotel complex’s accommodation is filled by an intense calendar of events. To administer this agenda, CMNet’s events module centralizes quotations and proposals in a single environment and it is integrated with another solution that administers the sales team. In turn, back office activities (purchasing, inventory management, accounting, and tax) and the governance and maintenance area are also supported by TOTVS’ knowhow.

In 2017, Costa do Sauípe plans to adopt the Uniform System of Account for the Lodging Industry, an international methodology for the finance area, which compares a hotel’s costs with market standards and analyses expenses and profits in line with the sector’s best practices. The complex’s IT infrastructure will be prepared in advance to cope with this new demand.

All this is only possible due to the integration of systems, a key aspect for Costa do Sauípe’s digitalization process. Until 2009, the complex’s data was dispersed across platforms that did not talk to one another. The adoption of TOTVS’ complete package of management solutions, however, has enabled a significant improvement in the monitoring of the profitability of the business’ different units, as well as a macro view of operations. “As we are a publicly traded company, having rapid and easy access to financial indicators permits absolute transparency in the reporting of our results, and in this way we ensure peace of mind for our investors,” Syllos concludes.

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S U S TA I N A B I L I T Y 58

Inspired by Silicon Valley, the complex’s architecture breathes innovation and originality.

CULTURAL TRANSFORMATION TOTVS’ new head office, called Seneca, marks a new moment in the company’s strategy

S U S TA I N A B I L I T Y 60

ment will likewise be stamped on the brand’s products. “When you talk of a company’s culture, connectivity and digital transformation, you have to revalidate your products and often the company’s own culture,” Cosentino says.

According to TOTVS’ CEO, the biggest transformation of recent years has been connectivity between people, which has impacted all sectors of the economy. “The way you buy and supply goods and services has changed completely,” notes Cosentino. Being aligned with this new context demands innovation in all senses.

This applies to TOTVS’ physical facilities. If the company does not use the

In June 2015, those responsible for the head office’s design visited Silicon Valley in search of innovative ideas and trends to transform the company’s layout into something new and pioneering.

Following this, the team came up with a design featuring large work areas, with hardly any partitions and no suspended gypsum board ceilings, and including sets of meeting rooms specifically for use with clients, as well as team meeting rooms spread around this extensive environment. These areas also contain three booths to enable silent, private phone calls, when necessary.

The decision to seek inspiration in international architectural experiences,

Work on designing the building, christened Seneca and scheduled to open in early 2017, began in March 2013. The design is intended to reflect the company’s young and modern spirit, and it stands out for its convergence of technological innovation, optimization and functionality.

In its organic shape, it also reflects the present moment of the world’s sixth largest management software company, where people will be connected, online and in person, to a new joint work perspective. Another extension of this move-

solutions it develops, especially its stateof-the-art technology, it will stagnate. In this sense, TOTVS is acting as its own innovation prototype. Its new head office reflects this reality.

As a result, Seneca provides economic, social and environment benefits, such as lower operating costs, a higher speed of occupation, modernization and less building obsolescence, improved satisfaction and well-being among stakeholders, and lower consumption of water and power.

such as Apple’s new headquarters, as well as the offices of Facebook, Google and Cisco, which were all visited in California, led to the adoption of the tech campus concept. This involves aligning the circulation and production of knowledge with physical structures and architecture, besides taking academic environments as an inspiration for research, development and innovation.

These are the elements that have guided TOTVS’ vision for the digital transformation it has been focusing on lately,

INNOVATION IN ALL SENSES

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INTERNATIONAL INSPIRATION

OTVS has moved to a new address. This move, however, went far beyond transporting equipment, furniture and documents, and reallocating staff. The move is also part of a cultural transformation at the company, which is affecting the organization on all levels.

The key word in this process is connectivity. Before, the company’s employees were spread across eight sites in and around the city of São Paulo. The new head office will bring everyone together under the same roof. “The new building is an opportunity not only to unite people, but also to introduce a culture that is more in tune with the moment we are experiencing,” says Laércio Cosentino, TOTVS CEO.

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$78891:;<=>??162,000m2 *<9;>@:?121,000m2 *8A;8:B@B8C? Shopping mall containing 14 stores, services open to the public, and a food court for 350 people (expandable to 500) !<9DBCE? Set of underground levels with spaces for 1,162 cars and 288 motorbikes, a valet parking service, a self-parking area for monthly parking customers, a bike rack, and additional outdoor parking spaces !8F>91G<=DH;?13 generators in the basement

which has encompassed both its new physical facilities and its way of selling its products and services. For example, it has migrated from the sale of software licenses to the provision of services in the cloud. This business model is part of a worldwide trend. The logic of consuming technology has been reaching new heights, and technology has been adapting to people, including in physical infrastructure, joining physical and digital environments.

MOBILITY, HUMAN CAPITAL AND TECHNOLOGY After years spent working in another complex on Avenida Braz Leme, in Santana, a neighborhood in the north of São Paulo, TOTVS’ human resources director, Rita Pellegrino, says that being in a

The internal layout promotes greater interaction between people. Collaboration and creation in the same space.

more modern and open environment promotes greater interaction between people. “We hoped to create an inspiring place that facilitates creative and collaborative processes among TOTVS employees.” In her view, a youthful, relaxed working environment, with the look of a tech company, contributes to people’s engagement and wellness. “Working where many people would like to be also feeds a sense of pride and belonging.”

TOTVS is also committed to using little power and water, as the new complex makes maximum use of sunlight and natural ventilation. Some of the electricity used in Seneca is renewable, generated through technologies such as solar panels installed on the facade. The building also features efficient VRF air conditioning equipment, and a water re-

use and treatment system, which is designed to cut water use by 40% to 60% and sewage output by 80%. There is also a commercial center, and social and decompression areas for 3,400 employees, as well as a space reserved for silence and concentration. One third of the area is assigned for productive use.

Some ways to facilitate circulation and mobility were incorporated, such as escalators interconnecting the main floors, to avoid the need for elevators.

In addition, different colors were used in different parts of the complex to aid orientation, and mini-kitchens were positioned in strategic places on each floor to let users get a coffee and eat some fruit or another snack in between productive activities.

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