Source: http://worldcityweb.com/home/MIA/publications/magazine/26/646/

Q&A with José Duarte

by Mary Dempsey

Jos Duarte describes himself as a bit of a chameleon. He relishes the opportunity to explore a new environment and fit into it. In his 13 years at technology solutions company SAP, that ability has handed him assignments as delicate as handling sales in Saudi Arabia and Israel at the same time. Now he’s taking on a challenge in a part of the world that’s new to him: Latin America. Working with a small staff in an office in Miami, but spending plenty of time on the road, the multilingual native of Portugal is overseeing 1,200 employees in the region. SAP’s new regional managing director for Latin America talks about the goals and challenges ahead.

How is your division structured?

We have four regions: Mexico and Central America, the Andean and Caribbean region, Brazil and the southern countries Chile, Argentina, Uruguay and Bolivia. Each region has its own management teams and own management director. As we grow, scale matters. That’s when regions come into play.

*Does Latin America need different technology than other parts of the world? *

We live in a global world. The kinds of solutions that acompany needs in Argentina or Kansas City or Istanbulare the same. They need business solutions. The solutionsare sector-driven rather than geographicallydriven.

And that’s all there is to it?

No, there is also the element of the maturity of the market. Some countries are front runners. Latin America as a region is not a front-runner in the development of technology. But every rule has an exception and Brazil is pretty developed. Some parts of Mexico, too.

What sectors in Latin America are most likely to need the technology and services SAP offers?

We have a very, very strong foothold around everything to do with big-growth utilities. But there are three emerging sectors that I think will be the biggest focus of technology solutions over the next two or three years. They are financial services, public services and retail.

Why will they be the growth sectors?

In financial services, the factory is IT. Someone comes up with a product and IT makes it available. More products are coming on the market the more you make available the stronger the technology you’ll need and the existing infrastructure in banking is pretty old.

Then there is the phenomenon of globalization. There has been consolidation in banking European banks acquiring Latin American banks. If I bring new technology to my bank, I’ve immediately raised the bar for all the other banks competing with me. At the same time, Basel II and everything around compliance has become a priority. Being compliant doesn’t bring one cent to your bottom line, but there is a price paid for not being compliant. You have to invest in this. Otherwise you’re gone.

Do you expect financial services to be the biggest source of your growth?

Public services are probably where the biggest opportunity is in the market. Public services are known globally for being inefficient. If you want to look at a big, obsolete landscape, go and look at what’s available in government departments.

What makes you think governments will spend money to be more efficient?

They have been investing already, but most investment has been on maintaining the status quo. But they know they are running very complex businesses and they want to make their businesses better. Nowadays there is much more transparency. There is much more electronic business, including online procurement. I think this segment will account for 30 percent of our revenues in Latin America.

Why at this particular point in time will governments invest in more technology?

There are two moments in which you invest: when you can and when you have to. The economies in Latin America are more robust so they have more funds available. We’ve seen this in Russia and we’re starting to see it in Latin America. The governments will take advantage of this moment.

You also mentioned retail as a growth segment of the market.

Retail has been a very fragmented business, but also a business dependent on IT. There’s a huge customer base. And it’s a business that is evolving very, very fast. Banks have larger profit margins. Retailers have tiny little margins they make their money from volume. So the key is to control the bottom line.

Can you give me an example?

You have a system with a decentralized warehouse. If you centralize it, you cut costs. It’s a great idea but it only works if you have software that allows you to do it. There’s so much competition in retail. You may not be able to sell more in volume, but if you’re supplying the goods in a much more efficient way, you’re making more money.

Who are your customers in Latin America?

We have 2,000 customers in the region. Brazilian oil company Petrobras is our biggest customer. Then there’s [Mexico’s government- owned petroleum company] Pemex. Jet maker Embraer in Brazil. [Steel and construction conglomerate] Techint in Argentina. A public ministry in Mexico just bought our engine for government procurement.

All big corporations?

No. There aren’t 2,000 big corporations in Latin America. We have many medium-sized and small customers. In fact, we have one product especially for small companies with fewer than 150 employees. We have a lot of customers in the Caribbean.

It sounds like Brazil is your most important market.

It’s Mexico. For SAP’s business globally, Mexico is the fourth most important country after the United States, Germany and Spain.

Is Oracle your biggest competitor?

For standard applications, it’s probably Oracle. But in Latin America there are also significant local players, predominantly living in the mid-market segment.

So how do you approach companies that already have non-SAP software?

We are a software factory. We build a platform with components that feature our own software. Or we can work with other companies’ technology. Sometimes we build our product to work with somebody else’s, with Adobe, for example. We recognize that we don’t develop all the software a customer may need.

There is also the possibility that a company has developed its own software. We work with them to build onto that, to complement it.

Miami is a new city for you. What was your reaction when you were handed this assignment?

I welcomed the change. I like being out of my comfort zone. And I wanted my children to have the experience of living in the United States. We’re already enjoying it. Miami is not a cosmopolitan place, but it’s evidently a place full of entertainment.