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The role of technology in businesses is crucial for their growth and long-term success. However, many Latin American companies still do not invest in technology adequately, which can have negative consequences on their performance and competitiveness.
Some of the main issues that arise in a company when the business culture does not value investment in technology include:
Loss of competitiveness: Lack of investment in technology can mean that companies are not up-to-date with the latest trends and tools that their competitors are using, which can lead to losing customers and business opportunities
Inefficiency in processes: Companies that do not invest in technology may have outdated and inefficient processes, leading to increased operational costs and a decline in the quality of products and services offered.
Lack of innovation: Innovation is key to the long-term success of any company. Companies that do not invest in technology may fall behind in terms of innovation, which can mean losing market opportunities and new products or services.
On the other hand, there are some advantages and disadvantages of not investing in technology that we should consider:
Advantages
- Lower immediate costs: Not investing in technology can mean that a company does not incur large expenses in infrastructure or tools.
- Focus on core business: Companies that do not invest in technology may focus more on their core business rather than being distracted by technological implementations.
Disadvantages
- Loss of long-term competitiveness: As mentioned earlier, not investing in technology can cause a company to fall behind its competitors.
- Higher risk of human errors: Manual and outdated processes may be more prone to human errors, leading to higher costs and loss of customers.
- Lower quality of products and services: Inefficient processes and outdated systems can lead to a decrease in the quality of products and services offered by a company.
A clear example of the effects of investing in technology can be seen in the financial performance of companies. According to a study by McKinsey, companies that invest in technology have superior financial performance compared to those that do not. The study showed that companies with higher technology investment also have higher revenue growth rates and greater operational efficiency.
To illustrate the effects of technology investment on business performance, it is possible to compare companies that invest in technology versus those that do not.
Below, we present some comparative charts to illustrate this situation:
| Financial Indicator | Companies Investing in Technology | Companies That Do Not Invest in Technology |
|---|---|---|
| Revenue Growth | 8% | 3% |
| Profit Margin | 15% | 10% |
| Return on Assets (ROA) | 12% | 8% |
| Return on Invested Capital (ROI) | 18% | 12% |
This comparative table shows that companies that invest in technology have higher revenue growth, a higher profit margin and a higher return on assets and invested capital than companies that do not invest in technology. These financial indicators point to greater efficiency and productivity in the business management of companies that make such investments, such as in CMMS computerized maintenance management systems or ERP business management systems.
Operational efficiency of companies that invest in technology vs. companies that do not.
| Operating efficiency indicator | Companies Investing in Technology | Companies That Do Not Invest in Technology |
|---|---|---|
| Average sales cycle time | 60 days | 90 days |
| Percentage of on-time deliveries | 95 % | 85 % |
| Number of billing errors | 1 per 1000 invoices | 5 per 1000 invoices |
Companies that invest in technology have a shorter average sales cycle, deliver more products and services on time, and have fewer billing errors.
There are well-known real cases of Latin American companies that have suffered the consequences of not investing in technology.
Case 1: Kodak
Kodak was a leader in the photography industry for decades, but its lack of investment in digital technology led to its bankruptcy in 2012. Kodak failed to adapt to changes in photographic technology, resulting in decreased demand for its products and services. While competitors like Canon and Nikon invested in digital technology, Kodak continued to rely on its analog technology, costing it the opportunity to be a leader in digital photography.
Case 2: Blockbuster
Blockbuster was a chain of video and game rental stores that once led the industry but failed to invest in online streaming technology and was slow to adapt to new media consumption methods, leading to its bankruptcy in 2010. Instead of investing in technology to offer an online movie-watching experience, Blockbuster relied on its physical stores. This strategy resulted in a loss of customers and decreased profitability, leading to its eventual disappearance.
Case 3: Telmex
Telmex, a Mexican telecommunications company, has been criticized for its lack of investment in technology. The company has been slow to invest in emerging technologies, such as fiber optics and mobile technology, resulting in decreased customer satisfaction and loss of clients to competitors offering more modern and updated services.
These cases illustrate the negative effects that a lack of investment in technology can have on Latin American companies. Without adequate investment in technology, companies may miss out on growth and competitiveness opportunities in the market. “Companies that do not invest in technology also risk losing customers and becoming obsolete in their sector.
In contrast, companies that invest in technology can improve their efficiency, productivity, and profitability, and have more opportunities for growth and competitiveness in the market. Therefore, it is essential for Latin American companies to understand the importance of technology in their business strategy and make the necessary investments to stay at the forefront of their sector.
On the other hand, there are Latin American companies that have invested in technology and have become leaders in their sector:
Case 1: MercadoLibre
MercadoLibre is an Argentine company that offers e-commerce services throughout Latin America. The company has achieved significant success thanks to investment in software technology, such as its highly customizable e-commerce platform and online payment system. MercadoLibre’s technology has enabled the company to offer a faster and simpler online shopping experience, which has been key to its success.
Case 2: Nubank
Nubank is a Brazilian company that offers online financial services and has achieved great performance thanks to its highly customizable mobile app and online payment processing system. Nubank’s technology has allowed the company to provide a faster and simpler online financial experience.
Case 3: Rappi
Rappi is a Colombian company that offers delivery services for food, products, and services online. It has achieved significant success in Colombia due to investment in software technology, being a leader in its sector with its mobile app and delivery logistics system. Rappi’s technology has enabled the company to provide faster and more efficient delivery services.
Case 4: Despegar
Despegar is an Argentine company that offers online travel and tourism services. It has been successful in its country and throughout Latin America as the number one choice for booking airline tickets and hotel reservations, with its flight and hotel booking platform and personalized recommendation system. Despegar’s technology has allowed the company to offer a simpler and more personalized online travel experience.
Case 5: Cornershop
Cornershop is a Chilean company that offers delivery services for supermarket products and online stores. They are leaders in their sector due to their mobile app and delivery logistics system. Cornershop’s technology has allowed the company to provide fast and efficient delivery services.
Case 6: Natura
Natura is a Brazilian company that offers beauty and personal care products online. Its success is attributed to its online sales platform and its order and delivery management system, achieving a simpler and more efficient online shopping experience.
Case 7: Amper
Amper is a Bolivian company that offers maintenance products and services to the electrical and telecommunications sectors. They have become leaders in their sector thanks to innovation in their processes and their focus on customer satisfaction through the use of the CMMShere maintenance software, achieving high efficiency in the operation of the assets their clients have entrusted to them.
How to change the business culture to adopt technology
To change the business culture and adopt a technology adoption cycle, companies must implement a clear and well-structured strategy. Some recommendations for companies wishing to invest in technology and change their business culture include:
- Awareness and Education: The first step is to raise awareness among top management about the importance of technology in the company. Business leaders need to understand that technology can enhance efficiency, productivity, and profitability. It is also important to educate employees about the significance of technology and how it can assist in their daily work.
- Evaluation of Existing Technology: The company should assess its existing technology to identify areas needing improvement and update outdated systems.
- Definition of Objectives: The company should clearly define the objectives it aims to achieve through technology investment. Objectives should be measurable, specific, and achievable.
- Technology Selection: The company should identify the most appropriate technologies for its objectives and needs. This may involve consulting with technology experts, conducting market research, and identifying industry best practices.
- Implementation Planning: Once the appropriate technology is selected, the company should carefully plan the implementation. This includes setting timelines, allocating resources, defining responsibilities, and conducting tests.
- Employee Training: It is important that employees are trained to use the new technology. The company should invest in training and development to ensure employees can effectively utilize the technology.
- Results Evaluation: The company should periodically evaluate the impact of technology investment. This includes measuring outcomes, comparing them with defined objectives, and identifying opportunities for improvement.
How to obtain financing for technology investment
To leverage investments in technology for SMEs in Latin America, there are various financial tools available:
- Bank Loans: SMEs can obtain bank loans to finance their technology investments. Banks offer different types of loans, such as lines of credit, long-term loans, or leasing. Bank loans can be a good option for SMEs with a solid credit history and good repayment capacity.
- Supplier Financing: Some technology suppliers offer financing for the purchase of their products. This option can be attractive for SMEs wanting to acquire specific technology but lacking immediate liquidity. There are monthly and annual payment plans depending on the company’s cash flow, adapting to each company’s situation.
- Investment Funds: Investment funds are an option for SMEs seeking long-term financing for technology investments. These funds can provide capital in exchange for an equity stake in the company.
- Crowdfunding: Crowdfunding is an alternative to obtain financing for specific projects. SMEs can present their projects on a crowdfunding platform and secure funding from individual investors, such as angel investors.
- Grants and Aid Programs: SMEs may be eligible for grant and aid programs offered by governments and private organizations. These programs can provide funding for technology acquisition, employee training, and other technology implementation expenses.
Additional support policies in Bolivia, Colombia, and Ecuador:
In Bolivia, there are aid programs for companies seeking to invest in technology. The Ministry of Planning for Development, through the Program for Strengthening Competitiveness of Companies (PROFOCOM), offers advice and financing for technology adoption and innovation in production processes. The program also provides technical assistance and training to companies.
In Colombia, the government has created aid programs to promote technology adoption by companies. The Ministry of Information Technologies and Communications offers financing for companies to adopt technology and train their employees. There are also grant and aid programs for companies seeking to develop technology and innovation projects.
In Ecuador, the government has established policies to encourage investment in technology. The Ministry of Telecommunications and the Information Society offers financing programs for companies seeking to acquire technology and develop innovation projects. Additionally, there are technical assistance and training programs to help companies with the technology adoption process. Three success factors when investing in technology
- Customer Focus: Latin American companies that successfully invest in technology focus on delivering an exceptional customer experience, aligning the technologies they use with customer needs and desires. Companies that take the time to understand their customers’ needs and desires and use technology to provide personalized and efficient solutions are more likely to succeed.
- Business Culture: Technology investment can also drive an innovative business culture. Latin American companies that adopt a business culture valuing innovation and experimentation are more likely to invest in technology and adopt new solutions. Additionally, an innovative business culture can foster creativity, collaboration, and continuous improvement, generating additional benefits for the company.
- Innovation: Latin American companies that successfully invest in technology do not settle for following the same processes and strategies. Instead, they continuously seek new ways to improve and optimize their business through innovation. Investing in technology can help companies develop new solutions and business models, creating a significant competitive advantage.
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