Ka-ching! In tight times, tech comes to the rescue with software that pays for itself—and then some

Latin Trade, Jan-Feb, 2003 by Greg Brown

Used to be, software was all about making things work better, faster, more efficiently. In economic doldrums, however, it takes a little more to loosen corporate purse strings. The newest pitch from sales: Buy our product now, and we'll show you how it can make you money.

"it's the only way these days we're getting dollars out of IT," says Jose Roy, managing director of Latin America for Concord Communications. "Most of these companies have more infrastructure than they need. Even if you do spend, you have to justify like never before."

Some solutions are a matter of saving a few thousand, by paying less for newer, better stuff, like getting phone calls over the same computer server already handling your e-mail and Internet access. Others are more dramatic, such as the case of Sao Paulo state, which uncovered tens of millions of dollars in back taxes using new software.

And sometimes the solution is just like e-mail: Simple and efficient. Mexican printing company Grupo de Integracion Digital found that out when it switched over to free, Internet-based tracking from shipper Federal Express.

Now, just hitting one key on a computer shows all of their shipping material in transit, something impossible before. "It will cut my inventory, and allow me to produce more just in time," says Jose Garcia, owner of Grupo de Integracion. "Instead of waiting 14 days to bill my customer, I can bill in four days, which is another savings."

So here, for your boss's edification, are some real-life cases from Latin American business where spending, yes, spending, even at this bleak hour, can make sense.

For good measure, in the pages that follow, LATIN TRADE took a look at a different kind of sales pitch, from Argentina's booming call center businesses.

A collapsing economy eventually rights itself, if only because labor becomes so cheap. In Argentina's case, two sterling examples of its development in recent years--higher education and top-of-the-line telecommunications systems--are making it the landing pad for a growing number of customer service companies.

Not far behind is Mexico, where a cultural edge and proximity to U.S. companies makes for a home field advantage in getting Spanish-language service contracts from its northern neighbor.

Investment US$500,000 Return $40 million

Carlos Leony, Information Systems Director at Sao Paulo state's tax service, the Coordenadoria da Administracao Tributaria, had a simple aim despite facing a complex problem. He wanted to be able to look at the million-plus taxpaying businesses in the sprawling, industrialized Brazilian state, and pick out a sector, then pick out one taxpayer, if necessary. To do that, he spent $500,000 on software from Business Objects in hopes of being able to pull a needle from a haystack on command.

Business Objects software ties together unrelated systems, such as accounting, sales and shipping, in order to make it easier for managers to make choices, says Tomas Helou, vice president of Latin America for the company. ACNielsen used it in Mexico, for example, to help Coca-Cola understand what happens to a can of soda after it gets to the store. Business Objects has helped MasterCard's managers track misuse of its customer's credit cards and helped find fraud within Mexico's Pemex. "Software is a tool, that, along with policies, makes business more orderly and without a doubt reduces corruption," says Helou.

Using Web-based software called Business Objects Visualizer, Leony is able to track up-to-date taxpayer records against the state's massive data files of past records. By establishing normal tax payment behavior by economic sector, he is able to select businesses that seem to be underreporting taxes. Tax examiners are then deployed to check up on the business in question.

It's hard to figure how much Sao Paulo state might be saving in efficiency costs, in part because the old system was so mind-bogglying inefficient, Leony says. In time, it will become more clear, since taxpayers now know they are being watched and should pay up on time. "Without this software, in addition to being much slower, the process was very inefficient," says Leony. "Since you could be selecting a taxpayer that, truth be told, did not merit being examined, at the cost of others that should be examined. This decision was being made in an unsystematic way."

There's more. After installing the software and checking over previous figures, Leony and his team figure they have already uncovered more than US$40 million in unpaid taxes. Taxpayers may fight with the state of Sao Paulo about the exact amount, but, Leony says, at least businesses now have a sense of the size of their potential problems and feel a new urgency "to begin to meet their obligations, starting now."

Investment $0 Return $22 million

Leonard Boord loves to watch them squirm. The CEO of Procura Digital, an online reverse auction provider, sets up suppli ers with a buyer, then turns on the clock.

Put simply, reverse auctions are an invitation for suppliers to bid on a contract, usually things big companies need, like toilet paper or computer keyboards. Instead of bidding up the price of something, as in a traditional auction, the suppliers registered on Procura's Web site are in a race to the bottom, each trying to get the deal before the clock runs out. Procura vets the potential bidders to make sure they can actually supply the items required, then the final pool of companies enter a Web site at a specific hour to bid on the deal. No personal relationships, no favors, no free lunch: Either your price is right, or it's not.