10 Recommendations for promoting new innovative technologies to the Latin American market. Though many large tech players have established subsididaries, as Facebook as demonstrated, innovative tech companies can build an extrememly profitable market in the region by heading some of these recommendations.

1. How to Successfully Sell Innovative
Technologies into Latin America
An Introductory Guide with 10 Do’s and Don’ts
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2. ABOUT THE AUTHOR.
Born in Atlanta, GA, Alan Colmenares has studied the
impact of digital technology and its application to solving
business challenges for more than 20 years. A BSEE
graduate of Lehigh University with an MBA from the INALDE
University in Colombia, he has worked for some of the
premier high tech companies both in the US and Latin
America. These include Intel Capital, Oracle, SCO, SAS
Institute and others in Silicon Valley and Latin America
providing a strong bicultural and global perspective to his observations. Currently, he is a
columnist for Dinero.com in Colombia and has written and edited articles for InfoWorld
Magazine. He has spoken on eMarketing and Digital trends at events Monterrey, Guadalajara
and Mexico City in Mexico; San Jose, Costa Rica; Caracas, Venezuela and Cali, Medellin and
Bogota in Colombia. His opinions and articles have also appeared in VARBusiness and the
Colombian newspaper, La Republica. He is a professional consultant and principle editor of the
blog: TropicalGringo.com
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3.
This e‐book is . Share it with the
world under the terms of Creative Commons Attribution 3.0 License.
© 2009 Tropical Gringo
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4. TABLE OF CONTENTS
5 THINGS TO AVOID
01 Beware the prestige tax.
02 A good time isn't equal to good business.
03 All partners are not created equal.
04 Don't rush it.
05 Use caution when bestowing power.
5 WAYS TO LEAPFROG THE COMPETITION
06 Use the industry shift to your advantage.
07 Get adult supervision.
08 Distinguish yourself with real Biz Dev.
09 Centralize where you can.
10 Differentiation breeds profits.
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5. INTRODUCTION.
After 15 years working within Latin American subsidiaries of US technology
companies such as Intel, Oracle and SAS Institute, I decided to sit down and
create this eBook to summarize some of the pitfalls and opportunities of
selling technology in the region. With a few exceptions, hi‐tech leaders
have managed to develop a profitable business in Latin America.
Some companies such as HP, Oracle, Autodesk, Kingston, Intel, Microsoft,
Symantec and Cisco have been immensely successful with their regional
subsidiaries setting sales growth and profitability records throughout their
organizations. Others, such as Dell, IBM, Sybase and others have had some
hiccups along the way. Still others such as 3Com have been able to redefine
what their regional operations should look like in order to rediscover
success in the region.
While these established players have developed successful operations in
the region, there is room for smaller innovative technology companies who
wish to develop a profitable business in the region. Nevertheless, there are
some Dos and Don’ts to heed along the way.
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6. 01 BEWARE THE "PRESTIGE TAX."
Some companies are in a rush to establish a physical presence in Latin
American countries. They correctly understand the importance placed
within these markets on face‐to‐face contact and a local office certainly
helps. However, before rushing into establishing such an office, there are
some unique factors to take into consideration and one of these is what I
call the “Prestige Tax.”
In the US, joining a hi‐tech firm certainly can come with some prestige, but
this is nothing compared to that felt by employees in emerging markets,
particularly, Latin America. Though there is a good side to this (e.g.,
employee pride, etc.) there is down side that needs to be considered.
If you will be expecting your newly hired employees to work as a closely‐
knit team as well as working as equals with business partners, care will need
to be taken to ensure that employee pride does not degrade into a holier
than though attitude that may create employees successfully developing
their powerbroker status at the expense of the company’s objectives. Such
powerbrokers will levy a hidden personal “prestige tax” on the rest of the
organization.
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7. 02 A GOOD TIME ISN'T THE SAME AS GOOD BUSINESS.
Doing business in Latin America can be an incredibly fun experience (as well
as profitable). A number of things contribute to this including the tropical
weather, the culture and your possible hosts on your visits. Latin Americans
are some of the most gracious hosts you’ll want to meet and, for the most
part, they certainly know how to show their guests an incredibly good time.
Much comes from pride in their country and interest in other cultures.
Sometimes, the business partner you choose to resell your products and
services or to represent you can turn out to be the most charming
businessperson that you meet. Nevertheless, this is not necessarily always
the case and, therefore, it’s probably a good idea to avoid breaking down all
relationship barriers too quickly. Try to establish business relationships
based on verified information and business results.
Also, since there is a tendency within the Latin American culture to be
excellent actors and sales people, who at times, may mean that some
statements or affirmations should be verified or, at the very least, taken
with a grain of salt until you filter out and find the high quality
businesspeople that do exist in the region.
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8.
03 ALL PARTNERS ARE NOT CREATED EQUAL.
As is true with the technology business in general, partners determine a
good portion of the success you’ll have in Latin America. Thanks to
challenges such as currency fluctuations, lack of access to capital and,
particularly, undeveloped talent management practices, partners’
businesses in Latin America can be weaker organizations than their
counterparts in more developed countries.
This environment is particularly beneficial to a few larger, more powerful
players. These players have the advantage of having stronger financial
footing, relatively large installed base and more experience working with
multinational technology companies. The flip side of this is that many times
they are also more difficult to count on if your technology requires new
business models or value propositions to be effective. Also, they will usually
push for exclusivity or some other benefit before considering working with
you.
Nevertheless, since the technology industry is undergoing some substantial
changes, it may make sense to look at smaller more focused partners.
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9. 04 DON'T RUSH IT.
Except for special circumstances, the Latin American market is one that is
best developed at an even pace. Because of the unique obstacles of the
region (e.g., economic and political volatility), there is much to be said for
following a well‐thought out plan and sticking to it.
As I mentioned previously, when hiring and partnering, it is best to begin
these relationships with an eye towards comparing promoted qualities with
demonstrated achievements. The trick is to develop an environment where
several potential candidates (partners or others) have a chance to
demonstrate their mettle.
The same goes for employees. It’s quite difficult to evaluate people after a
few interviews. In this scenario, what has worked extremely well in my own
experience, outsourcing sales, marketing and technical personnel. Once
you have some successes under your belt, it may make sense to place some
more permanent bets.
In general, it is key to understand what your specific business goals are (e.g.,
volume sales, differentiated offering, building new channels) and make
decisions that are coherent with the specific goals.
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10. 05 USE CAUTION WHEN BESTOWING POWER.
As mentioned above, it’s important to understand the “Prestige Tax” that
can be levied on your company’s operations when operating in Latin
America. Not only employees, but also partners, if given enough power, can
sometimes focus their efforts on personal agendas to the exclusion of your
company’s objectives. In my experience, I have seen complete geographic
territories’ business development stymied because of exclusivity
agreements conferred to an underwhelming partner.
Make your employees and partners earn the empowerment you confer on
them. When you develop metrics for measuring their value to your
organization include metrics beyond pure sales. In Latin America,
salespeople and partners are excellent at achieving sales goals.
Nevertheless, sometimes much collateral damage can be generated if the
correct behaviors are not rewarded. Whether you wish to build a local
organization or develop the local market, conferring power to the wrong
people or partners can produce immediate results, but forfeit future profits
because of an excessive focus on the short term.
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11. 06 USE THE INDUSTRY SHIFT TO YOUR ADVANTAGE.
As we know, the IT industry is going an interesting transformation at this
time with the virtualization of computing power, Software as a Service and
the customerization of the industry and other trends taking hold. These
trends make new and interesting offerings available and promise to
transform the IT channel, as we know it.
Take advantage of these trends and create interesting offerings that allow
you to test out the old channel and/or develop a new channel. Much can
be accomplished today through the web. It’s definitely a time of exploration
and experimentation that can bear fruit in positioning your company within
the region as an innovator.
One example of this is what I call IDC calls Business as a Service where all
kinds of business services will be enhanced and offered more efficiently by
leaning on SaaS and other technologies. For instance, companies such as
Intuit and Intaact have successfully been working with accountants as part
of the channel efforts. In Latin America, this type of partnering is still
nascent and ready for development.
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12. 07 GET ADULT SUPERVISION.
It’s important to understand that cultural differences can enrich your
organization, but it can also create blind spots in key areas. Think about
getting assistance in filtering out the BS.
One large company for which I worked hired a regional “King” who was
adept at hitting sales targets in his own country because of his excellent
business contacts. Nevertheless, he was a disaster at building up other
countries leaving millions of dollars on the table for the company’s
competitors to divvy up among themselves in these regions.
To someone who has lived in the region for many decades and to native
Latin Americans, this executive’s skills gap was obvious. Nevertheless, this is
a common mistake. The key decision maker, residing in North America,
couldn’t see the obvious because of this cultural blinders providing his
competitors in the region with a substantial gift.
Most of the time, the VP of Latin America is a native Latin American highly
skilled at “crash and burn” strategies, which completely sacrifice the long
term for the short term. This leaves an excellent hole for new technology
companies in the region.
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13.
08 DISTINGUISH YOURSELF WITH REAL BIZ DEV.
Many of the bigger players such as Oracle, HP, SAP and others have
implemented volume strategies and have commoditized a good number of
market segments. They have been successful in accomplishing this
employing the usual tools (e.g., distributors, telemarketing, inside sales,
etc.). Nonetheless, this has left room for players offering a more
differentiated strategy and looking to place more serious effort into
developing the market.
It’s possible that such “brute strength” strategies are becoming less
effective in these markets. Without a solidly positioned brand and well‐
regarded product, such strategies would be totally ineffective.
For innovative technology providers willing to construct, execute and
continuously improve their business development efforts, long term,
profitable market segment dominance is achievable.
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14.
09 CENTRALIZE WHERE YOU CAN.
Oracle’s most productive Division in Latin America is Oracle Direct, their
telemarketing and inside sales operation. It’s also the type of work that can
be done from anywhere, even the US. For companies just initiating
operations in Latin America, you can make a lot of headway with a similar
operation located where it makes the most sense for your company.
There are a number of benefits to starting out with some central operation
similar to Oracle Direct. First, you avoid the overhead cost of paying the
“Prestige Tax” I spoke of earlier and can spend your valuable resources in
areas that provide more bang for the buck. Secondly, there’s no better way
to understand the regional sales process by analyzing close to your home
turf.
In order for these types of initiatives to bear fruit, you’re core Latin
American team (could be one or more people) will need to do a good
amount of travelling in order to complement these activities with real face‐
to‐face time. Think of focusing on one or two countries at the outset (these
don’t have to be Mexico and Brazil right off the bat).
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15.
10 DIFFERENTIATION BREEDS PROFITS.
The traditional way to offer technology solutions in Latin America is to work
with existing players such as Value Added Distributors (e.g., Tallard
Technologies, etc.) and larger partners. This strategy has worked relatively
well for the technology leaders in the region.
Nevertheless, companies with innovative technology willing to develop a
differentiated offering (with or without partners) in the region will find
some highly profitable untapped opportunities. Latin American customers,
while conservative when it comes to basic technologies (e.g., databases,
servers, etc.), are open to innovative new offerings especially when
accompanied by a strong channel strategy that increases the value of said
offering (normally, the channel value‐add is more difficult to discern).
Take into account these 10 recommendations and your probability of
developing a profitable regional market will be quite high.
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