ERP King on Mexican Software Market

July 19, 2013 by Jacqueline Prause 0

BXTI_HQ_MexicoCity

BXTi headquarters in Mexico City (Photo: BXTi)

SAP.info: Mexico’s economy expanded by 3.9% in 2012, according to the Worldbank, which says the country has “huge potential for accelerating growth.” The GDP is forecasted to further increase by 3.5% in 2013. How is this growth reflected in Mexico’s IT market?

Juan Pablo Loperena: Mexico’s IT market has grown at a good pace recently as a result of the economic growth during the last three years. Domestic mid-sized companies are expanding and entering global markets with their products. Competition from around the world has also arrived in the domestic market, forcing local companies to become more efficient in many areas, such as capital employment, technology, and new products.

Lately, more and more companies are turning their attention not only to ERP systems, but also to more innovative and inexpensive ways to adopt them, because many of these companies need to leapfrog their competitors or at least equalize the competition. Some companies are looking to become more productive with mobile technologies, but they are finding that first they need to establish a robust IT platform that can help them go mobile. Business intelligence is becoming more popular because it enables companies of any size to analyze information in a short time and empowers users to explore data in faster and easier ways.

What industry sectors are growing the fastest right now? What types of IT projects are you seeing in these areas?

Loperena: The big winner is the automotive industry with the major OEM’s announcing large investments over the next few years to install their plants in Mexico. Volkswagen, Audi, Mazda, Honda, and Nissan are among the OEM’s that have announced plans to set up new plants. These plants will generate additional investments from manufacturers to supply assembly parts to OEM’s. All these plants are expected to be functional between 2013 and 2015, increasing total auto output from 3 million units-per-year up to 4 million units. This sector is looking for IT projects related to manufacturing, quality, warehousing, and transportation. Also, they want to take advantage of mobile technology and extended collaboration with suppliers through integration and cloud services.

Next page: Unique challenges for the Mexican economy

What sort of IT solutions are Mexican customers buying? What technologies are they interested in?

Loperena: ERP is still the king. Although ERP software has been around a long time, it is still the most sold solution today, because many medium enterprises have grown and now they are looking for an ERP platform to support growth. More and more, companies of all sizes are looking for ERP solutions in cloud technology to reduce adoption costs. Over the next few years, cloud will become one of the most in-demand technologies in Mexico. And, mobility is gaining momentum mainly for data analytics and to enable processes such as workflows and sales.

What unique challenges does the Mexican economy face now?

Loperena: The Mexican economy is facing many challenges these days. First among them is its public education. Young people do not have access to quality education and technology, and are losing ground versus people from other countries, such as India and China, that are improving their access to knowledge and technology. Last February, the government presented to congress reforms to turn Mexican education policy into a quality education.

Monopolies a big impediment to economic development

A second challenge, not less important, is competition. For many years monopolies have prevailed in several sectors such as telecommunications, banking, and energy. Monopolies are a big impediment to economic development. Recently, the government passed a reform to fight monopolies and enhance competition in the telecommunications sector.

Another challenge for the Mexican economy is energy. For 77 years, the government has been the only one authorized to generate and distribute energy in all of its forms – oil, gasoline, and electricity – causing market distortions such as high prices and insufficient supply. Today Mexico needs help from private firms to obtain petroleum from deep waters, to create infrastructure for gas distribution, and to generate green energy. Finally, Mexico faces a big challenge to eliminate informality from its economy. Almost half of the economically active population works informally without paying any taxes to the government.

Next page: The SME market in Mexico

How is the SME market developing in Mexico? What are the specific pain-points for SMEs?

Loperena: The SME market in Mexico is growing along with the overall economy. Mid-term expectations look good, if you read what analysts are writing about the opportunities in the country. The most relevant pain-points of Mexican SMEs are in becoming more competitive in order to play at a global level. This is where SAP software can help SMEs to be more efficient and agile.

There has been a recent trend in near-shoring of IT services and support from the U.S. to Mexico. How is this business model developing? What trends do you see?

Loperena: Looking more deeply, you will find that these services are hired by “maquiladoras” – assembly companies set up at the border with the U.S. Generally speaking, these companies belong to U.S. companies, so it is easy for their headquarters to extend the support services they currently have at their home site. However, it is a fact that in today’s economy, it is not surprising that services such as support are delivered from the U.S. to Mexico, or from Mexico to Europe. We live in a global economy and technology enables mobility.

Next page: Dealing with the talent crunch

Many countries are wrestling with a talent crunch in finding qualified candidates for IT jobs. What approach are Mexican firms, specifically BXTi, taking to ensure their talent pipeline?

Loperena: In Mexico we live permanently with a talent crunch in the IT industry. As mentioned before, the education model in Mexico faces important challenges, and one of the most critical is to generate talent. As BXTi has grown, it has become more and more difficult to find the right candidate for the right position. After considering several ideas we came up with two strategies.

The first is to recruit people from all around the world. Today we have people from Argentina, Venezuela, Colombia, Uruguay, Spain, and Holland. We understand that we compete in a global market so we need to source our talent from global sources.

Develop talent internally

The second strategy is to develop our talent internally. We hire people that are finishing their studies at university and we provide them with e-learning, support tasks, research tasks, and we send them to projects as apprentices and junior consultants for 18 months. After this time, they are ready to go on low-difficulty projects. We have found that taking this approach generates better talent and more loyalty.

Find out how BXTi keeps pace with Mexico’s rapidly growing IT market. Read more on SAP PartnerEdge Interactive at http://scn.sap.com/community/partneredge-interactive.

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