News Release

Internet increases the productivity of Latin American companies

Study shows many Latin American companies use Internet- based business applications and methods to receive and carry out orders online, provide customer service, engage in supply chain management and deliver e-learning.
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Jul 22, 2003

Miami, USA, July 22, 2003. - Almost half of the business leaders from the major Latin American economies believe that the Internet has significantly improved the productivity of their companies.

This is one of the key findings from a study sponsored by Cisco Systems and conducted by the independent market research firm Kaagan Research Associates entitled "Attitudes of Latin American Business Executives Regarding the Internet."

The growing influence that the Internet is having in increasing productivity levels in companies throughout Latin America is particularly evident in Brazil (53%) and in Mexico, where more than half of the respondents agree that the Internet has significantly improved their companies' productivity. This percentage is smaller, but still important, in other Latin American countries: Colombia and Peru (45%) and Argentina and Chile (33%).

The study is the first of its kind to be conducted in Latin America and its main objective was to gain an understanding of the region's business leaders' perceptions of Internet and web-based applications, as well as the productivity increases in their businesses.

"Business executives of the region consider the Internet to be a strategic tool that has significantly improved their productivity and will continue to do so in the future," said Keith Goodwin, President Americas International (Latin America and Canada), Cisco Systems.

Internet-based Business Applications

The study highlights the positive impact the Internet has had on productivity in Latin American companies. The study shows that many of these companies use Internet-based business applications and methods to receive and carry out orders online, provide customer service, engage in supply chain management and provide e-learning.

Furthermore, in response to the question about whether these applications and systems significantly contribute to the generation of new income and profitability, the research showed that more than one-third of executives (36%) say that they do, while 45 % feel they do not, and 19% are not sure.

Among the companies that offered specific information estimating the percentage of revenues attributable to Internet-based business applications, 33% said Internet-derived revenue represented between 5% and 10% of their total revenues; another 31% of companies offered that up to 20% of their total revenues came from Internet-based applications. However, Latin America business leaders expect revenue figures to increase significantly over the next five years due to productivity gains resulting from Internet-based applications.

New Investment in Technology

More than half of the companies interviewed indicated a high probability of making important investments in Information Technology (IT) in the next year or two, for the following reasons:

  • 40% of the respondents said they would invest in IT in order to keep up with their competitors
  • 30% will invest to acquire new technological developments and services
  • 22% will invest to recuperate losses from recent years
  • 14% will invest due to a better economic and business climate; and
  • 13% will invest because of the pressure to remain ahead in advanced technologies

Representatives from large companies are the most certain that they will make these investments in the next year or two.

The probability of making important investments in IT within the next year or two is especially high in Brazil (71%); followed by Mexico (50%); Colombia and Peru (48%); and Argentina and Chile (39%).

"Investments in IT and in Internet technologies are key to revitalizing the economy in Latin America and to increasing the region's competitiveness on a global level," says Goodwin.

About the study

The survey on Attitudes of Latin American Business Leaders Regarding the Internet was carried out by polling 500 business leaders in medium-sized and large companies in the region.

The executives of all companies who were polled work with local or regional companies and not multinational organizations. The study sample did not include branch offices of multinational companies whose headquarters are outside of Latin America. The reason for this was that the perception and decisions of the latter regarding technology are, in most cases, influenced by global corporate criteria, independently of the country or the region. State organizations and government-owned entities were also excluded from the survey sample.

The survey was designed, supervised and analyzed by Kaagan Research Associates, Inc., a New York-based research firm and was sponsored by Cisco Systems. To reduce the possibility of bias, respondents were not informed of this sponsorship at the time of the interview. Interviews were conducted between April and June with Presidents, Vice Presidents, Directors, Managers and Division Heads at large and medium-sized companies in Latin America. Of the 500 interviews conducted, 150 were made in Brazil, 150 in Mexico, 100 in Argentina and Chile, and 100 in Colombia and Peru. Given the political situation being experienced by Venezuela during the survey period, this country was excluded from the sample.

The company officials interviewed belong to the most important and representative corporate sectors in economic activities in the region and in their own countries, including manufacturing, services, banking and insurance, distribution and retail sales, energy, mining, telecommunications, agriculture and communications media/ entertainment.