Theme was the main subject of the forum “IDC Software Chapter: Business Transformation through Software in LatAm”, carried out by the consultancy
In recent years, the software has been completely transforming the businesses of Latin American companies and their entire ecosystem, from data management to the customer experience. “This phenomenon is due to the acceleration of digital transformation in this era that we call 'Digital First', whose main objective is to prioritize the use of digital services to the detriment of analogue services”, explained Luciano Ramos, Country Manager at IDC Brasil and domain leader in analysis and data software and services for Latin America, during the “IDC Software Chapter: Business Transformation through Software in LatAm”, a virtual event hosted by IDC, a leader in market intelligence, consulting services and conferences in the IT and Telecom industries.
During the event, in addition to addressing the role of software in the evolution of companies in the region, IDC discussed the main trends in the sector, such as the customer experience (customer experience) and the customer engagement (customer engagement), the modernization and agility brought by software development, and the fundamental role of digital security in business transformation.
Digital First
Claudia Medina, Business Solutions Manager at IDC Mexico and domain leader in software and analytics and data services for Latin America, highlighted that IT resiliency is a holistic concept that is taking on a digital dimension. This, in turn, seeks to develop and take advantage of digital capabilities, not only to optimize operations, but also to take advantage of and capitalize on all changes implemented. “The Digital Resilience Model proposed by IDC comprises three steps, each with a very specific objective: achieving business continuity, empowering the organization and incorporating digital resilience.”
With this, the future of operations can be located in a conceptual framework that will allow organizations to build a resilient business culture, considering aspects such as operation optimization, technological assets, experimentation/innovation processes and economic and human resources. “To cite a few examples, according to the study 'IDC Latin America IT Investment Trends 2023', which heard from 215 Latin American companies, business initiatives point to three main fronts: operations, with improved productivity in 46%; data usage, with a 27% improvement in data privacy practices and a 26% improvement in leveraging data to create new digital revenue streams and innovation and CX (customer experience), with a 32.1% increase in customer retention and 25.1% growth in balance between physical and digital experiences”, points out Medina.
From the perspective of decision makers, another study, the 'IDC FutureScape CIO Agenda 2023', indicates that, by 2024, at least 65% of the CIOs of the interviewed companies will actively leverage resiliency capabilities as a competitive advantage to deliver financial differentiation, a more efficient supply chain and a sustainable operation. “The business conversations that must be had with end users will be oriented towards the tangible benefits already mentioned. However, another factor that we must add to this equation is the Cloud, which definitely has a notable impact on this resilient IT theme”, explains Medina.
The IDC manager also says that the performance of the software market in Latin America can be described as 'remarkable', since, by the end of 2023, it is estimated that growth in dollars will reach 15%, an increase greater than the average IT business, which does not exceed 7% for any of the countries in the region. “Now, if we look at the priorities of the study 'IDC Latin America IT Investments Trends 2023', we found that in the first three positions we have: IT and Cloud Security, with 35.8%; IT consolidation and modernization, with 23%, and IaaS consolidation and modernization, with 20.5%”.
Regarding verticals, priorities vary, but there are common denominators, such as Cloud, Analytics and Data Management modernization. Finally, on a view of use cases, as shown by the 'IDC WW Digital Transformation Spending Guide' launched in the second half of 2022, fastest growing in 2023 are: Next Generation Payments, Connected Guests & Passenger Experience, with 42%; intelligent traffic management with 31% and strategic data-driven pricing optimization with 30%. “In any of these cases, software accounts for about a third of the total spend. However, the range of possibilities offered in software is very wide and allows for specializations for very specific needs”, concludes Medina.
IaaS, PaaS, SaaS and Cybersecurity
already the study 'IDC WW Public Cloud Services Tracker 2022H1' points out that among the three cloud service elements – IaaS (Infrastructure as a Service), PaaS (Platform as a Service) and SaaS (Software as a Service) –, the first is the leader and should represent 32% of the total Cloud market in 2023. However, there will also be a strong presence of the software in the other two categories.
For the PaaS market, IDC projects an average annual growth of 38.1% until 2026, driven by the development of new solutions that differentiate the company from its competitors, since for traditional business operation solutions, such as ERP (Enterprise Resource Planning ) and CRM (Customer Relationship Management), the market movement is towards adoption or migration to SaaS applications, with CAGR (annual growth rate) of 2.4% until 2026, or modernization, complementing the legacy again with the use of PaaS .
In SaaS, cybersecurity is an element with a strong growth rate. “We know that, despite the high priority that technology executives in Latin America give to cybersecurity, little is invested in it. Of the total software investment by companies in the region, on average, only 7% goes to security, while in the North American market that average is almost 10%. On the other hand, we know that this is changing and we believe that this market should grow in 2023 above 12%, being the second largest in the segment, behind only China, which should grow a little more than that”, clarifies Pietro Delai, Director of Business Solutions at IDC LatAm and leader in the domain of cloud and security of analysis and data for Latin America.
Still on digital security, especially in the areas of AI (Artificial Intelligence) and Analytics, the challenge lies in identifying specialized professionals, as pointed out by 83% of the 650 LATAM companies interviewed for the study 'IDC Latin America Cybersecurity Report 2022'. “This is a motivator to hire As a Service from a provider that, by having a larger team of professionals, is proportionally less impacted by a loss of a specialized professional. As such, there is increasing pressure to turn frozen IT operating costs into dynamic costs that can adapt, grow or shrink based on business outcomes. - what is expected by the CEOs of companies”, explains Delai.
IT services
Information technology services are increasingly important, especially if you take into account that they support companies in one of the most critical issues today: the lack of qualified professionals. According to 'IDC FutureScape Worldwide 2023 IT Industry Predictions – Latin America Implications'By 2026, difficulties in building critical skills and limited training efforts in key IT technologies will prevent 70% enterprises from realizing the full value of cloud, data and automation investments.
“We see organizations in Latin America continue to move forward with IT service partners for the intelligent management of their critical enterprise environments and applications. Thus, 'Application Management', which is part of the scope of IT services, should grow by 7.2% in 2023, according to the study 'IDC Worldwide IT Services Tracker 2022H1'. Results will be driven by the constant pursuit of efficiency through observability and intelligent automation.”, said Luciano Ramos.
Another point that stands out is the modernization movement of these same corporate applications. On the one hand, SaaS gains prominence, with a global growth forecast for cloud applications of 30.7%, in 2023 – compared to a growth of 2.5% in on-premises (local servers), according to the study 'IDC Worldwide Software Tracker 2022H1'.
On the other hand, the development of custom applications appears as an important activity for IT service providers. “This approach has been used for cases where the company is creating a new corporate application or updating and/or expanding an existing one in order to align it with new technologies: Cloud, Analytics, AI/ML and good practices of information security”, adds Ramos. According to the study 'IDC Worldwide IT Services Tracker 2022H1', the custom application development market should move around US$ 2.5 billion in Latin America this year.
functional markets
“The good news I have is that of the 80+ functional markets we measure at IDC, only two are in decline. Adding all forms of commercialization (perpetual license, maintenance, subscription and even as a service), the average growth for the next five years is 15.4%”, says Pietro Delai.
In terms of value, in 2023, the main groups called “secondary markets” will be: DM (Data Management), ERM (Enterprise Resource Management), CW (Content Workflow) & MA (Management Applications) and CRM (Customer Relationship Management). “However, with digital agility and new business priorities, by 2026, the order in which these secondary markets are presented will change. Naturally, the execution environment of the application (local or cloud) will also change”, predicts Delai.
Forecasts for Latin America
IDC predicts that the cloud will play a central role in IT business transformation for years to come. Therefore, the subject permeates several other themes.
According to the study 'IDC FutureScape Worldwide 2023 IT Industry Predictions – Latin America Implications', it is expected that by 2026, 40% of infrastructure, security, data and network offerings will require cloud-based control platforms that enable extensive automation and promise significant reductions in ongoing operational costs. “Such a movement is already beginning to be noticed with the great increase in conversations about FinOps and intelligent automation throughout Latin America. In Brazil, this was one of the themes of the event “IDC Predictions Brazil 2023”, who presented research data 'IDC Brazil Managed and Professional Services for Cloud 2022', carried out with 120 medium and large companies. Among them, 93% believe that cloud cost optimization should be part of the managed services offer”, exemplifies Luciano Ramos.
Another forecast brought by Ramos in the same report 'IDC FutureScape 2023' is that, by 2026, 40% of enterprise adoption of IaaS and SaaS will be held back by an inability to measure the promises of faster innovation and operating profits. That is, in addition to costs, LATAM organizations will demand much more clarity on how cloud technologies will contribute to business environments.
This becomes even more important in countries like Mexico and Colombia, which are placing Cloud Infrastructure and Cloud Applications at the top of their IT initiatives in terms of strategic importance, according to preliminary data from the study. 'IDC Latin America IT Investment Trends 2023'. “30% of Mexican companies put Cloud infrastructure in their main IT initiatives, versus around 20% in a regional view of Latin America. In Colombia, for example, SaaS has 19% of responses on IT priorities, versus 14% of the sample average across the region”, concludes Ramos.
also participated in “IDC Software Chapter: Business Transformation through Software in LatAm”: Wendy Martínez, software analyst at IDC Mexico; Pilar Cornejo, Senior Analyst, Enterprise Solutions, IDC Chile; Emanuel Figueroa, senior security markets analyst at IDC LatAm; Bruno Valera, CEO of Medikit; and Juan Manuel Márquez, global CIO of ECOM Agroindustrial.
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