Top predictions for Latin America's digital journey

Wednesday, December 27, 2017

While 2017 wasn't a stellar growth year for many Latin American economies, the digital economy continued to evolve relentlessly, with companies increasingly aware of the need to digitally transform and invest in emerging technologies to remain competitive.

BNamericas takes a look at IDC's top 10 ICT predictions for 2018 and beyond, with plenty of examples from across the region.

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  1. Digital Tipping Point

According to IDC, Latin America's evolution towards a digital economy will hit a tipping point in 2021, when at least 40% of the region's GDP will be digitized.

Low currency valuations will drive M&A activity in the region. Companies will undergo cultural and structural changes that must be embraced by business leaders who want to hang on to their jobs. By 2021, investors will use data value and customer engagement metrics to monitor business progress.

This applies not only to companies but governments as well. Chile's newly elected president Sebastián Piñera has established a five-point digital economy plan, which includes having 80% of public processes digitized by 2022.

  1. Digital transformation strategies

By 2020, 40% of large enterprises in Latin America will have started implementing an organization-wide digital transformation strategy. An 'intelligent core' will be at the heart of the digital transformation platform and form the basis of digital innovation for business growth.

One good example of this is Chilean systems integrator Adexus, which a year ago began shifting towards a services model as clients were indicating they wanted flexible contracts based on an as-a-service model.

CIOs will take on a key role in scaling that platform as enablers of business outcomes and priorities as defined by management. Mining industry CIOs have begun doing just that, as CollahuasiSQMCodelco, and Komatsu executives explained earlier this year.

Digital transformation platforms will digitally transform workflows and business processes. The intelligent core must be interoperable with other members of the ecosystem (partners, suppliers).

  1. Cloud 2.0

IDC predicts that by 2021 spending on cloud hardware, software and services in the region will double to US$11bn, of which 80% will be multi-cloud, 15% specialized and 10% at the edge. Edge computing is an emerging trend, pushing data processing and analytics closer to the source of the data, thus reducing latency and communications bandwidth between sensors.

This will be key in hospitals, mines, factories and transportation, and crucial for companies such as SAS, which is leveraging edge computing for predictive maintenance.

  1. Artificial intelligence

By 2019, 30% of digital transformation initiatives in Latin America will use artificial intelligence (AI). By 2020, 50% of commercial enterprise apps will use AI; half of customers will interact with customer support bots, and over 40% of new industrial robots will leverage AI.

Brazil's state-run federal savings bank Caixa Econômica Federal is implementing an artificial intelligence-based chatbot for its employees and service providers. Brazil's food giant BRF improved IT support for its employees, reducing waiting times through implementation of a machine-learning virtual assistant called EVA built on IBM's Watson platform.

Companies will need to invest in technologies to ingest and process multiple streams of high volume data that feed into machine learning and cognitive computing apps. AI will require an inter-disciplinary and cross-business unit strategy, with both AI engineers and data scientists needed.

  1. Hyperagile apps

By 2019, enterprise apps will shift to hyper-agile architectures in Latin America, with over 50% of application developments taking place on cloud platforms (PaaS).

New types of applications leveraging IoT and analytics will need a modern architecture that uses microservices, which are small, modular services tailored to suit a specific business goal.

On company driving agility through adoption of new software and applications is CA Technolgies, as explained in this interview with BNamericas.

These platforms will enable organizations to better explore emerging digital capabilities enabled by IpT, AI, virtual and augmented reality and blockchain.

  1. HD Interfaces

Human-digital interfaces are changing. By 2021, 50% of new mobile apps in Latin America will use voice as the interface and 20% of the region's top 3000 companies will use biometric sensors to personalize experiences. In the retail space alone, IDC predicts investment in AR/VR technologies in Latin America to reach US$150mn in 2019. Shifting to new interfaces will be a trial and error process on platforms like Alexa, Google Assistant, Watson and Cortana.

AR is a key part of the strategy for Microsoft through its Hololens application and is studying proposals for the military, real estate and automotive industries.

  1. Blockchain

By 2021, 20% of Latin America's top 3000 companies will use blockchain services. Some 25% of banks, 30% of manufacturers and retailers, and 20% of healthcare organizations will use blockchain. Delivering digital trust will be the biggest driver for blockchain in Latin America, and early adopters have the opportunity to establish strong positions. Chile's Santiago stock exchange announced a partnership with IBM in May to implement what it says will be the world's first blockchain system for securities lending.

  1. Data-as-a-Service

By 2019, 10% of large companies in Latin America will generate revenue from data-as-a-Service (DaaS), up from 3.5% in 2017. Companies in the process of digital transformation will see the benefits of monetizing data, while customers will come to see it as an integral part of a purchased product or service. As DaaS evolves, this will lead to tightened controls and governance on privacy. Countries such as Argentina and Brazil have been preparing data protection legislation.

  1. Everyone's a Developer

Improvements in simple development tools will expand the number of non-tech developers over the next 36 months. By 2020, non-traditional developers will build 20% of business applications in Latin America and 30% of new applications. Organizations will be able to meet business goals and reduce time to market without involving IT.

  1. Open API Ecosystems

By 2021, more than half of the Global 2000 with a Latin America presence will see at least 20% of their digital services interactions come through open API ecosystems from virtually 0% in 2017. External APIs will allow enterprises to accelerate their innovation by expanding their products and services through interaction with third parties.