The content has been shared, if you want to share this content with other users click here.
US software supplier Pitney Bowes Business Insight (PBBI) (NYSE: PBI) announced plans this week to greatly expand its revenues and staff in Latin America, with a particular focus on Brazil.
The region today accounts for 10% of all PBBI revenues from the Americas, which includes the US and Canada, but is expected to account for 20% within five years, the company's director for the Americas, Greg Van den Heuvel, told BNamericas. PBBI is experiencing growth above the industry rate of 12-15%, he added.
BNamericas spoke with Van den Heuvel on his visit to São Paulo. Heuvel was accompanied by Latin America regional director Ramon Balboa and Brazil country director Ronaldo Oliveira.
BNamericas: You said PBBI plans to double revenues this year in Brazil. What makes you think this is possible, and what is your principal strategy for realizing this goal?
Heuvel: In Brazil this year, we have tripled the size of our sales and support staff. We expect to double the size of our revenue growth on the software side. Gartner and other industry analysts project software sales will grow at a clip of 12-15%, and close to US$2bn in purchases will be made in the software industry in Brazil alone. We see it as a rapidly growing economy, and we plan to participate in a significant way here. The growing middle-class segment of Brazil presents opportunities.
Our focus is on financial institutions, the insurance and telecom or utilities industries, and the public or government sector. These are core clients that we look to provide software solutions or tools to.
Why do we think we can grow rapidly? Well, we've been doing it over the past few years and don’t think this next year will be any different. That's part of the justification and rationale for why we're doubling or tripling the size of our staff in the area. It's because of our past performance and rapid growth that we've experienced here in Brazil. The other reason is the Brazilian economy and the makeup of the populations. We think there's a tremendous opportunity to market to businesses in Brazil, and for businesses in Brazil to almost leap a cycle of technology and embrace the new generation of consumers that exist in the country.
Finally, the  World Cup and the  Olympics certainly have placed a new focus on the region, and we think Pitney Bowes can provide opportunities to the Brazilian government, to help them be more effective in handling this world population coming to visit.
BNamericas: What percentage of your business today comes from Brazil, or the region more broadly? What do you expect from the region down the line?
Heuvel: Latin America represents about 10% of the Americas overall portfolio for PBBI. In the short term, within 3-5 years, I would expect it to represent close to 20% of the revenues for the Americas. I would expect that closer to the three-year mark.
BNamericas: And what are the total revenues for the Americas?
Heuvel: I can't share that publicly. But as I said earlier, analysts expect there to be a US$2bn revenue stream for software annually in Brazil alone and a 12-15% growth rate. We're experiencing much higher growth in the region than that, and that's why we're investing heavily in the area.
BNamericas: You mentioned an emphasis on the telecom and financial sectors, as well as the government markets. Can you expand on why you see these verticals as strategic in Brazil?
Heuvel: In the software division - and Pitney Bowes throughout - our core focus is on customer communication management. Any communication from businesses to consumers are things Pitney Bowes can directly impact for businesses and consumers too.
Consumers are in control today. They can choose what channels they want to interact with businesses. They respond to a variety of different messages and trigger points. There's a much more mobile environment and culture, and businesses have to adapt because of the proliferation of choices and channels that consumers have.
Businesses today have to market, attract, retain and solicit new clients much differently than they have in the past. Previously, it was much easier to invest in infrastructure and to market or sell to many. Today, that's not acceptable. It’s marketing on a one-to-one basis.
Not only do we help businesses today enable what we call lifetime customer relationships, but we also help businesses analyze potential consumers, collect and analyze data, cleanse that data and associate it with certain demographic and socioeconomic factors around that potential consumer. So the message types sent to the end consumer are customized or unique. They're outputted or composed into the channel where it will be most likely received—smartphone, SMS, email or even physical distribution of communication.
In the telecom and financial industries, this is critical. In the financial institutions, for example, they're looking for different business models. For example, when they decide to locate an ATM or store, they're using our location intelligence tools to determine exactly what neighborhood they want to locate it in. They're profiling that neighborhood based on age group, income status, likelihood to move and consumer behaviors as well. The goods and services offered through one store might be uniquely different from another location.
PBBI helps banks and financial institutions to understand their consumers, customers' behaviors, what messaging types and channels to use and, most importantly, analyze the response from those consumers. That way the IT engine is constantly updated based on consumer preferences.
BNamericas: And the government?
Heuvel: We think there's a real opportunity to help the Brazilian government to prepare for both the World Cup and Olympics. I'll provide a few examples.
I experienced the traffic on the way in from the [São Paulo's international] airport, and I must say it's a pretty heavy traffic load. All before infrastructure is either built or funded, PBBI has solutions that help government engineers to analyze the traffic flow, the pedestrian flow, take a look at the timing of lights, whether rail is the right type of transportation, where the stops would be most appropriate for rail transportation, and what the emissions effect might be on the environment for vehicles on the infrastructure that might be built.
So our ability to plot and plan and 3D-model infrastructure and understand traffic patterns is absolutely vital for hosting world events.
A second area is around crime and profiling crime. We have software tools that will take in data when crimes are committed: what type of crime, who committed it, what neighborhood, the time of the day. So we take this data and consolidate it into a 3D map. Police and security forces take that information and design programs and tactics and strategies to combat that crime. It's a powerful tool that many governments around the world today use. We think it would be important for the Brazilian government and cities around the country to take a look at it.
BNamericas: Have public officials been responsive this far?
Heuvel: We're just beginning to work with the government and also city officials and look forward to exploring opportunities with them further. But we're just at the beginning stages.
BNamericas: You've said PBBI sees Brazil in a different light than some of its competitors. You see the country as a mature market, as opposed to an emerging market. That said, there must be some key differences in the business environment here versus some of the other places you operate, such as Europe or the US. Can you expand on how the company has adapted to Brazil and Latin America generally?
Balboa: We started working in Brazil in 1997. Back then we rode the telecom boom wave. At that time, we entered into several projects with local partners. We can jump to today and see that the whole country - the whole market - has been evolving and consolidating and has created an economy that is booming. Companies are increasingly consolidating and creating conglomerates that provide solutions that require a lot of integration and communication with the customers. That's where we come in, helping banks and telecom companies. Vivo and Telefônica, for example. We have a worldwide agreement with Telefónica and have helped them to reduce printing and other costs.
Regarding the maturity of the country, what we see is companies today understand that CCM is the strategy that will take them to where Brazil is going. Going back to 1997, 1998, 1999, Brazil was emerging. Everything was moving fast; the focus was on growing. Today, the focus is on retaining customers, communicating with them effectively and reaching them in any type of channel.
We talk about paper, which is a physical, traditional sort of communication, but also SMS, email, Facebook, Twitter. All of these communication types are very important. We can send and receive communication interactively.
Heuvel: We also think it's a more mature market because of the concentration of large business that dominates each of the vertical market segments and the maturity of those businesses within those segments. Their knowledge of emerging technology and understanding how to deploy it for their potential consumers is very strong. They understand the importance of how to use our technology to get at segments they haven't been able to reach yet.
BNamericas: Is the acceptance level for some of the trendier technologies, such as cloud computing or virtualization, also high in your estimation?
Heuvel: There's been significant investment from some of these large clients in their own infrastructures. They've been developing platforms and they're looking to enhance and grow those platforms. And as there's been a multitude of different channels that have exploded over the past few years, they're looking for creative ways to leverage their existing infrastructure with new software tools and products in ways that we, frankly, haven't even thought about. So it's a collaboration and a partnership with them.
So we can take them in different ways. It can be a license fee, but it depends on their environment and security concerns. We offer it in a [software as a service] SaaS model. And we also offer, from a cloud computing standpoint, a way to share out applications across their networks.
We normally find in the mature businesses that we've talked about, as add-ons to existing infrastructure. When it's new businesses or SMEs that are growing rapidly, they prefer a hosted environment, SaaS model or cloud-type solution, mostly because it allows them to scale up without a large capital outlay. So it depends on the customers' needs and what they've invested in.
About Greg Van den Heuvel
In his 21 years with Pitney Bowes, Greg Van de Heuvel has worked across the company's products, services and software departments. He now heads the Americas for the software unit, PBBI.
About the company
Pitney Bowes last year celebrated its 90th year of doing business. A Fortune 375 company, the company has more than 200mn clients worldwide across three principal business units: products, software and services. Over the last decade, Pitney Bowes acquired 21 companies that now make up its software unit, Pitney Bowes Business Insight (PBBI).