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WHITE PAPER
The Evolution of Business Intelligence in Latin America
Sponsored by: IDC
Darren Ware
August 2004

INTRODUCTION
The current business intelligence market in Latin America appears poised for
moderate growth in a number of directions. Overall, Latin America appears to be fully
engaged in the ongoing adoption of the traditional BI functionality: tracking, analysis
and delivery of information. This is the first stage of BI market development which
begins with tools usage and often leads to enterprise-wide intelligence applications.
Latin American BI adoption levels still trail more advanced markets in North America
and Europe, but BI has established a foothold in the region and in the minds of
progressive business leaders.
As the BI market develops, new customers enter the market for basic tools, existing
tool users are readying for applications, and the resulting intelligence is infiltrating
more decisions, hence becoming more strategic and valuable. BI itself is often its own
best proponent: when used effectively as the results can be obvious and significant.
Once organizations begin to use BI in tracking and analysis of key metrics, the
benefits of utilizing BI in other lines of business or decisions often become
compelling. To borrow a hardware term, the BI market has potential for scalability. For
example, the market can scale up by adding customers to the market or it could scale
out by adding users or new modules in the existing customer base. Both routes seem
to have significant potential and should be pursed dually by vendors. Adding new
customers to the market, or scaling up, is the primary focus of most vendors, but
given the nature of BI applications, IDC believes that pursuing a strategy of adding
users and BI modules in existing accounts, or scaling out, should be pursued heavily.
This document will explore business intelligence spending and adoption trends in
Latin America and examine the region's position compared to a leading edge trend of
business intelligence.

BI Today in Latin America: Leaving the


Spreadsheet Behind
In a recent study, IDC found that 48% of regional organizations have made a
purchase of BI software in the last three years (see Figure 1 below). This study, Latin
America Decision Process for Software Purchases, surveyed over IT decision makers
in 600 organizations. Given that approximately half of the regions organizations have
made a BI purchase in the past three years, the regional transition from spreadsheetbased intelligence to analytic software is definitely well underway. IDC believes
however that the penetration within each organization is limited and that there is a

BI itself is often its


own best proponent:
when used effectively
as the results can be
obvious and
significant.

small group of users who benefit from the BI investment. Given the recent
investments across the region in ERP and CRM, where adoption levels are at 68%
and 56% respectively according to the same study, companies now have significant
amounts of historical data which can be utilized. Recent purchase activity also points
toward BI moving up in the ranks of importance. For example, 41% of organizations
made a major BI purchase in the previous 12 months before the study was
conducted, compared to only 36% for Supply Chain Management software and 49%
for CRM software. ERP still rules the enterprise applications suite with 58% of
respondents claiming a major purchase in the last 12 months. The pool of
respondents for this question included only those who answered that they had made
some kind of major software purchase of any kind in the previous three years.

FIGURE 1
Percentage of Organizations in Latin America which have made
a Major Purchase in Business Intelligence in the last Three
Years, by Country
70%
60%
50%
40%
30%
20%
10%
0%

Brazil

Venezuela

Colombia

Argentina

Mexico

LA Average

Chile

Source: IDC, 2004

Not only does the historical data point to an increase in BI adoption, but the futurelooking survey responses reinforce the expectation of continued growth in BI. Indeed,
in another related study, Latin America Software Spending Trends 2004, survey

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respondents revealed that BI would be the main software applications spending


priority for 13% of organizations. The survey revealed that organizations plan to
spend more on important enterprise applications like ERP and CRM, but IDC believes
that a 13% rating for spending intentions on BI is a significant indication that BI usage
and acceptance is growing and maturing.
The data also revealed that 63% of large organizations claimed a BI purchase in the
last three years, compared to the regional average of 48%. This would indicate that
the market is continuing along a typical BI maturation path: the large companies or
multinationals adopt first and then the other segments tend to follow. In terms of
spending intentions, 17% of medium size organizations indicated BI would be their
applications spending priority in 2004, compared to the regional average of 13%. This
coming growth in the medium segment echoes the point that the small and medium
size segments often follow the large corporations in a market such as this.
The vertical segmentation analysis differs slightly from the horizontal segment
analysis. In the horizontal analysis, it is evident that additional segments (small and
medium) are planning to buy more than in the past. However in the vertical segment
analysis, it appears that the same segments which have already adopted BI are going
to be the ones that keep spending. To that point, in terms of industry penetration, the
data-heavy industries of manufacturing and finance posted an adoption rate at or
above 60%, compared to the 48% regional standard (See figure 2 below). Not only
have they adopted BI more readily than other industries, but Finance (18%) and
Manufacturing (16%) are planning to spend even more in 2004 than the regional
average of 13%.

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FIGURE 2
Percentage of Organizations in Latin America which have made
a Major Purchase in Business Intelligence in the last Three
Years, by Industry
70%
60%
50%
40%
30%
20%
10%
0%

Manufacturing

Finance

Communications

Public Sector

Services

Commerce

Other

LA Average

Source: IDC, 2004

New account growth therefore can come from the medium segments, while vendors
should focus on growing the Finance and Manufacturing accounts in their existing
customer base. This is not to say that any segments should be ignored, but given the
survey analysis, these findings could help vendors to effectively focus account
development efforts.

Focus on Brazil
The Brazilian market grew in 2003 to nearly US$50M, making it Latin Americas
largest BI market. Brazil is commonly a leader in technology spending and BI
spending is no exception. Brazil is also home to some of the regions larger
companies, which typically begin investing in BI sooner than do the small or medium
size companies.
The BI market in Brazil is expected to grow at an average rate of over 7% from 2004
to 2008. This is higher than the global expectation of 4.5% over the same forecast

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period. This accelerated growth rate for Brazil indicates that Brazil is moving to catch
up to the worldwide level of adoption. More information can be found in the IDC
document Brazil: Business Intelligence Tools 2004 by Bruno Rossi.
From the survey results of the studies previously discussed, conclusions also indicate
that Brazil is a more advanced BI market than the others in the region. The adoption
rate in Brazil also was the region's highest at 60% (compared to the average 48%)
and spending intentions came in second-highest at 17% (compared to the average
13%). In addition, the percentage of the IT budget that Brazilian organizations expect
to spend in 2004 is nearly 50% greater than the average percentage of the budget
being spent on BI.

The percentage of the


IT budget that
Brazilian
organizations expect
to spend in 2004 is
nearly 50% greater
than the average
percentage of the
budget being spent on
BI.

The Leading Edge: An Explanation of Decision


Centric Business Intelligence
Decision-centric business intelligence, or DCBI, (as defined by IDCs Henry Morris
and Dan Vesset in their February 2004 IDC document Policy Hubs: Progress Toward
Decision-Centric BI) is the next step in the evolution of BI applications. According to
the original document, DCBI is significantly different from and adds to traditional BI in
the following way:
DCBI adds collaborative support on top of access to information by individuals.
DCBI adds support for decision-making processes, especially for repeatable,
operational decisions such as antimoney laundering, fraud detection, and
portfolio analysis.
DCBI filters, monitors, and delivers information based on relevance, enhancing
the insight of decision makers.
DCBI employs advanced analytics for decision optimization.
This is the leading edge of BI which is beginning to have impact in the advanced
markets where BI is becoming much more widely adopted than in Latin America. The
very collaborative nature of DCBI signifies that multiple users must already be utilizing
the BI application in order to be able to in fact collaborate. In Latin America, IDC
believes there are still many instances of a small group of users that are taking
advantage of the power of BI tools. Therefore, given the small numbers of users, the
collaboration such as DCBI calls for among BI users is still a future possibility as
opposed to a current opportunity for BI vendors or users.
The definition and very nature of DCBI is that it focuses on the decision, just as CRM
has always called for a focus on the customer. This is another inhibiting factor for
Latin America as will be explored in the next section.

BI Tomorrow in Latin America: Scaling Up,


Scaling Out
In Latin America, the CRM market has also slightly trailed worldwide adoption levels,
perhaps because of the lack of customer focus of some regional organizations. Many

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Latin organizations have adopted CRM effectively and have bought in to the CRM
customer-centric philosophy; however, there are still many segments of the corporate
or government populations which have yet to understand the impact of making the
customer the center of their organizations activities. Granted there are certain
macroeconomic factors such as national unrest or currency devaluations which
illogically make focusing on the customer sometimes a lower priority, but under a
normal set of conditions it still seems that many Latin organizations are unable to
effectively design processes and strategies around their customers needs.
Not properly focusing on the customer in CRM strategies has delayed the CRM
market growth in Latin America. The ability of an organization to focus on and
understand its decisions will be equally critical for DCBI. Therefore, if BI market
development follows a similar pattern to that of the Latin America CRM market, the
arrival of decision centric business intelligence will be delayed.
Another factor which could affect the BI market in the future is the corporate
landscape of the region. In Latin America, the average company is smaller than the
average North American or European company and there are often fewer people at
the executive level. There are also many companies which are still primarily owned by
a family and have a concentration of power at the top among a tight group of
executives. These corporate demographics limit the scope of what BI could provide in
terms of value to an organization and also lend the organization's information to easy
control by a select few. Much of the power of BI is when intelligence can be created
by many users, shared across the organization and deliver a true portrait of the
business to the users at each level.
Given the lesser adoption of BI in the region when compared to the North American
or European markets, IDC believes that adoption of DCBI is still years from adoption
by a significant portion of the market. What will happen in the meantime is that BI will
begin to spread throughout the organization that has already adopted BI. Decisions
will be taken with more available intelligence and thus, decisions should improve and
intelligence-based results be apparent.

Conclusions
Business intelligence is beginning to penetrate more organizations and become
prevalent in IT applications portfolios around Latin America. In a region famous for
tight budgets combined with information controls, the fact that nearly 50% of regional
organizations have purchased BI in the past three years indicates that BI has in fact
arrived to the region and is here to stay. Other indicators, like the BI spending
expectations for 2004, also indicate that BI is not just here to stay, but here to grow.
As BI adoption and usage grows in the region, more organizations use BI and more
users within each organization will also utilize the BI tools available. Revenues are
being generated by current product set is still firmly in the traditional BI roles of
accessing and delivering information to different users throughout an organization.
As BI continues to develop on the worldwide level towards decision-centric business
intelligence (DCBI), Latin America will eventually follow suit. Currently however, DCBI
is ahead of its time for all but a handful of advanced BI users in Latin America,

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although Latin organizations could certainly learn from the collaborative nature of
DCBI and the power of information sharing.
For now, vendors should continue to push the variety of BI tools and applications that
are available, at the same time that they make themselves available to customers
who may need assistance in getting the most from their investments. BI is made to
deliver results and vendors can (and should) be eagerly engaging their customers
along the path to broad BI deployments to ensure these results. The vendors' future
revenues will fare as well as their customers' last implementations and in Latin
America there is room for both to grow.

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Copyright 2004 IDC. Reproduction without written permission is completely forbidden.

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