Big ideas: ten tech decisions you must make now.

Sooner or Later--probably sooner--companies will start spending. As the world's economies shake off the cobwebs and begin to grow, companies both large and small are looking at all the decisions that have to be made to make themselves competitive, including technology purchases. Info-tech spending in the region bottomed out in 2003 at just under US$23 billion. It's forecast to rise by almost a third during the coming three years to more than $29 billion.

During the crunch of the last few years, however, most tech chiefs, if they kept their jobs, threw up their hands and simply tried to patch their way through as software platforms updated but hardware did not. It's hard to get money out of the finance side lf the boss has to decide on Layoffs and cutting, not how best to grow.

Trouble is, there's an open debate, still, on what tech spending makes sense. Even during the fat times, CEOs felt they were being sold a bill of goods, and the overlay of dot-com mania didn't help tech managers make their case. Only the most obvious value spending--e-mail, high-speed networks, and databases--could get past the bean counters.

What companies consider sacred has become so because everyone in the company touches it, uses it, and feels the value in every day tasks. But that doesn't mean it was the best spending decision, only that it was the easiest sell. Figuring out what the next purchase will be--easy or not--is the key to reviving budgets.

What tech decisions matter, really matter, to the bottom line? LATIN TRADE talked with experts in the field about what they see coming up over the next 12 months, and the message was clear: Competition--the relentless force driving innovation--has finally come to technology.

1 Some initial advice: Think, then act.

Microsoft's Alvaro Cells, server and tools business lead for Microsoft Latin America, says the trend has been until recently to spend 60% of a company's tech budget on core business hardware and software and the remainder on new tech ideas. He expects that trend to reverse, so have a clear idea of what your company needs to do next--and having enough brain power to pull it off--will be important. "If you don't have a strategy, no matter what you buy, you're going to have a problem," says Cells. "Strategy isn't only about what you do, it's about what you don't do, consciously."

2 It's the end of telecom as we know it.

Most important, experts told us, is something called voiceover-IP (VoIP), which is, simply put, talking via Internet (IP stands for Internet Protocol). Instead of hardwired, standard phone systems, companies plug their phone systems into their existing computer networks.

This isn't the tricky, garbled headset system that was sold to home computer users in the late 1990s. The technology has caught up to expectations, and now a VoIP call feels and sounds like any other phone call. Bandwidth is now so plentiful that callers can't tell this is going on. It sounds just fine. Yet breaking a voice signal into pieces creates a lot of opportunities: If you own your company's data network, for instance, calls among your employees--whether they are in China, Silo Paulo or the next door down, are free. "That's a slam dunk" says Carlos Blanco, managing director of Next Level, a technology marketing and consulting company in Miami.

Setting up phones gets easier, too. Instead of a $100 service call to move an extension, the employee can unplug a phone, walk to a conference room--or fly to the Bogota office--and plug it in. The network simply follows the number to where it is being used. "Once we configure the system, it doesn't really matter where you connect," says Kelvin Berberena, 3Com's director for the Caribbean.

3 White you're at it, let's get rid of all the wires.

Next up on the list of most-mentioned trends is wireless. Most people think of their cellular telephones when they hear the word. But the business world is about to be besieged with options. Voice will still be king, but the amount of data being pushed to powerful devices--always-on, laptop-strong business tools--will increase steadily as service and equipment prices drop.

The newest models usually combine the usefulness of a phone with the power of a handheld computer. The big change will be live access to corporate e-mail--already widely available through the popular Blackberry device--on nearly any entry-level cellphone. The difference is subtle: Key is "push" technology, which failed to spark much interest among Internet users early on but will drive the wireless revolution. Instead of logging in and downloading e-mails, which is tough sledding on a cellular phone, the e-mails just arrive, like they do on a regular office network.

Add to that Wi-Fi, a cheap standard for wireless broadband already available in places where business gets done--like hotels, airports, convention halls and office buildings--as well as broadband cellular services, and the business case becomes unavoidable. "For corporations, taking a realistic view, once it becomes available, companies will be able to negotiate attractive packages from their carriers," says Birger Thorburn, chief technology officer for the Caribbean and Latin America for software maker CSG Systems.

4 Break the workplace ball and chain.

Wireless means more than just a fancy cellular phone. Computer maker Dell expects the next wave in Latin America will be foregoing the typical office-wiring setups and simply migrating to cheap, easy-to-use wireless broadband, technology so simple that many non-technical consumers have set it up at home. No more drilling through concrete.

The early adopters in Latin America, interestingly, have been schools. Many had computer labs, but that space--at a premium in cash-strapped public schools--went unused between classes. With wireless, a school can be up and running the Web in no time. "You put the laptops on a cart, and the teacher pushes the cart to a class," says Mvaro Echeverria, Dell Regional Sales Director for Central America and Caribbean and the Andean Region. "When the students open their laptops, they are automatically online. Then the teacher can move on to the next class."

5 Got Internet? Then spread the love.

Internet Protocol (the IP in VoIP) should also be used to connect front and back office systems. It's not necessarily wireless, but the conversion of all the company's data into information that centralizes around Internet transmission--Hong Kong or Havana, everyone and every bit of data is as close as a Web browser.

In companies where a third or more of people travel, going to IP standards for connecting workers, for example, becomes a big step up, says Roberto de la Mora, IP communications manager for Latin America for Cisco Systems. Cisco is, in its own company, rolling out what is called unified communications: Instead of e-mail in one inbox, voicemail in another, instant messages landing somewhere else and so on, each worker has one big inbox which can follow them around on wireless, be accessed from anywhere and adds tons of productivity tricks. "Wouldn't it be great if you called your office you got an automatic attendant and you tell the attendant, call this guy back and you don't have to write the number down," says de la Mora. "It will really break the link between your physical connection and your work."

6 Keeping cost tow has a tot of fans in the corner office.

Back at the ranch, cheap technology is quickly becoming king. As companies add on to or replace outdated servers, they are presented with a compelling case not to spend at all. Network-attached storage--simply described as gigantic hard drives linked to existing servers--can make up for a lot of the needed room instead of buying more servers for additional applications.

Adding on cheaper memory is a must, our experts say, since most companies already have too many servers. The move away from proprietary software platforms, too, seems unavoidable, several of our experts noted. Until now, many companies have shied away from an all-out switch to open-source software because it would mean dumping legacy systems and all the investments already made. But the lean times have left them running behind on both license updates and hardware, so a move to a new infrastructure can suddenly seem reasonable.

Does that mean a whole new ballgame? Not necessarily, says Guillermo Cueli, general director for SSA Global Mexico. Many companies are simply working with multinationals to convert their already-hefty investments into returns by developing the connections they need to take full advantage of systems they already understand and use. SSA Global, for instance, buys enterprise resource planning software providers--essentially buying customers--then buys niche software solutions like shipping and marries the two. For the folks on the user end, they get no changes in software but sudden access to much more data about their own operations. "If you're going to start a revolution, stop." says Cueli. "You can evolve instead."

7 Hook it all together and reap the rewards.

Another big idea likely to hit in the coming 12 months--depending on the business--is Web services, which is best understood as machine-to-machine integration. A heck of a lot of software has sprung up, from production to management to accounting to sales. Most of these programs were developed in isolation. Ever try to open an attachment in e-mail your computer doesn't recognize? Imagine that multiplied by a factor of a thousand. Logistics companies have great delivery databases on their customers, but they can't get that data into accounting. Car manufacturers have in-house software tracking every step of assembly, but none of the salient facts--the factory is running low on brake pads--can be seen by suppliers.

Integrating the business from front to back will require industry-by-industry consulting, but it also means that the technology suppliers are beginning to open their doors to allow companies to work up their own best practices for software applications. "One of the key components of software development is not to have a big budget and talented people but also a person from the industry;' says Raul Vejar, president of database giant SAP International.

Integrating channels in a company via the Web will be the key to big productivity gains, says Joao Luiz Souza, operations partner business consulting services IBM Latin America. In short, if a customer in Brazil's interior orders a toy online, how fast does the main office know? And how fast does the shipper, the accounting department, even the factory that made the toy? "I'm not talking about buying a box, but designing an architecture and integrating it into your business," says Souza.

8 Can cut to the chase, spending wine.

Tech managers need to understand is the role information technology plays in the company, says Fernando Garcia, General Manager Latin America of American Power Conversion, which builds data centers. Some companies gain their competitive edge from tech spending, and some do not. Only then can the company decide which needs it can outsource and which it must do in-house.

Once those issues are squared away, it should be easier to determine spending levels, says Garcia. "Companies could save a lot of money if they make decisions the right size for their company" Fernando Garcia, "Sometimes it should be higher to drive their business, but most times it should be lower." Server consolidation will be a big part of the process, says Garcia, as will consolidation of tech support staff once scattered across the region. "Now, bandwidth is so cheap companies are saving money by bringing everything into one place," Garcia says. "VoIP and wireless is driving that even more. Having people more wireless means you have to increase the power and increase storage at the central office because they will have a lighter device."

9 Watch out for TMI: Too Much Information.

Dealing with the data explosion will begin to occupy some serious time for info-tech managers, says Delio Cardona, data product director at Oracle Latin America. What was once managing the flow of e-mail and database information is growing to include documents, images, wireless messages, radio-frequency tag data, calendars, online meetings, contact info and so on. Business intelligence, once defined as the marriage of raw production numbers and selected financial statistics, will soon including the total flow of data through an organization. Managing well from the start is crucial, says Cardona.

"It has to be structured, not grow unplanned," he says. Countries interesting in signing free trade deals, for example, could soon be asked for volumes of product-quality data from the larger economies to which they hope to export. "We have to get ready," says Cardona. "Confidence in information is vital."

10 Security first, middle and last.

The amount of data moving across all of the above-mentioned systems--financial, production, strategic--all of it will need to be backed up, archived and readily available, but the sheer movement of information across open networks also implies risk. Viruses will run rampant, and they can, without a doubt, get into your voicemails and cellular devices, as well as e-mail and desktop machines.

Workers will begin to show up with tiny ways to store stacks of data. Camera phones are already banned in many multinationals (espionage is the risk) but even passwords are due for an update--randomly generated strings that expire in minutes are already normal in big tech clusters and data centers. Look for biometric devices like fingerprint readers and retina scanners to become common on critical systems and even extend to laptops and portable memory.

CASH MACHINE
Tech spending in Latin America is on the rise.

(US$ billions)

'02      23.8
'03      22.8
'04E     25.2
'05F     27.2
'06F     29.4

SOURCE: IDC

E = Estimate F = Forecast

Note: Table made from bar graph.