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Mxico: A Market for Visionary Entrepreneurs


The World's 10th largest economy, larger than Brazil and India. ... China, India, South America and the US ... Standards Pink Elephant, Cynthus (Cobit), Vanti ... – PowerPoint PPT presentation

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Title: Mxico: A Market for Visionary Entrepreneurs

México A Market for Visionary Entrepreneurs
  • June, 2005
  • ? Vision Holdings México S. de R.L.

Mexico Overview
  • The Worlds 10th largest economy, larger than
    Brazil and India.
  • Exchange and interest rate stability for the last
    10 years, doubled its GDP in the last 15.
  • 100 million people, with 20 million more living
    in the U.S. alone, who sent over 16 billion USD
    in remittances last year (14 of global share).
  • Mexico is located in North America. Central
    America starts in Guatemala and South America
    starts in Colombia.

Mexico Foreign Trade Overview
  • The most open country in the world (with over 60
    free trading treaties) with total exports of over
    180 billion USD, importing about
  • the same ammount 87 of all trade with the
  • but E.U. share increasing with the recent
    EU-México Free Trade agreement.
  • Most exports are manufactured goods (TV sets
  • we are the largest world producer, appliances,
  • machinery, packaged/processed food, textiles),
  • also a leader in many mineral and oil products
  • oil, silver, zinc, etc.), fresh produce (fruits,
  • and services
  • We are net importers of technology in almost
    every aspect. We also import machinery, cars,
    food, manufactured goods, textiles, services,
  • We are several countries in one a very US-tied
    north with a large near-shore outsourcing
    industry (maquiladoras), an upper-middle
    class-industrial center and an impoverished
    south-southeast, with 10 million indigenous
    communities with over 76 dialects, scattered in
    10 states close to central america.
  • We have a large, skilled workforce with good
    price-performance ratios and a good logistics
    base geared for trade to the US and Canada,

Mexico Business
  • A tough market
  • The overwhelming majority of Mexican private
  • companies, regardless if they are listed or not,
  • large or small, are managed as a family affair,
  • with the exception of a very few (Cemex,
  • Tamsa).
  • Purchasing is always driven by price. Quality,
  • additional services, best value, warranties, are
  • much les important during negotiations.
  • Large corporations are technology laggards, not
  • innovators they will follow on proven solutions
    put in place by smaller or niche players (i.e.
    Telmex, Cemex, Vitro, America Móvil)
  • Many large companies operating in Mexico are
    subsidiaries of multinationals (Philip Morris,
    PepsiCo, Siemens, Santander, Smurffit, etc.),
    which take many strategic decisions at corporate
    or regional (LatinAmerica) offices (some of them
    already moving back to Mexico from Miami or Sao
    Paulo, or in Mexico in the first place. Mexican
    executive in charge of LatinAmerican operations
    HP, Microsoft, Dell, Citibank, Oracle, SAP,
    Motorola, etc.)
  • Customers are not that keen on technology (with
    the exception of certain sectors) they are lured
    far more by fashion, sense of belonging,
    price/performance and publicity
  • Government business is driven by strict
    purchasing rules that try to avoid corruption
    practices, which makes bidding process unique and

Mexico Business
  • An easy market
  • We as customers, spend a lot in non-vital things,
    commonly leaving basic obligations for the quick
  • We like things from abroad, much more than local
    (the Malinche syndrome)
  • The higher the purchasing power, the more
    likeliness of acquiring exclusivity
  • We work hard, play hard and spend a lot of time
    with family and friends. We give away a lot of
    presents in the most diverse situations, even to
    unknown people
  • Financing has come back big time, growth of
    Mexican and Latinamerican economies is the reason
    for it.
  • We have built and purchased 2 million new homes
    in the last 3 years alone, along with almost 4
    million new cars in the same period.
  • We have a cell phone for every 3 mexicans and

How to do business in Mexico
  • Some simple rules
  • Never come into the market looking for the big
    players. Start with
  • smaller customers and create a presence and a
    constituency. Then
  • hit the jackpot.
  • Always deal with a local partner, or install
    local offices. It is very
  • expensive to operate from abroad and multiple
    customer visits
  • are required before any possible business. But
    choosing the right
  • and serious partner is not easy.
  • Business relations are person relations. Mexicans
    never purchase
  • from an unknown and will rather obtain
    references or ask an
  • acquaintance about a brand, a product or a
    person. But foreigners
  • residing in Mexico are commonly well regarded.
  • A contract is not a binding obligation, but a
  • Tener palabra or having word (compliance of
    promises) is far more important.
  • Purchase lifecycles can vary in length, but it
    takes similar effort to sell
  • 10K or 10 Million
  • Logistics infrastructure is under development,
    but you will find serious players as well as
    interesting opportunities in that industry.
  • Distribution is key, but it is also challenging.
    There are scores of intermediaries and middlemen
    trying to grab a piece of the commercialization
    chains, street positions, etc., although
    pyramidal schemes are very successful.
  • To position a brand or a concept, first go to the
    wealthy and appeal them. Then expand to the rest
    of the population many mexicans purchases are

Changing Business Environment
  • Banking business is changing from a comissions
    based to a product colocation one, so financing
    is expanding and profits are growing
  • National Debt has switched from being mostly
    governmental to mostly private, meaning
    businesses are expanding and have better
    qualifications than before, but overall still
    smaller than most OECD countries in proportion
    and value. Public debt obligations through 2007
    are being payed this year.
  • Companies are looking for better operational
    expenses and reduced
  • costs, to compete with imports and products from
    the likes of
  • China, India, South America and the US
  • Because of our closeness to the US and the
    location of many
  • multinationals, Mexico has published its own
  • Regulatory Guidelines as part of a change in the
  • Markets law, which is forcing for operational
    and organizational
  • changes
  • Companies and government entities are trying to
    focus in
  • its core business and regulatory compliance and
    relying its
  • non-core activities (specially IT, logistics,
    and some supplies)
  • to third parties or specialyzed companies with
    proven track
  • records or brand name recognition
  • Because of all that, there is a boom on managed
    services, outsourced solutions, ISO, etc. with
    some contracts reaching tenths of millions of
    dollars per year.

New Market for IT Shops
  • No more Business Redesign, Technology
    Solutions, Best Practices, Process
    Reengineering offers are credible
  • Standards are all the rage
  • Standards in Hardware
  • Standards in processes
  • Standards in Software
  • Bottom line, standard means cost-savings and
    better services
  • Technology is going the business way, so
  • IT Processes have to be aligned with the
    business, not the other way around
  • IT Expenditure is limited to ROI and TOC
    considerations, linked
  • to benefits in the cost structure, rather than
    increased sales
  • CIO position is diminishing, reporting to CFO
    once again
  • End users and end customers rule
  • IT have to deliver with less resources, better
    business acumen and improved timing
  • Compliance is driving business strategy and IT
    requirements, stretching far more the limited
    available resources.

What we have found in Mexico (and in other
  • Two main markets are considering all of the
  • Large Corporate Accounts
  • Government (federal and state)
  • The main driver is IT budget constraint, but
    there are other reasons too
  • Assessment that IT investment has not produced
    acceptable ROI
  • Best practices are out there, already in place
    and for a cheap price
  • Implementing process redesing or best practices
    at home is really expensive and time consuming
  • Outsourcing is out, Infrastructure Service
    Operations is in (ISO)
  • People are already out with previous cost-cutting
    initiatives, and internal and business related
    service levels are deteriorating
  • Managing and operating Wintel is an absolute
    time-consuming, high complexity endeavour that
    generates the least value imaginable for IT, but
    is of the most priority to users
  • PC, Networing, Servers and software are a very
    complex and changing environment, that is better
    served by experts
  • Companies and institutions should focus in its
    core business and leave specialties to third

Multiyear Managed Services Contract
  • What we have designed and have developed with
    several partners is a new offer named Multiyear
    Managed Services contract, in which all ISO
    operations are offered under an umbrella that
  • Hardware provisioning
  • Software licensing, management and control
  • Maintenance and operations services
  • Help Desk (Service desk)
  • Proactive monitoring and management
  • Networking
  • Application Certification Lab
  • Security Management
  • Financing
  • Management and operations
  • for a monthly fee for the duration of the

Multiyear Managed Services Contract
This model goes beyond just HW provisioning
  • We have aligned all processes to CobiT and ITIL
  • We have created specific offers for every part of
    the equation

Help in the contract design, SLA design,
management and control tools implementation,
processes setup
Consortium Organization
MMS Contract
Front Supplier
Supplier 1
Supplier 2
Supplier n
Design the specific needs solution, organize
project, manage project (PMO), manage suppliers
(from design table to roll-out, delivery)
Design, specify and deliver the specific MMS
contract that would suite customers needs and
match it with offerings in the market
Help develop offers and take them to market, help
in the selling process, bring opportunities and
develop processes and alliances
Analize, qualify and align second-tier,suppliers
to project and offer needs, implement processes
and help create practices
Trends in Government purchasing
  • Services contracts allow savings in several
  • Efficient use of annual budget
  • No need to sell national assets
  • Withdraws obsolescence
  • Allows for the clear measurement of IT
    organizations operational efficiency,
    stablishing SLAs and OLAs within those
  • Allows for the access to best practices and
    technologies for the cheap
  • There are several methodologies for these type of
  • Multiyear Managed Services
  • Public-Private Partnership (PPP)
  • Specialized services contracts

Purchasing vs. MMS
Example considering 7000 equipments at market
prices. Net Present value is overwhemly favorable
for the MMS model, the longer the timeframe, the
bigger the return.
And we have set the right alliances
  • PC, Servers, Network Gear Dell, Cisco
  • Imaging, Printing, Copying Xerox
  • Proactive monitoring, management, SLA Computer
  • Big ticket services EDS, Compusoluciones
  • Help and Service Desk Servinext, Unisys, EDS,
  • Field services and Break Fix Unisys,
  • Point of Sale systems NCR, Dell
  • Telecom Telmex, Satmex, Motorola
  • Other support hardware MGE, Capstone, IGSA
  • Software Escher, Oracle, NewScale,
    Computer Associates
  • Standards Pink Elephant, Cynthus
    (Cobit), Vanti

In Summary
  • Strategies
  • Large Corporations
  • Medium sized visionary companies, those competig
    with the large corporations
  • Existing Customers elsewhere in the world
  • Taking advantage of Méxicos NAFTA position
  • Multinationals with significant operations in
  • Mexican multinationals foreign operations

In Summary
  • Reccomendations and Lessons Learned
  • Mexican partner or mexican-based operations, run
    by mexicans
  • Patience and perseverance, local partner takes
    the risk
  • No direct sales against the channel and partners
  • Takes several years to develop and mature the
    market (Hyperion, Microsoft, Oracle)
  • Irish model of developing speciallized,
    innovative product in niche markets a winner
  • Capitalize success in other parts of the world
    credibility and experience
  • With all its uniqueness, México is like many
    other countries and markets locally based,
    relationship driven business model

  • Dr. Raul Medina-Mora Icaza
  • Director General
  • Vision Holdings México, S. de R.L.