regarding the internet - cisco's the network

ATTITUDES OF

LATIN AMERICABUSINESS LEADERS

REGARDING THE

INTERNET

July 2003

2003 Internet Survey

Cisco Systems

Encuesta Internet 2003, Cisco Systems 1

Table of Contents

Introduction

Presentation, Keith Goodwin 2

Objective of the Survey 4

How the Survey was designed and carried out 5

Who responded 6

Use of the Internet by Latin American companies 7

Results

Key findings 8

Productivity gains 9

Internet and company performance 12

Internet-based Business Applications 15

Internet contribution to Revenue/ Profitability 17

New investments in technology 18

Comparison with Competitors (Internet) 19

Attitudes of Latin AmericanBusiness Leaders Regarding the Internet

2003 Internet Survey, Cisco Systems

2 2003 Internet Survey Cisco Systems

■ ATTITUDES OF LATIN AMERICAN BUSINESS LEADERS REGARDING THE INTERNET

As a contribution to the Internet culture in Latin America, which is adetermining factor for the future economy and competitivity of the region, wesubmit this first large- scale survey regarding the Attitudes of Latin American

Business Leaders Regarding the Internet. We undertook the task of findingout how Latin American executives use the Internet in their work and in theircompanies, what Internet-based business applications they use, and whetheror not the Internet is considered to be a factor in productivity andcompetitiveness, as well as their future plans to broaden their Intenet-basedactivities.

And, although this Survey is the first of its kind in Latin America, (which is whywe do not have anything to compare it to), the study offers very valuableinformation regarding the stage of development of the Internet as a corporatetool in the region.

Little by little, the Latin American business community has been incorporatingtechnology into its basic scope of knowledge. Technology, and the Internet,have thus become a factor of competitiveness and, in many cases, of survival.The groundwork has been laid for new technologies to be a topic of interest forbusiness leaders, particularly those technologies that represent a direct effecton the profitability of their companies. We refer to the convergence of voiceand data networks, or the use of data networks to transport voice, withdramatic savings for the organization; security technologies that safeguard anorganization’s main asset: its information; technologies like Virtual PrivateNetworks (VPNs) that work both on the Internet and on private IP networksand which will redefine the way in which companies and clients will access theInternet in a much more profitable manner; wireless Internet, which will deliverthe wealth of Internet contact to the users of mobile telephones and devices;storage technologies … and this, just to mention a few examples.

Cisco is committed to the development of Latin America in the long term.During the last few quarters, we have been gaining market share in allsegments where we have a presence in the region, despite the difficulteconomic situation that Latin America is experiencing. Clients look to Cisco forrouting and switching technologies, but also for the so-called advancedtechnologies, such as IP communications, security, wireless and storage,which redefine business performance, increase productivity, reduce costs andenhance communications, among others. Hundreds of companies in the

Introduction

KEITH GOODWIN

President Americas

International and

Vicepresident

Cisco Systems

2003 Internet Survey Cisco Systems 3

ATTITUDES OF LATIN AMERICAN BUSINESS LEADERS REGARDING THE INTERNET ■

region are betting on technology as a fundamental tool for the achievement oftheir objectives.

Despite these facts, there is still a great unexplored potential in the region, asevidenced by the results of this study. Our clients in the region are concernedabout the same issues and factors as business leaders in other areas of theworld: productivity, profitability of their operations, cash flow, customersatisfaction, new markets, etc.

Investments in IT and in Internet technologies are key to help Latin America toget out of the recession and to make the region more competitive on a globallevel. And Latin America has a long way to go. Latin American investments inInformation Technology represented 1.7% of Gross Domestic Product last year,while the United States invested 5.2%, Europe 3.5% and Asia 2.4% of theirrespective GDP.

Conscious of this great potential, we will continue working hand in hand withour existing and future clients, including business clients, service providers,and small and medium sized enterprises, with the aim of becoming theirtrustworthy advisors for technology and connectivity.

A key aspect of Cisco’s corporate culture is to remain close to our clients, hearabout their plans and concerns. This survey, which we deliver to theentrepreneurial community in the region, allows us to better understand theneeds of business leaders in the region and gives evidence of ourdetermination to listen to our clients and to know them.

Keith Goodwin

President Americas International

and Vicepresident Cisco Systems

“Investments in

IT and in

Internet

technologies

are key to help

Latin America

to get out of

the recession

and to make the

region more

competitive on

a global level”



The core objective for the survey on Attitudes of Latin American BusinessLeaders Regarding the Internet was to ascertain the perception that businessleaders in the region have about Internet and connectivity technologies, andthe impact of those technologies on the business and productivity of theircompanies.

This information is of particular relevance in Latin America, where Internet hasbegun to exert a power of transformation in the way companies operate andwork, and in the way business is conducted.

Companies in the region find themselves with an increasing need to expandtheir businesses, reduce their costs, increase productivity, improve theirrelationships with their clients, and automate their supply chains. They areincreasingly resorting to the use of information technology to achieve this, inorder to generate a competitive advantage, attain productivity increases andimprove the profitability of their companies.

This survey, the first of its kind in the region, provides important informationfor entrepreneurs and business leaders on the way their peers in theentrepreneurial world think and act with respect to Internet and informationtechnologies. The study provides relevant information on:

● How the Internet is being used by companies in the region● The effects of Internet on communications, productivity and profitability● The most widely used Internet-based business applications● Differences with respect to attitudes, behavior and opinions regarding

Internet in the various countries in the region● Attitudes with respect to investment in technology in forthcoming years.

Objective of the Survey

“The survey

provides

important

information for

entrepreneurs

and business

leaders on the

way their peers

in the

entrepreneurial

world think and

act with respect

to Internet and

information

technologies”



Kaagan Research Associates, Inc. (KRA) is

experienced in the design, execution and

analysis of sophisticated measurements of public

and elite opinion for clients who seek strategy

insight and tools-for-change… and not merely

data collection.

Among KRA’s clients are the Boards of Directors

and Executive departments of some of the largest

companies in the world, as well as educational

institutions, NGOs and non-profit organizations,

for which the firm performs research and

consulting on changes in social trends and helps

formulate strategies that are required to adapt to

new demographic and social forces.

In 2001, KRA performed a widely-cited study on

the Attitudes of Latin American Journalists with

respect to Internet, sponsored by Cisco Systems,

to ascertain the various uses that journalists in

the region make of the Internet, both for their

work and in their personal lives.

Kaagan Research Associates

How the survey was designed and carried out

The survey on Attitudes of Latin American Business Leaders Regarding theInternet was carried out by polling 500 business leaders in medium-sized andlarge companies in the region.

The executives of all companies who were polled work with local companies;that is to say, the study did not consider branch offices of multinationalcompanies whose headquarters are outside of Latin America. The reason forthis was that the perception and decisions of the latter regarding technologyare, in most cases, influenced by global corporate criteria, independently ofthe country or the region.

Neither were State organizations or companies nor government-ownedentities considered for inclusion in the survey sample.

The survey was designed, supervised and analyzed by Kaagan ResearchAssociates, Inc., a New York-based research firm. Interviews were conductedbetween April and June via telephone and, at the option of respondents, in-person conversation. The survey was sponsored by Cisco Systems, althoug toreduce the possibility of bias, respodents were not informed of thissponsorship at the time of the interview.



Female20%

Gender of Survey ParticipantsAll Respondents

Male80%

Under 50032%

Over 2.00034%

Total Number of Company EmployeesAll Respondents

500 y 2.00034%

4 years or less28%

21 years or more16%

Respondent Tenure with Current EmployerAll Respondents

11-20 years29%

5-10 years27%

Average Tenure: 10.1 years

Less than ollege graduate4%

Doctorate3%

Respondent´s Highest Education LevelAll Respondents

Masters degree40%

College gradua53%

In this study, Presidents, Vice Presidents, Directors,Managers and Division Heads at large and medium-sized companies in Latin America were interviewed.

Of the grand total of 500 interviews conducted, 150were made in Brazil, 150 in Mexico, 100 inArgentina and Chile, and 100 in Colombia and Peru.Given the tumultuous political situation beingexperienced by Venezuela during the survey period,this country was excluded from the sample.

The company officials interviewed belong to themost important and representative corporate sectorsin economic activities in the region and in their owncountries, including manufacturing, services, bankingand insurance, distribution and retail sales, energy,mining, telecommunications, agriculture andcommunications media/ entertainment.

Under 3529%

35-4440%

Ages of Survey ParticipantsAll Respondents

45 and older31%

Who responded

On average, the executives interviewed have workedfor their companies for over a decade. Almost allparticipants in the survey are college graduates, and40% hold a Masters Degree.


Almost half of the companies that participated inthe study have been connected to the Internet forfive years or more. Larger companies tended to bethe ones that have used the Internet for a longertime. Brazil is the country with the largest numberof companies connected to the Internet for thelongest period of time.

The vast majority of persons interviewed use theInternet at the workplace, but it is only in Brazil thatit has been a tool used by senior executives for along time. 53% of Brazilian executives surveyedhave been using the Internet in their work for overfive years, while only 21% of Mexican businessleaders make the same claim for themselves.


Past 2 years or less 12%

Not sure2%

All Respondents

5 years or more42%

Between 2 and 5 years

44%

¿How Long Internet has Been Part ofRespondent´s Workplace?

Increased somewhat2%

Neither increased nor decreased

18%

All respondents

Greatly / somewhatdecreased

25% Greatly increased55%

How Respondent’s Internet Use Has Changed In Past 12 Months

ArgentinaChile

By County

Greatly Increased

How Respondent’s Internet Use Has Changed In Past 12 Months

Brazil ColombiaPeru

Mexico

40%

63%47%

64%

Use of the Internet by Latin American companies



Following is a summary of the main

findings in the study:

Latin American entrepreneurs consider that the

Internet has been a determining factor for the

improvement of productivity in their companies.

For 47 % of the interviewed executives, theInternet has significantly improved productivity intheir companies, while for 36%, it has improvedproductivity at least “somewhat.” In the long run,Internet is not considered to be just a simplecommunications tool or a site to maintain acorporate presence on the Web, although thesefunctionalities are, in fact, used extensively by mostof the companies. Executives in the region considerthe Internet as a strategic tool that has improvedtheir productivity and will continue to do so in thefuture.

Latin American executives also consider that the

Internet has had a very positive impact on their

personal productivity at work. For 56 % ofrespondents in the survey, the Internet has allowedthem to be more productive in their work. But thisstatement exhibits wide regional differences. InBrazil, 74% of entrepreneurs say that the Internethas allowed them to be personally more productivein their work, in Argentina and Chile, only 40% ofthem consider this to be the case.

One of every 3 executives in Latin American

enterprises considers that the Internet has a

significant effect on the generation of new

revenue and on the profitability of their

companies.

The biggest effects of the Internet in companies

are perceived in the area of internal and external

communications. 82 % of executives interviewedsay that the Internet has had very positive effectson their external communications. 72% of thosepolled consider the Internet’s effects on internalcommunications as very positive.

Most of the companies in the region have some

sort of functionality to receive orders and to

order on line. 71 % of the companies havefunctionality to receive or place orders on line, or e-commerce systems.

Six out of every 10 companies in the region have

on line customer service systems. 59 % of thecompanies in the region have on-line customerservice systems. Two thirds of the companies thatdo not provide on-line customer service at presentexpect to add this functionality within the next fewyears.

E-learning is one of the business applications

that is used the least by Latin American

companies, with only 38 % of the companies inthe region using e-learning systems to train theiremployees.

One of every two companies surveyed have

some type of functionality through the Internet

to manage and handle their supply chain.

Manufacturing companies and companiesheadquartered in Mexico are in the lead.

Over half of the companies interviewed stated

that the probability of making significant

investments in Informaiton Technology in the

next two years is very high. 54% of the

Key Findings


companies surveyed stated that it is highly probablethat they will make significant investments inInformation Technology over the next two years.Larger companies are more certain to do so, as wellas companies headquartered in Brazil.


47 % of executives interviewed say that the use ofthe Internet has significantly improved theproductivity of their companies, and 36% considerthat it has improved productivity at least“somewhat.” Only 5% feel that the Internet has notcontributed to productivity gains.

From a regional perspective, the increasing role ofthe Internet in the enhancement of companyproductivity is particularly evident in Brazil andMexico. 53 % of those interviewed in Brazil, and50% of those polled in Mexico are in full agreementthat the use of the Internet has significantlyimproved their company’s productivity, while thepercentage in the other countries is lower:Colombia and Peru (45%) and Argentina and Chile(33%).

When asked if their company could operate just aswell without any use of the Internet, region-wide65% of executives interviewed stated that theywere in complete disagreement, which bearswitness to the increasing use that Latin Americancompanies have of the Internet for the operation oftheir business. In Brazil, an overwhelming 83 % ofthose interviewed disagreed with this statement.

The increasing importance that Latin Americanbusinessmen attribute to the Internet, together withits importance for productivity achievements, help

Productivity Gains



to fuel their desire for enhanced computerequipment in their companies. Thus, 42 % ofexecutives would like for the technologies andcapabilities that they have at present to be moreadvanced, both in hardware and knowledge.



From an individual, as well as a company, point ofview, Latin American executives also feel that theInternet has had a very positive impact on theirown personal productivity in their work. For 56 %of those surveyed, Internet has permitted them tobe more effective in their work. But this statementhas wide regional variations. While 74% ofbusiness leaders in Brazil consider that theInternet has permitted them to be moreproductive, in Argentina only 40% of executivessurveyed consider this to be true.

47 % of executives

interviewed say that

the use of the Internet

has significantly

improved the

productivity of their

companies, and 36%

consider that it has

improved productivity

at least “somewhat.”



For 75 % of the business leaders in LatinAmerica, the use of the Internet has representeda positive contribution to corporate performance.Companies in Brazil and Mexico, the largesteconomies in the region, perceive the greatestimpact.

Executives interviewed perceive the majoradvantages of Internet deployment to be theimproved speed and enhanced possibilities interms of communications, and the improvedability to seek and find information.

Company profitability: 36 % of the LatinAmerican executives are in strong agreement thatthe Internet has had a positive impact on theircompany’s profitability, and 38% say that it hasinfluenced profitability somewhat. Companies inMexico(52%) and in Brazil (45%), perceive theeffects of the Internet on the profitability of thecompany more than companies in Colombia andPeru (19%) and Argentina and Chile (16%).

Internet and company performance

“For 75 % of the business

leaders in Latin America,

the use of the Internet

has represented a

positive contribution to

corporate performance”



Company productivity: For 55 % of those polled,the Internet has had a very positive effect on theproductivity of their companies. An additional 35% ofthose interviewed indicate that the Internet has hadat least a somewhat positive effect on productivity.The strongest effects on company productivity arecited in Brazil (69%) and Mexico (61%), while inColombia and Peru (40%) and Argentina and Chile(38%), the contributions to profitability have beenless dramatic. The size of an enterprise also seemsto matter: The larger the company, the greater theperception of positive effects from the Internet onproductivity.

Under 500

By Company Size

Very positive

500-2.000 Over 2.000

51% 52%61%

Internet Effects: Company Productivity

14 Encuesta Internet 2003 Cisco Systems

■ ACTITUDES DE LOS EMPRESARIOS LATINOAMERICANOS CON RESPECTO A INTERNET

Internal and External Communications. TheInternet has a beneficial effect on internalcommunications in Latin American companies: 72% of executives surveyed describe the effects ofthe Internet as “very positive” for their internalcompany communications. In national markets,83% of executives in Brazil consider that theInternet has had a very positive effect on internalcommunications in their company, while 73 % takethe same position in Mexico, 64 % in Colombia andPerú, and 62 % in Argentina & Chile region.

In external communications, the Internet is also akey element for Latin American executives. 82 % ofbusiness leaders surveyed say that Internet has had“very positive” effects on their companies’ externalcommunications. In national and sub-regionalmarkets, the consensus is sustained: in Brazil, 89% of executives surveyed say that the effects ofthe Internet on external communications have beenvery positive. In Mexico, 81% feel that way, 80% inColombia and Peru, and 71% in Argentina andChile.

Very positive72%

Somewhat positive

17%

Neither positive nor negative

9%

Very / somewhat negative

1%

All Respondents

Not sure1%

Internet Effects: Internal Comunications

Very positive82%

Positive15%

Neither positive nor negative

3%

All Respondents

Interner Effects: External Comunications

ArgentinaChile

By County

Very Positive

Brazil ColombiaPeru

Mexico

62%

83%

64%73%

Internet Effects: Internal Comunications

e-commerce. Most of the companies in the region,71%, have some type of functionality to receive orprocess orders on line. Among the companies thatdo not have any type of functionality of this type,manufacturing companies in particular are moreprone to say they will add this functionality in thenext few years. Among the companies that do nothave this functionality, 29% state that there is ahigh probability that they will add it in the next fewyears.

Internet-based Business Applications

ArgentinaChile

By County

BrazilTotal ColombiaPeru

Mexico

71%62%

75%68% 74%

Features Of Respondent’s Primary Workplace: Placing / Receiving Internet Orders

ArgentinaChile

By County


Mexico

59%50%

65%55%

63%

Features Of Respondent’s Primary Workplace: Customer Service / Follow-Up Care

■ ACTITUDES DE LOS EMPRESARIOS LATINOAMERICANOS CON RESPECTO A INTERNET ■

Encuesta Internet 2003 Cisco Systems 15

Customer care and service. Throughout theregion, 6 in 10 companies (59%) have on- linecustomer service systems. Furthermore, two thirdsof the companies that do not now provide on linecustomer care expect to be doing so in the nextfew years. Manufacturing companies are moreprone than service companies to announce theseplans.

Supply Chain Management. Slightly less than halfof the companies that were surveyed (48%)possess some type of functionality on the Internetto manage and administer their supply chain.Manufacturing companies and Mexican-headquartedcompanies are at the forefront of this process.Among those companies that do not have thisfunctionality now (41%), 22 % say they are verylikely to acquire it in the next few years, while 29 %are less inclined to do so.

ArgentinaChile

By County


Mexico

48% 44% 46%40%

58%

Features Of Respondent’s Primary Workplace: Vendor / Supplier Supply Chain Management



ArgentinaChile

By County


Mexico

38%30%

41% 39% 41%

Features Of Respondent’s Primary Workplace: E-Learning / Training Programs

e-learning: At present, somewhat more thanone-third of companies in the region (38%), usee-learning systems to train their employeesthrough the Internet in the areas of corporatecommunications and marketing, technicaldocumentaiton, customer support, quality control,manufacturing, engineering and public relations.Among the 58% of companies that do not havee-learning at present, 24% are very likely to addthe capability in the near future, and 32% are‘somewhat likely” to do so.

Among the companies that do not possess thisfunctionality, companies in non- manufacturingsectors are the ones most inclined to add it in thenext few years.

“Among the 58% of

companies that do not

have e-learning at

present, 24% are very

likely to add the

capability in the near

future, and 32% are

‘somewhat likely”

to do so”


It is quite clear that the Internet has had a positiveimpact on productivity in Latin American companies,and that many of these companies have Internet-based business applications and methods to receiveand carry out orders on line (71%), providecustomer service (59%), engage in supply chainmanagement (48%) and conduct e-learning (38%).

But, do these applications and systems significantlycontribute to the generation of new income andprofitability? More than one-third of executives (36%) say that they do, while 45 % feel they do not,and 19% are not sure.

Among the small number of companies that offeredspecific information estimating the percentage ofrevenues attributable to Internet-based businessapplications, 33 % said Internet-derived revenuerepresented between 5 % and 10 % of their totalrevenues; another 31 % of companies offered anestimate that up to 20% of their total revenuescame from Internet activity.

Nevertheless, it is interesting to note that for thesecompanies, these Internet-credited revenue figuresare expected to increase significantly over the nextfive years. For 55 % of companies, the percentagefive years from now is expected to be at over 20 %of revenues; for 24 % of the companies it isexpected to be between11 % and 20%.

For most of the companies that do not have anytype of Internet-based business application, andwho do not foresee adding or acquiring any type ofapplication in the near future, their directors andexecutives simply feel that these technologies donot apply to their business, product or work area.


Internet contribution to Revenues/ Profitability

Yes36%

No45%

Not sure19%

Respondents In Companies Where Order Or Payment Management Done Via The Internet (82%)

Does Internet Commerce Significantly Contribute To Revenue Or Profits?

“More than one-third of

executives (36 %) say that

these applications and

systems significantly

contribute to the

generation of new income

and profitability”



Over half of the executives who were interviewedin the survey (54%), stated that the possibility ofmaking significant investments in InformationTechnology in the next two years was very high.Explaining why, they mentioned the need to keepup with their competitors (40%); to have access tonew technological developments and services(30%); to recover lost ground from previous years(22%); to respond to an improved or improvingeconomic and business outlook (14%) and pressureto stay abreast in advanced technologies (13%).Larger companies are the ones that are morecertain that they will carry out these investments innext several years.

The probability of undertaking significantinvestments in Information Technology during thenext year or two is particularly evident amongexecutives in Brazil (71%), followed by Mexico(50%), Colombia and Peru (48%) and Argentina andChile (39%).

The probability of undertaking large investments inInformation Technology during the next year or twois also related to company size. In 63 % of largecompanies, or those that have more than 2,000employees, there is the highest probability ofinvesting near-term, whereas a smaller 52% ofthose companies with 500 to 2,000 employees feelcertain of near-term IT investments, and only 45%of those companies with less than 500 employeeshave a strong probability of investing in IT in thenext year or two.

New investments in technology



Under 500

By Company Size

Very likely

500-2.000 Over 2.000

46%52%

63%

Likelihood Of Respondent’s Company Making Significant IT Investments In Next Year Or Two

About the same52%

Less advanced9%

Not sure15%

All Respondents

More advanced24%

Respondent’s Company’s Internet Capabilities, Compared To Competitors

When corporate executves compare their owncompanies’ Internet capabilities with those of theirmajor competitors, one half (52%) say that they areat “about the same” level. Another 24% ofexecutives say that their own companies are “moreadvanced” users of Internet technologies andapplications than their major compeititors.

Within the group that feels they have betterfunctionality and features than their competitors(24% of the companies), 51% say that theiradvantage is due to the fact that they have good andtechnologically up- to- date equipment and that thecompetition does not have comparable.

Comparison with Competitors (Internet)

sm

www.ciscolatam.com/encuesta2003

Cisco Systems, Inc. is the worldwide

leader in networking for the Internet.

Cisco's Internet Protocol-based (IP)

networking solutions are the

foundation of the Internet and most

corporate, education, and government

networks around the world. Cisco

provides the broadest line of solutions

for transporting data, voice and video

within buildings, across campuses, or

around the world.

Today, the Internet and computer

networking are an essential part of

business, learning and personal

communications and entertainment.

Virtually all messages or transactions

passing over the Internet are carried

quickly and securely through Cisco

equipment. Cisco solutions ensure

that networks both public and private

operate with maximum performance,

security, and flexibility. In addition,

Cisco solutions are the basis for most

large, complex networks used by

corporations, public institutions,

telecommunication companies, and

are found in a growing number of

medium-sized commercial enterprises.

regarding the internet - cisco's the network

Documents