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Commercial Behavior of an Emerging Technology (RFID) in a Secondary Emerging Market

The vision and socio-economic culture of emerging markets play a very important role in RFID's adoption as an alternative technology in the evolution of businesses.
By Luis Angel González Villa
Aug 07, 2016

It's not unusual for a first-world or multinational company to have, on an annual basis, a defined budget to invest in emerging technologies. Such an initiative usually brings certain benefits, such as discovering some technology that generates a return on investment sufficient to cover the total funds invested throughout the year. The multinational corporation understands that only during the following year can it begin to implement this initiative at its other plants and multiply its investment to then generate large savings and operational benefits.

But what happens when it comes to national companies in an individual secondary emerging market? The answer is very simple, because it happens to be quite the opposite.

In a secondary emerging market, such as Mexico, the average corporate culture does not usually budget for investments in emerging technologies. Overall, this is because the same economy pushes companies toward the other direction—the direction of reducing costs, not expanding budgets. The philosophy is usually "to do more with less." This is part of a corporate culture in which, by its terms, it becomes unthinkable to consider investing in some technology to discover the benefits it might bring to the company.

A Mexican firm's information systems (IS) department is traditionally composed, in the best case, of a recently graduated (hence, cheaper) IS engineer. The engineer quickly becomes the company's all-systems guru, performing functions ranging from installing accounting or inventory-control software to managing the network, building a website business, managing the employee email system, updating the company's Facebook profile and even determining why the Candy Crush game doesn't run on the smartphone of the company owner's wife. If the firm tends to be larger, it will allow its systems manager to hire assistants who will gradually take over some specialized functions within the organization.

Obviously, if we refer to a systems engineer with more seniority, he will have lived with this process for years, so that we now find much more mature and structured systems management. However, for the vast majority of small and midsize enterprises (SMEs), information systems represent an expense and not an investment—hence, each expenditure budgeted for this area lacks a certain return on investment.

Taking these ideas as a basis, and returning to the initial concept, how can we expect an SME to consider investing in an emerging technology, such as radio frequency identification?

What happens with entrepreneurs in emerging markets is that they become lost in the financial analysis (that is, what it would cost to implement a new-generation technology) and thus lose sight of how much they will gain in return. In the specific case of an emerging technology like RFID, entrepreneurs are often deluded in their belief that they will be able to use their smartphones to count on controls and monitoring of their operations, alert notifications, and shipment and operational deviation messages, all in real time. It's like that old tale of the entrepreneurial dream of lying on a beach, sipping a drink and watching everything that happens at one's company on an enabled device in the palm of one's hand—which, of course, highlights only the items on which one needs to take action.

Fortunately, not all entrepreneurs are cut from the same cloth, and some eventually emerge who make the decision to seek to incorporate emerging technologies within their business operation. It is at that time that they ask their systems manager to search for and select an appropriate provider, one who can demonstrate knowledge, certifications and sufficient experience so that they can provide support. This process comprises many phone calls, email exchanges, remote presentations and visits to the company's offices—not to mention onsite demonstrations to "see if it works in our facilities and with our products." Thus are overcome, one by one, the requirements and conditions set by the company to arrive at making the project a reality.

But make no mistake, the intention is not to hire that technology provider. The real intention is to learn the brands, models and other information about minor equipment that the provider would use to address the business' need. It is also important to try to decipher how the technology provider has configured its data model and methodology so that the equipment can connect to the enterprise information system that the entrepreneur's company had developed internally. This internally developed IS is the most valuable systems-management asset available because it is serves as that company's anchor of security.

While my impressions are generated based on many years of experience, they are not law. There are new generations of entrepreneurs who have a different point of view, with perception and understanding of technology playing an important role in its development. This new generation has grown up with technology and understands quickly that it is not possible to wait for an all-systems guru to solve every technological issue that a company might face.

The secondary emerging markets are awaiting mature-stage technological solutions to reach their shores, preferably packaged, thus enabling them to implement the solutions quickly and efficiently, and allowing them to avoid making investments in emerging technologies without the assurance that the benefit will be greater than the investment. The big difference is rooted in the maturity and economic strength that changes an entrepreneur's idea and perception of investments, whether in developed markets or emerging markets in all their variants.

Luis Angel Gonzalez Villa is an RFID specialist in Mexico and a founding partner of GC Technologies, a consulting technology company specializing in RFID implementations. He has been an RFID evangelist in Latin America for more than 10 years.

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