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CORPORATE RESEARCH

Digital opportunities

Totvs invests in R&D and positions itself as a provider of knowledge management computer platforms

LÉO RAMOS CHAVES Company headquarters in São PauloLÉO RAMOS CHAVES

Digital technology has changed the relationship between businesses and consumers. Online shopping is now an everyday activity for millions of consumers, and devices can even be programmed to place orders automatically, such as monthly deliveries of a pre-selected list of items from the supermarket. Relationships between companies—or even between internal departments—are also increasingly being mediated digitally, generating a huge volume of data that can be used to improve processes, increase productivity, and inspire new business proposals.

On this modern landscape, Totvs, Brazil’s largest technology company, sees an opportunity to position itself as a provider of knowledge management platforms, offering its clients the technological means needed to generate value from their business data; such as who buys their products, who their suppliers are, and key financial figures, as well as storage of customer information.

Company
TOTVS
R&D center
Units in São Paulo, Rio de Janeiro, Joinville, Belo Horizonte (all in Brazil), and one in Silicon Valley, USA
No. of employees
2,105 profissionais

Totvs, which means “whole” in Latin, was founded by Laércio Cosentino in 1989. The company was originally called Microsiga, and over the years it has bought out more than 20 Brazilian corporate software manufacturers, including Logocenter, RM Sistemas, and Datasul. Its rapid expansion was driven by enterprise resource planning software (ERP). ERP systems focus on the management of four key areas: inventory, accounting, finance, and taxes. In 2015, Totvs acquired Bematech, which manufactures hardware—such as receipt printers—and integrated software for commercial automation. Last year, Totvs generated a net revenue of R$2.2 billion from an organization comprising its headquarters in São Paulo, four offices around Brazil, 52 franchises, and seven branches elsewhere in Latin America. The company has a staff of 7,388 employees, of which 4,070 are graduates, 941 have postgraduate diplomas, and 56 have master’s degrees or doctorates.

Weber Canova, the company’s vice-president of technology, reports that R$1.2 billion has been invested in research and development (R&D) over the last five years, which has enabled the company to diversify its areas of operation. The result is a series of innovations coming to market across a range of fields, such as artificial intelligence (AI), the internet of things, big data, and cloud computing. The R&D department has a staff of 2,105 employees across six distinct units: São Paulo, Rio de Janeiro, Joinville, Belo Horizonte, Porto Alegre, and the Totvs Lab in Silicon Valley, USA. These professionals also work on developing adaptations of existing products for specific customers. The first of the new platforms was Fluig, which arrived on the market in 2013, and integrates mobile accessibility, collaboration tools, processes, and content management into one single interface. In 2014, a digital human resources platform was launched, which was updated in early 2017 to include a mobile version.

LÉO RAMOS CHAVES Development of an application for agroindustryLÉO RAMOS CHAVES

In June this year, Totvs launched Carol, an artificial intelligence system developed by the Totvs Lab. Artificial intelligence improves data organization and analysis, and generates business insights, reducing subjectivity in decision making. It could be used at a private university, for example, to help prevent students from dropping out by detecting low attendance rates or delayed tuition payments; or on a farm, where data on pest incidence in neighboring regions could help make decisions on which crops to spray and when. The effectiveness of this type of platform depends on the accumulation of data fed into it. The Carol system aggregates information obtained from the Totvs customer database, which covers 30,000 companies, from large corporations to small businesses, in 11 different industries: agribusiness, manufacturing, distribution and logistics, services, retail, banking, construction and engineering, law, education, health, and micro and small business.

“As well as technology, we offer business experience, with market data from the production chain of whatever sector our customer operates in,” says Canova. One of the applications being developed based on Carol is a point-of-sale solution. The aim, with the approval and agreement of the customers contracting the service, is to collect a set of data on the items sold. In a restaurant, for example, the data would include sales volume and prices, and the busiest times and days of the week. The information is then used to generate performance reports that can be compared to local competitors, allowing for planning adjustments.

LÉO RAMOS CHAVES Above: Products designed to offer greater automation and options in the stores of the futureLÉO RAMOS CHAVES

The platform is also fueled by data that can generate business insights, such as weather forecasts, which can help to predict the sale of hot or cold products over the next few days. A sports event near a bar will attract more people to the region and increase drinks sales, and a public holiday will increase sales volumes, meaning inventory will need to be adjusted accordingly.

“We are making technology easily available and affordable for companies of all sizes,” says Eros Jantsch, vice-president of small and micro businesses at Totvs. To ensure the proposal’s success, it needs to be marketed innovatively. “We are not going to approach small businesses with a speech about AI. The aim is to offer a set of practical, day-to-day solutions in a new platform called Bema,” he explains.

There will be different versions of the system for each of the markets in which Totvs operates. The software will not be offered under a licensing model—instead the technology will be available on the cloud, and customers will pay a monthly subscription for access, the value of which will depend on the number of users and consumption of the information. It is a contract model that Totvs has already adopted for several other products since 2015.

LÉO RAMOS CHAVES Innovation laboratory in São Paulo: development of data management platformsLÉO RAMOS CHAVES

Commercial automation
Totvs Bematech has taken major strides in the field of ​​commercial automation through the development of a point-of-sale control system that automatically sends fiscal data to the state treasury via the Internet. “It is a sensitive system that must avoid errors and breaches as much as possible,” explains Jantsch.

It was developed, tested, and perfected in partnership with the Lactec Institutes, a group of private technology centers located in Curitiba, Paraná. Electrical engineer Jefferson Chapieski, IT and electronics manager at Lactec, says the partnership is challenging because commercial solutions demand quick responses. “Our researchers are used to working with universities, so this is an opportunity for our academic staff to experience the demands of the business world,” says Chapieski. The Lactec team working with Totvs involves 20 people, 15 of whom are researchers. Eight years ago, it took Lactec up to two weeks to test a fiscal control solution, today the work is completed in two days with the help of an automated testing process.

The store of the future
New technologies simplify customer choices

Since the end of August, Omnistory, a laboratory-store in ​​the Villa Lobos mall in São Paulo, has been offering a glimpse of how new technology could transform retail. The initiative is run by retail consultancy GS& Gouvêa de Souza, and uses tools developed by Totvs. The store is classed as a multi-channel retailer, offering sales in store, online, and through smartphone applications such as chatbots (virtual assistants). One innovative approach provided by the laboratory-store allows customers to select and buy a product on their cell phone, then choose where to collect or receive their purchase: whether in the store itself, at home, or from a registered collection point such as a locker. This can be a useful option when a product is out of stock in a certain store, if a customer would prefer not to carry the product home, or to avoid the queues.

Upon entering the store, a camera connected to the Carol AI platform recognizes the customer, accesses their profile and purchase history, and shows personalized suggestions and offers on digital and interactive displays, including information about products that may not be available at the point of sale.

The physical purchase is processed using a mobile point of sale—through which payment is taken and a receipt is issued—installed on the sales attendant’s smartphone, eliminating the need for traditional cashiers. With the entire sales process performed by a single employee, the store gains more physical space for customer circulation and product displays. All the technologies are integrated into the Totvs ERP platform, allowing real-time management of inventory, credit, cash flow, and taxes. In its first four months, the store is selling ​​health and beauty products through partnerships with companies in the industry, but the plan is to change the items available every four months until the end of 2018, when the experiment is due to end.

Ronan Maia, vice-president of distribution and retail at Totvs, expects many of the technologies on show at the store to become commonplace in Brazilian retail over the coming years. “The customers are already digital. Retailers need to undergo their own digital transformation so that they can continue to relate to their existing customers and attract new ones,” he says.

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