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Programs of the right size

Three companies from PIPE develop software projects that will contribute to Brazil's greater competitiveness in this sector

With projects that differ amongst themselves, three companies supported by FAPESP’s Small Companies Innovation Research (PIPE) have as a point in common, the search for solutions that are still little considered by software developing companies of all sizes in Brazil. InfoDinâmica, from São Paulo, is investing in a premises control system that couples hardware and software to make possible a new step in local and remote monitoring of almost all the electrical and electronic equipment in homes and offices. Also from São Paulo, Invenire is developing software for exchange desks in banks and foreign trade departments of the major corporations. Spall, from São Carlos, is very close to launching the first version of a program that simulates the formulation of materials for the ceramic industry.

Better still, the three companies, which are investing in important niches in the country, are contributing towards Brazilian software becoming more competitive in the domestic and foreign markets. While the domestic sales share of software developed here is 76% , the sector’s balance of trade still shows negative figures. Although Brazil’s exports reached the level ofUS$ 120 million in 2001, having grown close to 1,200% since 1995, imports amount to US$ 1 billion a year. Talking of creating softwareis then a strategic issue, because knowledge and technological development in this area are indispensable for supporting growth in all the areas of the economy.

Remote control
InfoDinâmica’s software for controlling residential and building systems is an old goal of the world giants of the electrical and electronic industries. “I looked around to find out if there was anything similar, and I discovered that there is no similar system, in spite of technology to do so already being available”, says mechanical engineer Eduardo Vettori, the owner of the company. He has been working since 1972 in the information technology area, and has worked at NEC and the English headquarters of the Shell International Petroleum Company.

The system that Vettori is concluding, called Suit, is the realization of an ancient dream of the science fiction writers. The software can monitor and control, in a remote manner or otherwise, any device that is part of a circuit, from a television set to a security alarm mechanism, from a refrigerator to a set of blinds. The software makes it possible to command these devices through an interface with the digital controls on the equipment and with a network interconnection.

The user defines and changes the settings, adjusting the controls to his routines, using a PC standard computer, palmtop or telephone. Besides its usage in security and control systems for homes, buildings and companies, another use indicated by Vettori for Suit is the hotel segment. “Using a Personal Digital Assistant (PDA) with a good memory, like a palmtop, the supervisor of a hotel can control all the devices in the guest rooms”. In the case of concert halls, among its various uses, the software can switch on and control the air conditioning equipment.

“Suit’s process is based on just three variables: what the device is, what one wants to control and at what level or state, like, for example, the functions of on-off, volume, etc., as well as who wants to do it”, Vettori observes. “It is a simple solution”, he says. He began the process to register a patent for the product in 1996.

Developed in the C and Visual Basic languages, two of the most common and disseminated one, the initial basic program runs on Windows, Windows CE, Mac, Palm and Unix operational systems. Other languages may also be used. Its installation may use the infrastructure of the electricity network, without any modification, or wireless radiofrequency communication. The systems currently available, besides controlling only a few devices due to the lack of a universal interface, also demand infrastructure remodeling.

Remote control takes advantage of the infrastructure of public services – it can be done by any telephone line, fixed or mobile, or by the Internet. The system will have seven hardware accessories, which are being designed at the Renato Archer Research Center (Cenpra), a unit that belongs to the Ministry of Science and Technology and that succeeded the Technological Center for Information Technology Foundation (CTI). These accessories make it possible the devices control without any modification. Five of them are already ready: a telephone answering machine, equipment that emits infrared rays, a radiofrequency transceiver, power sockets and switches. “Still missing is a multisensor, to identify, amongst countless things, the presence of human beings”, says Vettori, who foresees that the project will be concluded in the second quarter. He believes that the product will be available on the market before theyear is out.

Today, InfoDinâmica has practically no sales. Aside from a few consultancy jobs, Vettori is totally focused on the development of Suit. In his business plan, he estimates that the Brazilian market for property control may shortly have a turnover of US$ 1 billion a year. His calculation does not include possibilities in the industrial automation area, a segment not yet covered in the original sales strategy.

MC3 prototype
Invenire is another believer in the great marketing potential for its product. According to forecasts by a partner in the company, José Carlos Arruda Alves, the software, temporarily baptized MC3, may win over dozens of the 150 so banks in the country, amongst those that use in-house solutions and less advanced applications from competitor software houses. “We are also going to offer the application to large-sized multinational companies, which operate foreign currency dealing desks because of their high level of international transactions”, he says. The MC3 is a multiplatform product that operates in the Windows, Unix and Linux environments, can run on large (mainframe) computers, and should be ready for sale between this year and the next.

Founded in 1999, the company went into the market offering services for implementing and maintaining solutions for integration with the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, serving mainly small and medium sized banks. Invenire is a venture by brothers José Carlos Arruda Alves, an engineer who followed a career in the business area of IBM, and Valter Francisco Arruda Alves, a lecturer at the Polytechnic School of the University of São Paulo (USP). “Our objective has always been to develop innovative software products”, says José Carlos.

The challenge for Invenire in the foreign exchange system is perhaps less important than the exercise of programming in Java – a language of Sun Microsystems with a large market share in the area of development for the Internet – following the concept of componentization. This is based on the premise that a software house does not have to develop on its own all the parts that make up the product. A chunk of its technical needs is purchased from other companies. This makes it possible to integrate components of proven quality, supplied by companies specialized in a certain kind of software.

Among the utilities, a good example is the program installers – products with complex functions that would demand a great investment in time and money to develop in-house. Componentization is one of the strong trends all over the world and has been fundamental for the progress of the software industry in India, a country with a strong performance in this sector. In defining the strategy to be adopted, the Alves brothers took into account not only the major tendencies for software consumption in the business environment, but also the ability of the companies to make good use of it with a small structure and investment availability. “The option for the development of components emerged as a natural path”, says Valter.

In practice, this means that Invenire has no intention of conceiving a complete platform for automating companies – but it does want to develop applications that can be integrated in large umbrellas, like, for example, the systems of business management, orenterprise resource planning (ERP), a segment in which Germany’s SAP, America’s People Soft and Brazil’s Microsiga and Datasul are active, among several other companies.

The trend for componentization tends to become stronger with the dissemination of the model of the application service providers (ASP), servers that house Internet services, hosting databases in remotely. Componentization is also picking up strength with the appearance of web services, which makes it possible for user companies to “search” the Internet for certain system solutions. For example, a bank can analyze the credit of its customers, via Internet, through companies specialized in this activity.

Web services allow users to form packages of software with products they regard as most suited to their needs, without worrying over the integration of the applications – one of the greatest challenges for an IT department and for service providers – based on standards of communication between programs, such as Extensible Markup Language (XML). The XML standard makes it possible for various kinds of software to talk to each other, by exchanging documents and data in standardized format. “We work with Simple Object Access Protocol, or Soap, which is based on XML”, observes Mauricio Nacib Pontuschka, the coordinator of the Scientific Computing Nucleus of the Pontifical Catholic University of São Paulo (PUC-SP) and an instructor with Sun in the Java area, who provides advisory services for Invenire.

Under the guidance of Pontuschka and Carlos Eduardo de Barros Paes, also a lecturer at PUC-SP and an advisor to Invenire, the development team is made up of nine trainees from PUC-SP’s Computing Sciences course. With an annual income of R$ 60,000, Invenire uses the funds from PIPE to pay these trainees and two consultants involved in the development of the MC3. Besides Pontuschka and Carlos Paes, the company can also draw on the knowledge of a specialist in the banking industry, Rui Cabral de Mello, who gives guidance on the concept of the software in its functional aspects, to ensure that it is suitable for the needs of the target public.

Another important step, in the vision that Invenire’s directors have of the future, is the certification of its products. “Our goal is to start to export within a few years, and to do so we need certification that attests the quality of our software”, José Carlos explains. An essential certificate is the Capability Maturity Model (CMM), an endorsement of quality of software products and processes that is internationally recognized.

Obtaining this endorsement is not cheap, because it involves the services of specialized consultancies, authorized by the certifying body, a role that is carried out today the Carnegie Mellon University, in the city of Pittsburgh, under license, after a tender, from the Software Engineering Institute, a research center sponsored by the Department of Defense of the United States.

Fine blend
PIPE’s third company, Spall, concentrates its technological and commercial investments on solutions for the industrial sector. More precisely, for the ceramic surfaces industry, responsible for the production of floors, sinks, toilet bowls and wall tiles. Before the end of the half year, the company plans to launch the first version of a program that simulates the material replacement for this industry. With no known competitor in the country or abroad, Ceramix may save millions of reals for companies from the industrialized ceramics sector, and also to make feasible quality control procedures capable of making them more competitive in the international market. The product will be launched in a version for the Windows system. “Operation on a network can be done easily, if a request comes from any customer”, says Fábio Leme de Almeida, the company’s Research and Development manager.

There is also a great marketing potential for Ceramix. The fourth largest producer in the world – losing only to Italy, China and Spain -, Brazil has difficulty in giving uniformity to its tiles, chinaware and porcelain, as a result of the lack of information technology tools capable of simulating results after the inevitable replacement of raw materials, which calls for all the clay mixture to be reformulated. “Even clay coming from the same quarry may show physical and chemical variations, and it is almost impossible to guarantee the maintenance of such characteristics as the capacity for water retention, hardness and resistance in ceramic products”, observes Edélcio Leme de Almeida, Spall’s administrative director and the project’s coordinator.

The problem over the raw material replacement is not limited to the question of uniformity. “Companies avoid replacement to the maximum, storing enormous quantities of material, and remain chained to their suppliers”, Almeida comments. In other words: the problem affects the use of space and the financial turnover of the companies, and turns them into easy prey for any abusive price increases. Furthermore, tests with new raw materials, based on trial and error, cause enormous losses. “Given the size of the equipment used, the minimum quantity for testing is 1 ton, and replacement usually calls for several tests, with a high consumption of raw material, human resources and energy”.

Ceramix simulates the use of various raw materials for reformulating the clay material and the glazes for ceramics. Using a database, the software helps the users to identify mistakes in the formulation of the products. “It is software based on scientific models, with a module totally dedicated to calculations”, Fábio explains. The new system is being tested by a São Paulo company that prefers not to have its name disclosed, for strategic reasons. “This company’s collaboration has been very important for checking the efficiency of the software”, Fábio comments. According to his forecasts, the launch of the product should take place before the end of this half year.

Edélcio says that it became feasible to develop Ceramix in 1998, following technical conversations with Edgar Dutra Zanotto, the professor of the Material Engineering Department of the Federal University of São Carlos (UFSCar). The region is an important center for ceramics, and UFSCar runs laboratories aimed at the sector. Zanotto collaborates in Spall’s software project, which also receives consultancy from a mathematician and is being looked after three students for UFSCar’s Computing Department.

With net income of around R$ 40,000 a year, Spall was born in 1994 and now has an order to meet. The deal that was the reason for the company to be founded resulted in the launch of SIM – the Masonic Information System, which was later to attract 5,000 customers in Brazil. Spall also provides consultancy services in the areas of networks and the Internet, besides developing websites. “With Ceramix, we intend to at least double our sales before the year is out”, explains Edélcio.

Ceramix, MC3 and Suit are examples that creativity and entrepreneurship, coupled with the development of innovative products in small companies, can launch the country to a higher level in the production of software, a product that goes into the basket of basic necessities for any sector at this start of the 21st century.

Certification guarantees the sector’s future

Brazil’s exports of software had an astonishing increase between 1995 and 2000: they leapt from US$ 10 million to US$ 100 million. “The results for 2001 have not yet been calculated but they should be in the region of between US$ 120 and US$ 130 million”, forecasts Fábio Pagani, the executive coordinator for the development of business at the Society for the Promotion of Excellence of Brazilian Software (Softex), which was created by the National Council for Scientific and Technological Development (CNPq) in 1993, and in 1997 was transformed into a private non profitable entity.

The growing increase in exports of software developed in Brazil, however, is still far from assuring Brazil a good share of the world market. Local production is more concentrated on the domestic market, where it accounts for 76% of domestic sales, which in 2000 added up to US$ 3.2 million, according to the Secretariat for Information Technology Policy, of the Ministry of Science and Technology.

But the figures for the domestic market do not bring the country any comfort as to the possibility of growth and of making good use of the Brazilian product. In 2000, according to the forecasts of the Central Bank, imports of software reached US$ 1.02 billion, resulting in a deficit of US$ 920 million for the sector’s balance of trade. From 1995 to 2000, the purchases of software produced outside Brazil recorded a rise of 500%, while the Brazilian market grew 74%. A simulation presented by Kival Weber, Softex’s vice-president, at the Minas Gerabytes Forum, which took place at the Federation of Industries of the State of Minas Gerais, in Belo Horizonte, at the end of last year, forecasts that if the situation remains unchanged today’s 24% share of imported software will reach 94% in 2010.

Proven capability
The fact is that the production of software in Brazil, which has as its high points creativity and flexibility, is not guided by universally accepted standards of quality. “Certification is today one of our main banners”, says Vanda Scarterzini, head of the Secretariat for Information Technology Policy (Sepin), of the Ministry of Science and Technology. The country needs to adapt itself to the international standards of the software industry and to boast this in the four corners of the planet, not only to export more, but also not to lose share in the domestic market.

To do so, Softex is seeking agreements with consultancies specialized in preparing companies for obtaining the Capability Maturity Model (CMM), which defines concepts and practices for software development. According to Sepin’s data, only 10% of the 3,500 software houses established in Brazil had already conquered this certification by 1999, a proportion that should reach 20% in 2001.

The CMM, which sets out to perfect the process and the results of software development, both from the point of view of engineering and of management, fosters the definition of a structure for the promotion of continuous improvements. It is divided into five levels – initial, repeatable, defined, managed and optimized. “The Brazilian companies that export have at the least certification up to level 3”, comments Pagani.

“Investing in the quality of our software is also a way of fighting Brazil’s social deficit”, Vanda ponders. According to Softex statistics, the Brazilian software houses generate over 180,000 direct jobs. According to surveys made in 1998, 40% of them are micro companies, with less than ten employees, and 33% have between 11 and 50 members of staff. Of the total, 8% are medium in size, and 19% are large companies with a workforce of over 100 employees.

The Information Technology Law, approved in 2001, does not address itself directly to the software industry, but it can stimulate the sector strongly, observes Secretary Vanda. Its 1st article, to son regulated, encourages the use of software produced in Brazil and creates a legal framework for the government to use its purchasing power as an instrument for encouraging research and development.

Sectorial fund
Another advance in the regulation process for the new law was the creation of the Committee of the Information Technology Area (Cati), to manage the funds set aside by information technology and telecommunications companies that receive tax benefits. These funds form the Sectorial Fund for Information Technology (CTInfo) and should be applied in research and development. “In 2002, the amount should reach R$ 50 million, which corresponds to 0.5% of the sales of the companies benefited by the legislation”, Vanda reckons.

India as a paradigm

India is the first country mentioned when the subject is the production of software in third world countries. Between 1996 and 2001, this country’s foreign sales, of which 62% go to the United States, increased from US$ 1 billion to US$ 8.5 billion. Exports are driving the growth of the domestic market in India, which went from a mere US$ 670 million in the 1996/1997 tax year to over US$ 2 billion in 2000/2001.

The former British colony has the competitive advantage of using English as its second language – which all children learn when they go to school. In addition, India concentrated on programming back at the end of the 70’s, when IBM left the country – one of the cases where necessity was indeed the mother of invention.

For all these reasons, the country’s transformation into a hothouse of brains was a natural path, because the salaries offered by the American companies proved to be very attractive by Indian standards. Afterwards, the major global companies realized that to set themselves up in India or to form business partnerships there would be more advantageous, taking advantage of the low labor costs of the local market. Trade exploded, and the so-called software factories, which develop customized products, proliferated.

The Projects
1. Universal Remote Control Interface System (nº 99/06189-9); Modality Small Companies Innovation Research Program (PIPE); Coordinator Eduardo Vettori – InfoDinâmica; Investment R$ 166.200,00
2. Exchange and Foreign Trade System (nº 99/11584-4); Modality Small Companies Innovation Research Program (PIPE); Coordinator Valter Francisco Arruda Alves – Invenire; Investment R$ 232.370,00 and US$ 30,000.00
3. System for Formulating and Reformulating Ceramic Clay Mixtures (nº 98/14927-7); Modality Small Companies Innovation Research Program (PIPE); Coordinator Edélcio Leme de Almeida – Spall; Investment R$ 97.360,00