Oracle chases SME business in Brazil

The company is ploughing resources into increasing local market share in the segment

Oracle is placing a sharp focus on gaining market share in the small and medium enterprise (SME) space in Brazil, with significant investments planned towards that goal.

The firm currently has a rather slim share of the SME market in Brazil - only 9 percent - according to a study by business school Fundação Getúlio Vargas (FGV). Overall, the local ERP space is dominated Brazilian software house Totvs, with a 35 percent market share, followed by SAP, with 31 percent. Oracle ranks third, with 15 percent of the local ERP business.

However, this might be about to change. The company has been delivering 40 local implementations of its enterprise resource planning (ERP) systems monthly, with SMEs representing a big chunk of that work.

Today, SMEs represent 20 percent of the firm's business in Brazil, an "exponential" growth rate when compared with results of a couple of years ago, according to executive Vice President for Latin America at Oracle, Luiz Meisler. These customers will tend to go for the company's cloud offering, which over the last year has been boosted by the Netsuite portfolio.

"We want to demystify the [SME user] perception that we are big and expensive - it might have been the case before, but all of that has changed now," Meisler told journalists at Oracle Open World in São Paulo today (20). Similarly, SAP is also looking to win more SME business and change price perceptions of local smaller organizations.

According to Meisler, Oracle is ploughing resources into enhancing its own capability to serve small and medium customers. For Latin America, the company has got 1,000 people focused solely on products for this particular audience, split across Colombia and Brazil.

"We have an unlimited headcount target for [the SME-focused group]. If we find that we have to hire an additional 200 people for that unit, we will do that," Meisler added.

According to Oracle Brazil president Rodrigo Galvão, who has been promoted to lead the country's operations a year ago, the company expects it will be soon improving its ranking in terms of market share within SMEs, given its investments in becoming more popular among those organizations.

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"All transitions takes time, as do customer references and projects that reflect on the bottomline. But I believe that we will soon be better positioned due to the robust way we are organized in terms of capability we can offer to these companies and the fact we have been building an ecosystem around [that segment] as well as specialized manpower," Galvão said.

During his tenure so far, performance in Brazil for Oracle has been positive, says Galvão. This was driven by demands around digital transformation across all segments and helped by the growing adoption of cloud locally - be it at larger organizations as part of migration initiatives or in smaller clients who have adopted the cloud from the start.

"Cloud computing came to democratize technology and SMEs are a very representative part of that. But we will continue to support large clients and their digital transformation strategies as well as smaller customers and their new ideas - we can act across all these segments," Galvão said.

But this doesn't come without internal challenges for Oracle itself. According to the executives, the company has been "on a journey" of transformation over the last couple of years and has been trying to change its own culture and processes to be able to provide better service to its clients.

"There is an exponential change taking place in the market and the big challenge is not around the technology of digital transformations - it is rather about the disruption of the on-premise model: when you depart from that model and focus on services you need professionals that are adapted and can meet the needs of clients," Galvão pointed out.

"While revenues from traditional projects continue to exist, our cloud model is growing significantly and requires different expertise. Nowadays, if clients paying on a monthly basis are not satisfied, they will just leave. So the best professionals will be the ones that best adapt to that reality - we need people inside Oracle that are able to make that transition," he added.

"We now have professionals moved by purpose rather than financials - and we have to keep bringing that talent inside and motivate them. Telling people they can change the world seemed utopic at first, but now we are able to tell real stories of transformation in the region such as using technology avoiding floods in Buenos Aires and improving the Mexican criminal justice system. That really speaks volumes to the internal organization."