In this episode, we discuss digital transformation trends in the Latin American market. We also explore the common challenges associated with defining digitalisation roadmaps in situations where the baseline maturity level is low, but the aspiration level is high. 

Our guests today are Charles Lefevre and Rafael Barros of Braincube. Braincube is an IIoT platform suite with business and expert apps designed for manufacturing. 

IoT ONE is an IoT focused research and advisory firm. We provide research to enable you to grow in the digital age. Our services include market research, competitor information, customer research, market entry, partner scouting, and innovation programs. For more information, please visit iotone.com

Erik: Welcome to the Industrial IoT Spotlight, your number one spot for insight from industrial IoT thought leaders who are transforming businesses today with your host Eric Walenza.

Welcome back to the Industrial IoT Spotlight podcast. I'm your host, Eric Walenza, CEO of IoT ONE, the consultancy that helps companies create value from data to accelerate growth. And our guests today are Charles Lefebvre and Rafael Barros of Braincube. Braincube it is an IIot platform suite with business and expert apps designed for manufacturing.

In this talk, we discuss digital transformation trends in the Latin American market. We also explored the common challenges associated with defining digitalization roadmaps in situations where the baseline maturity level is low but the aspiration level is high. If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy, or training initiative that you would like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.

Charles, Rafael, thank you for joining us on the podcast today.

Charles: Hi, Erik. Thanks to two of us.  

Rafael: Thank you, Erik.  

Erik: Before we jump into the conversation here, I'd love to just learn a little bit more about yourselves and how you joined Braincube and what kind of the scope of your work is and then we can get into these topics. Charles, do you want to kick us off here?

Charles: Yes, sure. So as my name might indicate, I'm French. I have been in Brazil like for probably 15 years. After my engineering graduation, I went to Brazil. I love the country of the culture. I've been working there since then. And I had the opportunity to know Braincube in, I think it was 2014 Schwabb, probably best friend of mine, Stephane, which is sales manager in Europe. And I had the opportunity to meet [inaudible 03:15] Braincube team, and I started as a sales executive at Braincube in 2015.

So as the team has been growing, Braincube has been growing in LatAm; since then and now I'm sales manager and in charge for the growth of the company and attending industries in LatAm.

Erik: And how about yourself, Rafael?  

Rafael: Well, different from Charles. I'm Brazilian. I'm working in Braincube for five years, and I met the company some time ago when I was working in the paper industry. I had the opportunity to understand the technology and a few years later to be a part of the team.  

Erik: And you guys, are you working together? Are you in the same city? Is your organization like centralized? Or are you kind of working from home? I know Brazil is also quite a large country.  

Rafael: Well, after the pandemic, we are working from home most of the time. We gather some time at the office. But today I'm Bela Ischia, Charles is in Sao Paulo, so we're a little bit far away.  

Erik: I got it.

Charles: I think this pandemic allowed us to change the way of working. We used to be like at the office most of the time, and now we meet one day a week to do meetings that we didn't do remotely. And so yeah, we had to adapt it to that.

Erik: I wonder how this works back in France, because I remember your headquarters is in this beautiful chateau in the French countryside somewhere. So I guess there you're one of the few companies where when people actually might want to be in the office?

Charles: Probably. We don't have a nice chateau, but we have the weather at least, talking for myself as a French in Brazil is like 50 weeks of summer a year, also a nice place to be.

Erik: We are working through the agenda before we kicked off here. And I'm thinking maybe it makes sense to flip it a little bit and start with just geographically. What does digital transformation and Industry 4.0 look like in Latin America today? So it'll be useful if you can educate me and probably the audience around this. And then we can get into the topics of developing a digital transformation strategy and executing on that.

But how do you look at Latin America? Obviously, it's a big region with probably a lot of difference in terms of maturity. But what is the way that you segment the region of Latin America when you're thinking about what solutions might be a good fit where?

Charles: Yes. Thinking about LatAm, as you said, is a very wide region and you have a high diversity of kind of industries. You have international groups like I know paper industries, automotive industries, and you have regional groups probably as strong as international. And I think due to this variety of origin of these groups, there is also a big variety of progress on the digital journey. So we talked about this 3.0 that's started probably like 30, 45, 40 years ago.

And now the 4.0, what we can see here is very different needs from a company to another compared to what we can see when we discuss with our peers in Europe or America.

Erik: And what I think about Latin America, I think logistics, it seems like a region with very challenging logistics because of the odd shape of the region in Central America and then the rainforests and the mountains. So there's probably some challenging logistics environments. We just did a project in Brazil recently where we were talking about sugar factories and tomato factories that were out in the areas where they didn't have great Internet connectivity and where maybe hiring technical talent was challenging. But what do you see when you're trying to figure out how to execute on a digital transformation initiative?

Charles: If you think about LatAm, it's a region that are used to instability, economy, probably politics also. I understand that my perception coming to Brazil and knowing more LatAm, that's a developed like a protection system. Industries and people are highly flexible here. So it's not necessarily a difficulty when you try to implement change. It’s probably their best asset when you try to implement a new methodology or new technologies like digital transformation.

Erik: So this project I mentioned, we were dealing with West Coast, U.S., Brazil, Italy and France, so four different regions. And the Brazilian team was the team I enjoyed working with the most because they were just super pragmatic. Within Latin America, are you primarily focused on Brazil? Or where are the other countries where you see a significant market for industry 4.0?

Rafael: So far, we have been focusing on Brazil because it's the biggest economy in LatAm and also because it's easier for our office, we all speak Portuguese. And we identified the last months, years that there is some verticals of industries that are driving LatAm economy, such as mining and steel industry. So we have been putting some efforts on helping these industries in LatAm. And we are seeing more opportunities and more way to help industries in Peru, Chile, China where the steel industry is very strong.

Erik: When it comes to technical talent, especially on the IT side, what is the level that you're typically dealing with there?  

Rafael: On that topic, we noticed industry that are around big cities, we have a high level of maturity of people. But as Charles said we have well, a wide region in Latin America and the Meuse that are far away from the city centers, they struggle a lot with talent. So that's one of the biggest challenges regarding to people in industry. I would say not only IT, but even operations specialist, engineers, analysts.  

Erik: I think this is then a good time to get into the conversation of how you actually work with companies. So maybe the first question here is when you're working with companies that they could be global, but then you're working with the regional team or they could be a regional company, my assumption here is that you have to, to some extent, educate them along the way of what is their digital transformation strategy or at least within a particular scope how do they carve out an initiative and define that? And then how are they going to execute that? Because if they don't have that in place, then they're not going to be able to use Braincube's technology. So how do you think through when you're working with customers? How do you think through what makes effective digital transformation strategy? And then we can get into the execution topic. But first, just kind of looking at the strategic level, what do you see and then maybe you can also point out, what do you see people commonly doing wrong when it comes to defining their DT strategy?

Charles: As you say, we can work with global and regional groups. And I think that's one of the strengths of a company like Braincube to have entities traverse the world to be able to help to reestablish a real partnership with multinational industries. And doing this, we can adapt to the local culture. And about what's the best way to start or what to avoid, with Rafael, we try to simplify as much as possible, we notice that in LatAm, most industries are really studying digital transformations, they’re studying use case from China, from USA, from Europe and they think it's highly complicated. They think that they need to have big teams to spend a lot of money.

And the way we want to guide with Rafael is to simplify as much as possible and helping the company to focus on their business needs, what makes them specific on the market we are working with like cement companies or steel companies, paper companies. The very first start of the conversation is what makes you special, what makes you unique on the market and helps you to be fast from your competitors? And the next step would be, so, okay, how do you work on this day to day basis? What are your routines?

Until we get to okay, so what's a bottleneck, what prevents you to reach your goal? And we understood with Rafael that I think this simple and pragmatic approach, we were able to do dis-complicated 4.0 digital transformation to have successful implementation, successful adoption by users all over the plants but growing partnerships, I would say.

Erik: If we look at the two different large customer segments, so we had the multinational companies and then we have the regional players, where do you see decisions being driven from? But does it tend to be coming from headquarters? Does it tend to be coming from the local factory? Is it kind of bottom up from maybe a production line engineer manager who has some budget to solve a particular problem? How do you see the decisions being made between these two big buckets of customers?  

Rafael: Erik, I see that the local mills, they have a lot of power on the decision. So even with our great customers that we would work with our international roll out, we always see that the local teams, they have a lot of knowledge from the technology, the mills and the market. So they are an important part to be considered in their implementation roadmap too.  

Charles: We noticed a big difference for global rollout or when we discuss with our colleagues in the US or Europe where decisions are easily made, it's quarter and then rolled out on the plants. At least in Brazil are no for other countries in LatAm, but we very frequently see the opposite. I mean, we have to convince, for example, operational director or IT director about the need has to evolve to change.

But it will sponsor the decision, but the first reflex will be to invite engineers final users to the meeting so they can complement with where there’s difficulty and what the needs on the day to day basis. I would say that we can see a lot of meetings with an engineer or an operator discussing directly to a VP, for example, to say, okay, I like this solution because it helps me to control my process, it helps me to have a holistic vision of the production.

And then it's part of the decision process. I mean it shakes all the reacting. I mean you have operators and VPs and directors on the same level discussing about the need and deciding together about what to do.

Erik: I'm sitting here in China and I'd say we have a very different culture here. So on the one hand, a lot of Chinese organizations are relatively strong because they're a large footprint for the company. But what we see is typically headquarters will effectively push tech rollout into China. But traditionally, that's been the kind of the, frame and the local teams won't push back too much in meetings, so they'll accept standardization on the tech stack. But then what will happen will be there's going to be a lot of shadow IT where people will accept that the technology is going to be rolled out, but they won't use it because it's probably not a good solution for the local needs. They'll just on the side find some budget and build or buy a secondary solution and use that instead and then you have this proliferation of Shadow IT because they don't want to kind of directly say, no, this solution is not going to work.

I can imagine that Brazil is a bit more argumentative and certainly very communicative culture. So maybe it's easier in Brazil for teams to push back and communicate how things need to be localized. Whereas in China, it's still done right, but it's done a little bit more subtly not necessarily directly, but just by going around and finding solutions without necessarily telling headquarters about them.

Charles: And that was part of our learning process actually on the region because Braincube is French. I have totally French thinking. I thought starting in Brazil, that's okay if a decision is made somewhere and someone wants to apply in Brazil or another country, it will happen. We learned the hard way. Fortunately, we learned it fast. But that's not the way it's working here. So now it's really part of our process to create the good conditions for adoption. And if you think about adoptions, its end users, it's the engineers, the operator, coordinator, I mean, depending on how they want to be owned to make decisions on a day to day basis and it's now part of our process.  

Rafael: And Charles, I see that's a key point for us to have like local people here in Latin America to understand the customer needs here because not every time they will speak back to corporate and argue about the solution. So it's very important to understand the whole [inaudible 19:09] to be able to help them and discuss those subjects with corporate so that the solution can work in a long time.  

Charles: That made me think, Eric, I wanted to ask you actually. How is it in China, because I told you earlier that LatAm is used to instability, so as I used to change very fast and very easily? So it's part of the strategy also in [inaudible 19:38]. Is that the same thing in China? I mean, those are strategy tends to change frequently.

Erik: So yes and no. I think on the one hand, China has had a tremendous amount of change just because of the very strong GDP growth. So, there's been this culture or this environment of constant growth for 30 years and that's created a certain unique dynamic where every year it's okay, we've got ahead of 15%, 20% growth target for our China business. And you can imagine that creates a certain type of culture where it's just put more capacity and that's changing right now.

But that forced you to react very quickly and to change very quickly. And of course, Chinese businesses epitomize that. So you have all of these companies that are pivoting into completely new industries. You have airlines that are becoming real estate companies and so forth because they're identifying opportunities and then they're just trying to jump on those opportunities as quickly as possible before somebody else takes the market. So there is that very strong dynamic of growth.

On the other hand, you traditionally have more of a top down market especially among the state owned enterprises where a lot of the decisions are being driven by a small group at the top and then it's kind of counter to change. You also have in a lot of corporates, a fairly strong headquarters presence. And now headquarters, they are trying to localize more and put more decision making in the China subsidiaries. But that's a relatively new trend. I guess, yes and no, I think it's probably somewhat different than Brazil.

Let's get into this topic of maturity. I think that's probably an area where there's some similarities. I mean, China also, it's a very diverse market with world class factories in some areas and then a lot of industry pointing to factories. And when I was speaking with Laurent, we were focused more on the more cutting edge solutions that Braincube is bringing to market. But I know that you also do things that are more suited for companies that are a bit less mature.

But maybe a starting point how do you when you're first engaging with the customer, how do you assess their maturity and then assess what solution might be right? Because I guess maturity can be there's different axes. You can look at it in terms of their machine connectivity. You can look at it in terms of their lean six sigma processes, their IT backbone, etc. So what are the critical variables for you when you're assessing what the maturity of a factory or of a company is?  

Rafael: Eric About maturity, I think we should look at two different points. The first one is technology, so how prepared the customer is regarding technology, about connectivity, the systems that are running, how those systems talks with each other and those kind of things? And the other point that's really important too, it's about the people maturity regarding data, and that's something that we work a lot here in Latin America.

The first phase of the assessment with the customer, we really deep dove into their future to understand how they use data today, what they are expecting to use their data; and joining those two points, technology and people maturity, we start to build with them the road map of digital transformation. So I think one of the important points to consider to have a successful digital transformation is to address the correct solution to the moment.

So sometimes the customer is really eager to advanced technologies. But in our roadmap building process, we always have this approach, how is the people maturity, how is the technology maturity, and what can we provide right now. And as the customer evolves, we evolve with the customer and can provide more advanced technologies.  

Charles: I think that's exactly it. When we consider the four pillars of digital transformation: technology, people, I would say strategy first, but strategy, technology, people and data. There is this six year side of autonomous machine learning neural networks etc. And the assessment we do as a company is okay, it's a journey to partnership with us. So we also have companies with last year, the matter is how to help you to get results first. And so that's why we really try to understand as the best possible way, the days are working today because if you implement big change on the routines between Friday and Monday, everybody would be lost. So it needs to be very subtle change at the start. You've shown to have good adaption and then adapt on the roadmap as the advance and their journey.

And usually, what we see here in LatAm for the first kind of usage, if we are to pass from is access to data. I mean be able to access data from any plans, anywhere, any time and be able to take decision. It's the first big value of society is breaking silos.

Erik: There's always this tension where on the one hand you want to establish a more long term vision, so you have some clarity around where the organization is going towards. On the other hand, there's going to be a lot of learning along the way, and so you need to be able to evolve probably quite significantly.

And so there's always that tension of how much structure versus flexibility you want to have in the roadmap. Maybe it would be useful if we can think of one example of a customer that you're working with and you can, of course, anonymize the name, but so that you have a clear example in mind and walk us through what first do for them, what was step number one, and then how did the roadmap evolve and maybe where are you today? Is there a customer that you could refer to? And again, feel free to anonymize it.  

Rafael: I have really good customer in mind, it's one big cement group here in Brazil. In the beginning, with that customer, we try to understand their needs. So the customer ask us for technology, for advanced analytics, artificial intelligence and technologies that everyone is using today. And the first step in the roadmap that we build is data access. So although they already have had access to their data, it was not in a structured way.

So the first step we build with them was a simple virtual train that was able to communicate with all the meals, with all the process, and structured that data in a way that all the engineers and analysts could use the data to understand the process. After they achieved that level in technology and we work with them for them to achieve that level in people's maturity forward data too. It looks like maybe six months for them to achieve that level.

Then we built the next step that was focused on how to use that data to make analysis. So how can they be proactive about their process, how can they understand the factors that made the furnace stop or that contribute to low quality during the day? In that stage, the people's maturity, it's more important than the technology itself. So it was clear for us that we were working with maybe five or six mills in that time and was clear for us that three mills had more major engineers and they were able to build advanced solutions using the apps that we provide to work with data.

But one important point of working with big groups in the same platform is the ability to get what one mill is doing on a really good way and to roll out that solution to the other mills. So even in groups that you have different maturity around the mills, using the same platform, using the same data saturation, customer is able to quickly reply that results, that apps dashboard or analysis that was executed in one mill to all the other mills in the group. So in the end, you end up increasing the people's maturity to toward data.

And again, talking about technology, that customer is really focused on using artificial intelligence and advanced analytics in all of their mills. But we are in the middle of the roadmap, and building step by step, we can grant the customer that they're having a constant value from this solution and they can evolve in the long term with us.

Erik: What are the timelines here? Are we talking about between these different iterations? We're talking about 6 months, 12 months, 24 months?

Rafael: Well, it really varies depending on the customer. But in that case, specifically, the first step took 6 months to implement the technology to train and constitute to the teams to achieve that point. And then the second stage, I would say it took three months to some of the more advanced mills, and to reply that solution to other mills, it took three months more. So we're talking about a huge roadmap like this that was able to be executed in one year. And we're talking about sustainable results. So it's really important to take the time that's needed by each mill

Erik: And I'm always curious how organizationally these are structured. So was this led by like a central team under the CIO or the VP of engineering, or was it led by separate teams, each mill having their own team and them then coordinated together? What was the organizational structure on the customer side?  

Rafael: Well, to achieve sustainable results, it's necessary to have the high management engaged on this. So it's really important you have the CIO and the COO really engaged on the process, follow up the results, understanding how the teams are evolving and developing solutions. In that case, specifically, we managed to build some future workshops that was some online meetings with all the mills, the CEO, the CIO, the COO, all the high management where all the end users were able to show and to share for everyone what they were developing, which results they were achieving. And although it's a simple point, it was really important to build the data culture in the company.

So having all the high management involved in having the team, actually bringing the team the opportunity to share what they are doing regarding data to the high management level, we notice in all of these years. That's one really important engagement point for the team.  

Charles: And what's interesting is focusing on the sustainability because that's what we want our partners. The key point is respecting customer base. And you told Erik about human organization, how they’re organized to do this. In this specific case of a cement industry in Brazil, the VP of operation asked us to go slow. I mean, he wanted success. He didn't want to grow fast or to lose money. I want success, so let's go slow step by step.

So we were expecting a long journey and that's today perfect for us. But actually, since they had this corporate organization with corporate engineers and engagement of executive level, they were able to move very fast. And we were surprised that in less than a year they had all their Brazilian mill covered and using Braincube to leverage their data.

Erik: What else should we touch on here? There's one topic that I'm just personally interested in, so maybe I can quickly pick your brain on this, which is the topic of sustainability. It's obviously a very important topic around the world, but I think in Brazil, it's also quite a strong topic right now. And it's quite related to the topic of digital transformation. If you look at a cement mill, for example, there's a lot of energy consumption there. And probably the data analytics that you're enabling can also support them when they're trying to achieve sustainability targets. What have you seen in Brazil around this topic? Has this become a priority for your customers? Are you supporting projects or do you see this as still maybe a number three priority behind maybe more cost and efficiency?   

Rafael: With all these ESG trends around the world, we noticed that the companies are looking for it, not only for the sustainability thing, for the environment thing, but actually to be able to receive some funds for external companies. We noticed this during the last two years that a lot of investors are flocking more and more in companies that are ESG compliant. So that's a big trend here in Brazil for companies that are trying to adapt not only to Brazilian standards, but to global standards to be able to access these funds, to be able to grow with these funds.

Charles: We're working with a lot of energy consumption, environmental things, things that five years ago, almost no one was focusing on technology and analysis on this. Today, we see big trends around all the types of industries.  

What's interesting here in LatAm is that the industries have a lot of power. If you look on the global scale, politically, Brazil wants to be sustainable, but it's hard for them to take this decision. But we see as Rafael said, the industry is taking the step and really wanting to be more sustainable that they need just to respect laws. Maybe you can recall other examples, Rafael, but I remember the specific case of steel industries really monitoring the emission and trying to get to the zero carbon, so trying to compensate anyway from a way and another to be as green as possible.  

Rafael: Another really good example that we have is on the cement industry where you need to be able to mix your raw products to produce high quality cement; but at the same time, you end up producing some gases on this. So we have really tight legislation on this. More and more, the companies are trying to understand their data, understand the impact of adding the different material on how this will impact the cement quality and the production of gases too.  

Charles: We have these resources internally that we call it's a “digital twin”, it's a way to aggregate the data in a way that makes sense for the customer to take decisions. And I remember this example of a customer that needed to understand what product was polluting the less and then understand what were the conditions happening in this process that it was polluting less. So mix of raw materials, process conditions like, for example, temperature and speed and stuff like that.

So this is really a matter of having the mean to reach it, having a holistic vision of your process and also specific apps to be able to monitor your pollution and be able to know what's happening in your process and the unwanted conditions.

Erik: So last question that I wanted to touch on here is how you address kind of volatility or change. So you mentioned that time is a region where you need to be very flexible. I think the same is to an extent true here in APAC. So how do you enable this? What are the tools that you're providing customers with that allow them to be more flexible in how they deploy technology?  

Charles: Now, our technology evolution during all of these years, we started noticing that people want to be more autonomous on their solution. So today we have a lot of apps like low code, no code apps and dashboards that all of the engineers, the analysts, the operators, everyone on the shop floor to build their own solution to see data, to analyze data, to build their own solution with a high level of autonomy so they can adapt in itself really quickly and not necessarily ask for us to build something different for them that will take some weeks. So with these low code, no code apps that we have, mainly the engineers too, they are able to use their own solution in a matter of some minutes or maybe hours to take some decisions and actions their processes.  

Erik: What are some of the more common or maybe more interesting tools that you've seen people build?

Charles: People are really creative. Open environments like the ones that Braincube provides, we saw engineers doing all kind of things. Like one of the most impressive I saw was on the cement industry when engineers build a correlation graph that showed to the operators how the furnace is deviating so they can act with like 3 hours in advance to prevent the furnace to stop. And it was not using some advanced analytics algorithm, not like this. It was like in our basic graph environment use some correlations. And he was able to build that tool totally alone and provide this initially for one mill and then he rolled out these for all their mills that face of the same issue. When you structure the data in a really good way, you provide the end users the ability to be creative and to build their own solutions.  

Erik: And I think this is a very good point also that it doesn't need to be fancy or beautiful, but it just needs to do the job and it needs to be to some extent affordable and quick and flexible.

Charles: So adaptable scenario. You need to be quick, not to be fancy or beautiful. You need to be quick and assertive.  

Erik: Well, guys, I think we've covered a good amount of territory here. Anything that we didn't touch on that you want to cover today?

Rafael: I don't think so. We had some other ideas, but so really far away. I think we've covered what we needed.

Erik: Really, thanks for taking the time. I appreciate it.

Charles: Yeah, thank you very much for your time and patience. Well, I hope it will see some good.  

Rafael: Yeah, for sure. Thank you very much for the opportunity, Erik.

Erik: Thanks for tuning into another edition of the IoT Spotlight podcast. If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy or training initiative that you would like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.