Technology fundamental to Mexico's business efficiency and productivity

Mexican companies are making strong progress in adopting digital technology to improve the efficiency and productivity of their operations, according to new research; however, industry figures have highlighted opportunities for greater advancements to be made in the field of innovation.

The 2017 “iDX Business Digitalisation” report released by market intelligence company International Data Corporation and digital consultancy Salesforce revealed a significant divide in the use of digital technologies, with businesses mainly deploying technology to improve existing operations rather than develop innovative practices.

Mexico registered an overall score of 64.6 out of 100 in the report, the results of which were derived from a survey of more than 100 local businesses. The country put in a stronger performance with regard to efficiency-based metrics of speed and productivity (81.5) and mobility (75.5) than intelligence (49.3) and connectivity and integration (37.2).Highlighting this trend, the report found that the five main priorities identified by Mexico-based companies using digital technology all related to boosting efficiency and building on existing operations. However, innovation-based areas such as big data analytics, the internet of things (IoT) and machine learning were considered less important priorities.

Only 15% of companies reported using artificial intelligence (AI) in their existing operations, while a further 5% said they were looking to AI in the coming 12 months, with the current economic environment cited as an important factor behind the focus on efficiency rather than innovation. R&D SYNERGIES: Industry figures have highlighted the importance of investment in research and development (R&D) in improving levels of digitalisation, with some concerned that low levels of spending, coupled with a reluctance to take up new forms of technology, could hinder further development. While global innovation leaders such as South Korea spent the equivalent of 4.2% of GDP on R&D activities in 2016, Mexico’s investment totalled just 0.5%.

Mexico’s lack of a supporting R&D ecosystem presents additional challenges. “Although investment is also important, synergies are undoubtedly the solution to forging ahead with Mexico’s R&D agenda,” Efrén Ocampo, CEO of Neolpharma, a pharmaceutical lab, told OBG. “All of this cannot come without a long-term, comprehensive strategy that identifies the most relevant areas to apply this science and technology.” More alliances between universities, R&D labs and private companies is one way such synergies could be fostered. “Privately led collaboration could stimulate innovation,” Carlos Antonio Coello, dean of Centro de Estudios Universitarios Monterrey, told OBG. “The government should also help to promote these alliances.”

Automotive Driver

Despite these challenges, Mexico’s automotive industry has been identified as a leader in the country’s digital transformation. The country is the fourth-largest vehicle exporter in the world, according to the UN Economic Commission for Latin America and the Caribbean, and although it represents 18% of manufacturing GDP, the automotive sector accounted for 90% of the 5m robots purchased domestically in 2016. Industrial manufacturing giant Siemens says digitalisation technologies such as AI, IoT, machine learning and big data are growing at a rate of 8% annually in Mexico, with business figures highlighting the benefit of multinational firms setting up digital prototype operations in the country.

“Whereas many Tier-2 and Tier-3 companies have a long way to go in their digitalisation strategies, several automakers are designing their Mexico operations to be some of, if not the most, technologically advanced in the world,” Peter Kroll, CEO of technological consultancy firm Everis México, told OBG.