Desmond Mullarkey, President, SAP México: Interview

Interview: Desmond Mullarkey

To what extent are local conditions suitable to ensure Mexico’s ICT sector is globally competitive?

DESMOND MULLARKEY: Mexico is a wide-open market. Companies can come into the country and sell goods and services in one of the most open economies in the world. This offers an opportunity for many Mexican corporations, but it also forces them to be more competitive. It means that the whole management of data – the digitisation, relationship and customer experience – has become extremely urgent. We are seeing an acceleration towards innovation, and a significant use of data in the country, particularly from industries such as retail, banking, the consumer and entertainment industries, and the hospitality sector. Data is used on a massive scale, and data analysis can substantially improve the process. Data centres are also growing significantly, bringing many advantages to the market and attracting large investments.

Furthermore, the supply chain in Mexico is one of the world’s most sophisticated. This country comes from a very long history of manufacturing, which has spread throughout the country. Manufacturing requires a modern supply chain, which Mexico can further develop to both grow and strengthen its pre-eminent position in global trade. For instance, Mexican companies could look into understanding customers’ needs and transform their supply chain based on this knowledge. Regarding the competitiveness of its human capital, we also have to consider other factors, such as loyalty and work ethic, which are also key to local multinationals.

How are new technologies being used to better optimise productivity and efficiency while at the same time improve the customer experience?

MULLARKEY: There have been some disruptive technologies that represent a breakthrough in the local market. These include technologies that synchronise manufacturing systems, and bring everything into real time. This way, businesses are able to have all production areas running at the same speed, which enables planning, adjustments and overall synchronisation.

With regard to customers, technology facilitates and enhances the customer experience at every step of the interaction with the client. This is the role new technologies can play. There is a gap between what CEOs think the customer experience is like and what customers really experience. That is what is called the experience gap, and the way companies react to closing this gap is how they will remain competitive. Nevertheless, understanding and capturing that information can be a challenge, with the purpose being to make it more useful for planning, marketing, and product or service development. The use of new technologies is shifting everything back to the consumer, as their opinions are more readily available, and companies can better align their products and services to consumers’ expectations.

What distinguishes the way Mexico’s e-commerce industry is expanding, and what is the reason behind this idiosyncratic development?

MULLARKEY: In recent years there has been a noticeable surge in Mexico’s e-commerce segment, which has grown by 20% in 2018. The way this business is developing in Mexico differs from more sophisticated markets, such as the US, where physical stores are closing down because of e-commerce. In Mexico we are seeing a hybrid model where people are still visiting shops. This is because of growth in non-retail activities in shopping centres in Mexico, which feature more attractions – such as cinemas – than malls in other parts of the world. Nevertheless, customers still order many of their products online, and the country has become very efficient in delivering these to customers’ door. This way, retailers in Mexico are still expanding, while additionally having a clear e-commerce strategy. Ultimately, although the act of visiting a physical store will not disappear anytime soon, new technologies will help e-commerce continue expanding in the future.