Head of Commercial Expansion and Enablement
These are fast-moving times for the development of the Internet of Things(IoT) in Brazil, following deployment of a national digital strategy that aims to stimulate business activity, focus investment, and transform society from the ground up.
The plan, signed off earlier this year by Brazilian President Michel Temer, will encourage companies to adopt and integrate IoT into their work processes and operations. This activity will focus in key vertical sectors such as manufacturing, agriculture, smart cities and healthcare, where the expanded use of connected technology is viewed as a vital means of unlocking future growth.
The government strategy builds on some impressive momentum for IoT adoption in Brazil. Vodafone’s IoT Barometer 2017/18 found that Brazilian companies are positive about digital technology and its business potential, with 78% of organisations in the country saying they had a comprehensive digital vision and strategy, compared to 71% globally. Furthermore, those that have prioritised digital are already seeing the benefits. 76% of organisations in Brazil said their digital strategy was generating measurable business value. Of those that have adopted IoT, the vast majority are seeing positive results, with 96% of IoT adopters in Brazil reporting tangible returns or benefits.
According to management consultants McKinsey, IoT adoption has the capacity to add US$200 billion to the Brazilian economy by 2025. This staggering growth will be driven by Brazil’s rapidly urbanising population, which currently sits at 86%, with connected technology being used to deliver improvements in mobility, public security and resource use.
With such positive factors in place, it is perhaps no surprise to find that many global organisations are looking to establish IoT infrastructure in Brazil or expand their current footprint. But some words of warning are required: while there is undoubtedly strong support for IoT in Brazil, deployment can sometimes be challenging, especially for overseas organisations. The formation of plans requires careful consideration of several important factors, including regulatory and legislation issues, if successful implementation is to be achieved.
On taxation, for instance, a higher tax is levied at technologically advanced products. To illustrate, a traditional light switch is defined as construction material which attracts a lower tax rate than a smart IoT-enabled light switch, which is effectively considered a computer. Tax criteria is also linked to the specific classification of each IoT project, with some taxes applied per mobile/SIM connection. These tax issues aren’t necessarily prohibitive factors for companies looking to expand or establish IoT services in Brazil. They just require foresight and planning when establishing business case criteria.
Also, in terms of the roaming, the regulator’s current guidelines state that permanent roaming is restricted, which can cause problems for businesses using global SIMs. However, Vodafone ensures that its partners’ local SIMs are fully compatible with its Managed IoT Connectivity platform. For businesses in Brazil, this arrangement delivers full visibility and control of IoT implementations using local SIMs from a single managed platform.
It’s clear, then, that as with any country, taxation, legislation and regulation are all factors to be considered in Brazil. That said, there are plenty of examples of overseas organisations that have spotted an opportunity for IoT in the largest country in Latin America and have gone on to create a viable business model. The key is to take a structured approach – defining a specific set of objectives and validating at pilot level, before deploying in one facility, or on a specific production line, and then scaling up.
More importantly, in order to consistently implement a successful, go-to-market strategy, an experienced local partner is necessary. In a country as large and diverse as Brazil, even global organisations do not have all the skills and resources required to launch a successful IoT project on their own. Therefore, it is a journey best undertaken in partnership with Vodafone and knowledgeable local service providers that, together, can manage a wide range of complexity and provide reliable end-to-end connectivity.
Read our Breaking into Brazil whitepaper and find out more about deploying successful IoT projects in the largest country in Latin America.
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