The Brazilian software developer is now the seventh largest in the world and market leader in Latin America. It is reinforcing its assertive business model based on segmented operations and the distribution of its portfolio through regional channels.
Founded in 1983, TOTVS started out with the objective of developing software for personal computers. Since its inception, it has been innovative both in the development of its products and in the distribution and expansion of its business.
As a result of this activity, TOTVS is currently the seventh largest software enterprise in the world, according to the world ranking published by Gartner. TOTVS is also market leader in Latin America, and this is the only continent where a regional player leads the segment.
TOTVS has presented an organic annual growth rate of more than 15 percent per year over the last ten years, and its performance in 2009 is unparalleled by any other application software enterprise of similar size in the world. The enterprise ended last year with positive indicators in all its revenue lines, a record profit of $68m, which was 150 percent higher than in 2008, and 2,591 new software customers, meaning a 22.1 percent increase in the number of customers for the year.
The main reasons for these solid and consistent rates of growth are in the foundations that sustain the company, its strong consolidating profile and its assertive business model. TOTVS commercialises a staple product, since there is currently no enterprise of any size whatsoever that can survive without water, electricity, a telephone service and a software package to ensure satisfactory operational performance.
Furthermore, and also according to Gartner, only 7.8 percent of small businesses have already adopted some kind of business management software system to optimise their operations; in other words, there is still a vast universe of more than 468,000 enterprises of this kind to be reached.
Another factor that has contributed to the development of TOTVS is its strategic location: Latin America is in full economic
development mode and substantial changes are underway in Brazil, such as company law reform, as well as business opportunities stemming from the great events scheduled to take place in the country over the next few years, such as the 2014 FIFA World Cup and the 2016 Summer Olympic Games.
The TOTVS business model is another important factor that contributes to its constant growth. This developer is the only enterprise in the segment with 208 distribution channels. This condition enables it to work on three business fronts with regards to software: licensing, service and maintenance (new versions and help desk). Currently, 25,500 customers pay monthly maintenance fees to TOTVS. This group of factors has led TOTVS to conquer 49.1 percent of market share in the ERP suite in Brazil, its country of origin, according to Gartner.
Another strong characteristic of the Brazilian company is its strategy to segment its operations in order to be active in several different markets. TOTVS has specialised solutions in its portfolio for the management of the following sectors: Distribution and Logistics, Agribusiness, Manufacturing, Retail, Construction and Projects, Financial Services, Education, Health, Law and Services. The experience required to operate consistently in these 10 very different sectors, in such a personalised manner, was only possible with the consolidation of more than 23 enterprises, acquired over its 26 years on the market.
Besides software, TOTVS also offers administrative solutions that ensure greater competitiveness for its customers, such as Consulting, Technology and Value Added Services (BPO, Training, Infrastructure and Service Desk). It is an offering with high added value, whose objective is to elevate the level of business management effectiveness of an enterprise. With this set of solutions, customers can focus entirely on their core business whilst outsourcing their operational procedures to TOTVS.
TOTVS is the only Latin American company that has its own technology platform for developing its software, and it is currently investing in interactive devices for the near future. The company is taking a further step in the innovation of its middleware, so that its systems can be fully integrated with the web and capable of conducting business in network scenarios. That means structured and secure information between customers, suppliers and the community at large.
With more than nine thousand employees in 23 countries, the company has been winning awards such as Best Corporate Governance in Brazil, 2010 from World Finance, when we recognised those enterprises consistently offering better conditions for investors, despite market difficulties and the global economic downturn. In this
evaluation, TOTVS was the most prominent company, at first place in the Brazilian ranking.
The enterprise has also been recognised by several awards and institutions, such as the Brazilian Institute of Corporate Governance (IBCG), which focuses on the excellent Corporate Governance practices carried out by TOTVS. The company has become a market reference for its transparency in financial accountability, equity and corporate responsibility.
On the international front, TOTVS is already present in Latin America, Europe and Africa. It has its own business units or certified representatives for the sale and delivery of the available solutions in the following regional groups: The Southern Cone (Argentina, Paraguay, Uruguay, Chile, Bolivia and Columbia), The Northern Cone (North and Central America and the Caribbean), as well as Europe and the Portuguese-speaking African countries, or PALOP (Portugal and Angola).
The company spares no effort in fulfilling the specific demands of each country, each with its own characteristics and current legislation, methods of business negotiation and specific business procedures.
In order to reinforce its international operations, TOTVS recently announced a partnership with two American universities in Silicon Valley, Stanford University and San Jose State University (SJSU), for the expansion of Research and Development projects.
Stanford will be responsible for identifying new business and technological tendencies in the North American ERP market and to guide TOTVS strategies for operating in this market. SJSU will evaluate the interface, the available tools, the functionalities and delivery of the company’s development platform.
These initiatives are the result of constant improvement in TOTVS offerings for adapting to the sector’s tendencies and are aligned with the trajectory of the enterprise. In 2009 alone, more than $60m were invested in research and development, amounting to 12 percent of the company’s net revenue, one of the largest proportions in the Brazilian market.
Over the last two years, TOTVS has restructured its distribution system and invested in new technology, factors that led to an expansion in its EBITDA margins in 2009. As a result of this consistent evolution and adherence to the company’s founding principles, TOTVS has announced that it expects to present an EBITDA margin of between 27 percent and 30 percent for the period between 2013 and 2016.
