“Part of the Process”: Logicalis and its role in transforming the Latin American IT infrastructure

Rodrigo ParreiraCEO Logicalis LatAm

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Table of contents

• Setting up the context: Emerging Markets, Latin America and the IT market

• Playing the game: Logicalis business development in Latin America

• The road ahead: New perspectives and challenges

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Source: BMI, IHS, Goldman Sachs, Logicalis Analysis

Argentina2011: 7%2012: 4.1%

RSA2011: 3.5%2012: 3.6%

Japan2011: -0.5%2012: 3.5%

Brazil2011: 3.6%2012: 4.1%Chile

2011: 5.9%2012: 4.8%

Perú2011: 6.2%2012: 4.9%

Mexico2011: 4.3%2012: 2.5%

USA2011: 1.6%2012: 1.9%

Europe2011: 1.7%2012: 1.2%

SoutheastAsia2011: 4.7%2012: 6.0%

Russia2011: 4.5%2012: 4.1%

Latin American Average2011: 4%2012: 3.9%

China2011: 9.4%2012: 9.2%

Emerging Markets are driving the world growth2011-2012 GDP growth forecasts

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«The major Emerging Marketshave become the main enginesof world growth»

IMF, 2007

«Emerging Markets present majoropportunities for growth – but onlywith the right strategic approach »

Deloitte, 2011

«Emerging market multinationals are becoming a force in reshaping global industry, with rapidly expanding South-South investment and FDI inflows. International financial institutions need to adapt fast to keep up »

World Bank, 2011

« This time appears that the fundamentals are in place for the region (Latin America) to become a true force in the global economy.»

Forbes, 2011

« Latin America's economies showed surprising resilience during one of the worst economic downturns in modern history.»

WSJ, 2010

LATAM shows favorable conditions for sustained growthPerceptions from the market

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2000

# of companies based in Latin America 

(revenues above US$ 1bi)

Brazil33

Mexico18

Chile8

Peru3Colombia

3

Venezuela3

BRAZIL: 34

ARGENTINA: 7

CHILE: 21

PERU: 3

COLOMBIA: 5

VENEZUELA: 1EL SALVADOR: 1

MEXICO: 28

Source: Forbes, BCG, Logicalis analysis

The Emergence  of the “multilatina” corporation

Local companies are gaining global relevance and expanding regionallyGlobal corporate ranking and cross border strategies

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Source: Gartner 2011, Logicalis Analysis

LATAM EasternEurope

ME/A Asia/Pac

250300

384

174 149184 206 240

297

521

660

898

24%

2008 2011F 2015F

Total IT Spending in Emerging Markets(US$B)

The Latin American IT market has advanced rapidly in line with a need to modernize local productiveprocesses

• The hardware component in terms of CAPEX is larger thanin developed markets(~ 55%) due to a regional infrastructurepent-up demand

• Technology leapfrogging isusual

• Lack of skilled workforce is a widespread issue

• Local support in spanish/portuguese languageis seen as a very importantneed

Local corporations are driving large investments in ITIT spending evolution in LATAM compared to other Emerging Markets

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IT Management

Cloud Computing

Mobile Technologies

Virtualization

Business Inteligence

Infrastructure

Business Process Management

Service-Oriented Applications

Enterprise, Resource Planning

Networking, Voice and Data Communications

1

2

3

4

5

6

7

8

8

10

*

1

4

3

2

*

8

6

9

7

4

1

3

2

5

9

**

**

7

6

LA 2011 LA 2010 WW 2011

Source: Gartner, Logicalis Analysis

Local market has specific characteristics associated to its maturityTop 3 LATAM CIO´s priorities

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Table of contents

• Setting up the context: Emerging Markets, Latin America and the IT market

• Playing the game: Logicalis business development in Latin America

• The road ahead: New perspectives and challenges

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Logicalis is the most important Cisco partner in Latin America; 15 offices in 9 countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Perú

and Uruguay; 800 employees.

ArgentinaBuenos AiresCórdobaRosario

UruguayMontevideo

BrazilSao PauloRio de JaneiroBrasiliaBelo HorizonteBarueri

ParaguayAsunción

ChileSantiago

BoliviaSanta Cruz de la Sierra

PerúLima

EcuadorQuito

ColombiaBogotá

PromonLogicalisLatin America

60%

40%

Logicalis is a reference player in the LATAM IT infrastructure marketStructure and current geographic coverage

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Logicalis’s portfolio is built around helping our customers use technology to embrace, support and drive their strategic business processes, through advanced skills, world-class products and proven experience.

ADVANCED SERVICESManaged Services, Training, Support and Maintenance

Access technologies

Collaboration,Voice and Video

Communication Networks

Data Centers

Networks & SystemsManagement

Information Security

BUSINESS AND TECHNOLOGY CONSULTING

TEC

HN

OLO

GIE

SLogicalprojects

Assessment

Cabling

IntegrationProject m

anagement

PROFESSIO

NAL SERVICES

Business and Technology Working as OneLogicalis offering in LATAM

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• Highest level accreditations with Cisco for LATAM and some key partners– Netapp, HDS, EMC, IBM, McAfee, Nominum, Arbor, among others

Main awards and recognitions Cisco Global Partner of the Year

2011 – Enterprise

2010 – Technology Excelence

2009 – Emerging markets

Top IBM SWG Business Partner for Brazil – 2010

McAfee Best Technical Excelence Partner of the Year for Brazil –2010

Sales growth award for Southern Cone – Bluecoat 2011

Leveraging key partnerships in its business cycleMain partners and industry recognitions

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Logicalis has grown strongly in Latin America for the last three years

• Robust growth in the Enterprise/Corporate segment in Brazil, diversifying client base

• Penetration in the SP segment outside Brazil leveraging specificknowledge and practices

• Strong focus on regional clients (Carso Group, YPF, Itau etc.)

• Restructuring of the Southern Cone operations

• New services offerings : help desk and value-added operations

• New markets: Colombia, Bolivia, Ecuador

Logicalis results have consistently outpaced the market

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As of September 2011Source: Logicalis Analysis

ServiceProviders

67%

Oil & Gas 3%

Retail 1%

Services 3%

Manufacturing 3%

Construction 3%

Finance 13%

Mining 1%

Utilities 1% Public Sector 5% • In LATAM the SP segment representsthe majority of Logicalis Business

• Strong investment flow from fixedand mobile operators throughoutthe region

• Promon brand awareness in theSP market – networking/Brazil

• Cisco indirect sales model

• Financial Sector is growing steadily in Logicalis regional client portfolio

• Global /Regional clients: Santander, HSBC, Itaú a.o.

• Public sector is important but specificrisks drive a «controled growth» strategy for this particular segment

Service Providers are still the dominant segment in Logicalis client mixBreakdown of business per industry segment

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Large Corporations: over10k employees, excess of

US$ 1B in revenues

Mid-Sized Enterprises:from 250 to 10k employees, average revenues from US$

100M to US$ 1B

Small-Sized Businesses:less then 250 emplyees,

revenues below US$ 100M

• Logicalis in Latin Americafocus the largestregional/local corporations

• The typical Logicalis clientwould be an organization withmore than US$ 500M in revenues

• Logicalis currently managesaround 700 active clientsthroughout Latin America

Global standardcorporate

segmentation for ITLATAM standard

corporatesegmentation for IT

Source: Cisco IBSG, Logicalis Analysis

Logicalis is currently focused in the upper part of the pyramid Market segmentation and strategic focus

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Source: Logicalis Analysis

Logicalis clients are very representative of the LATAM corporate environmentSelected list of clients

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Logicalis successfull development in Latin America has been based on

• Understanding the geographic diversity of different markets in terms of maturity and competitive dynamics

• Leveraging regional synergies, both commercial and operational

• Building relationships with key economic groups on a regional level without losingtrack of local leader organizations

• Focusing on the technical expertise and the quality of its services

• Operating in a very close and colaborative mode with important technology partners– Cisco

• Growing its offering from strategic adjacencies, one step at a time

Main Themes

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Table of contents

• Setting up the context: Emerging Markets, Latin America and the IT market

• Playing the game: Logicalis business development in Latin America

• The road ahead: New perspectives and challenges

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CollaborationSolutions

Networking/Data Communications

Data Center and Virtualization

Solutions

Value – AddedServices

The core of Logicalis offering. There is stillspace for growth in Networking solutions due tothe current regional ICT infrastructure gap

First adjacency: IP is substituting analogictelephony platforms in LATAM at a strong pace. VC and telepresence are beginning to ramp up

The road to cloud: refreshing of existingcomputing platforms, new virtualized, «cloudready» infrastructures

Leveraging customer relationships to add valuethrough services, maximizing margins and increasing client grip

Geography/Footprint Grow, organically and via acquisitions toenhance current footprint

Key strategic prioritiesPhased offering and footprint evolution

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Total Hardware Market (LATAM)*US$ B

* includes: Brazil, Argentina, Chile, Perú, Colombia, Venezuela, MexicoSource: IDC, Cisco, OECD, Logicalis Analysis

• Hardware is still a major driver for IT investments in Latin America

• New infrastructures such as converged multipurpose IP networks are stillbeing deployed by corporations and service providers

• Goverment direct or indirectinvestment programs for boosting theuse of computers and internet as a social inclusion tool (PNBL – Brasil, Conectar/Igualdad – Argentina, Plan Ceibal – Uruguay, among others)

Top 5 Broadband Penetration Countries (LATAM)

Argentina 10,7%

Chile 10,7%

Uruguay 9,5%

Mexico 8,1%

Brazil 8,0%

IT Infrastructure is still a major opportunity for the regionIT infrastructure growth forecasts

2009 2010 2011 2012 2013 2014

29,9 36,6 38,4 40,3 42,7 44,6

CAGR8%

UK BB Penetration rate

(Dec 2010) 31,9%

20

0

400

800

1200

1600

2008 2014

Pure IP Phone Lines (LATAM)Thousands

CAGR15%

• Collaboration solutions, especially IP Telephony is currently the second mostimportant offering for Logicalis in LatinAmerica

• Corporations are actively replacing existinganalogic PBX and hybrid telephony systemsby pure IP solutions

• This movement is expected to last for at least three more years

• More advanced collaboration solutionsinvolving video (VC, Telepresence) are alsoramping up in terms of demand throughoutthe region

• Logicalis is by far the partner of choice forthese deployments in the Cisco ecosystemfor Latin AmericaSource: Frost & Sullivan, Logicalis Analysis

Collaboration solutions are still expected to gain ground in the upcoming years IP Telephony forecasted expansion in Latin America

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Skilled Workforce• LATAM companies have difficulty in recruiting and developing IT professionals in line

with the speed of technology evolution and market transformation

Operational Scale• Public clouds are specially atractive for SMB. Even large corporations in LATAM

operate in a scale comparable to mid-size business in developed markets

Global Markets• LATAM companies face large scale multinationals in their local markets and need to

have immediate access to latest technology in order to be competitive

Cloud computing is viewed as a very attractive value proposition for Latin American corporations Main drivers for the adoption of Cloud Computing in the region

• Logicalis is actively developing its DC/Cloud offering with Cisco and other vendors (EMC, HDS, Netapp, IBM, VMWare)

• First projects include clients in various vertical segments such as Finance, Oil & Gas and Service Providers

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Horizon 1: Standard Services• Design and implementation• Reactive support, troubleshooting• Break-fix, parts replacement• Basic operations and outsourcing

Horizon 2: Managed Services• Creative financial/leasing models• IaaS• Proactive monitoring• Help Desk

Horizon 3: Strategic Services• Application Management• Vertical Solutions• Hosting• XaaS

Current Short to Mid Term Mid to Long Term

Logicalis build up of its service offering points out to further value aggregationServices portfolio development horizons

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Final remarks

Logicalis plans to grow its business significantly in Latin America by…

• …extending its footprint regionally…

• …positioning itself in line with the new technology deployment waves throughout theregion…

• …leveraging its relationship with key strategic customers and increasing its participationas a partner of choice for their ICT infrastructure demands…

• …penetrating new market segments…

• …diversifying its relationships with partners in order to grasp a broader prespective of themarket…

• …increasing its services portfolio offering…

• …aiming constantly to excell as a solution provider through innovation, knowledge and quality of its delivery.

Questions