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Interview

with Santiago Pena, Vice President Latin America, AVEVA Brazil

17.06.2010 / Energyboardroom

AVEVA has been in Brazil for a little over a decade and just two years ago, the company made the decision to open offices here in Rio de Janeiro. What was behind this push to create a larger footprint?

AVEVA had historically operated through resellers in the region, which was an okay model but we decided that it wasn’t the best way to get our technology to the market. As a result, we began terminating our agreements throughout Latin America.

Three years ago, we made the decision to open up our offices in Mexico City and hired local employees while maintaining a lot of operations in Houston. This experiment went well and based on this model we took the next step which was to enter into Brazil which has AVEVA’s largest install base in Latin America. In 2008, we opened up our offices here in Rio and officially, AVEVA do Brasil began in [October] that year.

Overall, it was a simple process taking over operations in the country as our customers received us with open arms and we had the experience from Mexico in terms of transitioning contracts and handling the shift. It was slightly more challenging in Brazil to begin a new company but we managed to do it in a short timeframe having gone from a name on paper to offices in six months. In fact, we’ve actually just doubled our office space after just more than a year.

You’ve also doubled your revenues since opening offices here.

More than that actually! As well as the staff and infrastructure that comes along with this growth.

This has changed the whole face of our game here in Brazil. Customers have accepted us as a technology provider that offers local support using a business to business model. Of course, this transition was extremely demanding so we have had to continuously grow.

Today we have 25 employees based out of Rio with 5 more working remotely from Sao Paulo and we look forward to hiring 7 more people by the end of June. All told we will be nearly 40 people by the end of our first quarter which is amazing when you consider a year ago there were 5 employees on the ground.

Among other markets, AVEVA caters to the marine and oil & gas sectors which converge for Brazil’s offshore finds. What is driving the business for you here?

The short answer is oil and gas, or even shorter: oil.

AVEVA is very well established in the downstream sector; all of the new refineries, petrochemical complexes and onshore facilities are being designed with our plant technology.

Just recently, the offshore side of Petrobras’ business opened up an old specification that had been fixed for many years which now allows for any technology to be used and provides us with new opportunities. Companies that previously had to use the set technology can now pick and choose.

There is a considerable opportunity here when you consider the influence of our marine technology in APAC including China, Korea and Japan which has led to our product being used by 90% of the industry. This has been amplified by our acquisition of Tribon four years ago which combines the best of planning and marine solutions.

Therefore, AVEVA has a unique particularity here in Brazil as the shipyards are now going through a new blooming era reminiscent to the 1970s. Given our new footprint and complimentary technology, AVEVA is a perfect match for the industry today.

Over 20 new yards have opened in the past decade in Brazil and there are at least another 15 on this horizon. For these new clients, how do gain their trust?

I would point to a short story about AVEVA NET and two new projects we closed in March in order to answer this question. This platform is a brand-new technology but we were able to demonstrate through a very exhaustive process against other companies that our solution is the best for what our clients want. We have no references whatsoever for this technology in the Americas so the selection of our offering came mostly on credibility. I think this example can prove to be analogous to the marine segment.

This opportunity keeps us extremely excited about not only Brazil but the rest of the region as we feel we’re just scratching the surface right now. Over the past decade we have more or less been providing one product – PDMS – while today we are offering all of the new technologies in our portfolio. All of this is being received very well by local firms and more will be made public soon enough.

The marine segment is very interesting to me as my background is in piping and the refineries are very familiar to me so the opportunity to build ships is something completely new. PDMS is still our bread and butter but it adds a new flavor to sell technology based on the credibility of your previous accomplishments.

AVEVA recently signed a deal with SENAI here in Brazil to develop more PDMS engineers here in Brazil. This approach of brokering deals with local technical institutions is similar to what your colleague Dirk Drozd established in Russia. Why does AVEVA take this angle for development?

Our biggest challenge at the moment is finding the skilled people to staff up. AVEVA, and myself in particular, is very pro-university and educational institutes. We recognize that as a student your resources are very limited when it comes to access to the latest and greatest in technology. When you read older books on technology that no one uses you end up graduating having to learn everything else from scratch again. This is why AVEVA promotes and opens our technologies for use in academic settings.

We initiated a regional deal with SENAI four years ago in Sao Paulo which was a direct consequence of the lack of skilled PDMS people available in Brazil. A year and one half after signing a contract with them they had prepared about 1,500 PDMS designers. Ever since this success we have been chasing the possibility to sign a nation-wide contract which allows SENAI to pick a school in any city, in any state and teach people how to use our technology.

On a smaller scale, we have done a similar program with the UFF as well as URFJ who prepare naval architects so our objective is to provide access to our marine technology. We have continued this initiative in other locations in Latin America as well including Chile and Peru. However, this new contract represents the largest one we have signed and which is particularly interesting as it’s not with a university but a technical institute. This allows any person to sign up for PDMS training at a low cost and after 40 hours has a skill set for multiple industries.

Today, we’re hiring juniors for this offering: if you’re a senior administrator in Brazil you’re making a lot of money at the moment because your company doesn’t want to see you go. Moreover, we don’t want to steal talent from our customers as it’s rather counterproductive so our solution is a long-term one and we believe we have a responsibility to contribute to the preparation of the talent in this industry.

Looking long-term, PDMS may be the workhorse of the company but AVEVA has many advanced technologies: where will you find the people for these more advanced applications?

AVEVA currently has a very short staff in Brazil for these applications so for our two AVEVA NET projects we have to import people from Cambridge, Houston and elsewhere. That being said, this is not a hit-and-run operation so we’re bringing the best of our best with many projects under their belt and having our junior members shadow them to gain the experience. In the short-term this may double our internal costs but it’s an investment in the long run because these juniors after two or three projects will be ready for challenging jobs.

In terms of your client base, who is demanding you top applications: domestic or international groups?

Brazil has a particularity about it amongst other markets in South America. For example, Chile has a large minerals and metals market where most, if not all, of the major international EPCs are headquartered in Santiago. When you look at the EPC market in Brazil, it’s comprised of local companies which is risky but plausible solution pushed by the government to develop local content.

It would be very easy to bring into Brazil the big, international providers who already have the technology and knowhow to execute large projects. Nevertheless, the promotion of local content has made sure that these projects are done by Brazilian companies. Therefore, despite AVEVA’s more than 40 years in the market working with both owner-operators and EPCs, the level of influence we see from these groups is little to none.

As a result, this adds another layer of complexity for companies with new footprints in the market such as us. Luckily for us, we have been able to establish a good reputation thus far which hopefully will continue to build.

Given the movement going on in Brazil and the reputation AVEVA is creating here, how much do you see these offices being the hub not only for Latin America but other similar markets such as the Golden Triangle?

Brazil is the B in BRIC and after ‘Black October’ in 2008 it was clear that the impact this crisis had on Latin America was much smaller than in other parts of the world. Countries like Peru are projecting growth targets of 7% in 2010 while Brazil could grow by double-digits. In spite of the global economy, large industrial companies like Vale are continuing with their plans for the future. It may be contradictory to the current mindset but these investments continuing so we believe this is real organic growth.

In Latin America, Brazil has always been the largest economy and it will definitely keep this position but it will also positively influence other countries. Petrobras is now revamping its Pasadena refinery, entering another one in Japan and buying blocks in West Africa. Both the company and the country are poised to play leading roles in the global economy.

The second BRIC meeting was here in Brazil in April and you can tell something is cooking; these countries will change the face of business today.

Brazilian companies have made it clear they need to develop technologies. Petrobras and the government are pushing for local content which has poised local companies as great platforms for technological agreements. What role can AVEVA play in this dispersion?

AVEVA is a technology company so we’re a perfect match for what Brazil is trying to achieve. Brazil has shown it knows how to develop technologies and has done so in deepwater and aerospace. For our company such as us whose business is technology, having feed back from companies such as Petrobras drives us to keep developing the latest and greatest offerings.

Our developments are based on the client requirements so pioneering companies are perfect match for us. While we don’t do any programming in Brazil, AVEVA’s technology centers in the UK and Sweden work off of local requirements in order to create solutions.

Do you have any flagship projects you would like to highlight for AVEVA Brazil at the moment?

We could talk in a few months and it may be a different story. I would highlight our projects in AVEVA NET and while everyone in out company is talking about it there is good reason behind it! At the moment, 3D design tools comprise a competitive market with lots of good applications available. However, the data management arena has fewer competitors, particularly with agnostic applications that can enhance technology that is not our own.

These contracts represent a key win for AVEVA. We have been benchmarked against other companies to create a system that will manage data for high profile projects that integrate EPC and construction information across multiple companies. Having gone through this process we were selected as the prime contract to develop the system. Importantly, this is not a plug-and-play system but one that has to be created on site which is what we are now configuring between Rio de Janeiro and Sao Paulo.

Where do you want to see AVEVA in Brazil over the next five years and what do you think these operations can mean for the company as a whole?

The sky is the limit and while I normally don’t use clichés I feel this one fits here. It’s hard to say where we’ll be because when we first started there were only three of us running around Brazil trying to make things work in the framework that is Brazil’s legal system.

If you told me a year ago that we would be doubling the size of our office and nearly 40 people strong then I would have told you you’re kidding. We set up this office to hold 24 people and I was convinced it would take a while to fill but we might as well establish it while we had the opportunity.

To put it in other terms, we haven’t yet touched the mining or petrochemical industries, introduced all of our technologies or started on commercial marine projects such as FPSOs and tankers. Put these opportunities together and give me five more years and you’ll see the plan is clearly ambitious.

In five years, AVEVA in Latin America has nowhere to go but up. We’re planning on opening two more offices which will give us four offices in various key countries. Looking globally, there are three divisions in AVEVA: APAC, EMEA and Americas. The Americas represented 17% of the total revenues from 2009 and half of that comes from Latin America.

For project execution, our biggest segment, the growth will continue for at least the next five years but we also expect to grow our presence in operations and maintenance.

Our targets are ambitious and we see the business potential is there.

Do you have a final message you would like to send on behalf of AVEVA?

I’ve personally been working in Latin America for 15 years and it’s the first time during my career that I’ve seen something like this. It’s extremely motivating to be part of this growth and be able to give back to the customer base and signal that our intentions in the region are completely serious. This isn’t just Santiago Pena saying so, but the entire executive board of AVEVA affirming this plan of action.

We see huge potential in Latin America so if you don’t have a job in other parts of the world we welcome you to come and work for us!

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