For TOTVS Labs, Artificial Intelligence’s Home Is Silicon Valley

Brazil's TOTVS Labs is among several companies that are betting on AI, which one industry analyst believes "has the potential to be more disruptive than the internet."

artificial intelligence

TOTVS SA, the largest enterprise software company in Latin America, is making a big bet on artificial intelligence (AI). The Brazilian company, which is headquartered in São Paulo and has 15 developers in Silicon Valley, is taking its experience with vertical markets in the SMB space and coupling that with a powerful AI platform that will improve decision making in integrated management systems.

“We are on a mission,” said Vicente Goetten, the executive director of TOTVS Labs in the heart of Silicon Valley’s Mountain View, California. “The future of every software will be a combination of applications, data points, and AI. At present it is extremely hard for smaller companies to hire data scientists, or an AI engineer.”

TOTVS Labs landed in Silicon Valley in 2012. Its emphasis is on research and development, with a focus on data-driven AI and mobility. The company is also leveraging its presence in California for business development, with ongoing efforts to find partner companies that can accelerate its penetration into new markets.

“There are three great opportunities for us with regard to AI,” said Goetten. “First, as a platform that can bring in data from other ERP applications like SAP. Second, this is a native integration project that will be able to predict and develop patterns. And finally, we will be building industry-specific applications, such as in healthcare, which will provide stakeholders insight off of mobile devices.”

There is significant optimism with regard to the potential of AI. Oren Etzioni, CEO of the Allen Institute for Artificial Intelligence in Seattle, has stated that AI has the potential to create a utopia “where people have income guaranteed because their machines are working for them.” This is a long way from traditional business intelligence (BI).

“Straightforward BI applications require a person to ask a specific question and analyze the results,” said Bruce Daley, principal analyst at the Denver-headquartered Tractica, which specializes in AI research. “It’s a human being who determines the query and recognizes the pattern in the results, whereas AI algorithms recognize the patterns, modify the queries based on new data or apply logic to the results.”

To make a compelling and commercially viable AI platform, you have to go to where the action is. Part of the appeal for TOTVS Labs’ presence in Silicon Valley is its access to a culture of innovation and entrepreneurship, with a deep commitment to cutting-edge technologies.

“It’s nice to be here, to collaborate with Stanford and other universities, and to have access to the workforce” said Goetten. “It can be difficult and expensive to hire them and hard to keep them — but you can.”

For TOTVS, which uses an exclusive franchise distribution model for management solutions specific to 10 vertical markets, the AI strategy will be to go after core industries where the company has the greatest strengths, such as healthcare, manufacturing, construction, and agriculture. “We are working to bring AI to one of the largest hospitals in Latin America so that they can identify outbreaks or patterns and make smart recommendations for their patients,” said Goetten. “We are also working with manufacturers to better forecast inventory, and are collaborating with a large construction company in Brazil.”

To make all this work, TOTVS’s AI platform will draw on both internal and external data — such as macroeconomic indicators. The artificial intelligence solution, which is set for release in Q3 this year, will be delivered exclusively off the cloud. The company is also now transitioning from a software licensing to a subscription-based model. This positions it to deliver enterprise applications that can use AI in concert with the Internet of Things (IoT), with customers able to add data from remote devices without having to re-invent the business model.

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“Given the amount of data the IoT is poised to produce, it won’t be humanly possible to analyze it using traditional methods,” said Daley from Tractica. “Frankly, if AI didn’t exist, the IoT would force it to be invented. It will be a requirement for every vertical that gathers data, including healthcare and agriculture. And AI will be adopted more quickly in agriculture than healthcare, because it has stronger ROI.”

That suits TOTVS, which has a strong presence in agriculture in Brazil, where it has been transforming farming practices. The Latin American giant has over 65 million hectares under cultivation, with a crop value approaching $70 billion.

“Our company is extremely strong in agriculture,” said Goetten. “Farmers worldwide have been contacting us — and we expect to see more of that.”

The company, which has 8,000 employees, has no plans at present to enter the U.S. market, but it is embracing Silicon Valley-headquartered technology partners like Moxra Inc. for mobile collaboration and GoodData Corporation for cloud-based analytics. The plan is to be a major player in what promises to be an exciting, and challenging, era in computing.

“The market will have tremendous difficulty adjusting to AI,” said Daley. “It is a natural step in a progression that began 200 years ago with the Industrial Revolution and will continue throughout our lifetimes. AI has the potential to be more disruptive than the internet. The next 10 years are going to look more different than the last 10 years — or even the last 20 years.”

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