Opening up

An opportunity for open software and business models is emerging across Latin America.

The open-source software development model is a community-powered approach to developing software such as cloud, container and operating systems. The source code for this software is made freely available for possible modification and redistribution. Open business models are those build upon offering innovative new services and products based upon third party data.

In theory, this community-led approach enables greater flexibility to develop solutions tailored to customer requirements, avoiding the limitations of closed-source software.

In Latin America, open technologies are still a nascent software solutions business which has been spearheaded by the presence of Red Hat, the world’s leading provider of open-source technologies, in Mexico and Brazil. The company claims that the enhanced collaboration between programmers, engineers and digital solutions experts can provide innovative tools to companies which could ultimately result in economic growth, both for corporations and countries.

A Director of a Latin American data science institute provided some context, “Open software and business models are well-established in the US and Europe but are lagging in Latin America. It is hard to get exact numbers, but as a comparison, only 30% of Latin American countries have data in the cloud, while in Europe and the US it is more like 60 – 70%.”

“Open software and business models are well-established in the US and Europe but is lagging in Latin America.”

Director, Latin American data science institute

The opportunity for growth is obvious but there are several challenges to overcome, as the CEO of a cloud-based software business in Mexico explained, “Mexico has a lot of potential but there are regional differences. Monterrey is embracing these technologies, due to its relationship with the United States, but Mexico City is more old school ‘its my data, I won’t share it with anyone’. More evangelism is needed about the potential of using data to generate income.”

A company’s attitude towards security is another barrier, according to an executive at a cybersecurity company, “There is a mistrust about making data available to third parties, as you need to under open business models, but also about the vulnerability of information security. In Europe, it is understood that half the investment goes to the cloud and half goes to security. In Mexico, the perception is that cyber attacks are so prevalent it’s best to try and minimise access and hope nothing happens.”

“Attitudes are starting to change,” explained the CEO of an IT consultancy in Mexico, “the idea is beginning to permeate that in order to provide better solutions we must better exploit the information we have and make it available to others, thinking collectively leads to better and more innovative business models. However, the idea of interconnecting information is still new in Mexico, the saddest thing is that there are public agencies with really valuable information but they don’t know what to do with it.”

“The idea is beginning to permeate that in order to provide better solutions we must better exploit the information we have and make it available to other.”

CEO, IT Consultancy, Mexico

During the pandemic, the Mexican bank Banorte incorporated both open source technologies and artificial intelligence to gain a better understanding of its customers’ behaviour. The IT consultant described how this trend was widespread, “The pandemic and the need for rapid adaptation led many companies to turn to open source software in order to respond quickly to the needs of their customers. Open source allows greater speed in finding innovative solutions and incorporating artificial intelligence, so I think more companies will eventually adopt it.”

As open technologies advance in the region, regulators will have to adapt to the new products and services emerging from these collaborative platforms.

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