COVID-19 Spurring Innovation in Different WaysBy Jan Hogewoning | Thu, 07/16/2020 - 12:54
Q: How is COVID-19 changing the demand for your solutions?
A: At first there was a pause in decision-making in some areas, particularly in verticals that have to do with the federal and state governments. Many took a step back to reassess what needed to be done. Now, the pandemic is acting a lot like an accelerator. Not necessarily in the implementation area, but in planning. Projects that were not being considered in the past are being considered now. In the oil and gas sector, for example, there is a rising need for greater ability to anticipate problems. With fewer employees on the ground able to respond immediately to problems, the need to prevent problems has grown. Another area of change is the move away from models that depend on physical intervention. This is visible in health and education, where the digital channel has definitely been pushed up the list of priorities. While many of these issues were already part of the industry’s plans, the situation has changed those plans from being an option to being a necessity.
All industries go through phases of adoption. If we analyze the adoption curves, oil and gas is probably in a phase where its consumption is starting to fade. Oil will be produced for the next 20-30 years for sure, but the long-term consumption trend is downward. The question emerges: What to do with a product that is no longer new and is falling in consumption? The answer is to work more efficiently. The differentiator is not in new technologies that allow you to access new oil reserves. The focus should be on how to produce, monitor and distribute in such a way that production remains profitable. Using tech such as artificial intelligence and advanced analytics to optimize the process, you can still generate significant revenues. In the oil and gas sector, artificial intelligence can be used to identify the utility of wells in the upstream area. In the midstream area, it can be used for better distribution by determining the best format and method of transport. In downstream, it can be used to improve analyses of where and when the product is needed.
Q: Is PEMEX ready to adopt more advanced analytics and artificial intelligence?
A: It is an opportunity. The company does not have the revenues it had before. There is no magical solution to this reality. It is a process that requires investment, first in operational technology and then in IT. Grupo Altavista is already making proposals that are related to systems of intelligence for the upstream, midstream and downstream segments.
Q: What changes have you seen in the educational and health verticals?
A: In education platforms, the value of a shift to digital channels will not be something we can measure immediately; this will take time. There will be more educational content available through the internet but are students enjoying it? Younger generations are accustomed to using the internet, but now it is suddenly mandatory.
In the health sector, the regulatory question weighs more heavily. Regulations have to move at the same speed as technology, which is usually not the case. Regulations can hamper the adoption of telemedicine, not its development. If there is no way to do physical consultations, then telemedicine will have to be accommodated. Maybe, instead of calling them medical consultations, they will be called something else to allow faster adoption in the industry.
I believe the barrier is with budgets and political decisions. There is no one, even in the government, arguing that technology does not generate more accessibility. Now, a doctor can switch on a computer and reach patients no matter where they are.
Q: Besides the area of industrial chemicals, where is Grupo Altavista focusing its research and design activities?
A: Grupo Altavista has a center of innovation that is the result of a co-investment from different arms of the group. Right now, one area we are definitely looking at is how to leverage technology to optimize the supply chain in the food sector. One technology we are looking at is blockchain. We think that by better understanding the origin of the food, distributors and destinations, we can create more efficient links. This means you can increase the reach of products without having to increase production. It also makes it easier to price products adequately. This is even more relevant with the new USMCA treaty, which not only opens up more opportunities but also requires new protocols based on tech. This research is long-term, with results expected in two to three years.
Another area where we have dedicated resources for research is the implementation of 5G in Mexico. Its installation, which will be a bit more delayed for Mexico, will allow the development of many different technologies with new capabilities. Lastly, an area we are focusing on in the shorter term is the concept of smart city. We are looking at how we, as a group with integrated solutions, can contribute to different aspects of connectivity. This includes technologies such as video monitoring, as well as access controls on buildings.
Q: When can we expect more companies in Mexico to adopt and apply technologies like advanced analytics and AI in their processes?
A: Large companies at the top of the pyramid already have their tech departments dedicated to these activities. We always regard these technologies as very advanced and out of reach. The truth is most technologies are free and accessible to everyone in a pay-per-use model. Mexico has major opportunities in the middle and bottom of the pyramid. Many SME owners use their phone to conduct business. While they may not call it data analytics or business intelligence, they are already making use of analytics in one way or another.
The real opportunity is in second and third-tier medium-sized companies. They do not have the same resources as large companies but they can access technologies through the internet without having to make a major investment. Before, we used to say it was the apps that provide the tools; now, it is the internet. The internet not only hosts the technology, it also has the information on how to use it. The biggest investment is therefore not in technology but in the cost of acquiring the human resources who can understand it and the added benefit it can bring to the company.
Q: What are your expectations in terms of the economic recovery from COVID-19 in Mexico?
A: Currently, COVID-19 has pushed almost every sector in a downward performance curve. However, we believe the curve will be V shaped. The economic recovery will most likely happen through a series of reboots. Companies will go up and down, more like in a W-shape, actually. Whether it will take six or 12 months, many companies will not achieve recovery at first, but on their second or third try. Those that have the capacity and discipline will succeed. As to whether we will go back to an economy where interaction is largely physical, this is easy to imagine because we have lived it before. Physical contact will not disappear but it will be modified. Things like the use of cash will become less prominent, as digital forms of payment take their place. In addition, e-commerce is becoming stronger. Ultimately, we are not moving into a fully different reality but a hybrid between the old and the new. The same can be said for education, which will become more virtual but will maintain a presential component.
Grupo Altavista offers integrated solutions that combine management and technology in different sectors, including oil and gas, security services, health, IT, education and construction. Its primary client is the government