Unlocking the potential of IoT for Brazil small and medium businesses

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

• Most SMEs around the world are struggling to embrace the Fourth Industrial Revolution
• The World Economic Forum and the C4IR Brazil are supporting SMEs in the manufacturing industry to start using smart devices and sensors to modernize their operations
• Companies involved in the initiative on IoT for Brazil saw a 192% return on investment

The impact of IoT adoption for SMEs

Small and medium-sized manufacturing companies in Brazil will benefit from the collaboration between the Forum’s Platform for Shaping the Future of Urban Transformation and the Centre for the Fourth Industrial Revolution (C4IR) Brazil, as the two organizations work to remove barriers to the adoption of the internet of things (IoT).

The C4IR Brazil, together with the Ministry of Economy, the Government of the State of São Paulo and other partners, has developed a Protocol for Action for policy-makers, which enables them to support small manufacturing companies to adopt smart technologies. Sensors and devices that simplify, speed up and automate the way these companies work will bring them in line with larger firms and ensure they remain profitable and prepared for technological advancement.

The protocol describes specific actions policy-makers can take to support businesses in this transition, including:

• Raising awareness of emerging technology and IoT in particular
• Providing expert support to SMEs
• Providing financial support to SMEs
• Providing technology advisory
• Fostering collaboration environments for SMEs to learn from one another and build trusted business partnerships

The policy protocol was first prototyped in 10 aeronautical and automotive companies in 2019. It was then extended to an additional 70 companies in other manufacturing sectors to test the model’s scalability in metalworking, automotive, aeronautics, plastics and rubbers, and agribusiness.

“We are aiming to develop a policy to support this very important sector of our economy in a practical and actionable way, creating a virtual environment for the ecosystem to develop and nurture SMEs towards a consistent technology adoption journey.”— Marcos Vinicius de Souza, Executive Director for C4IR Brazil

The businesses that took part in this initiative saw several positive results:

• 21.6% average increase in operational efficiency
• Over 192% return on investment, on average
• 80% of the participants declared that they would continue investing in IoT technology adoption even without government financial subsidies

“Governments have an opportunity to not only reduce barriers to adoption but also help position these companies for success in a rapidly evolving global economy.”— Jeff Merritt, Head of the Centre for Urban Transformation

The learnings from this work are applicable well beyond Brazil’s borders and are currently being adapted and piloted across multiple 4IR centres in the Forum’s global network, including Colombia, Kazakhstan, Saudi Arabia, South Africa and Türkiye.

What’s the challenge?

SMEs represent more than 90% of companies around the world, and are responsible for close to 70% of jobs and GDP globally. These companies are the main drivers of economic opportunity and social mobility, creating seven out of 10 jobs in emerging markets. These businesses enable the local entrepreneurial and innovative ecosystem, paying local taxes and creating economic opportunities in the community.

Unfortunately, most of these companies – particularly those in the manufacturing industry – are struggling to embrace the Fourth Industrial Revolution. Their slow adoption of new technologies risks exacerbating economic inequality and dragging down global industrial productivity. Many companies use outdated software and information technology systems and lack the expertise to implement new technologies and train staff to use them. This can lead to a fall in profits and a lack of contribution to local economies.

Compared to SMEs, large enterprises (500+ employees) are six times more likely to access, analyse and take advantage of big data collected from smart devices or sensors.

Our approach in supporting Brazilian SMEs

The policy protocol was built on Brazil’s National Plan for the Internet of Things. The state’s leading industrial research institutes – Technological Research Institute of São Paulo (IPT) and Aeronautics Institute of Technology (ITA) – acted as key partners. The initiative was supported by Deloitte Brazil in developing the methodologies for the prototyping phase and creating the use-cases catalogue.

“Without proper industrial policies, Brazilian SMEs will be left behind in the new industrial revolution. This project is giving voice to these companies to understand their challenges and promote their inclusion in the digital economy.” — Marcia Matsubayashi, Partner and Technology Leader, Deloitte Brazil

Based on the first implementation of the protocol, Brazil’s Ministry of Economy has incorporated the learnings in its Brasil Mais programme and created the Conecta Mais programme to expand its scope and reach, and to support a broader digital transformation journey considering the maturity level of different companies. The Brasil Mais initiative is part of a broader productivity programme which aims to stimulate SMEs to adopt technology, and the development of the conditions to facilitate such adoption.

Get involved.

The pilot is part of the Small and Medium Sized Enterprises Futures Network initiative led by the Forum’s Platform for Shaping the Future of Urban Transformation and C4IR Brazil.

To learn more about business and government engagement opportunities, please contact us.