Creative entrepreneurship at iconstruye: a pan Andean e-procurement market maker.

After only 3 years of existence, iconstruye had a positive cash flow. The team attributed its success to its development of creative solutions to the many difficult problems encountered during that time. The company had devised a new electronic procurement system for which it owned the code, and had shown through its deployment in the Chile Compra project that the system was stable, scaleable, and robust. The team thought that it had demonstrated that the quality of Chilean software compared with any in the world and believed that the company had benefited from the cost advantages associated with developing it in Chile. In the team's judgment, iconstruye had overcome the lack of traditional venture capital sources by building a strong relationship with the CChC, the equivalent in Chilean terms of an institutional investor.

Correa was sure that a decision regarding the future growth strategy of iconstruye was required. He challenged his team to identify options, and it identified several promising possibilities. The first was to expand by bidding to provide additional online services to the Chilean government. A second option was to expand by bidding for government contracts in other Latin American countries. Finally, a third option was to expand into the North American market by providing Spanish-language procurement software to companies that did business with South American entities.

Provision of Services to the Chilean Government

The government of Chile through the presidential ICT initiative facilitated access to many branches of government through the Internet. It also expressed the wish that the private sector take the lead in developing Internet-based services while working under government oversight. Each presented a potential opportunity for iconstruye.

Portal Tramite Facil ("Easy transaction"). The design of the tramite portal was intended to facilitate easy public access to information on over 1,400 government-related procedures and to allow the public to purchase government documents through the website. The site received approximately 30,000 visits per month. (21) The government in 2004 was looking to expand its Internet-based public services in 13 areas, building upon the tramite website. One example involved the health services, where the government proposed the creation of an electronic patient record system (known in Chile as an Electronic Clinical History (22)) that would contain the health information of all citizens. The government also proposed a procurement portal especially developed for the health service. Health care is a constitutional right for every Chilean citizen, and in 2002 accounted for approximately 7% of GDP. (23)

Servicio de Impuestos Internos: SII (The Internal Taxation Service). (24) The Chilean government has been a proponent of moving its citizens to online payment of taxes. The SII system originated as an information portal in 1998 and accepted its first tax submission the following year. It facilitated tax preparation, but taxpayers also could use third-party software to prepare taxes and file electronically through SII. In 2004, the site received over 1.6 million page views a month and led to 1.6 million electronic tax returns, representing 85% of the Chilean population and providing US$1.9 billion to the exchequer. (25) The government proposed to build upon its SII success with the development of a system for collecting taxes from the country's 950,000 commercial organizations. An SII survey in 2003 showed that 76% of Chile's companies that file sales tax (value added tax) declared that they were interested in paying taxes over the Internet, while 17% preferred to pay over the telephone.

National Customs Service. In 2004, Chile had international trade valued at US$56.0 billion, and over the previous decade had actively developed its trade relationships with countries on the Pacific Rim. Largest among these trading partners was China. In 2004, China Daily predicted that China's trade with Chile would exceed US$10 billion by 2008. (26) (U.S.-Chile bilateral trade in 2004 was US$6.4 billion). (27) In its 2004 ICT initiative, the Chilean government had also recognized the need to build an array of electronic customs services (28) to promote international trade. These systems included websites to provide technical information aimed at commercial entities together with publications aimed toward a public and tourist readership. The government also proposed the "Isidora" project, an Internet-based system that would improve and support inter-government customs formalities, law enforcement, and customs transactions. (29)

A Latin Expansion Option

Historically, technological infrastructure expenditures across Latin America region have been uneven. (30) In 2004, Chile ranked 32nd on the networked readiness index (NRI), (31) followed by Brazil, ranked 46th, Mexico (60th), Columbia (66th), Panama (69th), and nine other Latin and Central American countries that ranked below 70. (32) Between 2000 and 2005, several governments had announced plans to deploy technology systems, the largest of these Mexico' s technology initiative. The Tramitanet Portal de Mexico ("transaction network of Mexico") initiative, launched in January 2002, aimed to enhance legal transparency and improve the collection of revenues. President Fox wished to develop the technological infrastructure of Mexico, a country with a population of 104 million (2004 est.), and a labor force of 34.11 million (2003). (33) Mexico in 2005 had approximately 12 million Internet users and experienced a connectivity growth rate of 351.6% (34) during 2000-2005. The tramitanet initiative had three major modules; in the eyes of iconstruye's team, each presented an opportunity:

Tramites (Transaction Network). An online catalog of 2,962 documents (35) covered both federal documents and documents from six of Mexico's 31 states together with instructions pertaining to the documents' completion and use. Government office addresses were also in the databases. The government wished to extend the system's coverage.

Tramites Electonicos (Electronic Forms). This system provided information on the submission of 68 tramites (documents). (36) Government functions and administrative offices covered by the system included social security, agriculture, education, and energy. In 2002, Mexican citizens filed 400,000 tramites electronically. The government wished to expand the system to cover all federal and state offices and their tramites.

Quejas y Denuncias (Complaints and Denouncements). This portal was designed to facilitate citizens' reporting of complaints and issues (irregular acts) to the authorities. In 2001-2002, 179,807 citizens (37) used it to register complaints.

In 2002, the "Secretaria de Contraloria y Desarrollo Administrativo" (SECODAM), which had managed the tramitanet initiative from inception, was allocated US$67 million (the government had originally projected a 2002 operating budget of approximately US$200 million (38)). SECODAM now looked for ways to commercialize aspects of the system together with the possibility of outsourcing development.

North American Options

In the United States, during 2004-2005, the percentage of Hispanics in the population rose by 3.3%. The 42.7 million people of Hispanic origin accounted for 14.4% of the total population. (39) In 2004, Hispanic Business Research estimated that the Hispanic sector of the U.S. economy contained 3.2 million businesses that would generate revenues of US$465 billion by 2010. (40) Latin America had continued to grow as a trading partner with the United States, and by 2004, the state of Florida alone had trade valued at $38.8 billion with South and Central America, accounting for almost half of Florida's international trade. To facilitate trade and commerce, several states, including Florida, had started development of English-language procurement e-marketplaces. (41) Additionally, President George W. Bush's administration initiated a Spanish-language website at the Department of Commerce to allow Hispanic businesses better access to information on government grants, trade, and high-tech issues. (42) Iconstruye's team saw several opportunities in developing a procurement system for the Hispanic market in the United States.

A Spanish Language Software Market Opportunity. In 2001, the Gartner Group predicted that the market for e-marketplaces and private exchange software in the manufacturing sector alone would amount to $4.8 billion by 2004. (43) Within the manufacturing sector, exports by Hispanic companies had totaled US$1.8 billion in 2004 (an increase of 17.5% over 2003), with 25 Florida companies accounting for US$1.4 billion. (44) The provision of a Spanish language procurement system run in an outsourced mode appeared to be an opportunity for iconstruye.

The Federal Procurement Data System Reengineering Project. In 2000, the U.S. government through the U.S. Hispanic Chamber of Commerce's Federal Sector Procurement Council identified a need to assist the Hispanic business community with respect to federal procurement opportunities and to have a Spanish-language procurement system in place as quickly as possible. (45) "Pro-Net" (46) (Procurement Marketing and Access Network), an English-language system created in 2000, provided an electronic gateway of procurement information for small businesses. By 2005, the Department of Commerce had not deployed a Spanish-language version.

Conclusion