The cards up the sleeves of Hitachi Vantara in LatAm

Hitachi Vantara, created by Japanese conglomerate Hitachi in 2017 to deliver IT and data-driven solutions for commercial and industrial enterprises, reports thousands of customers in Latin America.

It unified the operations of Hitachi Data Systems, Hitachi Insight Group and Pentaho into a single business.

Its customers are from the finance, government and telecoms sectors, among others. But the company is also trying to win over new partners and create new channels, as well as getting more synergies from other Hitachi operations, such as Hitachi Energy, around datacenters.

AI, digital twins, data protection and data storage consolidation are other focuses.

In this interview, Mike Bush, global VP of sales, Daniel Scarafia, Latin America VP and Andrea Fodor, Brazil country manager, share their views and plans in the region.

BNamericas: How is the Latin America strategy structured? Where are the main opportunities for Hitachi and which are your priority markets?

Bush: So, in Latin America we're definitely seeing opportunities for new technologies. There are companies that are the size of a lot of the companies in the US and they are looking at AI technologies, they're looking at hybrid cloud, at modernizing the datacenter, at data management. 

This is probably one of our biggest opportunity regions.

Scarafia: We have been growing our business since the pandemic, having double-digit growth. So, that means that customers need our technology, our solutions.

The value we're having in Latin America is that we have presence in almost all the countries, and we have people working very close to enterprise customers. We're moving between companies, keeping our focus on data management. And customers see great value in that. 

I'm really confident we'll continue that path of growing in the region.

[Editor’s Note: The Hitachi Group, including Hitachi Vantara, does not break down revenues for Latin America. In the first quarter of its fiscal year 2024, ended June 30, the group delivered 2.21tn yen (US$15bn) in revenues, down from 2.32tn yen a year ago.]

BNamericas: How about markets? Is Brazil the group’s largest in Latin America?

Fodor: Brazil is the largest market. Looking from a Hitachi product perspective, we also grew by two digits in the country. It was a very good [fiscal year], especially in the enterprise market, where we're very well positioned with a high-end enterprise infrastructure.

It was also a year of construction in terms of team, in terms of people knowledge, in terms of building relationships with other customers. We invested a lot this last year bringing in and capacitating large partners, large integrators to leverage this message and to do more consultative selling. This is where we are right now in Brazil. 

BNamericas: How many partners are we talking about?

Fodor: When I joined Hitachi, we were mainly focused on channels through distribution, meaning tier 2 partners. And we used to have a very important tier 1 partner.

A core of last year’s agenda was to develop a new tier 1 partner network. We're talking about large integrators like NTT, Logicalis, Telefónica, Unitech, Kyndryl and a lot of other GSIs [global systems integrators]. 

And also, we're working very closely with other service providers, datacenter companies like Cirion, for example.

This was the strategy, to build this more consultative selling through partners.

Bush: We're trying to be partner-centric, partner-first. When I got here a year ago, about 42% of the business was through partners. Right now, globally, we're up to about 62%.

Scarafia: In Latin America, we're at 65%. We believe that a partner... is not just a reseller. They have their own value in the process.

BNamericas: Costa Rica’s foreign trade minister Paula Bogantes recently met Hitachi executives in Japan. What is Hitachi eyeing in Costa Rica?

Scarafia: We have a lot of enterprise customers in Costa Rica working with us, with our partners there. In Costa Rica, we have telecommunications, banking accounts, some local governments. Now, we don't have an office in Costa Rica, but we do have a very good partner ecosystem there.

We have offices in Argentina, Brazil, Chile, Colombia and Mexico.

Fodor: Hitachi is a huge company, with many businesses. In fact, our main focus is that we're looking for a more synergy operation between our companies.

BNamericas: In what sense? Can you give an example?

Fodor: Hitachi Vantara and Hitachi Energy. In terms of, for example, datacenters and efficiency.

In Brazil, we have a Hitachi holding that takes care of all the companies. This is very important for us to try to bring more synergy, be stronger also in the relationship with the government.

Bush: We have an initiative within Hitachi called One Hitachi. That is Hitachi Japan, the proper limited company, which has 700 or 800 companies underneath it. They want them to have communication, to collaborate. 

Bringing together Hitachi Rail, for example. There is Hitachi Energy that does nuclear power plants, and also the transformers that run the datacenters.

Hitachi Group, I think, is the biggest IT company in Japan. If not the biggest, it is one of the two biggest.

Scarafia: With Hitachi Rail, we're doing right now metro lines No. 2 and No. 3 in Lima, Peru. In Brazil, we have also the Hitachi side that is discussing with the broadcasters the next generation of the TV, TV 3.0 and 4.0. 

BNamericas: When we talk about datacenters for the Hitachi Corporation, does it sit below Hitachi Energy?

Bush: Part of it, the infrastructure, the power and consumption, sits under Hitachi Energy. The compute and storage infrastructure sits under Hitachi Vantara. We have to get those two to marry together.

What we're seeing is a direction in both ways. Companies are building out datacenters because of AI. But AI consumes a lot of power, so the datacenters today are not totally capable of running AI infrastructure.

Then you have companies that are buying other companies, and they're shrinking, they're getting rid of datacenters. They're consolidating those. 

They look to Hitachi Vantara and our managed services to help them consolidate all that information, downsize those datacenters. We have done that with thousands of customers.

BNamericas: Can you mention some of the partners or customers in this particular segment, for example, in Latin America? 

Scarafia: I can tell you that we have at least 10 customers in Latin America. 

Bush: We have one major project underway in the US I can't share, but it's a US$235mn transaction. This is a consolidation of probably 50-something datacenters into about 15.

Scarafia: As Mike mentioned, there is a huge amount of data that AI will bring, not just pure data, but about the consumption of computing. So this is a concern for all the IT execs.

If I look to the top 10 customers in Latin America, we have a lot of banking, but I can tell you that more than five are service providers. 

BNamericas: What else is driving the business, aside from these two segments here in the region? 

Scarafia: Telecommunications, service providers, government, we have some retailers. But the top clients are more focused on finance. 

Bush: We have perhaps nine of the top 10 banks in the world. When you have mission critical apps that can't go down, that need to be up 24/7/365, they tend to look at Hitachi to do that, to run that mission critical infrastructure. Finance is probably 40% to 45% of our business. 

BNamericas: How relevant is Latin America for the company? How many customers do you have, the share of revenues?

Scarafia: In the last three years we became more than 15% or 20% of the Americas revenues, which is good because it's far above the industry’s average. The average of my competitor is around 10-12%. We are higher than that.

In terms of customers, we have a lot. Thousands of customers in Latin America.

Bush: Worldwide, we have a little over 13,000.

BNamericas: To what extent has AI become a magnet to the business? Are companies flocking to Hitachi Vantara over projects with AI and genAI? And is this more experimenting with AI or are we starting to move to something more concrete and mature, reaping the benefits of AI?

Scarafia: Everybody is talking about AI, but nobody has anything concrete yet. So they are working on that. Infrastructure is a big challenge for our customers. Because one thing is 100% sure: the AI requirement is going to come. In two months, in six months or one year, but they're going to receive an AI requirement from the user. 

Bush: We have customers that are actually engaging, creating their models. And you have companies at the very beginning that have no idea how to get started.

‘Where do I begin?’ ‘Who can help me?’ And the question that keeps coming up. ‘I don't know how to get started.’ So we've created a starter kit, like a journey map on how to help people get started with AI.

The other side of the AI challenge is what data should be in that data lake. You have to make sure that it's accurate data. Because if you have garbage going in, you're going to have garbage coming out. The other side of AI is that if you make a decision based on bad data, it's a bad decision.

We've got partners to help us structure, classify the data, make sure it's compliant.

BNamericas: What are these use cases in genAI you are working on with clients? We see some more common ones arising, like customer interaction, document reading…

Bush: The ones you were saying, chatbots... but it is really all across the map. We're working with an energy company and we were able to accelerate their application performance by 340% with AI.

Right now, based on feedback that we have, we have the fastest AI implementation in the market today. Will we hold that? I'm not sure. But I can run my genAI models, I can get my output, I can make a decision much quicker on a Hitachi solution than I can on the competitors’. 

Scarafia: One thing that everybody is looking at right now with AI is more focused on the cost and efficiency than new revenue streams. They're not looking for new revenue streams. They're looking to improve the internal efficiency and cost.

This is maybe the main utilization of AI, or maybe the main goal for the utilization of AI in the coming months. This is what we're seeing right now. 

Bush: We're also working with clients on digital twins. They'll take a product, make a 3D rendering of that product, and then go through it and do samples and testing on it, see if they can make it smaller, faster, bigger.

They do that for manufacturing floors. For power transmission. 

Fodor: This is one of the examples that we're developing with a power company. It's a model that was developed in Japan and it is being replicated everywhere.

It's a very different type of implementation because it's not just efficiency, but you can touch also the security model of the operation, among other things.

BNamericas: Anything on the side of supercomputers, high performance computing?

Fodor: We don't sell the hardware, but the solution behind it, and we're discussing with some customers, especially in Brazil, projects around that. I cannot disclose names, but we're in some active talks.