TOTVS Protheus ERP Is Now TEC Certified

The most recently certified enterprise resource planning (ERP) software product by TEC analysts is offered by the Brazilian company TOTVS and is called Protheus. Although the vendor is not very well known in the North American and European markets, it is extremely well represented in the corporate solutions market of Latin America, particularly in Brazil, where the vendor holds nearly 50% of the entire business applications in use. Its influence in other countries in the region is also impressive—with nearly 34% of the Latin American market share overall. In addition, the sales figures continue to grow by double digits every year, particularly in the last 10 years.

In addition to verifying the typical software features and functions, during the certification process, TEC analysts wanted to see what was behind the vendor’s great success.

TOTVS was founded in 1983 as the startup Microsiga, and in 2006 it was the first among information technology (IT) companies in Latin America to have an initial public offering (IPO). Since then, the company started growing exponentially, demonstrating incredible and stable growth rates every year, from at least 12% to more 25% annually, even during several economic downturns. During this time, TOTVS made a number of acquisitions: the Brazilian company Logocenter, RM Sistemas, Midbyte e BCS, and some others, and most recently, Datasul.

Shortly after its inception, the company implemented a franchising model of product sales. In fact, though TOTVS has multiple working sales channels, franchising remains the prevailing one. Using regional entrepreneurs to promote and sell the software and applying an exclusive franchise model have resulted in easy access to the software for small companies, highly localized service for clients, and partners allowed to own clients and mutually align their own interests with the vendor’s goals.

Since its inception, TOTVS has developed and used a proprietary technology that is still used today—Protheus ERP is built on that technology.

Generally, TOTVS addresses the needs of companies of a micro (1–9 employees) to large (more than 500 employees) size, but it focuses on serving small to medium sized companies (between 10 and 499 employees). In this segment, TOTVS’ market share in Brazil is even higher—up to 72%.

There are 3 levels of TOTVS solutions based on the size of the client company:

  • Series 1 for micro and small businesses,

  • Series 3 for small to medium businesses (SMBs), and

  • Series T for small, medium, and large companies.

Regardless of the software series, all applications are subdivided within 10 major vertical industries—from agricultural and manufacturing businesses to health care and retail trade. Specific implementation methodologies have been developed for each of the series, depending on the client's size.

Currently, an ultimate goal of TOTVS is to become a global reference with an international reputation. TOTVS invests heavily in technology, ready-to-use industry–oriented solutions, and social network solutions, which will eventually become an interface for all TOTVS software packages in the future. The company also plans to continue merger and acquisition activities, which began a decade ago. Based on the financial results of 2010, TOTVS has become the world’s sixth largest ERP company, and has achieved the highest growth rates—at an impressive annual 34.9% growth. So far, in Latin America, the product is localized in 15 countries besides Brazil. TOTVS also has software and service sales channels in Portugal and other primarily Portuguese-speaking countries and regions.

Some of the vendor’s major competitive differentiators are the following:

  • Consistent target market focus—focus and leadership on SMBs with lower fragmented competition, along with a diversified client base. As small businesses mature and begin to formalize their processes, they tend to express an interest in ERP class software. This market segment is still continuing to demand affordable and flexible software.

  • Proprietary product and technology—flexible, independent technology that is hardware agnostic (Protheus can be used with any database), and scalable. TOTVS provides solutions for companies of all sizes, and it is easy to switch from one of its solutions to another. It is also cloud ready—whether in a real cloud or one hosted through a proprietary data center (Protheus is also offered in a multitenant cloud deployment option).

  • Software distribution model—TOTVS has reached a good level of capillarity in Brazil and other Latin America countries, using a regional exclusive franchising model.

  • Growing revenue model—fully controllable and stable business model, allowing for growth capture, particularly considering that the Brazilian SMB market has a higher growth rate.

The interesting thing that I have never seen before is that TOTVS does not sell Protheus (or any other product’s) licenses—instead, the company sells licenses of TOTVS technology that provide clients access to all the variety of software products from TOTVS, not limiting them to a certain product. When a customer buys a TOTVS license, it chooses what product will be used from all the products available. In the near future, the company is planning to make different modules of different products interchangeable, so that a client may use compatible modules from various applications simultaneously.

Protheus is not as deep in functionality as it is broad, very flexible, easy to integrate with other products, and easy to customize either by clients themselves or through TOTVS specialists. The company’s franchisees and other partners have created a store for TOTVS technology-based applications—TOTVS Marketplace—so that multiple products are available to a larger audience through this venue. It's also worth mentioning that the TOTVS social network tool—TOTVS Collaboration—underlines all the company’s software products, and in the near future it is supposed to become a single user identification entry point for the entire range of applications.

TOTVS has developed its own technology platform that supports any database and hardware for applications. It includes tools such as an application server, DbAccess tool, enterprise content management (ECM) with business process management (BPM), SmartClient Framework, and Developer Studio. In addition, the platform is capable of supporting cloud computing, mobile devices, and social networking. The vendor is actively working to bring all its solutions under this technology framework to make them universal, more flexible, and easy to modify.

Stay tuned for TEC's TOTVS Protheus Certification Report, with more on the product background, highlights, features and functions, and competitive strengths and weaknesses. It'll be available in upcoming weeks at Alternatively, subscribe to our certification report RSS feed.
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