Smart Card Talk : May 2011 : SCALA Associate Director’s Letter

SCALA Associate Director’s Letter

Dear SCALA–Smart Card Alliance Latin America Member and Friends,

I wanted to cover the topic of “value added” services in this month’s letter. The term is widely used by organizations in our industry in reference to the value chain. The term “value” refers to the concept of worth; when the term “value added” is used it means adding worth. In today’s society it is easy to confuse the term “value added” with profits or income. The confusion is not with the additional profits from goods and services generated, but with the belief that additional profits equate to the added value of those services to the market. During past years, organizations created confusion with these terms by stating that an increase in their profits demonstrated their added value to the market.

My past experiences have demonstrated that some governments and enterprises were focused solely on the increase of GDP (Gross Domestic Product) or profits and not on the “added value” to or well-being of their citizens and customers. In some cases, these public and private organizations destroyed their own wealth and sense of added value in the process of increasing profits. Countries are currently analyzing how they can reduce their budgets by reducing government services and increasing taxes, and therefore increasing their profits. Citizens would consider this approach a reduction in value, because they will now have to pay more to receive fewer government services. This may be the reason why all countries taking this approach are seeing massive protests. Another example is the famous case of an airline that increased their profits first by eliminating an olive, and later by eliminating the entire meal service for national flights. I don’t know of any frequent flyer who would prefer that airline over their full-service competitors, even on international flights. My last example is based on our own industry. After participating in several industry-related conferences, the events that have focused solely on the number of attendees and exhibitors have seen a significant decrease in both attendee and industry perceptions of the added value delivered by the event. Their numbers-based approach may affect the success of their future events.

In the smart card industry, we consider value-added services those that are delivered by organizations that focus on components of the technology, integration, applications and solution provision. These organizations provide an added value to the end users/customers/citizens and to the entire value chain. The results accomplished by combining the efforts of chip manufacturers, card suppliers, consultants, integrators, evaluators, governments, financial institutions, application developers, and others into a solution that solves real world problems and adds value to the quality of life are worth a lot more than the profits generated from the combined services.

SCALA was purposely named to sound like “Escala,” a word in Spanish and Portuguese that means to scale, to add, to go beyond, to improve. SCALA adds value through the participation of member organizations involved in the value chain, who contribute their knowledge to improve our industry by increasing market awareness and reducing the risk of smart card implementation through education.

Prior to joining the Smart Card Alliance, I attempted to integrate smart card technology to solve real world problems in Central America. I quickly learned that an individual organization could not influence the market by itself. Clients considered all distributed educational material to be propaganda for our solutions and products. The cost associated with trying to educate the customer about the technology, its benefits, processes, and implementation were too high to be absorbed by an individual organization. It was clear to me that the market needed an independent and impartial organization to assume the effort of expanding the education, awareness, and explanation of the added value of smart card technology and associated services. This is one of the reasons why I joined the Smart Card Alliance and one of the key areas where SCALA makes its mark–by bringing the entire industry together so that we have a united voice to say, “How can we help?”

SCALA is highly active in identity projects, explaining security features, describing applications that benefit customers, working with governments to provide service access to marginalized citizens, and integrating all sectors to improve society. SCALA is helping individuals to add value to the market and to the region through their work, knowledge, and contributions to the organization’s activities.

SCALA’s next activity is the Costa Rica–Government Information Exchange on June 29th at the InterContinental hotel. For more information on how to join this activity, please contact

Have a wonderful month!

Edgar Betts
Associate Director, Smart Card Alliance Latin America (SCALA)