CIO budgets may remain flat: Vineet Nayyar and CP Gurnani

India's fifth largest information technology services company Tech Mahindra reported in-line numbers for the December 2014 quarter. The company's deal pipeline remains healthy and it believes client budgets will remain flat this year. Sheetal Agarwal spoke to Vineet Nayyar, executive vice-chairman, and CP Gurnani, managing director and chief executive officer, at Tech Mahindra. Edited Excerpts:

What are your readings on client budgets for this year?

CP Gurnani: Different sectors have different momentum and velocity. Public sector spending, for instance, is down almost all over the world and that puts a pressure on the rest of the economy also. Many governments have chosen austerity as a way of addressing some of their deficits. At the same time, new businesses such as Flipkart or Snapdeal create enough velocity in the market to counterbalance some of the other slowdowns. In today's environment it’s no longer about healthcare it’s also about remote medicine, telemedicine, it is about remote diagnostics. Now that does not get accounted for in any IT budget. So, my personal take is spends on technology are increasing while CIO budgets may be flat. The pressure is to do more technology, which does not mean more IT only.

Ebitda margin gains were lower than expected in the December quarter. What is your outlook and what are key levers of this metric?

CP Gurnani: We have always maintained that we have to balance between growth, incremental investments in new
technology and margins. Also, some of our recent acquisitions such as LCC, which is a $430 million revenue acquisition but it is also an 8.5 per cent Ebitda company. Similarly, Sofgen is also a relatively lower margin company. Now any turnaround or transformation to Ebitda margin is going to take time. Meanwhile, in my current business there is a lot more to be done, particularly around efficiency, automation platforms, and to increase utilisation. We will continue to work on those areas.

Tech Mahindra has been talking about automation. Does this mean that hiring numbers will gradually become irrelevant?

Vineet Nayyar: The intensity of individual use will come down but as I said earlier the slice of the pie may get thin but the pie itself is becoming bigger.

So it does not mean necessarily that you will see reduction in use of people. Instead, each individual will be required to do more and cover a larger span of work because there is an element of automation.

CP Gurnani: The digital economy necessarily means that you understand the business, you are able to analyse, you are able to look at the process and you are able to also apply the right technology. The requirement for all-rounders is increasing. That is where the shift in our own skill development has to take place. We encourage certification but it has to be balanced by the individuals' willingness to change as fast.

You remain optimistic on the growth potential of the European markets. Which geographies will drive this growth?

Vineet Nayyar: Europe is going to be a good play area going forward. Italy, France, Germany and the UK should do very well.

What has led to higher attrition in this quarter?

CP Gurnani: Yes, attrition has inched up sequentially from 18 per cent to 19 per cent.

But remember, this quarter witnessed appraisals and some expectations were not met. Hence the attrition number has seen an uptick.

Tata Power to buy Nelco's biz vertical for over Rs 8 crore

Tata Power will acquire group firm Nelco's defence business of Unattended Ground Sensors (UGS) for about Rs 8.3 crore.
For the "slump sale basis" deal, Tata Power has entered into a "binding understanding" with Nelco.

In a regulatory filing, the power utility said the consideration would be around Rs 8.3 crore.
"The UGS business involves supply, installation and servicing of sensors for the Ministry of Defence. After purchase, the UGS business would be housed in Tata Power's strategic engineering division, which is also a supplier of defence equipment and solutions. Acquisition of the UGS business will provide synergies to the existing business of Tata Power SED and has scope for growth and expansion," the filing said.
"The takeover of Nelco's UGS business segment further enhances our presence in the defence segment and provides synergy and alignment in servicing the customers," it noted.
The transfer of the business is subject to approvals and consent of Defence authorities.

India, US envision a new business climate

US President Barack Obama shakes hands with India’s Prime Minister Narendra Modi (L) at the conclusion of a CEO Roundtable and Forum at the India U.S. Business Summit in New Delhi

Visiting US president Barack Obama and American business leaders on Monday raised concern over a lax intellectual property rights (IPR) regime and unpredictable tax system in India, prompting Prime Minister Narendra Modi to offer an open business climate and stable tax polices.

Obama also announced $4 billion worth of investment in India, including $1 billion for financing exports of made-in-US products. Both Obama and Modi pitched for the ‘make-in’ programmes of their respective countries.

At the India-US CEO Forum, the US president said exporters of his country were “very concerned” about issues like IPR as the US was increasingly becoming a knowledge-based economy.

He said the “absence of effective IP protection” in India was affecting business.

“We tend to operate at the higher ends of the global value chain,” he said at the meeting, which included Honeywell CEO Dave Cote, Indira Nooyi of Pepsico, Harold McGraw, chairman of McGraw Hill Financial, Ajay Banga, CEO of Mastercard, and Bob Iger, CEO of Walt Disney Company.

The Indian side included Tata Sons chairman Cyrus Mistry, who along with Cote was co-chair of the CEOs’ forum. Others who attended included HDFC chairman Deepak Parekh, RIL chairman Mukesh Ambani, ADA group chairman Anil Ambani, Adani group chairman Gautam Adani, ONGC CMD Dinesh K Saraf, SBI chairman Arundhati Bhattacharya, Jubilant group head Hari S Bhartia, BHEL head B Prasada Rao, Biocon CMD Kiran Mazumdar-Shaw and Sunil Mittal of Bharti Enterprises.

Mazumdar-Shaw later said US companies complained about counterfeiting and piracy in India, which she hoped would be resolved through a bilateral mechanism.

Parekh said Iger raised the issue of film piracy. Even Modi acknowledged that there was piracy in IT software and films. Finance minister Arun Jaitley, also incharge of information and broadcasting, said the issue would be looked into.

After the US Trade Representative (USTR) last year had said in its much-awaited annual special 301 report that India’s IPR laws and enforcement would be closely monitored by initiating an out-of-cycle review, the two countries tried to narrow down their differences through the trade policy forum. The department of industrial policy and promotion has put a draft on IPR policy in the public domain to revise the policy in general.

Indian companies expressed their worries over visa restrictions and restrictions on gas exports from the US to India.

Obama sought “consistency” and “simplicity” in the regulatory and tax environment in India to significantly increase trade and business between the world’s two largest democracies.

Seeking more US investment into India, Modi said at the India-US Business Summit, organised just after the CEOs’ meet by the US India Business Council, the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (Ficci), that his government had removed some of the “excesses of the past” and promised the visiting US dignitaries “we will now soon address the remaining uncertainties”.

The Modi government has repeatedly said retrospective amendment of the Income Tax Act had scared investors away and declared in this financial year’s Budget that all fresh cases arising out of the amendment would be scrutinised by a high-level committee of the Central Board of Direct Taxes before any action was initiated.

Pledging $4 billion in lending by US banks, Obama said his country was ready to help India grow by working with it in development of infrastructure such as railways, ports, roads and clean energy power plants. The $4-billion programme includes $1 billion for financing exports from the US, the same amount for small and medium industries and $2 billion for renewable energy projects.

At the meeting with CEOs, Modi said he would personally take charge of implementation of big projects and monitor them.

“You will find an environment that is not only open, but also welcoming. We will guide you and walk with you in projects. You will find a climate that encourages investment and rewards enterprise. It will nurture innovation and protect your intellectual property,” he said.

“There are still barriers,” said Obama, adding there was a need to streamline regulations, cut the red tape and jump through bureaucracy.

Appreciating Modi’s reform initiatives to bring investments, he said, “We need to incentivise trade rather than stifle. We need to be transparent, consistent and protective of intellectual property rights.”

“We can work together to develop new technologies to help India leap forward and partner in next-generation clean energy projects and upgrade railways, roads, ports, airports and broadband connectivity to provide the best connectivity to the world,” he said.

He also referred to the three smart cities –Allahabad, Ajmer and Visakhapatnam — that the US would help in upgrading infrastructure.

Reviewing his visit, Obama said the two countries had “a number of concrete” steps for more investments and referred to the breakthrough in civil nuclear agreement, defence cooperation, renewable energy and bilateral investment protection treaty (Bipa).

“When leaders make agreements, our agencies and bureaucracy will follow through,” he said. “We can grow and we can prosper together.”

Obama referred to the current bilateral trade of $100 billion and compared it to the US-China trade of $560 billion, saying, “It can give you an idea of what potential India can unleash.”

India only accounts for two per cent of US imports and 1 per cent of its exports, Obama said, expressing wonder that 1.2 billion people consumed such a small proportion of US exports. Notably, merchandise trade between India and the US was much less at $61.6 billion in 2013-14.

Listing the achievements of his government, Modi said the business sentiment in India was one of the strongest among major Asian markets and consumer confidence had turned positive after three years.

“Growth in eight core sectors of economy has increased sharply. Inflation is at a five-year low; 110 million new bank accounts have been opened in the last four months. Investments from the US have jumped by 50 per cent in the first six months of my government,” he said.

Obama said US companies could help India digitise the accounts opened under the Prime Minister’s financial inclusion programme.

Referring to the 50 per cent jump in investments from the US in India, Modi said, “I know that some of the pledges made in September in Washington have begun to flow in. Yes, I do keep track of these things.” The audience cheered his remarks.

India-Australia should build relationship beyond business: Modi to Robb

Looking forward to extending India- Australia ties beyond the ambit of business, Australian minister for Trade and Investment Andrew Robb said on Tuesday that New Delhi and Canberra were both eager and willing to take their relations to the next level.

Following a meeting with Prime Minister Narendra Modi, Robb said, "I was honoured to meet with Prime Minister Modi. We talked about how Australia and India can take our relationship, which has always been strong, to another level because of the ambitions he has, and because his agenda that excites the world." Robb also said Modi wanted the relationship to be much broader than just business, extending into cultural, the arts, theatre, music and sports. "Australia is a great sporting nation and Modi said one of the things he was concerned about was that many Indians did not have the opportunity to play the sports that are available," he added.

Robb also participating in the signing of a memorandum of understanding between Infrastructure Leasing and Financial Services Limited (IL-FS) and Sports Education and Development Australia (SEDA) for skill development and infrastructure in sports.

Speaking of the great sporting traditions of Australia, Robb said that his nation's athletes have benefitted from a strong infrastructure in place, adding that Prime Minister Modi wants a similar structure to come up in India. "India plays cricket very well and that has been a sport of great competition, but the Prime Minister and I spoke of sport more generally and he said that he would love to see many of the skills that we have had the benefit of in Australia made available to young people in particular across India," he said.

"Sport gives hope to one and all; it gives them fitness. It gives them teamwork and teaches them about losing. India is at the cusp of great things, and not only in business but in the social sciences, in education, health and so on, but also in sports and culture. This is a country with such a rich history and I do feel that if you look back over the past 20 centuries, India was part of the centre of gravity of the world for 18 of those. And now, I think, India and China are returning to that stature," he added.

Six Business Intelligence Predictions For 2015

Being a data-driven organization requires a combination of analysis and predictions. As we look at the last several years, big data has been the dominant force, moving from a consumer-based requirement to a must-have strategy for enterprises to stay competitive. This data revolution is seeing accelerated technology adoption curves and is forcing job roles to change, strategic investments in technologies like Hadoop and data quality/governance, threats to incumbent BI vendors, just to name a few. 2015 will see big changes in enterprise information management, as organizations transform every employee into being data-driven, as analytic use-cases become more complex, and as vendors try to predict the next need of the market.

Prediction 1: The lines will blur between data scientists and data analysts

Harvard Business Review declared data scientist as the “sexiest” job of the 21st century. But the role of data scientist is evolving rapidly from predictive analysis and code writing to someone who is able to to communicate in language that all their stakeholders understand. Likewise, the world of the data analyst who prepares graphs and visualizations from various data sets is also being disrupted.

As business requirements for data analytics and business intelligence tools emerge, the distinctions between data scientist and data analyst has become fuzzier. In 2015, I expect these job responsibilities starting to merge into a new class of data expert who possess the reporting and visualization skill sets but is also capable of understanding “the complexities of the new NoSQL databases like Hadoop and can marry data from many sources and types together to produce useful and profitable predictive models,” as Gartner articulated well.
Much of this has been driven by the democratization of business intelligence tools like Tableau, which has made it possible to transform complex data from back-office applications into simple-to-understand data visualizations.

Prediction 2: Microsoft and Salesforce will take a dominant share of the cloud-based business intelligence

Microsoft will likely achieve significant economies of scale in its cloud BI offerings, based on the Power BI suite for Office 366, which will result in considerable pricing pressures. Another potentially disruptive force is Salesforce Wave, its cloud analytics platform. If it lives up to its potential, Wave could wash out almost half of the BI incumbents. But Salesforce Wave will not fully crest unless they take a modern approach to how they help their customers solve the integration and quality challenges.

If successful, Microsoft and Salesforce will herald the arrival of a true end-to-end, cloud-based BI system that promises a unified offering for operational, predictive, packaged, and discovery analytics.

Prediction No. 3: Data preparation replaces Big Data as the hottest topic in BI

2014 was a formative year for data preparation, with a broad cross-section of contributors helping to define it as a distinct category within ETL. The data preparation market itself has been enabled and advanced by major technological breakthroughs in areas such as semantic algorithms, distributed computing, machine learning, and cloud computing.

The coming year will also see the industry delivering data-preparation technologies at scale for all users. The proliferation of ungoverned data will become so large and problematic that companies will need to shift their emphasis on data standardization, governance and data preparation.

The emergence of an all-in-one data prep stack will arise as CIOs and CDOs demand new approaches to end-to-end information management. The industry will respond by moving from delivering fragmented, point products to cohesive platforms built on elastic architectures that can scale and delivered as cloud-based and on-premise.

Prediction 4: Hadoop faces a make-or-break year in the larger enterprise market

If the entirety of the enterprise IT landscape were comprised only of Web 2.0 companies like Google , Yahoo , Facebook, and Twitter, Hadoop would be considered an unqualified success for Big Data projects.
Hadoop faces a tougher time however in demonstrating its applicability and value inside Big Data projects across the larger enterprise market, which constitutes a much larger commercial opportunity. The enterprise software market alone is estimated at nearly a $100 billion per year, growing at almost 5%. The challenges Hadoop faces in the enterprise market are varied:

Many Hadoop projects inside of mainstream enterprises are still largely “science projects” that have not been integrated into production environments;
The major Hadoop distributions (Cloudera, MapR, Hortonworks, Pivotal, and IBM etc.) are still largely not interoperable with each other;
As Hadoop encroaches further into mainstream enterprises, incumbent database vendors are responding more aggressively in protecting their primary turf.
Some other major Hadoop developments I foresee in 2015 include MapReduce being reduced to the ash heaps of history while Hadoop Spark having a banner year and becoming a mainstream technology.

Prediction No. 5: Marketing will be the primary driver of BI decisions

Traditionally, the IT department called all the shots when it came to all technology decisions. Then disruption happened in the forms of cloud computing and smart mobile devices, threatening IT’s hegemonic influence over the lines of business (LOBs). Self-service technologies have given rise to “shadow IT” and the shifting of the balance of power away from IT to the LOBs. According to Gartner, more than half of all budget spent on BI and analytics today are driven by the LOBs.

The power organization to watch in the BI and analytics space in 2015 is Marketing, as it attempts to reposition itself from a cost center to the growth engine of the company. BI and analytics are enabling platforms for data-driven marketing, along with a dizzying array of other tools and services that make up the marketing technology landscape today.

IT organizations who do not cooperate will be subject to whiplash as Marketing zips around them to get what they need elsewhere.

Prediction 6: Internet of Things Gets Real for B2B

One of the hottest “inventions” debuted at the 2014 Consumer Electronic Show (CES) was IoT toothbrush, enabling parents to see how long their children brushed. The number and variety of devices that will comprise the IoT is staggering and growing, everything from the Fitbit and Apple Watch to even the most economical car.

However, the real opportunity for IoT in 2015 will be in Smart Patient Rooms, Smart Cities, Aging in Place technologies, innovations around supervisory control and data acquisition (SCADA), smart meter reading, and even the reinvention of traditional workflows.
For instance, in the construction industry, workers can now get supplies brought to them instead needlessly going up/down ladders and risking injury. Imagine the insurance company who would offer discounts on premiums to the construction firm using an IoT ladder over an older model. Not so different than a utility offering discounts for purchasing “smart” appliances. An insurance company could correlate the data coming from the ladder against claim data and against risk data. Suddenly, the IoT data is ONLY contextual, and therefore valuable, if it can be viewed against other meaningful data coming from data warehouses.

Beautiful time for India and China to do business, says Alibaba's Jack Ma

[caption id="attachment_289" align="alignnone" width="208"] Jack Ma, the founder & executive chairman of Chinese giant Alibaba[/caption]

Jack Ma, the 50-year-old founder & executive chairman of Chinese giant Alibaba, on Wednesday promised higher investments in India, without specifying the quantum or timeline. Addressing an India-China summit, organised by business chamber Ficci here, Ma said he was inspired by Prime Minister Narendra Modi and this was a beautiful time for India and China to do business.

Ma also said Indian sellers were the largest suppliers on Alibaba’s e-commerce platform after Chinese ones. “We have been doing B2B (business-to-business) for the past 15 years and, surprisingly, the second-largest suppliers to us are Indian sellers.” Indian suppliers were so smart they had caught the right opportunity, he said.

Ma’s visit, of less than 24 hours as part of a 100-member Chinese delegation, is the second India tour this year by a global e-commerce chief executive — the first being Amazon CEO Jeff Bezos’ in September. Among non-e-commerce global internet giants, Facebook founder & CEO Mark Zuckerberg had come to India last month.

Unlike both Bezos and Zuckerberg, who had multiple engagements in India, including meetings with the prime minister, Ma’s visit to India was a low-key one. The PM is currently in Nepal to attend a Saarc (South Asian Association for Regional Cooperation) summit.

Ma’s Alibaba has been in the news for its recent blockbuster $25-billion initial public offering on the New York Stock Exchange.

The Alibaba founder did not make specific announcements on investments in India, but the India-China summit on Wednesday resulted in signing of 12 memoranda of understanding, worth $2.4 billion, among companies from the two countries. Alibaba’s American rival Amazon had recently committed itself to investing $2 billion in India.

While Amazon entered the Indian market last year under a marketplace model, Alibaba is yet to start e-commerce operations in the country; at present, it only has a sourcing business here.

Speaking at the summit, Ma said Alibaba’s focus area in the coming years would be globalising and helping small businesses grow. “I was inspired and moved by PM Modi and this is a beautiful time for India and China to do business... Alibaba plans to further enhance technology for Indian sellers,” Ma said, adding he was keen to make more investments here.

A former English teacher, Ma spoke about how 400,000 Chinese were buying from India. He had no idea so many Chinese loved chocolates and tea from this country.

Alibaba has 8.9 million active sellers on its marketplace platform. By comparison, Flipkart, Snapdeal and Amazon have a little over 50,000 sellers each in India. Flipkart is aiming to get 100,000 sellers over the next 18 to 24 months.

In what could be an indication of its scale, Alibaba Group websites accounted for 60 per cent of the parcels delivered in China by March 2013 and 80 per cent of that country’s online sales by September 2014.

Ma’s visit to India generated all-round curiosity, including speculation on potential deals in the e-commerce market. There also was a buzz that Ma might meet Snapdeal co-founder & CEO Kunal Bahl, but the company said no such meeting was scheduled. In fact, Bahl has often referred to Snapdeal, the four-year-old company that became a marketplace player soon after launch, as the “Indian Alibaba”. There are existing synergies, too.

Recently, Snapdeal got a $627-million funding from Softbank, a Japanese telecom and internet corporation that also holds the biggest stake in Alibaba. Masayoshi Son, 57-year-old founder & CEO of SoftBank, had visited the Snapdeal office last month and addressed the company’s employees. Also, Snapdeal is one of the three e-commerce companies where Ratan Tata has put in money.

Indian e-commerce is still only about one per cent of the size of Chinese e-commerce market. But the sector here has become a favourite for investors.

Ma said internet could help transform lives in the current era. “Internet is a young business for young people, and India has a lot of young people. I was a teacher earlier and internet changed my life,” the Alibaba founder said.

Jack Ma in India:

* Indian sellers are the second largest on Alibaba’s B2B platform.

* Alibaba chairman Jack Ma said he is inspired by PM Modi and keen to invest more in India.

* About 400,000 Chinese people are buying from India; Alibaba has 8.9 million active sellers on its platform

* Flipkart, Snapdeal, Amazon and Ebay have in excess of 50,000 sellers each.

* Alibaba wants to enhance its technology for better service to Indian sellers.

* Ma vouched for mutual engagement between India & China as this is beautiful time to do business in India.

* Alibaba Group websites accounted for over 60 per cent of the parcels delivered in China.

* Chinese have been buying chocolates, tea among others from Indian sellers, claimed Ma.

* Recently, it created history of sorts when it recorded single day sales of more than $ 9 billion

 

India drops to dismal 142nd in 'ease of doing business' rankings

India has dropped down two places to stand at 142nd out of 189 countries ranked by the World Bank for ease of doing business, underscoring the tough task that lies ahead of the Narendra Modi government, which has said it wants to make India a business-friendly country.

In the ten metrics used to measure ease of doing business in the Bank's 2015 report, which covers the period from June 2013 to May 2014 (when the UPA was in power), India came close to the bottom in two categories. It stood a wretched 184th in the category "Dealing with Construction Permits," and 186th in "Enforcing Contracts."

On the bright side, India stood 7th, an improvement of 14 places, when it came to "Protecting Minority Investors." It is the only category in which India has shown an improvement from 2013, when it was ranked 21 in this category and 140 in the overall ease of doing business.

Ranking in other eight categories are: Starting a business (158th), Getting electricity (137), Registering property (121) , Getting credit (36th - down from 30th place), Paying taxes (156), Trading across borders (126), and Resolving insolvency (137).

Getting construction permits in India involved an average of 25 procedures that took 186 days, and cost 28 per cent of the warehouse value. Enforcing contracts took 46 procedures and 1420 days — nearly four years. Getting electricity took 106 days and registering a property took 47 days.

Indicators measured in Mumbai, India's business epicenter, showed that it required 13 procedures to start a business, and it took 30 days to accomplish this, compared to an average of 4.8 procedures and 9.2 days in advanced economies.

The Modi government, which aggressively made ease of doing business part of its agenda and has already initiated some steps, has plenty to chew on in the report that chronicles how enervating it is to start a business in India. For instance, it takes five days to pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation and five days to request and obtain Certificate to Commence Operations.

It takes between a week and 12 days for each of the following procedures: Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) — 7 days; Register with Employees' Provident Fund Organization — 12 days, simultaneous with previous procedure: Register for VAT online — 10 days, simultaneous with previous procedure; Register for medical insurance (ESIC) — 9 days, simultaneous with previous procedure; Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department — 7 days.

All of India's neighbors except for Bangladesh (173) and Afghanistan (193) were ranked higher. China topped the neighborhood at 90, followed by Sri Lanka at 99, Nepal at 108, Bhutan at 125 and Pakistan at 128. Singapore stood first overall for the ninth year in succession, and is followed by New Zealand, Hong Kong, Denmark, and South Korea.

Doing business in India difficult, Honda Motor chief says

[caption id="attachment_280" align="alignnone" width="215"] Prime Minister Narendra Modi with the Honda Motor Company chairman Fumihiko Ike[/caption]

The Narendra Modi government may be talking of economic reforms, but the confidence of global investors in the Indian economy still seems jittery. Honda's global chairman Fumihiko Ike has said that doing business in India remains difficult and processes in the country are "complicated" and "burdensome".

Ike, who also heads the crucial Japanese Automobile Manufacturers Association (JAMA), said the new government should take steps to improve the investment in the country as poor infrastructure and uncertain tax regime makes it tough to do business in India.

Ike's statement comes a day after British telecom giant Vodafone echoed similar sentiments and European oil major BP also expressed "frustration" over the delay in gas price hike, which was delaying the proposed investment by the company. Vodafone, which battles a Rs 20,000 crore claim by the government over a capital gains tax issue, said foreign companies find it "difficult" to do business in India because of slower government clearances.
Speaking at the 54th annual convention of Society of Indian Automobile Manufacturers ( Siam) here, Ike said the Indian government needs to take steps to make the country an attractive destination for foreign investors and "improve the business environment for investments".

Ike said component suppliers to automakers "encounter problems" in getting business permits and having their paperwork done and many of the processes related to the setting up of factories are "complicated" and thus require simplification.

Ike made a special mention of the tax regime in India which he said was "burdensome" when compared to other countries. This, he said, was "impeding investments" in India.

The Honda chief sought an early rollout of a single goods and services tax. "India has a complex domestic tax system. We want a single tax system."

However, while highlighting the problems being faced by foreign investors, Ike had a special mention for Prime Minister Narendra Modi who promised the ease of investments in India during his recent trip to Japan.

Ike said the Japanese investors were enthused by Modi's call to increase investments in India. "He has promised that red tape will be replaced by red carpet. This makes us optimistic on making investments."

BP Plc, whose $7.2 billion investment in 2011 was the largest foreign investment in the energy sector in India, said on Thursday that the delay in implementation of a natural gas price hike was frustrating.

"We are ready to go ahead with our first project which is probably a $4 billion project. We are getting ready to potentially move that forward (but) are waiting for the gas price decision. So, is that frustration, yes because it was decided last June 2013," said Sashi Mukundan, regional president and head of country (India), BP Group.

Mobile banking zooms as India gets smarter

A sharp increase in use of smartphones has led to a sudden surge in mobile banking transactions — almost four times in a year in value terms. Leading the pack is ICICI Bank, the country’s largest private-sector lender, which has reported a three-fold rise to clock more than Rs 1,000 crore worth of transactions in a month, the first time by a bank in India.

ICICI Bank’s share in the country’s mobile banking payments is the largest. Abonty Banerjee, general manager and head of digital channels, ICICI Bank, says financial transactions on mobile devices is rising steadily. “In the first quarter of this financial year, we have already logged Rs 2,635.37 crore worth of mobile banking transactions, close to half the Rs 5,741 crore seen in full 2013-14. Also, compared with the June quarter of last year, we have almost tripled our value of mobile transactions — from Rs 941 crore to Rs 2,635.37 crore. Similarly, the value for June alone was Rs 1,000 crore, compared with Rs 333.23 crore in the month last year.”

Even other banks have seen significant jump in transactions on the mobile platform. HDFC Bank, India’s second-largest private lender, has also seen its transactions growing about three times — to Rs 795.6 crore in June this year from Rs 266.3 crore in the month last year. Axis Bank witnessed a five-fold increase during the same period — from Rs 115.8 in June 2013 to Rs 586.1 crore. In the month, the total value of mobile transactions across banks grew to Rs 3,985 crore from Rs 1,147 crore a year ago.

Jairam Sridharan, head of consumer lending & payments at Axis Bank, explains mobile banking has now become a core strategy for his bank, which is also investing to grow the overall digital medium base. “To stay relevant among consumers, banks need to focus on the digital medium. It helps works for banks, as they are able to save a lot of transaction cost. It is a win-win for both banks and their consumers.”

While private-sector banks have led the charge in tapping the digital opportunity with better technology, State Bank of India (SBI) is one of the few state-run lenders that have seen meaningful traction.

Consumers mostly use the mobile medium to pay bills, recharge mobile phones, book tickets and transfer funds.

Experts believe a rise in smartphone usage and improved applications by banks have helped mobile banking gain popularity among users. ICICI Bank’s Banerjee sees the momentum continuing. “The overall transaction value is at least doubling every year. This year, the value has tripled compared to last year. That might not happen on a larger base of the previous year but I am sure it will grow very fast.”

For ICICI Bank, the average value of these transactions is Rs 3,000 per user per month. To grow the mobile banking channel, the lender is planning to offer on mobile phones all services that are currently offered on the web. “At present, there are a few peripheral services that are not on mobile. For instance, services like closing a fixed deposit option is not available on mobile phones. The few services that are left might be offered on mobile in the next six months, we will be able to have all the available services even via mobile phones,” added Banerjee.

5 things to know about Nikesh Arora

After Satya Nadella and Vishal Sikka another Indian is making news in the global tech industry. Google’s Chief Business Officer Nikesh Arora has quit the company to join Japan’s SoftBank Corp as Vice Chairman of the group and CEO of SoftBank Internet and Media Inc. Leaving one of the fastest growing companies in the world is definitely newsworthy, especially when the person is the fourth most important person and the highest paid employee of the company.

Nikesh Arora also made news when he married Ayesha Thapar earlier this month. Times of India called it the mother of all fat Punjabi weddings. Attended by the Who’s Who of Silicon Valley, Hollywood stars like Brad Pitt and Angelina Jolie, the marriage was all over the US and Indian press.

However, for Nikesh Arora, who also serves on the board of Colgate-Palmolive and Bharti Airtel, the journey started from humble beginnings. Here are five things to know about Arora’s journey.

1. Born in Ghaziabad, Nikesh Arora completed his schooling from The Air Force School (Subroto Park), in Delhi. His father worked in the Air Force and Nikesh had been to different Kendriya Vidyalayas around the country. He graduated as an Electronic Engineer from IIT BHU in 1989. After completing his engineering he had a brief stint with Wipro selling computers. He however, decided to pursue a management degree from the US and enrolled at Northeastern University, Boston. After completion his MBA, Arora joined Fidelity Investments as an analyst but simultaneously enrolled himself for a master’s programme in finance from Boston College. Attending school at night and topping his class, Arora finished his CFA (Chartered Financial Analyst) course in 1995.

2. One of the few analysts (and perhaps the richest) who could boast of such an enviable CV, Arora moved from Fidelity to Putnam Investments where he tracked the telecom sector. But his heart was not in stock analysis. In an article in Livemint, Arora said that he felt that he wasn’t ‘doing things’. He quit his job to join Deutsche Telekom. While on the job he found an opportunity to start his own venture in June 2000, T-Motion PLC, which was providing certain value added services for the newly launched 3G services of the German company. But within two years T-Motion was merged into Deutsche Telekom as a part of T-Mobile. Arora worked in T-Mobile in various capacities including as a member of the board.

3. By 2004, Arora had plans of starting another venture, a mobile virtual network company. But, in September 2004 during a lunch with his friend his plans changed. His friend had an offer from a California-based company that was looking for somebody to manage its European business. Since the company was too small for his friend’s liking, he wanted Arora to have a look at it. The company was Google, which had gone public in August 2004. The first interview was conducted in a small rented office space, which didn’t impress Arora, the next one was with founders Larry Page and Sergey Brin at the British Museum. Google CEO, Larry Page mentioned about this interview and the fact that for some unknown reason Sergey Brin had selected this location for the interview in his social network site while announcing Nikesh Arora’s exit from the company.

4. Arora was looking after Google’s European operations from 2004 to 2007 and was later given charge of handling Middle East and African markets. He later took over global sales and became the chief business officer in 2011. Arora has been Google’s highest paid executive; as per Bloomberg Businessweek Arora received a compensation package of $57.1 million or Rs 344 crore (almost Rs one crore per day) in 2013. As Google’s top sales executive, Arora had been instrumental in opening up new advertising markets. According to Forbes, Google under Arora’s leadership made big in-roads into display ads and has been driving an ongoing push to get more brand advertisers to look beyond television and print magazines to run more ads on Google’s YouTube video site as well as its network of a million other websites to which it syndicates display ads.

5. A keen golfer and a fast thinker, Nikesh Arora is considered by his colleague and juniors as a team person and a cult-figure among Indian Googlers. But despite being a globe-trotter (Arora travels 100 days a year) Arora is an Indian at heart. His colleagues say that Indian culture still plays a very important part of his life. He eats Indian food at home (Arora carries his own bottle of hot sauce to add to his food in restaurants), his family speaks in Hindi and like all Indians he watches cricket matches, even if it is late in the night.

Business confidence up in Modi regime

[caption id="attachment_262" align="alignnone" width="300"] Prime Minister Narendra Modi. Business confidence is up after the Prime Minister Narendra Modi’s new government took office,[/caption]

Business confidence is up after the Prime Minister Narendra Modi’s new government took office, according to the Business Outlook Survey by the Confederation of Indian Industry (CII).

“Indicating a sharp improvement in investors’ sentiments amidst heightened expectations that the new government means business along with some improvement in basic macro indicators, the CII Business Confidence Index (CII-BCI) for the April-June 2014 quarter has moved up to 53.7 from 49.9 in the previous quarter,” the CII said on Sunday.

The number 50 is the dividing line on the survey’s index between positive and weak business confidence.

Mr Modi took oath May 26 at the head of a BJP-led government.

The survey, based on responses from over 150 industry members distributed over large, medium, small and micro firms, and almost equally between manufacturing and services, exuded confidence about prospects of economic growth based on decline in price-rise and deficits, export recovery, buoyant foreign capital inflows and strengthening of the rupee.

“We expect the index to gather momentum in the coming days, riding on improved sentiments and business confidence,” the CII director general Chandrajit Banerjee said.

According to the survey, while growth is expected to pick up from 4.7 per cent in 2013-14 to between 5.5 and 6 per cent in fiscal 2015, wholesale price inflation is expected to moderate to between 5.5 and 6 per cent in the current fiscal.

The CII cited economic uncertainty, low GDP growth and high inflation as its priority concerns, highlighting the need for stepping up efforts to improve business sentiments and removing supply bottlenecks.

“We are pleased to see that the new government is already working in this direction and it is only a matter of time when fundamentals of the economy will start falling in place,” Mr. Banerjee said.

Reflecting upward trends in demand, the survey found most businesses have started experiencing a rise in capacity utilisation, which augurs well for a turnaround of the economy.

As much as 56 per cent of respondents expected sales and new orders to increase in the first quarter of 2014-15, which is much higher than the previous quarter where only 35 per cent of respondents expected a rise in sales.

Dropbox makes it easier to handle personal and business storage by linking accounts

If you're the sort of person that likes to use Dropbox for Business and pleasure, your road has been a bit rough. Up until now, you had to keep them as two separate accounts and switching between the two involved signing out of one and signing into the other. If your dream is to eliminate this painful process and merge the two aspects together, then today is the happiest day of your life: Dropbox is now making it possible to have one option for business and another for personal use, and be able to link them together. This feature has been available to beta testers for quite some time now, but it's finally available to everyone else.

Additionally, Dropbox also announced that when collaborating with a colleague, you can both now look at the same shared document and make tweaks to that file in real-time. The company showed off a Powerpoint presentation shared by two people via Dropbox, in which both people were able to chat with each other and change things without having to re-download the file in the process. (Update: the collaboration project, also known as Project Harmony, is actually not coming out until later this year.)

This was just one of three announcements at this morning's event. Dropbox also introduced an Android and PC version of its Mailbox app, as well as a new app called Carousel which organizes all of your photos and videos -- old and new -- into a nice user interface which you can look through by date or event.

Quikr founder shows how to take an old idea and make it new

[caption id="attachment_242" align="alignnone" width="195"] Pranay Chulet[/caption]

When Quikr.com, a Mumbai-based online and mobile classifieds firm, recently raised Rs 550 crore ($90 million) from foreign investors, the company drew attention like never before. No other online company in the listing or classified business had gone in for such a big round of funding ever. But, Pranay Chulet, the 40-year-old founder and chief executive of Quikr, is unperturbed by it all. "It was a revolution waiting to happen," says Chulet in a matter-of-fact manner.

Armed with, what else, IIT-IIM degrees, this entrepreneur is like many others who have made it big in e-commerce and other online businesses. Only, he spent more years in regular jobs than most others did before chasing his dreams and the big bucks.

Chulet calls the current round of funding led by Swedish investor AB Kinnevik a "small step in the long journey ahead". Since 2008, the company has raised a total of $140 million ( Rs 870 crore), and the new funds will go into marketing and expanding the talent base in the organisation.

Across the globe, there are examples of online classifieds successes like Craigslist in the US and Trademe in New Zealand, but someone needed to do it right in India. Chulet did it, and he refers to himself as "a made-in-India product".

Quikr essentially enables people, many without Internet access, to sell things that they may not need. The pace at which such deals take place on the site reflects in the brand of the company - Quikr. The company has endeared itself to users by exploiting a very Indian thing - missed calls. The potential seller is required to give a missed call to the company, which will then contact the caller for the ad to be put on the site.

Quikr's revenue model is somewhat different from those of others in the same business, such as OLX and Zomato. These companies list for free and make money through advertisements, but Quikr primarily gets its revenue from paid listing and lead generation for small businesses.

While he's grounded about the present, the Quikr boss is busy planning for the future. Even as an IPO is not in the company's ken right now, it is "flirting" with the idea of going overseas.

Unlike in the Indian e-commerce world, where the Bansals (of Flipkart and Myntra) rule, his surname does not carry any entrepreneurial baggage, so to say. His father was a government officer who worked as a general manager in mines and his mother a homemaker. Chulet, who is single, spent his childhood in the mining towns of Dariba, Zawar and Maton in Rajasthan. But becoming an entrepreneur was his dream since his college days. "I was the first student from Kendriya Vidyalaya Dariba to take an IIT exam and clear it," he says with pride. He's quick to add, however, that he was no geek in school.

After his education, Chulet worked as management consultant in the US for a decade. He has also advised leading newspapers on their classified business, something that may be of great help to him now.

Beyond business, he's tried his hand at film-making too. A Hollywood movie buff, he made a short feature film called Latent Lava after a course in movie-making from New York Film Academy in 2007. The film was released globally the same year.

The Apps Business

Vic Bhagat, global chief information officer of EMC Corporation, keeps a close watch on his Mercedes parked in his garage in the US even when he is in a meeting in Bangalore. He pulls out his iPhone and clicks on an app to see if anyone is tampering with his car or taking it for a spin. “It allows me to track my car. I have kids who don’t drive yet, but it is a great safety feature to know where my car is,” says Bhagat. He can even start and switch off his car while sitting in India. Mercedes gave him the app when he bought his car.

Bhagat is convinced that apps will increasingly be part of our everyday lives — at work and at home. “The future is mobile for every corporation and consumer,” he adds.

Somakumar Kolathur and Sreekumar Paramu, both former Infoscions, are as bullish about apps as Bhagat is. They quit stable jobs at the IT services major to start up Moonraft in Bangalore. They believe in combining design with technology to create unique apps for clients. And in Ahmedabad, Kirit Gajera of DRC Systems has also staked his future on apps. He started DRC as an IT services company but is now concentrating on building exciting apps for clients. He expects that at some point in the future, the apps business will be his main revenue earner, even though it is currently one-tenth of his IT services business.

These people are not alone in dreaming of making a fortune through developing apps. In India, several hundred thousand companies — both established IT firms as well as startups — are very clear that apps will be ubiquitous in a few years’ time and will be the preferred way of doing everything — from shopping for goods and services to keeping track of security at home and office. The statistics on smartphone sales, app creation and downloads only serve to vindicate their bullishness on the app business.

According to data provided by research firm Nielsen, some 29 million smartphones and five million tablets were bought by Indian consumers in 2012. The smartphone sales for the year represented a jump of 145 per cent over the previous year.

Meanwhile, another financial advisory firm, Avendus, estimates that by 2015, India will have a smartphone population of 382 million (the global smartphone number are estimated to be around 2.2 billion). Of the 382 million, only 50 per cent will be active users of mobile Internet; and, the users will download 45 apps on average annually. Currently, Indians only download 10 apps on average.

In 2012, more than 60 billion apps were downloaded across the world. India accounted for a relatively minuscule 300 million. Research by Gartner estimates that in 2013, global app downloads will cross 102 billion; Indian smartphone and tab users will download over 800 million apps. It is estimated that by 2016, there will be a little over eight billion app downloads in India alone.

For all the mind-boggling numbers though, the app business is not for the faint-hearted. There are too many people chasing too small a pie because the app business has relatively low entry barriers — several entrepreneurs we spoke to estimated that you could create an app startup with an investment of as little as Rs 50 lakh, if you had a good idea and were willing to hire fresh-out-of-college engineers and designers. You do not need particularly expensive hardware or software, and a team as small as 10 engineers is sufficient to start out with.

The fact that giants such as Microsoft actively encourage and incentivise millions of independent software vendors to use their platform and stores also makes it easier for those who do not want to slug it out in the Android & iOS space. Little wonder then that there has been a rush of app startups in the past couple of years. An estimated 300,000 small and medium companies are building apps in India today, and that population is only going to grow.

On the other hand, the pie they are chasing is not all that attractive. The market for paid downloads is practically non-existent in India, and analysts estimate that the annual mobile ad spends in India for “in-app and mobile” advertising — the term used for the ads present in the free apps you are using — currently is just about Rs 300 crore.  And, India does not figure in the list of the top 10 countries by ad revenues from apps.



That is precisely why a great many app developers have decided to build their businesses around enterprise clients, and not around individual customers. It is the apps built to order for corporate customers that are providing the bread and butter — and the jam — for the average app company based in India.

Building Apps To Order
Every large company wants an app developed in double quick time. And, it is these companies that are providing the main business for thousands of app developers. Moonraft, for example, got its big break from Reva, makers of India’s first electric car. The automaker — now part of Mahindra & Mahindra — wanted an app that would help engage its customers better. Sreekumar and Somakumar obliged by creating an app with a simple interface, which could help the customer keep track of the vital statistics of the car, including the all-important battery charge indicator. Moonraft today boasts of 25 clients, and a staff of 50. It says it will clock revenues of Rs 5 crore this year.

Meanwhile, for IMI Mobile, a Hyderabad-based mobile data platform, value-added services (VAS) and interactive voice response (IVR) company, the showcase order came from a power distribution company in Mumbai which was trying to tackle corruption in its meter-reading staff. There were suspicions that some meter readers were being paid off by a few customers to falsify readings. IMI created an app which was put on a handheld device to be carried by all meter readers. Once the reader reached a household, he would click on the app which would connect the camera and capture the meter reading and transmit it to the central server. In one stroke, the problem of tampering with meter readings was eliminated. IMI boasts of revenues of Rs 500 crore. It says the enterprise app is part of a larger mobile integration solution and, therefore, revenues from just apps cannot be quantified.

The revenue model of app developers with corporate clients has evolved over time. In the initial days, corporations primarily contacted developers for one-off apps and paid a flat fee. Now, there are four clear business models that are emerging. The first being the time and material model. Here, the developer charges a flat dollar rate per hour. Many in the Indian developer community follow this model.

The second is the scope and milestone model. In this, the developer meets a set deadline and charges a flat fee. Companies like Moonraft and IMI Mobile follow this model. The third is the transaction-based pricing model. Here, the developer gets paid in accordance with the traffic that flows to the app — probably the number of times a customer uses the app. Ad agencies prefer this model and usually have an in-house app development team that also builds a traffic tracking engine.

The fourth model is outcome-based, one where the developer not only builds an app, but takes a percentage of the ad revenue that flows to the app. Here, the developer does not charge any upfront fee and leaves the marketing to the client. The app that Gajera of DRC Systems built for a Renault dealer in Ahmedabad is a perfect example of this. The app — which allows customers to check everything from availability of preferred colour to service slots  at the dealership — works by connecting with the ERP (enterprise resource planning) system of the dealer. It is envisaged as a lifecycle management app for the car that the customer purchased, and gives Gajera a recurring revenue stream. Currently, his firm makes just about Rs 12 crore annually. He hopes the app business will scale up.

The enterprise segment seems to be the most lucrative for developers because it involves long-term maintenance contracts and upgrades. Contus, a $1-million mobile app company from Chennai, started just five years ago and now has close to 140 people on its rolls. “In the mobile app business, we talk to the business managers of the enterprise; it is very different from an IT services business,” says Sriram Manoharan, founder of Contus. He adds that while delivering apps for enterprises is challenging, his company is also building expertise in consulting to add to the mobile app business. “The app business works on a pure IT services model with value additions in data analytics, building e-commerce, field force or distributor connect,” explains Manoharan.

Business confidence improves in Q1 2014

Business optimism saw a significant rise in the first quarter of 2014 mainly on sales volume, net profit and new orders on the hope of better political stability, a Dun & Bradstreet report said. The D&B Composite Business Optimism Index for Q1 2014 recorded a significant increase of 16.6 per cent.
"In fact, optimism in three segments, namely volume of sales, net profit and new orders, stands at an 11-quarter high for the period Jan-Mar 2014.
Hopes of greater political stability and accompanying certainty on the policy front could be partly responsible for the trigger in business sentiment," Dun & Bradstreet President and CEO, India, Kaushal Sampat said in a release issued here.
"Concerns regarding the size of the current account deficit as well as its financing have eased, while hopes of a recovery in the investment cycle have gathered strength with the Cabinet Committee on Investment facilitating a substantial number of clearances for large projects," Sampat said.
Installation of a stable government after the elections combined with policy moves to de-bottleneck large projects will help to counterbalance any possible impact from the Fed's decision to taper its monetary stimulus, he added. A significant majority of the respondents expect volume of sales to increase by 83 per cent in Q1 2014, while 5 per cent anticipate the sales volume to decline and the remaining 12 per cent expect volume of sales to remain unchanged.
The report found that around 78 per cent of the respondents expect an increase in profits during Q1 2014, while 17 per cent indicated they expect no change in net profits and 5 per cent expect their net profits to decline.

In Bhutan, Business and Happiness Don’t Mix

[caption id="attachment_226" align="alignnone" width="300"] Bhutan’s Prime Minister Tshering Tobgay.[/caption]

 

Say “Bhutan” and most people likely think happiness: The nation is the only one in the world to measure how happy its citizens are and to take account of the results in domestic policy.

Say “business in Bhutan” and the picture becomes far less rosy, according to the World Bank, which ranks the tiny South Asian country amongst the least business-friendly in the world.

Could there be a link between the two? Is the nation’s pursuit of high gross national happiness damping its efforts to expand its gross domestic product.

Some in the country think it might be. Needrup Zangpo, the editor of the Bhutan Observer, told The Wall Street Journal in an interview in October that the private sector is small “because there’s not enough impetus for growth from the government.”

Asked if the happiness measure could be a reason the government has not been able to help the private sector to grow, Mr. Zangpo said, perhaps, because the gross national happiness policy views likely effects of business on factors such as people’s stress levels, lifestyle and the nation’s culture and tradition as more important than potential to make money and help the economy grow.

Bhutan ranks 141 out of 189 countries in the World Bank’s 2014 “Doing Business” report, an assessment of how easy it is to conduct business in 189 economies based on their regulatory environment. Among South Asian counties, only Afghanistan is rated worse.

The tiny nation has carved out a distinct identity for itself. It imposes a national dress code during office hours and at public functions, and requires all buildings to conform to the national architecture.

Arguably out of a sense of geopolitical vulnerability, the country has sought to mark itself out from its giant neighbors, India and China.

Kuensel, a Bhutanese daily newspaper reported in October that inability to get loans, high tax rates and spiralling inflation shuttered businesses in industries such as manufacturing and steel. Stiff labor regulations and hard-to-get business licenses and permits were also blamed in the article for stifling business in the country.

The government is concerned, Prime Minister Tshering Tobgay said in an interview.

“If doing business in a large country is much easier than in Bhutan, we have to do some serious introspection,” Mr. Tobgay said and acknowledged that his country was “perhaps excessive on regulation.”

However, he said, the country’s policy of measuring gross national happiness was not responsible for that. “Who wants to promote a business that destroys the culture or the environment?” he asked.

In fact, according to the prime minister, gross national happiness and businesses “can reinforce each other.”

“We want to support the private sector to become competitive and productive,” he said, adding that he was against introducing business subsidies to promote growth.

“We don’t need to give entrepreneurs the run around,” the prime minister said. “As a small country, we can do things that are impossible in large countries,” he added

Coined in 1972 by Bhutan’s fourth king, gross national happiness today refers to the nation’s policy of balancing modernity with preservation of traditions, mostly by resisting laissez-faire development.

It is organized around four pillars – sustainable development, preservation of culture, environmental conservation and good governance – which seek to balance the material and the spiritual by resisting unbridled development.

After Bhutan transitioned to democratic rule from an absolute monarchy in 2008, the nation’s planning authority was renamed the gross national happiness commission and designed to ensure that happiness was taken firmly into account in all policies.

The commission uses gross national happiness as so-called screening tools to assess how a policy would affect society in terms of its impact on stress-levels, culture and physical exercise.

The commission’s secretary, Karma Tshiteem, said that the tools are only for policies, and do not directly influence business. They guide the rules that the government makes for the private sector, he said.

The emphasis on gross national happiness is seen in pretty much every industry in Bhutan.

In tourism, the government charges a daily tax of $200 a visitor in low season and $250 in high season, to restrict the number of foreign visitors to the country, Indians, Bangladeshis and Maldivians however are exempt from this charge.

Sale and production of tobacco products are banned. The Constitution states that 60% of the country’s land area must have forest cover, and successive governments have raised the bar to 70%.

The high-investment mining and hydropower sectors remain closed to foreign direct investment, and those sectors which do allow FDI, such as five-star hotels and resorts, organic farming and agriculture, have a high threshold for minimum investment.

Apart from regulation, the landlocked Himalayan nation has a few other limitations when it comes to encouraging business growth. It has transportation problems because of its hilly and rugged mountainous regions, with no railways or direct access to ports.

Almost two thirds (64%) of its 700,000-strong population live in rural areas, but only 8% of the land is fit for cultivation: Around 70% of the population rely on agriculture for their livelihood.

Economic Affairs Minister Norbu Wangchuk said that the weak businesses environment could be attributed to the nation’s focus on happiness. But that’s a conscious decision, he said.

“We have made a deliberate and informed choice of the kind of development we will pursue,” Mr. Wangchuk said.

A blinkered focus on gross domestic product did not lead to increased well-being among the populations of countries which employed such a strategy, he argued.

“It has created economic, financial and ecological crises and climate change, unemployment and poverty,” the minister said.

If Bhutan were to allow extensive mining and extraction of forest resources, it “would immediately give us a double digit growth in the GDP,” Mr. Wangchuk added. “But this is the path we have determined not to take.”

Bhutan is paying a huge price for that choice, he said, and pointed to “an enormous number of youth who are unemployed.”

The country does not have a support mechanism for its businesses, “because the world has a different kind of a business model, trading arrangement and market structure,” he added.

However, the gross national happiness policy is not anti-business as such, Mr. Wangchuk argued. “It challenges businesses to be innovative and creative, to respect environment, identity and culture,” he said.

Asked if Buddhism – followed by 80% of Bhutan’s population – is also a factor in the nation’s cautious approach in business, Mr. Wangchuk said the philosophy is based on the Buddhist concept of interdependence. “Individualistic self-motive gets subsumed by the common, general good and that comes from a firm belief that everybody is interrelated,” he added. “Pollutants in Shanghai, New York and New Delhi would melt our glaciers, causing flooding here,” he said.

The minister claimed that many economies, scholars and leaders are looking at the gross national happiness model, “and that affirms to us that perhaps we are on the right track.”

In 2014, Bhutan plans to host a conference of world leaders aimed at developing new gross national happiness-based agreement to rival the GDP-centric Bretton Woods Agreement, which established the rules for commercial and financial relations among the world’s major industrial states in the mid-20th century.

Is It Time To Float Your Business Up Into The Cloud?

What is the cloud?

There are many different definitions you can find, but for the small business owner it means essentially outsourcing your IT infrastructure (possibly including applications, servers, data storage, etc) remotely. Why would you move to the cloud? The most commonly cited reasons are focused upon the core business and cost savings, but in reality every company should consider carefully any move to the cloud to ensure it is the correct move for them.

For small to mid-size business owners migrating some or all of their systems to the cloud environments presents the usual IT issues, but the problems are compounded by having data stored and managed remotely, by external organizations and often in multiple locations. Among these issues are special considerations for privacy, interoperability, data and application portability, data integrity, business continuity, and security.

In this posting I’m going to focus upon the security issues, technical challenges, and best practices associated with a move to the cloud. In a discussion with one of our cloud security gurus, Mike Johnsen, he highlighted some of the key issues that a business owner should be aware of and factor into the decision-making process:

System Complexity. A public cloud computing environment is extremely complex compared with that of a traditional data center.

Shared Multi-tenant Environment. Public cloud services offered by providers have a serious underlying complication—client organizations typically share components and resources with other consumers that are unknown to them.

Internet-facing Services. Public cloud services are delivered over the Internet, exposing the administrative interfaces used to self-service and manage an account, as well as non-administrative interfaces used to access deployed services.

Loss of Control. While security and privacy concerns in cloud computing services are similar to those of traditional non-cloud services, they are amplified by external control over organizational assets and the potential for mismanagement of those assets.

Governance. With the wide availability of cloud computing services, lack of organizational controls over employees engaging such services arbitrarily can be a source of problems. While cloud computing simplifies platform acquisition, it doesn’t alleviate the need for governance; instead, it has the opposite effect, amplifying that need.

Compliance. Achieving industry-specific security compliance becomes more complex due to the different paradigm the “Cloud” brings.

Data Location. When information crosses geographic borders, the governing legal, privacy, and regulatory regimes can be ambiguous and raise a variety of concerns.

Risk of Unintended Data Disclosure. A fundamental underlying vulnerability is the difficulty of collecting meaningful consent for the processing of data available on the cloud.

There are, however, some benefits of a cloud based environment from a security perspective. Some of these benefits would include:

In general, security measures are cheaper when implemented on a larger scale. The cloud provider or third parties can generally offer managed security services which may be cheaper than maintaining an in-house security staff full time.

Standardized Interfaces for managed security devices which creates a more open and readily available market for security services.

Rapid and smart scaling of resources which facilitates the ability of the cloud provider to dynamically reallocate resources for filtering, traffic shaping, authentication, encryption, etc., to defensive measures (e.g., against DDoS attacks) has obvious advantages for resilience.

Audit and evidence-gathering which can provide dedicated, pay-per-use forensic images of virtual machines which are accessible without taking infrastructure off-line, leading to less down-time for forensic analysis.

More timely, effective, and efficient updates and defaults which can facilitate images and software used by customers to pre-harden and update with the latest patches and security settings according to fine-tuned processes.

Benefits of resource concentration which provides the advantage of cheaper physical limitation and physical access control and the easier and cheaper application of many security-related processes.

So what can you do as a small business owner to accurately assess your need to move to a cloud environment and execute the move, if required? Here is a thorough, although probably not all inclusive list of some of the best practices a business owner should use when looking at a move to the cloud.

Plan. Carefully plan the security and privacy aspects of cloud computing solutions before engaging them (e.g., SLA negotiations)

Ascertain. Understand the cloud computing environment offered by the cloudprovider.

Policy. Ensure that a client-side and provider-side cloud computing solution satisfies organizational security and privacy requirements.

Continuity of Operations. If the cost of losing access to an application is severe, it is recommended that subscribers perform the work locally unless a provider is willing to agree to pay for pre-defined damages for specific types of service interruptions.

Compliance. A subscriber should determine: (1) whether the capabilities for defining the necessary controls exist within a particular provider, (2) whether those controls are being implemented properly, and (3) ensure that the controls are documented.

Administrator Staff. Subscribers should make sure that processes are in place to compartmentalize the job responsibilities of the provider’s administrators from the responsibilities of the subscriber’s administrators.

Legal. Subscribers should investigate whether a provider can support ad hoc legal requests for: (1) e-Discovery, such as litigation freezes, and (2) preservation of data and meta-data.

Operating Policies. Subscribers should ascertain the operating policies of providers for their: (1) willingness to be subjected to external audits and security certifications, (2) incident response and recovery procedures/practices, (3) internal investigation processes with respect to illegal or inappropriate usage of IT resources, and (4) policies for vetting of privileged uses such as the provider’s system and network administrators.

Acceptable Use Policies. Subscribers should ensure that all subscriber personnel read and understand the provider’s acceptable use policy, and negotiate an agreement for resolution of agreed upon policy violations in advance with the provider.

Licensing. Subscribers should ensure that both the provider and subscriber properly license any proprietary software installed into a cloud.

Patch Management. Subscribers and providers should agree on a set of procedures a subscriber needs to perform to take an application offline (whether a software patch is going to be installed by the provider or subscriber), the testing that must be performed to ensure the application continues to perform as intended, and the procedures needed to bring the application back online. Plans for system maintenance should be expressed in the SLA.

Subscriber-Side Vulnerabilities. Subscribers should minimize the potential for web browsers or other client devices to be attacked by employing best practices for web browser security and patching, and seek to minimize browser exposure to possibly malicious web sites.

Data-at-Rest and Data-in-Transit Encryption.

Physical. Subscribers should consider physical plant security practices and plans at provider sites as part of the overall risk considerations when selecting a provider.

Authentication. Subscribers should consider the use of authentication tokens, which some providers offer, to mitigate the risk of account hijacking.

Identity and Access Management. Subscribers should have visibility into to the following capabilities of a provider: (1) the authentication and access control mechanisms that the provider infrastructure supports, (2) the tools that are available for subscribers to provision authentication information, and (3) the tools to input and maintain authorizations for subscriber users without the intervention of the provider.

Performance Requirements. Subscribers should benchmark current performance scores for an application, and then establish key performance score requirements before deploying that application to a provider’s site.

Visibility. Subscribers should request that a provider allow visibility into the operating services that affect a specific subscriber’s data or operations on that data.

Although this list of best practices may seem daunting, the more of these best practices that the business owner can use, the less risky, and more secure their eventual cloud implementation may be.

The MBA is being transformed, for better and for worse

The master of business administration is one of the success stories of our time. Since it was first offered by Harvard Business School (HBS) in 1908, the MBA’s rise has seemed unstoppable. Having conquered America, it reached Europe’s shores in 1957 when INSEAD, a French school, launched a programme. In the past couple of decades, Asia, South America and Africa have succumbed. Today, it is the second most popular postgraduate degree in America (after education).

Whereas 40 years ago, American colleges graduated similar numbers of lawyers and MBAs, nowadays nearly four times as many students pass out with a business-school master’s degree than with a law-school one (see chart). Although demand among Americans is plateauing, the slack has been taken up by emerging markets, particularly in Asia. India now has around 2,000 business schools, more than any other country. China has fewer, but their numbers are growing quickly. It has an estimated 250 MBA programmes, graduating around 30,000 students each year. This is less than half the number it will need over the next decade, according to Hao Hongrui of DHD, a consultancy.

Yet for all its success, these are demanding times. For a start, MBA candidates are beginning to question the return on investment of such expensive programmes. Business schools claim their graduates are less concerned than they once were about earning fabulous salaries. Instead of trumpeting the number of students who get high-paying jobs in finance, they now reel off examples of those who join non-profits or launch social enterprises. This fits the socially-aware image they wish to portray after the financial crisis.

However, there is a whiff of post-hoc rationalisation in this. Data from our latest ranking of full-time MBA courses, show that the average basic salary of graduating students is now $94,000, around $1,500 less than it was five years ago. And yet our survey of business-school students suggests that they are more focused on the size of their pay-packets than those who enrolled before the crisis.
As salaries have fallen, tuition fees have risen. At Chicago, our top-ranked school, two years’ tuition costs $112,000, an increase of around $17,000 since 2008. Harvard’s prices have risen by nearly $25,000. A degree that once let the brightest students name their starting salaries now warrants a careful cost-benefit analysis.

Concentrate!
The MBA is changing in other ways, too. The days in which students study a broad set of management skills, with little specialisation, are numbered. Most business schools now encourage students to concentrate on one area, such as finance. An increasing number of MBA courses are tailored to particular industries, such as health care, luxury goods or, in one case, wine and spirits management.

This is partly because students now have to have a clear career plan before they apply to business school. Competition for plum summer internships, the most common route to a post-MBA job, begins on the first day of school. Such is the focus on finding the right job, laments Sunil Kumar, dean of Chicago’s Booth School of Business, that students sometimes forget to savour the academic experience.

Business schools are expanding in other ways too. University administrators are wont to view them as cash cows and allow them to graze on other faculties accordingly. For years, they have been poaching professors from economics departments. Now they also woo psychologists and sociologists to teach softer subjects such as leadership and organisational behaviour. And their scope seems to be expanding.

“Big data” is currently one of the hottest study areas. York University in Canada, for example, recently launched a Master’s in Business Analytics. It recruits students with solid quantitative backgrounds, such as mathematicians and engineers, who spend half their time poring over mathematical models and half taking MBA classes. It is not enough to be a top-notch statistician nowadays, says Murat Kristal, director of the programme. Firms want people who can also understand the business implications of their analysis.

Perhaps the most disruptive influence on MBAs will be educational technology. Many institutions, from leviathans such as the University of Pennsylvania’s Wharton school to relative tiddlers such as Grenoble in France, now make some of their courses available free of charge as “massive online open courses”, or MOOCs. It is uncertain what long-term effect this will have. Roger Martin, the recently departed dean of Toronto’s Rotman school, clearly remains unconvinced: “Giving away your product? In what way is that a business?”

Instead, it is more likely disruption will be from better distance-learning technology. Demand for mass-market, paid-for but cheap online MBAs, delivered by institutions such as the University of Phoenix, is not new. However, it has been rarer for prestigious, traditional universities to offer distance-learning MBAs. This is changing. Top-ranked schools are spending heavily to equip themselves for this. Chicago, for example, has built video studios at its American campus so that students on its foreign campuses, in London and Singapore, do not miss its best tutors’ lectures.

The University of North Carolina at Chapel Hill (UNC) has gone further. It is one of the first top-ranked schools to offer a full-time MBA programme entirely at a distance. It has just enrolled 500 students in the second intake of its MBA@UNC programme, an online MBA that can be completed in 18 months. This is close to double the number it enrolls for its campus-based version. Interestingly, it typically costs a little more than attending Chapel Hill, partly because the technology has not come cheap. Yet students are signing up because they prefer not to give up their jobs, or because they cannot move to the campus for other reasons.

The tipping-point
Douglas Shackelford, the programme’s director, says that online classroom technology has now reached a tipping-point, whereby it is at least as good as a real classroom. Classes on the programme are limited to 15 students, spread across the globe, all of whom can interact. It has also allowed UNC to employ the best tutors whether or not they are in North Carolina. Professors lecture from India, France and across America. All lectures and class discussions are available in perpetuity, to be rewatched before exams or even after students graduate. Yet Mr Shackelford thinks he is only scratching the surface: “In 10 years we will look back and be embarrassed it was so simple.”

This may come at a cost, however. As students get more choice, so business schools, perhaps for the first time, will be forced to compete on price, says Clayton Christensen, the Harvard professor who coined the idea of disruptive innovation. Many will find they do not have the resources, so there could, thinks Mr Christensen, be many casualties. Students might celebrate; business schools may prefer to keep the champagne on ice.

A Tiny, Boring Kodak Takes Consumers out of the Picture

People may no longer buy much film, but breakfast-cereal boxes are forever. That’s the assumption driving Eastman Kodak as it exits bankruptcy this week as a relatively small, relatively staid business focused on printing packaged goods for consumer brands and other corporate clients.

Kodak, it turns out, is really good at large-scale digital printing and something called computer-to-plate technology, which quickly transfers images from a hard drive to a printing press. This is the somewhat sad distillation of more than 130 years of serious and celebrated R&D. Kodak, or what’s left of it, excels at printing things on foil, plastic, glass, and metal, according to its lengthy pitch to stay in business and avoid liquidation.

The Rochester (N.Y.) company will no longer wow the mass market as it did for decades with supersaturated pictures, sharp X-rays, tiny video cameras, and disposable electronics. In fact, it won’t do any business directly with consumers. In place of the once-beloved Polaroid, the new and less lovable Kodak will instead crank out timeshare brochures and toothpaste boxes, candy wrappers, and corporate presentation decks. It will also make touchscreen components for smartphones and tablet computers and film for the movie industry.

Boring, however, may prove to be beautiful for a company that teetered on the brink of the abyss. If all goes according to Kodak’s reorganization plan, the company will post $2.5 billion in revenue this year and $167 million in earnings before interest, taxes, and such noncash expenses as depreciation and amortization. It will also have only 8,500 workers, down from almost 64,000 a decade ago.

But the future is not entirely rosy. The commercial-printing business is not nearly as wide open as the market for digital cameras back in the late-1990s—or, for that matter, the film camera business of the late-1890s, when Kodak really made its mark. The proliferation of tablet computers has led, in part, to a decline in revenue for U.S. commercial printing, which has dropped at an average annual rate of 6.2 percent (pdf) in the past five years, according to market research firm IbisWorld.

The commercial-printing industry is also full of some massive, entrenched players like Hewlett-Packard (HPQ), which posted $24.5 billion in imaging and printing sales last year, about 10 times the amount Kodak is aiming for this year.

Kodak, however, seems to like its chances. “When we created the new portfolio, we were very aware of the fact that we were going to be late coming into this market,” Chief Executive Antonio Perez told  in an interview. “The only way that you could be successful coming in late is to come into the market with breakthrough technologies and very differentiated value propositions, and this is what we have.”

Cloud vs. Data Center: What's the difference?

Is a cloud a data center? Is a data center a cloud? Or are they two completely different things?

The terms "cloud" and "data center" may sound like interchangeable technical jargon or trendy buzz words referring to the same infrastructure, but the two computing systems have less in common than the fact that they both store data.

The Basics

The main difference between a cloud and a data center is that a cloud is an off-premise form of computing that stores data on the Internet, whereas a data center refers to on-premise hardware that stores data within an organization's local network. While cloud services are outsourced to third-party cloud providers who perform all updates and ongoing maintenance, data centers are typically run by an in-house IT department.

Although both types of computing systems can store data, as a physical unit, only a data center can store servers and other equipment. As such, cloud service providers use data centers to house cloud services and cloud-based resources. For cloud-hosting purposes, vendors also often own multiple data centers in several geographic locations to safeguard data availability during outages and other data center failures.

For companies considering whether or not to use cloud computing versus staying with or building their own data center, there are three primary factors affecting their decision: their business needs, data security and system costs.

Does your business need a cloud or a data center?

A data center is ideal for companies that need a customized, dedicated system that gives them full control over their data and equipment. Since only the company will be using the infrastructure's power, a data center is also more suitable for organizations that run many different types of applications and complex workloads. A data center, however, has limited capacity -- once you build a data center, you will not be able to change the amount of storage and workload it can withstand without purchasing and installing more equipment.

On the other hand, a cloud system is scalable to your business needs. It has potentially unlimited capacity, based on your vendor's offerings and service plans. One disadvantage of the cloud is that you will not have as much control as you would a data center, since a third party is managing the system. Furthermore, unless you have a private cloud within the company network, you will be sharing resources with other cloud users in your provider's public cloud.

Cloud security vs. data center security

Because the cloud is an external form of computing, it may be less secure or take more work to secure than a data center. Unlike data centers, where you are responsible for your own security, you will be entrusting your data to a third-party provider that may or may not have the most up-to-date security certifications. If your cloud resides on several data centers in different locations, each location will also need the proper security measures.

A data center is also physically connected to a local network, which makes it easier to ensure that only those with company-approved credentials and equipment can access stored apps and information. The cloud, however, is accessible by anyone with the proper credentials anywhere that there is an Internet connection. This opens a wide array of entry and exit points, all of which need to be protected to make sure that data transmitted to and from these points are secure.

Cloud vs. data center costs

For most small businesses, the cloud is a more cost-effective option than a data center. Because you will be building an infrastructure from the ground up and will be responsible for your own maintenance and administration, a data center takes much longer to get started and can cost businesses $10 million to $25 million per year to operate.

Unlike a data center, cloud computing does not require time or capital to get up and running. Instead, most cloud providers offer a range of affordable subscription plans to meet your budget and scale the service to your performance needs. Whereas data centers take time to build, depending on your provider, cloud services are available for use almost immediately after registration.