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Established in 1996, Indian Institute of Management Indore is the sixth in the prestigious IIM

family of management schools. The institute was chosen to be set up in Indore to give an impetus to
management education in central India and has ever since been acting as the pioneer in the field of
management, in interfacing with the industry, government sectors and PSUs.
IIM I believes that the essence of management lies in managing one's own ambitions and
forging ahead consciously."A strong theoretical foundation is the basis of good corporate practice" –
this idea, along with grounding in the practice of management forms the underlying theme of the
flagship Post Graduate Programme (PGP).
Spanning two years, the programme is benchmarked against similar programmes of the best
business schools in the world. Experiential learning, IT orientation, and social sensitivity are some of
the unique features of the programme.
Situated atop a scenic hillock, the beautiful 193 acre campus provides an ideal backdrop for
some of the brightest minds in the country to work at their best to become the best they can be. To
back this up, IIM Indore has a solid infrastructure ranging from a very beautiful campus and hostels
to a strong IT backbone and the latest teaching aids. The geographical proximity to the fastest
growing industrial belt in India and the presence of Special Economic Zones around Indore provide
the right environment for giving hands-on experience to the students and also enable the industry to
make use of the management expertise available at the institute.
IIM Indore Management Canvas-the quarterly business magazine, is the students' publication
of IIM Indore. It is a forum for the students of IIM Indore as well as the industry experts to share
their insights, ideas and views. The vision is to combine this student perspective with the
experience of professors, alumni and corporate in a unique business magazine which seeks to provide
a platform for the dynamic and vibrant energy on campus and create a synergy of such positive energy
with the vibes of the time to address the current challenges and issues facing corporate India.
IIM Indore's achievements in such a short span of time can be attributed to its innovative spirit,
its will to excel, and, to the relationship it has developed with the Indore community.

Eminent Guest Authors who have written for IIM Indore's business magazine:

Anand MahindraRaviSharmaKamalUpretiVishwakumarRamasubramaniam

From the Faculty’s Desk

It gives me great pleasure and pride to introduce to you the first edition of the IIM Indore
Management Canvas- the quarterly students' magazine of IIM Indore. IIM Indore
Management Canvas gives a unique opportunity to our students to show case their talent
and establish a dialogue with practicing managers even as they prepare themselves to take
up careers in the corporate world.

The magazine has quite a bit of history attached to it, starting off as an in-house magazine
of IIM Indore with the name iMag. It then underwent a transition, and repositioned itself as
the students' magazine, which is also meant for the corporate world. The objective of the
magazine is to bring forth the happening issues in the business world and analyze them from a student's
perspective. At the same time, the magazine also incorporates articles from the corporate honchos, with a few
articles from the corporate featuring in every edition, as 'Guest Speak'. The topics cover the whole gamut of
management including finance, marketing, IT and strategy, with each edition covering a few articles on the
selected theme.

I wish the team all the very best for the coming editions! I take this opportunity to request the corporates to
support this unique initiative of budding managers from IIM Indore.
- Prof. Ganesh Kumar N
PGP Chair, IIM Indore

Today, India is positioned in an era of change, transitions and of flux with the economy
going down, then up, and slowly recovering again.

What remains, or should remain unchanged, is the grooming of future managers and their
links with the world of business. The pedagogy of an MBA programme may be reviewed,
revised and updated just as the curriculum should be, but the aims and the attention to
competency development should remain untouched.

With this in view, at IIM Indore, as a member of the faculty, I am glad that the initiative has
been taken by our participants to experience hands-on - the planning and execution of an effort at bridging the
corporate and the academic worlds. It has come to fruition in the form of this magazine.

This expression, after all, is one of creativity, which, as we know, is important for any artist or person wishing to
paint his canvas in the colours, and shapes that he or she envisions. Moreover, it can only enrich the world
around us with multiple perspectives. The endeavour to interact and to dialogue with the corporates, will
enhance in manifold ways the worldviews of both, of this I am certain.

The fostering of understanding and relationships should create bonds reaching beyond differences of thought
and experience. I do wish the Management Canvas a journey that will take us to places hitherto unexplored and
look forward to changing us all for the best in the most difficult of worlds!
- Prof. Abha Chatterjee
Area Chair, General Management
Faculty Mentor, Management Canvas

©2009 IIM Indore Management Canvas. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system or transmitted
in any form or by any means, electronic mechanical, photocopying, recording or otherwise, without the prior permission of the IIM Indore Management Canvas.

Faculty Mentor DEAR READER,

Prof. Abha Chatterjee
You must be wondering whether this is the same business magazine from
Editor the stable of IIM Indore, as it was a few months back. I must say that the question
Arijit Das is only fair. Not only have we changed the name of the magazine, but we have also
merged two separate publications from IIM Indore, namely- iMag and iCANvas.
Magazine Team iMag primarily expressed the views of students, whereas iCANvas, had more
Arnav Neil Mukherjee industry inputs. iMag came up with articles on issues before leading business
Arvind Nag Hanuma K magazines did. On the other hand iCANvas had articles from the industry leaders
Gaurav Mathur of the likes of Mr Anand Mahindra and Mr Subroto Bagchi, to name just a few.
Jeffie John Parackal Each had its own advantages and successes.
Parthosarthy Roy
Subhajit Das We have decided to marry the benefits of both to give birth to the new-
Sumeet Saurabh Ajay IIM Indore Management Canvas. Although IIM Indore Management Canvas has
V Srinivas a rich legacy of its parents to bank on, yet it doesn't want to be encumbered by it.
That begs the question, as to how this magazine is different from the rest, and
Design what is its purpose?
Abhinav Agarwal
Sudhir Nair
Well, ours is not a magazine steeped in current-affairs-only, or a factual
magazine published every week, nor is it focussed on only a single vertical like
Website finance. Being students of management, we focus on fresh ideas which might
Santhosh Kanna change the business landscape of tomorrow. That is the picture we want to paint
in our Management Canvas. We would like to focus on the business possibilities
of the future by having a deeper understanding of the present scenario.
Printed by:
Profiles, Indore
In this first issue, we have a diverse set of articles specifically handpicked
to cater to the interests of a wider audience. The article on Microfinance,
advocates the necessity for embracing it to reverse the fortunes for those at the
For Feedback, Subscription bottom of the pyramid. The article on NeuroMarketing explains the fMRI_
and Advertising queries, technique, the promise it holds and its present applications in various industries
write back to in the developed nations, to better understand the consumer psyche. We also
have views from the industry experts. Mr Sandip Kar talks about the world after
IIM Indore Management Canvas the financial crisis, with his views on the 'New Normal'. Mr Viswakumar
IIM Indore Ramasubramaniam, AVP of CTS enlightens us on the potential of Cloud
Prabandh Shikhar
Computing in this networked world. In the wake of India being an invitee to
Rau-Pithampur Road
Indore -453331,
various G-X meets, Mr. Harjiv Singh, MD Gutenberg Communications
M.P. India emphasizes why India should focus on its soft power. The article on Green IT
emphasizes that we should also be conscious of our environment even as we
M: +91 9907664634 embrace IT in an increasing way. The penultimate article on Management
E: Philosophy presents an interesting similarity between ancient wisdom and the modern, Maslow's hierarchy of needs.
Having given you a flavour of what to expect, let's reiterate that our
magazine is a newborn, and we are still exploring various options to make it
richer and insightful for our readers. That is where you, our beloved readers,
play a significant part. While this new magazine is still taking baby-steps, we
would like you to pour in your views and suggestions to make this magazine
even better.
Best Wishes,

Arijit Das

A Year After – Yearning for Normalcy

Sandip Kar, Senior Vice President & Regional Business Leader – East
Corporate & Institutional Banking,YES Bank Ltd.

The global economy and erode national wealth. From The New Normal
markets suffered what start of 2008 to May of this year, In May 2009, Pimco – the
economists called a 'sudden the crisis knocked USD 30 biggest bond manager in the
stop' after the disorderly failure trillion off the value of global world handling around USD
of Lehman Brothers in mid- shares and USD 11 trillion off 840 billion on behalf of pension
September last year. It is a the value of homes, according to funds, universities and other
shock which has initiated Goldman Sachs. At their worst, clients – held its anticipated
intervention from governments these losses amounted to about 'Secular Forum', with the
to a massive extent leading to 75% of world GDP. Even with purpose to look into the next
government deficits and such enormity, it is not five years of economic future.
government debt in virtually
After 2 ½ days of the session,
every systemically important
country in the world. Left to its
Financial break- the analysts were in agreement
down caused losses that the financial 'markets will
devices, the global economy
revert to a mean, but it will not
would have gone through an of about 75% of the look anything like that of recent
even more wrenching cleansing world's GDP years'. The world has changed
process. Additional institutions
in a manner that is unlikely to
would have fallen and larger
be reversed over the next few
market segments, across the immediately clear why such
years. The world economy is
globe would have been losses would leave a lasting
fitfully getting back to normal,
dysfunctional. In the process, decline in economic activity. In
but it will be a 'new normal'.
the balance between public and fact, output often picks up in a
private sector has shifted and process of reconstruction. The
This notion of a New
also the erosion of trust answer lies on the other side of
Normal is convincing.
amongst counterparties. Such the balance sheet. Before the
Researchers estimate that
trust may take a long time to crisis, the over priced assets
American spending is about
restore. held by banks and households
USD 760 billion short of
alike were accompanied by vast
returning the economy to full
Unlike an economic debts. After the crisis, the
employment. Coming years
recession, a financial break- assets were shattered but the
would expect a world of muted
down can cause lasting damage liabilities remained standing.
growth with a continuous shift
to the growth in potential Such balance sheet recession
away from G-31 to the emerging
output as also to its level. Even was also what damaged Japan
economies led by China, India
when the economy begins to through a bubble in property
and Brazil even as they try to
expand, it may not regain its and stock prices in 1990s from
compensate for weak demand
earlier pace. Financial crisis can where it could never rebuild
in rich countries
pose such a threat to national and recover to earlier growth
income because of the way they rates. 1
USA, China & Japan – the three
largest national economies. 5

To m a k e a p o s i t i v e out private investment. Raising

World economy is contribution to growth, taxes would be necessary but an
fitfully getting back stimulus spending must exercise that needs to be
increase each year, else the handled with surgical precision
to normal, but it will economy will suffer from – Japan is a case in point of
be a 'new normal’ reduced growth. The crisis will premature increase of
place a heavy toll on public consumption tax in 1997 which
by significant pickup in the finances, according to the IMF. proved fatal.
consumption of their rapidly Economic decline and fiscal
expanding middle class. China rescues will increase gross
De-Risked, De-Levered & Re-
has become the world's biggest government debt in the
lender to America through its advanced G20 countries from an regulated (DDR)
purchase of American Treasury average of 79% of GDP before The banking system will be a
securities, which in theory the crisis to 120% forecast for shadow of its former self. With
would allow it to wreck the 2014. IMF has projected that by regulation more expansive in
American economy. While the 2014 only two advanced form and reach, the sector will
thought seems academic, there economies – South Korea and be de-risked, de-levered and re-
have been recent Chinese Norway – will have primary regulated. The forces of
articles citing the example of budget surpluses big enough to consolidation and shrinkage will
Soviet Union, which exploited ensure fiscal sustainability. spread beyond the banking
Western economic disarray Governments would therefore sector impacting non-bank
during the depression to acquire have to balance these two risks financial institutions and the
industrial technology from while ensuring that endless investment management
desperate American sellers. public spending do not crowd industry.


Since the crisis, world's more vulnerable to tighter

governments had injected USD Government credits than others. According
432 billion of capital into their support to financial to IMF, the manufacturing
banks, according to IMF and industries most vulnerable to
guaranteed bank debts worth institutions will be a financial disruption are
USD 4.65 trillion. America now double-edged computers and electronics,
holds 34% in Citigroup, Britain sword electrical equipments, plastics
owns 43% of Lloyds and 70% of and chemicals. These industries
RBS; Brazil's state development finance less than half of their
For them, the risk of insolvency
bank the National Bank for investments from plough back
has been mitigated with public

Economic and Social of profits. Self employed
funds (socialized).
Development, expects a jump entrepreneurs are also heavily
in disbursements by 40% this exposed as many rely of their
In the next few years,
year and state owned Indian houses as main collateral. A
there will be significant hurdles
banks have increased their share second mortgage is probably the
to the historical pace of growth
of lending to 74%of the biggest single source of start up
in potential output. Excessive
country's total. finance in USA and UK.
regulation, higher taxation, and
government intervention will
By summer this year, 33 be among the factors that will Summing up
American banks have repaid the constrain the growth potential
capital the government had output. There will be a growing Financial markets would be de-
injected into them. But the tendency of companies to rely levered, de-globalized and re-
state still has a large stake in the more on their own resources. regulated, thereby
financial system beyond its Profitable firms will grow, and demonstrating:
s t a t u s o f a n i n v e s t o r. since they will be having lower ? L ower growth and
Governments will do their leverage, they would be also be higher unemployment even as
utmost to avoid a repeat of the less likely to default. However, the business dynamics shift
collapse of major institutions the problem would be from industrial nations to
and the related chaos. This is a compounded in developing emerging economies.
double edged sword as it economies where the financial ? With few exceptions,
involves nurturing large, system often fails to channel price formation will be
complex financial institutions funds to companies that make influenced by direct
to operate with an implied State the best use of them. In Mexico government involvement.
Guarantee giving them as per a 2003 study, for example, ? Business models would
competitive edge in borrowing small firms with less than USD adapt to altered risk and return
money and expanding business, 200 invested in them had rates equilibrium, ballooning
thereby making them a bigger of return as high as 15% per government debt and a possible
liability for governments in the month suggesting they were migration of capital structure to
future. IMF points out that it starved of capital. In contrast, just equity and senior debt
was the top five American banks rates of return for firms with instruments.
by assets, which had the lowest more than USD 900 invested in ? Evolution of more
capital ratios. These same banks them were often negative, responsive investment
suffered the biggest loan losses suggesting they had over- management tools.
in the crisis. They received invested in themselves. Many
about 2/3 of the government's companies in the rich world (The opinion expressed is that of
capital injections as they must now feel the same way. the author and does not indicate the
increased their share to 63.5%. ? Some industries are views of YES Bank Ltd) 7

Network externalities in today's business

Arnav Neil Mukherjee, Gaurav Mathur, Parthosarthy Roy, Saurabh Sumeet
Ajay, Srinivas V, Class of 2011

Martin Luther King Jr. Once price but it pulled the demand N e t w o r k
said, “We are caught in an itself.
inescapable network of “Network externality has been externalities have
mutuality, tied in a single defined as a change in the benefit, or t w o m a i n
garment of destiny. Whatever surplus, that an agent derives from a characteristics : its
affects one directly, affects all good when the number of other agents cyclical nature
indirectly.” consuming the same kind of good
changes ”. and a positive
Each purchase, whether a feedback cycle
product or a service, has a value.
The value is primarily derived the corresponding hardware?
from the level of satisfaction of Probably not. In fact, it is
the customer with the exactly the other way
purchase. It also round. The hardware
comprises the manufacturers
difference between the upped their
perceived value of the sales by
purchase, and the next best making sure
option according to the their goods
customer. In addition, the h a d t h e
value of a purchase is potential to
sometimes enhanced or reach as wide
reduced by the number of a market as
buyers. This phenomenon possible, thus
is called Network leveraging
Externality. Now let's define Windows'
network externality more Why n e t w o r k
profoundly. is Microsoft Windows, by effect.
far, the most commonly used
In the early days of Operating System today, in “When the value of a
telephones, it was considered a spite of the availability of over a technology, product, or service
luxury item as it was expensive dozen free Operating Systems? depends upon the number of other
and the utility was less than its One of the biggest reasons entities using it, the phenomenon is
price. It was equivalent to a behind Windows' popularity is called network externality”.
showcase object unless one's it's compatibility with a variety
friends, relatives and more of hardware and software. But Network externalities have
people also have telephones to did Microsoft go to each and two main characteristics.
talk to. But, once a minimum every hardware manufacturer Firstly, they follow a positive
number of people owned it, not and make sure it's Software feedback cycle. If the number
only the utility matched the products were compatible with of users of a product (which has


a characteristically high
network externality) increases,
it attracts more customers
towards it, which in turn
attracts a higher number of
newer customers. This is the
reason for the rising monopoly
of a few firms in nascent
industries. When a new industry
is picking up speed, the firms
are small in size. But slowly
customers start aggregating
around a few chosen firms, and
the aggregation brings in further
aggregation. Secondly, it is
cyclical in nature. Let's take the
addition of value will keep enjoys if users increase.
Today's businesses taking place, until a very high Economies of scale relate to the
are leveraging this number has been reached. After decreasing cost of production
the value crosses a threshold, with increase in production.
power of networks problems will start to crop up,
to increase visibility due to congestion of services if Network externalities have
and gain rapid the company has not increased a variety of applications in
the scale of operations. It then various industries. Some of the
feedback, enabling
becomes paramount for the ways in which they affect the
them to quickly company to invest and ramp up industries are:
respond to user operations. So the net value
demands addition is cyclical in nature. ? They act as a different
platform of marketing known as
Network externalities, over viral marketing. When the
example of a mobile subscriber time, can create a bandwagon customer or a user buys a
company which has just effect, where a customer takes a product and feels that it is really
launched operations. It needs to decision based on what he sees a nice product, he would
bring in customers to get a customers doing. This effect recommend it to his friends to
critical mass, mostly through manifests itself subconsciously have it too. He is promoting the
cheap offers. After the company in the mind of the customer- product unknowingly and as
has acquired an initial that he'll be better off doing this word of mouth spreads,
subscriber base, more what others are doing, and people get inclined to give it a
subscribers are attracted to it, derive higher value out of his try.
and the net value of each decision. Many a times however,
existing subscriber increases this may be misleading. ? There are many small
because of the higher number of software development
subscribers. The existing A common confusion is companies who have created
customers can now call a higher between network externalities apps for Apple’s iPhone. In
number of users at cheaper and economies of scale. many cases, similar apps like
rates, assuming intra-network Network externalities relate to Chess Classics and Caissa Chess
call rates are lower. This positive the higher value a customer were launched by different 9

companies simultaneously and number of organizations using

were identically priced. Under ? We may also look at the the particular standard. India
these circumstances, it would credit card business. As the finally chose to go with ODF.
be wise for developers to number of retailers and e-
quickly offer what the commerce sites accepting ? In cutting edge areas
competitor is offering for a credit cards increased, the like cloud computing, network
lesser price, and focus on customers realized the benefit effect has started affecting the
increasing their market share. of having a credit card. If they fortunes of companies. Amazon,
As the popularity of the had to pay cash at most of the the pioneer in this field, has
application increases, there will stores and just a few accepted built a huge lead already. This is
be more downloads and more cards, there was no incentive to because transfer of data within a
revenues. A product like a real- keep credit cards. Now from the cloud is much cheaper and
time multiplayer game for seller's viewpoint, accepting hassle-free than between a
iPhones could see its sales boost credit cards involves certain cloud and an external entity.
due to extremely positive expenses. But since the Thus it makes more sense for
network effect. customers tend to buy more as more apps to be added to the
they do not feel the money already existing Amazon cloud.
? The present businesses going out of their pockets, With increasing number of
with their advanced technology, sellers find it profitable to applications going into the
globalization and accept cards. cloud, more data will be drawn
communication have made into it.
network externalities even ? In India, a recent battle
more important. L ots of was fought for the document Today's businesses are
business models have standards – Microsoft's leveraging this power of
developed taking the OOXML vs. the Open Source networks to increase their
connectivity of the world as a ODF. When nominating a visibility and gain rapid
given and basic condition. One standard, it is important to feedback which enables them to
is the e-commerce business analyze the existing customer quickly respond to user
model which connects base for each standard, and the demands. Once a product or
numerous sellers across the
world to innumerable buyers.
The most common example is
e-bay. The success of the
website accounts to the ever-
increasing number of people
using the website for purchases
and shopping. At the same time,
success of the website attracts
more business as the people are
assured of a wide range of
quality products. On the same
lines, we have the social
networking sites, blogs and
search engines which have
boomed recently with more and
more people accessing them.


idea is developed and starts to mobile users, the infrastructure case with Microsoft operating
get a customer base, the is struggling to balance and is systems; most of the users in the
businesses aim to create a leading to dissatisfaction among market use Microsoft products
market where those who do not customers. and hence most of the software
own that product feel inferior or are built compatible with
left out. The overall strategy can In some cases, externalities Microsoft systems. This has
be shown by the above diagram. act in entirely adverse ways. An made the entry of other players
example would be the case of too difficult as the softwares are
So far we saw the high premium cars. These cars not compatible with other
externalities benefiting the are status symbols and will systems.
businesses. But just as the remain so if are possessed by a
cliché goes, too much of few people. This is the reason, Critics say that
anything is good for nothing, the companies are selective in externalities tend to keep the
enough care is needed before system in a comfort zone and
the externalities turn negative. “I refuse to join pose a threat to innovation. We
When the number of users get used to the flaws and
increase too much, and the
any club that defects in the system. They
resources provided do not keep would have me have also criticized the
pace, the level of service and as a member.” monopolization of a model or
satisfaction starts falling leading – Groucho Marx standard. What most
to a fall in the value of the good organizations must realize is
or service which is referred to as that the network effect plateaus
a problem of congestion. This is their customers and choose who after a while. Facebook may be
happening with some mobile have high societal status and growing at 6,00,000 users per
service providers in India. With have the capability to maintain day but that does not mean that
rapid increase in the number of such cars. this number adds a lot of value
to the existing users.
Another Companies need to
f o r m o f continuously innovate, adapt
negative and improve in order to grow
network rapidly. With such a culture in
externality is place, the proliferation and
a lock-in extent of network effect is
situation. certain to be greater than that
This is the being witnessed today. 11

Micro Finance - Empowering those at the

Bottom of the Pyramid
Arijit Das and Bhavin Shah, Class of 2010

Saying that India is a land of For the farmers, the only way
contrasts, may sound like a Studies suggest that out is borrowing from the local
commonly heard and overused moneylender, who charges
cliché. Be that as it may, it is still
a mammoth 40% of them rates in the range of 36%-
quite pertinent in the many the population is 60% a year. Needless to say, the
opportunities available to denied access to any farmer keeps paying interest
India's “have's” and “have- banking facility and never reaches the stage of
not's”. Along with the paying the principal. The debt
educational and infrastructural
whatsoever keeps increasing due to unpaid
facilities, the wide gap in the interest and principal. The
financial opportunities available water and sanitation. One only farmer only finds himself more
to these two disparate segments needs to take a holistic view, indebted , although his earning
can put one to shame. While the and understand the rural power doesn't increase. Caught
I-Bankers, on this side of the economy. More often than not, between the devil and the deep
Hindu Kush talk of turning the poor farmer owning little or sea, the farmers operate in a
Mumbai into one of the no land- people who constitute vicious circle in which they,
financial hubs of the world, the bottom of pyramid in India, once indebted to local
there is the majority of the rural are indebted to local moneylenders, remain
& urban poor who are deprived moneylenders. The little indebted for life, leading to
of basic banking facilities. earning that they have from farmer suicides which we hear
Studies suggest that a their handkerchief-size farm about so often.
mammoth 40% of the plots are too less to feed them
population is denied access to for a year, especially when the Thankfully, the scenario is
any banking facility whatsoever, farm produce is below normal. not that bad as it seems, at least
out of which the major chunk In such a scenario they need in pockets of our country.
constitutes of rural poor. Can external funds to sustain Amidst all these, there is a
our country attain the much themselves and their family. messiah named Microfinance.
speculated economic- However both private and the Microfinance can be defined as
superpower status, with relatively altruistic public banks the provision of financial
millions of its citizens lend only to people who are services (such as credit, savings
remaining under-banked ? Its credit-worthy, and these and insurance) to the members
time, we take a closer look at farmers don't fit the bill. The of low-income households,
this issue. fact that such people don't have which helps them to augment
a regular and assured flow of their income. Often the credit
One might wonder as to income and lack collaterals only is given to a group of people,
why banking is so very weakens their case as credit- especially women, and the
important to our poor worthy people. Although it whole group is responsible for
countrymen when they don't might seem ironical, yet the the repayment of the loan.
have access to even basic banks, even PSBs don't lend to Having started as a fledgling
facilities like safe drinking people who need it the most. industry nurtured by charities,


Microfinance has now won the services at market rates, repay Micro-Finance. Home to some
backing of the big international their loans and use the proceeds 1.13 billion people in 2008,
financial institutions (IFIs), to increase their income and India constitutes approximately
such as the World Bank and the assets. They often start small one sixth of the world's total
European Bank for business which taps into the population. Of these, however,
Reconstruction and local market and sometimes, about 390m people are still
Development. Today there are even provide employment to below the 'Poverty Line' earning
thousands of micro-financiers other women in the village, less than US $1 per day and rural
serving over 40 million when their venture gains some India constitutes to about three
individuals. Many of these size. Apart from acting as a quarters of the total poor
lenders now seek a healthy lender, some of the Micro population. Assuming that
profit and some microfinance Finance Institutions(MFIs) there is one microfinance client
companies have done well also provides an opportunity to per household and given that
enough to go public. save their surplus earnings, and there are on an average five
earn interest on it, which members in one household, the
Though the concept of otherwise would have remained number of microfinance clients
microfinance was not new when unutilised. Although the rate of ranges from 58m to 77m. This
it was introduced by interest charged by (MFIs) translates to an annual credit
Muhammad Yunus in 1976, it while lending, are generally demand of US$ 5.7 to 19.1
can certainly be regarded as a higher than market rates, it is billion (INR 230 to 773 billion)
revolutionary one. While banks still much lesser than that assuming loan sizes between
were reluctant to give loans to charged by the local US$ 100 and 250. If we assume
the poor due to high default moneylender. Add to it the fact, that the low-income but
risks, Yunus believed that given the MFIs also often advise the economically active population
a chance, the poor would borrowers on ways to better including small and marginal
certainly repay their loans. This utilise their borrowed money farmers, landless agricultural
belief helped him come up with and some even train them with labourers, and micro-
the idea of microfinance certain vocational skills. It not entrepreneurs, are also
through microcredit as a viable only saves them from the potential microfinance clients,
business model and thus he set avaricious local moneylenders, the annual credit demand goes
up the Grameen bank in 1983 to but by virtue of Micro-Finance further up to an estimated 245.7
extend loans to the poor being primarily available to million individuals and US$
Bangladeshis. Recently, it has women, also acts an 51.4 billion (INR 2.1 trillion) in
spread its wings in the bastion of empowering tool for rural annual on-lending
capitalism –US as well. The women. There are now several requirements. This only
success of this venture captured thousand registered Self Help underlines the need for MFI's
the imagination of many Groups (SHGs) and and its tremendous potential for
entrepreneurs and NGOs across Microfinance Institutions growth in India.
India and prompted them to set (MFIs) across India. The three
up their own microfinance largest independent MFIs are At this juncture it would
institutions. SHARE Microfin, BASIX help to look at the success of
Finance and SKS. MFIs operating in this part of
MicroFinance has been the world. Not very long ago, our
present in India for more than To u n d e r s t a n d t h e neighbouring country
15 years, and going by past necessity of MFI's presence we Bangladesh caught the
records one can infer that poor can make a simple, back-of-the- attention of the world when its
people, when given access to envelope calculation to native Prof Yunus was awarded
hassle free and timely financial estimate India's demand for the Nobel Peace Prize for having 13

made significant contributions number of MFIs it is felt that on the Urban Self Help Group
to the social upliftment of rural they would be better off if they model which includes an
women through his Grameen share their experiences and informal association of up to 20
Bank. Closer home, recent learn from each other. Their members who meet at regular
studies show that there are collective wisdom should intervals to save small amounts.
some 250-300 MFIs operating enable them to draw up Satin CreditCare was
in India. Some like SHARE strategies to make some policy comfortable with lending to
Microfinance Ltd has done changes which would enable individuals since its inception
considerable work and has them to be cost effective, primarily to cater to their
gained international useful, pro-poor and thereby working capital needs.
recognition for it. It has grown penetrate further into the However, it has now graded
from 8 branches and 8136 market. Also, till now the itself to adopt the joint liability
clients in Mar 2000 to 307 beneficiaries of MFIs have lending model. Ujjivan, another
branches and over 8 lakh clients primarily been rural women, MFI follows the group lending
in June 2006, making it one of however as is obvious, the urban model and it lends to every
the fastest growing MFIs in the poor women are no less need, be it working capital,
world – no less an achievement. deserving of their blessings consumption, education, health
Lest one might feel that they (read: credit). Some of the or housing. During
just give away money, a look at MFIs which has deposits of the emergencies, money is handed
their risk portfolio would allay savings of poor, should utilise over the counter, to address the
such misconceptions. Their these funds in an efficient clients concern. Interest rates
share of total loans outstanding manner so that it earns the are around 1.25% a month.
for more than 30 days is only maximum interest possible. Ujjivan has also gone as far as to
4.6%, meaning that almost 95% This may require it to pool its introduce a festival loan so that
of the loans are paid in time. funds and invest in Mutual the lenders can celebrate the
Based mainly in Andhra Pradesh Fund/Equity and other financial festivals with pomp and
it was instrumental in pulling instruments while being splendour.
out many rural households from cautious of the associated
below the poverty line and market risks. In that way it will However not all MFIs are
handholding them to eke out a be able to give higher returns to innovative like Fullerton India
decent lifestyle. There are the poor whose savings although nor did they have a stupendous
other such success stories like minuscule and erratic are growth like SHARE, in fact
SKS Microfinance , Activists for nevertheless 'finance', which many are run only if they are
Social Alternatives(ASA) etc. can be better utilised, in this supplied with subsidies and
age, where we are flooded with government support. They
While the need for various investment options.
proliferation of MFIs is obvious, A mechanism that
there are other aspects where Let’s look at some of the allows collection of
the MFIs would do well to look innovative models that have
into. If Microfinance, as is been created my MFIs.
deposits from the
envisioned, is to be the tool for Consider the case of Fullerton poor apart from loan
inclusive growth, it has to India which is based in Mumbai. dispersals can lend
increase its efficiency apart It follows a unique model of strength to the sector,
from casting its net wider. The neighbourhood financing with a
time has come when MFIs need focus on mass market clients thereby addressing a
to innovate, often at the local within a radius of 5km from its crying need of the
level to see what works and what branches. Indian Bank has poor
doesn't. With the increase in the several MFI branches focussed


need to realise that lending on

mass scale can only be achieved
if they adhere to market
fundamentals and streamline
their operations. Put simply,
they should be economically
self-sustainable. There is also a
tremendous opportunity in
urban microfinance, especially
in offering services such as
savings, insurance, remittances
to special products etc. The
absence of savings in the Indian
microfinance context (barring a
few exceptions) is referred to as their transactions in three basic financial institutions could form
'walking on one leg'. A locations: passbooks, collection a joint venture with formal
mechanism that allows sheets and office ledgers. A loan sector institutions in which the
collection of deposits from the officer who has about 400 latter provide funds in the form
poor apart from loan dispersals customers with two products of equity and the former
can lend strength to the sector, each has to make about 2400 extends savings and loan
thereby addressing a crying manual entries a week. This facilities to the urban poor. In
need of the poor. A fine example means that he has to make about the coming years, funds from
of this is the Bank Rakyat of 1,25,000 entries a year – a mind financial institutions promises
Indonesia, which serves 30 boggling number by any count. to be one of the key drivers of
million savings' clients and 3 The fact to note here is that we this industry. While many
million borrowers and has $3 are talking about a primarily commercial investors see the
billion in savings and $1.7 low-skilled workforce. A missed industry as an emerging asset
billion in loan portfolios. This is zero or transposed digit could class, it will be critical to invest
a self-sustaining model indeed. result in erroneous results. So, in large capacity to channel
there is a need to digitize the capital and maintain growth and
They should also work on process. financial performance.
cost-reduction which they can
achieve through simplified and Software can be created Under such symbiotic
decentralized loan application, that is simple to teach and learn. relationships, the informal
approval and collection It should contain simple forms sector institutions (e.g. MFIs)
processes, for instance, through in which the loan officer can would be able to tap additional
group loans which give feed data for each applicant and resources as well as have an
borrowers responsibilities for an internet connection, incentive to exercise greater
much of the loan application enabling him to send the data discipline in their resource
process, allow the loan officers immediately to a centralized (read: funds) management.
to handle many more clients and location. There should also be a
hence reduce costs. They can provision to have backups since The experiences obtained
increase their operational electricity is unreliable in many through the operations of
efficiency by having a working of the villages. A simple solution successful as well as not-so-
partnership with their formal to this could be to use car successful MFIs offers us
financial counterparts. Most batteries. valuable lessons. Firstly, the
microfinance organizations in poor repay their loans and are
India still use paper to record The informal sector willing to pay for higher interest 15

rates than commercial banks

provided that access to credit is
provided. The group pressure
and incremented lending in
future, provide strong
repayment motivation and
produce extremely low default
rates. Secondly, the poor save
and hence microfinance should
provide both savings and loan
facilities. These two findings
imply that banking on the poor
can be a profitable business. It
would be ideal to enhance the various seemingly-noble but took one year to repay, in weekly
creditworthiness of the poor ineffective, governmental loan increments of $4.50. In
and to make them more waiver policies. subsequent years, she took out
'bankable' to financial other capital loans, eventually
institutions and enable them to Let us take an illustrative adding three more buffalo, a
qualify for long-term credit example. Saryamma and her cow, two acres of land, and a pair
from the formal sector. The husband were landless of bulls to her portfolio. Her
MFIs provide economic labourers who earned about $1 a family's net income has
empowerment to the people at day. Frequent drought in their increased to $10 a day,
the bottom of the pyramid, village often made work and propelling her firmly into
which in turn leads to food scarce. Circumstances India's lower middle class. Her
making them customers with compelled Saryamma's husband husband is now free from
financial muscle, and not just to become a bonded labour - a bonded labour, and Saryamma's
beneficiaries of subsidies and form of indentured servitude youngest children are the first
farm loan waivers. When the that still exists in India, so the in the family to attend school.
people, who benefit from MFIs, family would have enough
are considered as customers by money to eke out a subsistence Microfinance is a tool
the market forces, it will living. Her eldest son was forced whose potential we have just
automatically devise goods and to seek work rather than started to realise. As and when
services which fulfil the needs attending school. t h e M F I s m a ke f u r t h e r
specific to this class and thereby innovations in their operations
lead to overall improvement of In 2002, Saryamma joined it might open up new vistas and
their lives. That apart, the the empowerment program by lead to further socio-economic
credit provided to the female SKS and recruited four other upliftment, especially for those,
members of the household, women from her village who who are ignored by the market
makes them earning members wanted loans. In line with their forces and looked down upon as
of the family and often enables group-lending model, each loan burden by various governments.
them to have more say in the was linked to the others: if one If the Micro Finance Institutes
day to day activities of their woman couldn't pay her small can cast its spell, wide and deep
household. This in turn reduces weekly instalment, the rest of into the Indian hinterland, the
domestic violence towards the women chipped in; if she so-called 'Bottom Of the
women and better future for the refused to pay, the others Pyramid' can do justice to its
girl child. This is social pressured her into meeting her name, by being the bedrock of
empowerment from the grass obligation. Saryamma initially Indian society, over which the
root level without getting borrowed $200 to buy a buffalo relatively well-heeled but
trapped into the quagmire of, so she could sell the milk. She thinner layers are built onto.


NeuroMarketing - ‘See’ what the

Consumer thinks!
Arijit Das, Class of 2010

Coke or Pepsi? Well, the This is also when the scales equipped to decode the
explanation lies not in our taste- tilted towards Coke. What is at consumers' decision making
buds but within the play? process.
connectomes (read: neuronal
connections) embedded in our The response is not This is exactly where the
three-pound brain. A study confined to Pepsi or Coke but is fledging area of consumer
conducted few years back found common to various other similar research known as
that participants had no brands. This begs the question NeuroMarketing comes to the
significant preference of Coke as to why people are willing to fore. It is basically an
over Pepsi when they were choose one brand over the other application of Neuroscience-
administered drinks when they are not actually the science related to
anonymously in a blind taste. getting anything significantly understanding the functioning
Yet when they were told as to different in terms of of brain, in marketing. It first
what they tasted, there was a functionality. The question originated in the works of Gerry
marked increase in the number might have confounded Zaltman of Harvard University,
of participants who preferred marketing researchers for years, in the early 1990s. Although
Coke. but with traditional methods of expensive, it is pregnant with
marketing research they are ill- the promise to fully understand
While the test was
conducted, the researchers at
Baylor College of Medicine also
used fMRI (functional
Magnetic Resonance Imaging)
to monitor brain responses.
When the participants tasted
the drinks, only the sensory part
of the brain lit up. Whereas
when they were told what they
were drinking, the area
associated with emotional
response also became active.

themselves are
not aware of the
processes going
in the brain 17

consumers' decision making are inaccessible to our direct, physics and biology. It uses a
process while shopping. conscious introspection. Hence powerful magnet and radio
Tr a d i t i o n a l m e t h o d s o f the participant filling a waves to create high resolution
m a r ke t i n g r e s e a r c h h a v e questionnaire, despite his best image of the living brain. It
attempted to look at the human intentions, is himself not aware draws on the fact that the Red
brain as the Black Box. The of the rationale behind Blood Cells(RBC) in the blood
responses to the questionnaires preferring a particular product. contain iron in the oxygen-
and focussed group discussions They miss out the activity of the carrying- part of the hemoglobin
are used to understand what bio-chemicals in the brain and these atoms create
actually goes inside the human which plays a significant role in distortions in the magnetic field
brain. However all these have choosing a brand. Advanced around them. While any part of
significant limitations, not least t e c h n o l o g i e s l i ke f M R I , the brain becomes active, the
the inability of many to magneto-encephalography, and blood vessels in the specific
articulate their complex and more conventional region dilate causing more blood
often involuntary feelings electroencephalograms (EEG) to flow in that region to supply
towards something. The can do exactly what the the additional oxygen and
participants tell the marketers conscious mind of the glucose required by the more
what they think, they are participant misses out. active brain cells to do their
thinking. Yet they themselves work. This large amount of
are not aware as to what exact At this point it helps to freshly oxygenated blood in to
processes are going on in the understand what exactly these the region causes a small change
brain. Scientists, technologies do to unravel the in the magnetic field.
Neuroscientists to be specific, workings of a human brain-
say that close to 80 percent of thereby making them so The result is displayed as a
the human emotions that slosh potentat consumer research. patchy area of colour, amidst the
around in the approximately fMRI - an acronym of functional high resolution grey background
3x10 neurons in the brain, are Magnetic Resonance Imaging is of the brain. The coloured area
rooted in the unconscious which a technology which uses basic represents the active region as
opposed to the grey background
which represents the inactive
region of the brain. Armed with
such high-resolution 3D images
of the brain on a real time basis,
one can pinpoint exactly which
part of the brain is active.

This area-specific
knowledge plays a significant
role in the utility of fMRI.

Armed with high

resolution 3-D
images, one can
pinpoint exactly
which area of the
brain in active


Several parts of our brain work as reward centre, face-

together. Even as you read this recognition centre, self- This is a sure shot
article, the connectomes referencing centre, liking way to test which
related to your visual sense centre, anticipation centre etc.
along with the ones responsible This has path breaking advertisements
for reading and understanding applications in the field of have an impact on
the material are working. Each marketing and advertising. the viewers and
region with a rich intermesh of NeuroMarketing researchers which do not
neurons is responsible for a use fMRI to observe which areas
certain activity. The more you of the brain “light up” when the which advertisements have an
stress on any activity, the more test subjects view, hear or even impact on the viewers mind and
the work done by that part of smell products. The same which do not. The real time
the brain and more the blood applies to test subjects viewing imagery even gives the
flow in that region. The various advertisements. E.g If indication which elements of
interesting part is, the region participants undergoing fMRI the advertisement are effective
responsible for each activity is are shown a series of and which are not. They can
well demarcated in the human advertisements and if for some then focus more on the ones
brain. It is the same for all the medial prefrontal cortex which elicit the right response
human brains. While the whole lights up, indicating increased from the viewer and cull out the
brain is yet to be mapped by n e u r a l a c t i v i t y, o n e c a n ones which fail to do so. More
scientists, yet various centres of conclude that the participant is precisely it can be used to learn
the brain are already known for thinking about the product. which elements of the
various thought processes such This is a sure-shot way to test advertisement are responsible 19

the way they should tinker their Having said that, it needs
products, advertisements to to be noted that the field of
boost sales. E.g. Daimler NeuroMarketing is still in its
Chrysler has used fMRI to embryonic stage. It is
improve its car designs. In a developing with more and more
study Daimler Chrysler showed new studies being conducted
test-subjects images of cars round the year. The utility of
through an fMRI scanner while NeuroMarketing is dependent
images of their brains were on the development of
taken by fMRI scans. The study Neuroscience. As more research
showed that sports cars studies are conducted we get to
for 'neuroengagement'- things stimulate the reward centre of ex p l o r e m o r e a n d m o r e
that appeal to us, and which the brain, which is also territories inside the human
ones for 'counterforce'- our stimulated by alcohol, drugs and brain which affect our buying
brain’s calculated way of trying sex. Interestingly enough, when decisions. Our present day
to avoid such appealing forces. images of the front-view of the knowledge of the functioning of
E.g. In a advertisement for Rolls cars were shown to the test the 'neuronal geography' in the
Royce, its look would elicit subjects the area of the brain brain is very similar to the late
'neuroengagement', however its responsible for face recognition eighteenth century map of the
exorbitant price tag would 'lit up'! world, hand-drawn by the then
result in 'counterforce'. Such cartographers. However with
specific knowledge can save the However as with any more and more studies and the
advertisements millions of emerging field, there is enough development of sophisticated
rupees which are unknowingly scope of improvement in this as technologies like Brainbow,
spent on elements having no well. In spite of its utility it is
desired impact on the viewer. still not widely used by the
Having known the consumers' companies. The high price of
response to various stimuli it fMRI test prohibits many
equips the marketers with companies from trying it out.
significant fire power to elicit The fact that the test subjects
the desired response to their are subject to brain imaging to
brands. understand what they are
thinking, is considered to be
The effectiveness of this unethical to many, resulting in a
still-nascent field of marketing reluctance to participate in such which can map individual
has already been spotted by studies and high participation neurons with 90 odd fluorescent
some dominant brand building fees. The fact that fMRI colours, the day is not far when
companies. The first company machines are cumbersome we might have the 'Google
Neurostrategies was started by doesn't help things. Also, the Earth' of our brain! If a better
professors at the neuroscience cases where NeuroMarketing is knowledge of the world
wing at the Emory University- applied successfully are still few geography(read: world map)
Dr Clint Kilts and Dr Justine and far between vis-a-vis was instrumental in Europeans
Meaux. Presently there are traditional marketing methods, venturing out and colonising
more than 90 NeuroMarketing to gain currency amongst the half the planet, it takes little to
consultancies serving various marketers. As more and more imagine the immense
biggies like Coca Cola, Procter successful cases emerge, the p o s s i b i l i t y t h a t
& Gamble, Daimler Chrysler suspicion regarding the NeuroMarketing has for the
and Nestle. They advice their technique would fade way and marketers in influencing the
clients, providing insights into acceptance would take root. consumers' psyche.


Cloud Computing

Viswakumar Ramasubramanian,AVP, Global Technology Office, Cognizant

“Change is the only constant,”
said Heraclitus, an ancient
Greek philosopher. Present-day
IT and Business Process
Outsourcing is continually
influenced and transformed by
various economic, political,
social and technological factors.
As outsourcing evolves, new
business models emerge and
drive change. Cloud computing
is a key technology chapter
happening right now that has
the potential to define the way
outsourcing would be done in
the near future.

Traditional outsourcing
started with labor arbitrage. It Cloud Computing programming styles
leveraged economies of scale, ? Client/server
has the potential to
provided bottom-line benefits ? Object-oriented
and moved jobs offshore. Over define the way ? Service-oriented
the past two decades, it has outsourcing is done ? And now Cloud
evolved into transformational in the future computing
outsourcing with value provided ? Extension of the network
through business consulting, cloud, internet or
infrastructure are provided and
rationalization of applications LAN/WAN, to include
consumed as abstract, on-
and infrastructure, cost servers and storage
demand utility services
benefits, and so on. ? Elastic, on-demand and
accessed over a network.
With the advent of Cloud ? System with core
computing, new players have Cloud computing is a variety of management functions such
emerged and vendors and IT things: as Fault, Configuration,
outsourcing providers alike are ? Business model (to provide Accounting, Performance
seeing radical changes in their various services without and Security Management
operational models. Cloud incurring capital built in
computing is an evolutionary expenditure)
model of computing by which ? IT architectural style Clouds can offer three basic
computing resources such as ? Computing paradigm services:
applications, platforms and ? Natural evolution of ? Infrastructure as a Service 21

(IaaS) based Clouds such as playing the role of retailers

? Platform as a Service (PaaS) Amazon EC2, Microsoft ? Hardware vendors playing
? Software as a Service (SaaS) Azure, Google App Engine, the role of suppliers or, Sun Open Cloud, wholesalers
etc. ? Customers choosing and
Infrastructure as a Service
? Private Clouds: Clouds built paying for only what they use
(IaaS) inside existing data centers
Infrastructure components, using virtualization and For this, infrastructure
such as physical or virtual management products such outsourcing providers would
servers, storage and network a s V M Wa r e v S p h e r e , have to develop new skills to

resources, are provisioned and OVM/Open QRM, 3 Terra build and manage private and
provided as a service over AppLogic, Ubuntu public cloud infrastructure and
LAN/WAN. The Cloud takes /Eucalyptus, etc. p l a t f o r m s . Tr a d i t i o n a l
care of provisioning and ? Hybrid Clouds : Built private outsourcers would have to work
management of the but can extend to utilize with new public cloud providers
infrastructure. IaaS provides public clouds and establish commercial
flexibility on the choice of ? Community Clouds:
Operating Systems, Platforms, Interconnected private Cloud Platforms
etc. clouds of partner would remove the
IT barrier for
Platform as a Service (PaaS) entrepreneurs and
Opportunities and challenges
The infrastructure and
Cloud Computing presents
allow solutions to
platforms are abstracted in the reach market
several opportunities and
Platform-as-a-Service model.
The Cloud exposes an API or
challenges in the outsourcing quickly
business. Some of the future
provides a web-based service
scenarios could be as follows: contracts. High level of
through which applications and
infrastructure automation
data are deployed. PaaS might
The Hybrid Enterprise Data would have to be performed in
result in vendor lock-in and loss
the areas of monitoring and
of heterogeneity. Center management, leading to a
Operational efficiency and reduction in manual work.
Software as a Service (SaaS) increased utilization of
SaaS provides applications distributed infrastructure is Tr a d i t i o n a l h o s t i n g
alone as utility, multi-tenant made possible by the adoption providers have already started
services. SaaS users benefit of cloud computing. offering cloud hosting services
from foregoing the complexity and are transitioning from
and cost of building and Vendors would start offering traditional hosting solutions.
maintaining custom-built private cloud solutions for They would have to guarantee
applications. However, the optimizing the existing SLAs and satisfy QOS
underlying structures in SaaS infrastructure. However, new requirements, which most
cannot be programmed or procurement for hardware could enterprises demand for their
customized and are rigid in get delayed. Hardware vendors workloads.
nature. would target marketing directly
to public cloud providers. A new Application development and
There are different types of form of IT services retailing is
clouds: emerging with: management
? Public Clouds: Internet- ? Public cloud providers Cloud platforms would bring in


a new way of architecting be addressed by adopting cloud Presently there are not many
software and modeling data, and computing. standards on interoperability
pave the way for a newer family between various Cloud
of programming languages. The benefits of cloud computing solutions. But the
They would remove the IT computing would be leveraged rise of open standards would
barrier for entrepreneurs and in decreasing the processing accelerate cloud adoption along
allow for more solutions to reach time for data-intensive business with solutions to improve
the market quickly. processes, automation in security, large data movement,
document or image processing, etc.

Developers and testers and publishing. Most call center
would no longer be tied to their and CRM applications may not Cloud computing
desktops. Mobile workforce and undergo disruptive changes as represents an interesting shift
telecommuting would soon they are already on a SaaS-based and evolution in the
become viable as organizational operating model. BPO outsourcing industry. It could
policies would evolve to adopt organizations would eye cloud truly evolve into a pure utility-
cloud solutions. Already, most of sourcing for achieving non- based model delivering benefits
the code development and linear growth and focus on such as:
maintenance in offshore operational cost reduction with ? Cost-effective computing
outsourcing companies is new business models. with minimal or no capital
performed by connecting to the expenditure
customer desktop clouds. ? Efficient utilization of
I n n o v a t i ve p r o d u c t s a n d
Services such as code resources and increased
analysis, build and test automation
automation, continuous Business applications and ideas, ? Scale-as-you-grow, pay-as-
integration, auto deployment which are usually put on the you-go model
and self provisioning of backburner for lack of ? Capacity on demand
applications in production infrastructure or high effort (applicable to retailer
would be provided by the involvement, would benefit.
scenarios where more
clouds. This would result in Innovative ideas can be very
quickly developed into capacity is required only for
improved user productivity and
workable applications and the peak seasons)
lesser project slippages.
rolled out in a SaaS model. ? Flexibility, mobility and

S o f t w a r e , b e i t I S V- anywhere IT
Cloud computing really ? Reduced total cost of
provided or custom-developed,
helps where there is multi- ownership
might be used on a pay-as-you-
tenancy and a demand-supply ? Shorter time-to-market
use utility basis, though there is
model. Companies with in- ? Business-focused IT
little movement currently from
house IP and solutions would
software vendors toward
want to effectively move them
offering licensing models for In the near term,
to a public cloud model and
utility-based pricing of enterprises that have adopted
improve top line from new
software. aggressive virtualization would
build and use private clouds. In
Business process outsourcing
New products and services the longer term, as security,
As with any BPO operation, would be tailored and delivered lock-in and data movement
reducing manual labor and over the cloud and cloud concerns are addressed
increasing productivity would management software and effectively, public clouds would
be the key challenges that could services would gain ground. become widely accepted. 23

Unlocking India's Soft Power

Harjiv Singh, MD, Gutenberg Communications

Soft power refers to a country's that our respective interests are isolation”. Globalization has

ability to influence others aligned - is the fact that we live been the juggernaut propelling
through its culture, history, in a world where countries can interconnectedness and global
ideas, music, philanthropy and no longer live in “splendid media the glue that binds
most of all its weltanschauung. people across continents. The
“The greatest source of power proliferation of mass media –
in international affairs today”, Today, we find television, radio, internet and
says Joseph Nye, Dean of ourselves, often print media – with its reach
Kennedy School of being referred to as across vast swaths of the globe
Government, Harvard has made it a strategic
University and the leading
"potential power" imperative for countries today
proponent of Soft power, “may inspite of nearly half a to proactively manage their
lie in persuading other nations decade of record image and perceptions if they
to see your interests as their economic growth are to become a Soft power.
interests.” Underlying this Forming, communicating and
assertion – persuading others managing India's appealing
attributes in an era of 24/7 news
becomes increasingly important
to how we are perceived by
other nations and peoples. A
corollary to communicating our
attributes is that we need to
contemplate and define the
attributes that best define us as
a nation.

The importance of Soft

power is underscored by recent
events that bear witness to the
fact that military prowess alone
does not guarantee universal
respect. The United States of
America, a country that best
exemplified effective use of
“Soft Power” in the 20th
century, has in recent years
squandered this most effective
instrument of statecraft from its
arsenal. Relying solely on


military strength and unilateral ourselves often being referred

actions the US alienated a vast to as a “potential power” inspite
majority of world opinion by its of nearly half a decade of record The proliferation of
military intervention in Iraq, economic growth. To be mass media with its
which was widely perceived as acknowledged as a global power
blatant unilateralism. India needs to unlock its vast reach across the
potential to be a Soft power. We globe has made it a
This was not always so. In are uniquely positioned to tap strategic imperative
the immediate aftermath of into the characteristics - an for countries today to
World War II and throughout ancient culture, expanding
manage their image

the Cold War years the world economy, vibrant democracy,
came to see the US as a beacon spirituality, diversity, and a and perceptions if
not only for freedom and widespread Diaspora – which they are to become a
democracy but a leader who provide India with core Soft power
exemplified the qualities the attributes that are attractive to
world collectively aspired to. the World. Examples of success
The world watched Hollywood abound, Bollywood today is today. This dream can only be
blockbusters, listened to Jazz reaches an audience twice as accomplished by taking bold
and consumed global brands large as that of Hollywood; our steps and articulating attributes
like Nike and Coca Cola. I n f o r m a t i o n Te c h n o l o g y that will inspire others to
Universities like Harvard, industry competes globally; believe in India. As India enters
Columbia and Yale became Yoga has become mainstream in the second decade of this new
destinations for the global elite the west, and even the IIT's and century with all its concomitant
who wanted to pursue higher IIM's have become synonymous possibilities, it can become a
education at these Ivy League with world class education. global power by becoming the
institutions. President John F. India's philanthropic efforts in arbiter of a world that offers
Kennedy enthralled the world the reconstruction of opportunities to the vast
by outlining a vision for landing Afghanistan and more recently majority who live below poverty
the first human on the Moon. the aid offered to countries levels, a world free of prejudices,
Each of these elements of “Soft affected by the tsunami a world engaged in dialogue and
Power” re-enforced the world's underscores our concern for the learning, a world where global
fascination with and seduction world around us. For India to consciousness will encompass
by “America”. The recent truly become a tour de force in the realm of social, cultural,
disillusionment with the US's the community of nations, it political, environmental,
use of hard power rather than needs to look at its weaknesses religious and economic
soft power does not mean that and turn them into our biggest understanding. Like any good
US has ceased to be a power but opportunity by offering the edifice the foundation of India's
rather that it has opened up an world a new vision, a vision that vision would need to be re-
opportunity for an alternative would have to be rooted in our enforced with its own success in
world view. Barack Obama's own success. creating a better future for its
election as the 44th President of citizens. Positioning our values
the United States promises to India can become the to a global audience to gain
revive the way the US is architect of a new dream; a recognition as a Soft power in
perceived globally. dream that would undo the itself is not an end; rather I hope
misery of poverty, a dream for a it will be a journey that will
So where does India stand global understanding, a dream compel us to introspt on our
in terms of Soft power for creating a world that shall be strengths and weaknesses as a
potential? Today, we find a better place tomorrow than it nation. 25

Green IT

Onkar Deshpande, Class of 2010

In the current global scenario, eco-system at the core of the

businesses have come to be innovation. All sustainable All sustainable
defined as entities having to development requires a fresh developments
satisfy all the “stakeholders”— approach to IT and power, requires a fresh
and not just their shareholders. putting power consumption at
Rising energy prices, together the forefront in all aspects of IT approach to IT and
with government-imposed – from basic hardware design to power
restrictions on carbon architectural standards, from
production, are increasingly bolt-on point solutions to and the triple bottom line
impacting on the cost of doing bottom-up infrastructure build. (3BL) consisting of profit,
business, making many current The IT function of business is people and planet, has assumed
business practices economically driving an exponential increase great importance. No longer
unviable. This, coupled with in demand for energy, and can businesses merely
the need to achieve sustainable businesses have to bear the concentrate on economic
growth in an increasingly associated costs. More and more performance. They also need to
competitive environment, has IT companies are now changing set up a framework to monitor
encouraged modern businesses the way they operate in order to their performance on social and
to adopt radically new business reduce their carbon footprint; ecological fronts.
models. It has
become imperative
for all businesses to
a c t i n a n
responsible manner.
Companies are
competing in an
increasingly “green”
market, and must
avoid the financial
penalties that are
being levied against
carbon production.

IT has a large
role to play in all this.
Today, businesses
face the need to
innovate while
keeping the
preservation of the


So how do businesses
revamp their models to achieve
eco-efficiency? Eco-innovation
implies switching over to a
technology that, along with
lowering the total cost of
operations, also reduces the
pressures exerted on the
environment. To the data
center manager, it is a means of
controlling rapidly increasing
energy costs, while also trying to
control increasing demands for
space and cooling. To the eco-
scientist, it is a means of
achieving socially desirable about 0.65 kilowatt-hour per annum), but generates 1200
goals. (kWh) in use, 0.35kWh in kg of CO2 per annum. Spread
stand-by mode and 0.03 kWh this across a distributed desktop
According to the in hibernate mode. environment of 2,000 PCs and
? Assuming that the computer you have an annual carbon
U.K. government is used for 220 days of the footprint of 2400 metric tonnes
figures, 1 kWh year with 12 hours in of CO2! Put together the figures
produces 0.51 kg of operating mode and 12 hours of all computers in the world,
in stand-by mode, the total and you have a mammoth
carbon dioxide
energy consumed by this amount of carbon being
(CO2). Therefore, a computer is given by (0.65 + released into the atmosphere
typical computer 0.35) x 220 x 12 = 2640 kWh. each year, as much as 3 to 4% of
produces about ? Assuming that the computer the total carbon generated in a
is in hibernate mode for the year!
1200 kg of CO2 remaining 145 days of the
every year! year, it consumes 0.03 x 145 x Experts at Global Action
24 = 104 kWh. Therefore, a Plan, the U.K. based
typical computer consumes environmental consultancy
Carbon Footprint—Role of the about 2744 kWh of energy firm, have warned that the IT
per year. carbon footprint is skyrocketing
ICT industry
and is poised to surpass the
Just how much does According to U.K. aviation industry in terms of
I n f o r m a t i o n a n d Government figures, 1 kWh annual CO2 generation.
Communication Technology produces 0.51 kg of carbon Furthermore, they say that an
(ICT) contribute to the dioxide (CO2). Therefore, a average server creates the same
deterioration of our typical computer produces amount of carbon as a SUV
environment? Let us try to about 1200 kg CO2 every year! which does 15 miles to a gallon
understand the detrimental This makes allowance for the of fuel.
impact of modern ICT systems fact that with current nuclear
on the ecosystem through an capacity some 15% of electricity The common contributors
empirical treatment of the is generated without producing to an ICT company's carbon
carbon footprint left by the use any CO2. This means that a footprint can be classified as
of a single desktop computer. single PC costs an insignificant follows:
? A typical computer uses amount to run (about £16.00 ? Energy consumed by the 27

organization in order to achieve sustainable energy consumed.

? Waste material generated growth with minimum
due to upstream and environmental costs. A Efficiency in energy
downstream activities successful attempt of this kind consumption can be brought
? Use of stationary items, by the IT industry can then be about in two ways:
especially paper for printing emulated by other industries as ? Producing more energy
? Travel well. The good news is that efficient PCs, servers and
many leading organizations, data centres. One way to
According to the Silicon such as Accenture, IBM and reduce energy consumption
Valley Toxics Coalition, e-waste Patni Computer Services, have by computer systems is to
is the fastest-growing part of the realized this fact and have explore the possibilities of
waste stream. As per the begun to reinvent themselves to virtualization, which enables
Environmental Protection be “Green IT” providers. simultaneous deployment of
multiple operating systems
According to the and applications on the same
Mitigating the ICT carbon
computer system. Some
Silicon Valley footprint—Econnovation virtualization platforms can
Toxics Coalition, e- The ICT companies require run across hundreds of
waste in the fastest- channeling their efforts towards interconnected physical
growing part of the revamping their current computers and storage
business processes in order to devices, creating an entire
waste stream virtual infrastructure.
econnovate (Econnovation:
innovation to reach ecological Vi r t u a l i z a t i o n h a s t h e
Agency, e-waste accounts for 2% efficiency). The focus needs to potential of saving a lot of
of the municipal solid waste be on the two broadly defined energy, and can hence reduce
stream in the US alone. Given areas:
the toxicity of e-waste, the toll ? Reduction of CO2 A s p e r t h e
exacted by it on public and generation within the
boundaries of the
environmental health is
considerably higher than what organization Protection Agency,
the 2% figure suggests. More ? Transformation of the e-waste accounts
than a thousand different economy into a low-carbon, for 2% of the
chemicals, such as lead, mercury e c o - f r i e n d l y e c o n o m y,
and cadmium, used during through the application of
municipal soild
electronics production, have ICT technology waste stream in the
b e e n l i n k e d t o c a n c e r, US alone
reproductive problems and Businesses can track their
other illnesses. performance in these two focus the carbon footprint
areas through the model shown significantly.
This empirical analysis above. ? Designing better office
demonstrates that the IT premises that use solar
industry is a surreptitious, yet According to a Forrester energy during the day,
significant, contributor towards research, the ICT industry without compromising on
increasing the amount of CO2 consumes about 2-4 % of the aesthetic needs.
in the atmosphere. Needless to global energy. Therefore,
say, IT organizations need to bringing in efficient systems Many organizations are now
modify their business processes would be an excellent measure looking to reduce the damaging
and incorporate a 3BL approach for reducing the amount of impact of their operations on


the environment through technology budget. Both the management features that help
Environmentally Preferable Environmental Protection control energy consumption by
Purchasing (EPP), often Agency (EPA) and some state a computer.
referred to as Green Purchasing. environmental agencies
EPP is the affirmative selection mandate the proper disposal of Dell Corporation has made
and acquisition of products and e-waste. Responsible recycling significant changes to the way it
services that most effectively is one way to ensure that toxic carries out its business. It has
minimize negative materials in electronics i n t r o d u c e d t h e “ G r e e n”
environmental impacts over equipment do not contaminate OptiPlex 755 desktop, which
their life cycle of g r o u n d w a t e r, o r e x u d e consumes 70% less energy than
manufacturing, transportation, pollutants into the air. However, its predecessor. The OptiPlex
use, and recycling or disposal. a better solution is to 755 consumes $21 in energy per
Companies can build power and restructure manufacturing year, as opposed to $100
e-waste solutions into their processes to ensure that consumed by a previous
budgets and RFPs (Requests for potentially hazardous generation. The Dell
Proposal). IT managers can ingredients are eliminated Corporation has also started the
implement the same kind of altogether. For example, “Plant a tree for me” program,
methods on their own or their California's Department of under which a tree is planted for
partners' business processes. In Toxic Substances Control every Dell PC sold. The
addition, when building RFPs, requires companies to manage company also keeps track of its
IT managers should ask the disposal of CRTs with the suppliers' carbon footprints.
questions related to vendors' same caution and care as they
manufacturing processes, such would manage hazardous waste. India Inc. has also realised
as whether the products to be that it has a significant role to
purchased are made of Modern IT organizations play to promote Green IT as a
environmentally sensitive have begun re-inventing their clean and environment-friendly
materials or take advantage of products and processes to be way of doing business. There
recycled plastics. more eco-efficient. IT are considerable efforts to
behemoths like Sun spread awareness in this
Microsystems and Microsoft region—the Asia Pacific Green
The Modern Green Revolution
sponsor and drive active IT Conference 2008 held in
The greening of the technology recycling and reuse programs Mumbai from September 17th
industry is an emerging trend designed to keep electronics 2008 bears testimony to these
that is being adopted by a out of the waste stream. Apple efforts. Infosys Technologies
growing number of businesses, also processes all its e-waste in has been awarded the Best IT
and with good reason. the US to ensure that it is not Implementation for the Year
improperly recycled overseas, 2008 by PCQuest for its Green
The Silicon Valley Toxics where less stringent regulations IT Implementation project at
Coalition estimates that there have resulted in polluted land, its Chandigarh development
are 500 million obsolete air and water. Following the EPA center. In accordance with the
computers and 130 million cell Energy Star guidelines, Dell, company's efforts to reduce its
phones in the US that are among other vendors, has carbon footprint, the project
disposed off every year. created several desktop and aims to convert legacy IT
Companies need a recycling notebook products that infrastructure to a “green”
plan that effectively addresses consume less than 5 Watts in system through a futuristic
equipment obsolescence. This low-power mode. Vendors solution that leverages the
includes factoring the costs of including Apple and Microsoft benefits of virtualization and
recycling into a company's have developed power blade technologies. The 29

project, although requiring initiatives as an extra burden IT user behavior and policies. As
huge capital investment and and cut IT spends, or would energy and infrastructure costs
having a low ROI, will they consider long-term continue to increase
ultimately lead to substantial benefits and invest more? As of exponentially and
power savings as well as now, there is no evidence of a environmental considerations
reduction of carbon footprint by major impact of the global become more widespread, there
as much as 490000 kg, which is slowdown on investments in IT. is a real need for a power-based
equivalent to planting 4000 Companies do not appear to be IT optimization strategy,
trees and throwing 244 cars off cutting down on their IT bringing power right to the fore
the road! budget just yet. In fact, many of IT policy, thereby impacting
companies have increased their the end-to-end architecture,
Feasibility of Eco-Efficient budget allocations to IT, in hardware and software, and all
order to implement CRM, SCM the day-to -day processes
and ERP. The focus is on undertaken to support a
The question to be answered reducing the inefficiencies in company's workflow
about econnovation is: is it the current processes and
practically feasible and supply chains, and to improve Conclusion
economically viable in today's customer relationship for
world?? sustained business growth, with As society becomes more
reduction in the cost of doing environment-conscious,
According to a Forrester overall business by businesses are being forced to
survey, about 85% of IT implementing good software. become more responsible for
professionals were of the the impact of their operations,
opinion that environmental Interestingly, IT would both legally and morally. A
factors should be taken into rather support than impede a business owes this duty of care
consideration while planning IT business progress in a not-so- not only to its shareholders and
operations. However, only 25% bullish scenario such as the one employees, who demand that it
of these had actually prevalent today. IT can play an should invest wisely and
implemented the green criteria important role in helping a generate income most
in their company's purchasing company tide over recession. efficiently, but also to society.
processes. On the flip side, only Going green would also add Businesses must start to think
15% IT professionals are brand equity, helping a company green for pragmatic economic
sufficiently aware about their differentiate itself from its motives, and not just for
vendors' eco-efficient and green competition in an increasingly environmental and ethical
initiatives. This clearly environment-conscious world. reasons. A more efficient and
highlights the lack of awareness
frugal approach holds out the
about eco-efficient processes The purpose of IT is to
promise of saving really
among the global community. make businesses more
significant amounts of
productive and efficient, and to
money—both by reducing the
In the current recessional save money. Businesses are
consumption of energy, and by
scenario, other important issues competitive bodies, used to
avoiding penalties for producing
have cropped up. Would the having to 'do more with less' in
recession derail these “green” order to remain competitive. too much carbon. Eco-
initiatives? How would They will have to learn to use efficiency and Econnovation are
investments in green less electricity in just the same the need of the hour, and have
technology get affected amidst way, using green (sustainable) the potential to transform our
ripples of slowdown? Would computing to save money. This world into a low carbon
C I O s c o n s i d e r “ g r e e n” will demand major changes in economy.


Cutting the Long Tail Short

Gokul Kandhi, Class of 2009

What The Long Tail theory power is enough from both sides
shows is that as the world moves of the market, a yawning gap Research shows
towards the digital era, the exists in the rural shelfscape. that the rural
economics sees a paradigm shift customer is aware
by making it profitable to have For every product that of most of the
customized products, unlimited makes it to the rural shelf, there
choice and thus revealing the are countless others that don't. products in the
true face of demand . Borrowing And a huge proportion of these FMCG market. Rural
from the idea of Long Tail , I will products fall in the “Choice India buys 46% of all
apply it to the rural shelfscape. Set” of the consumers. They do soft drinks sold, 49%
The rural shelf is populated by not make it to the basket set
what the Long Tail theory calls mainly because of a single of motorcycles and
as the “Hits”, products that reason : The Economics of 59% of cigarettes
have made themselves reach. The cost of reaching the
profitable to be kept there. This marginal retailer becomes shows that the present
is achieved either by the scale greater than the profit infrastructure and quality of
economies the product enjoys or generated by him. The Long tail demand has kept the high
the sales volume it generates or diagram adapted to rural India profitable area( The Hits) to a
in most cases of rural shelf, value
for money it gives.

Research shows that the

rural customer is aware of most
of the products in the FMCG
market. According to MART, a
New Delhi-based research
organization that offers rural
solutions, rural India buys 46%
of all soft drinks sold, 49% of
m o t o r c yc le s a n d 5 9 % o f
cigarettes. This trend is not
limited just to utilitarian
products: 11% of rural women
use lipstick. Hence demand
does exist. From the supply side,
every company now looks
towards rural India for growth.
Though intent and market 31

restrained minimum. The hits driving force should be the reaching the marginal retailer in
are the products that do not ingenuity of the supply chain. the dusty rurals a profitable
need strength in every unit of venture to an extent.
the distribution value chain. Sachetization was the first Sachetization helped on a
The hits generally are products real breakthrough to reach the multitude of aspects- The low
that do not need strong last mile last mile. Increasing users while cost increased consumption,
power and presence. For compromising on usage, eased logistics, helped stocking
example, a villager will go to the sachetization brought about in small stores, was easier to
nearby town to buy his vehicle huge volumes which made showcase and gain visibility.
of choice. In the lowest end,
cigarettes need the barest of Sachetization T h e n ex t s i g n i f i c a n t
infrastructure and shelf space to brought about process innovation was the
warrant sales. intellectual leadership brought
huge volumes about by HLL and ITC.Project
How do companies that which made Shakti and e-Choupal. Project
populate the Hits segment in reaching the Shakti is HLL's smart way to
urban India , move out of the marginal retailer in use self-help groups to directly
long tail? The answer is to cater to 1 million homes every
revamp their supply chain. The
the dusty rurals a month in villages where
industry has always looked at profitable venture traditional distribution systems
Rural India as an economically to an extent cannot hope to enter. E-
stripped down version of the
Urban market. A mindset
reflected by their approach to
rural presence by offering cheap
products and sachetization
tendencies. Though effective
to obtain shelf space and market
share, it is hardly potent in
gaining wallet share. The


Choupal is ITC's much-feted organized rural retail. Godrej Nothing works in rural
business model to build a Aadhar, the rural retail initiative India like emotional connect.
trading platform with rural of Godrej Agrovet Ltd is an This has been well understood
India that eliminates nonvalue example. Aiming to be a one and worked on by the direct
adding intermediaries. Both stop store for all purposes for a selling initiatives in the new age
models have been discussed and farmer, they stock products of rural selling. Hindustan
analyzed and their impact duly from leading FMCG companies Unilever Network, though not a
appreciated. In short what they along with providing complete purely rural initiative, is making
did was to revamp the supply agricultural solutions for great leaps in this regard. With
chain of the companies t o such farmers. As the next step, an array of products that do not
an extent that it reduced moving away from competition, appear on regular shelves, they
procurement, processing and Aadhar has taken the route of cut down on distribution and
distribution costs. A strategy co-option and partnering to advertising costs to add more
that ballooned both the top-line augment its value proposition to value to their products. With
and bottom-line. what it also did the rural consumer. With a tie- highly targeted products they
was spawn a host of other such up with Apollo pharmacy to have been able to increase both
initiatives all across the FMCG bring in 24 hour medical users and usage in the rural
space. Now, almost all major support across all Aadhar game.Moving away from
FMCG companies operating in outlets, they have brought traditional delivery models,
India have their rural initiatives. health to rural doorstep. companies can partner to send
Such an organic revamp of mobile vans stocked with
supply chain has brought about Aadhar has taken the products from participating
accessibility and affordability to route of co-option companies to rural areas. They
a wide range of products in the
rural scene. and partnering to can share the operation costs
augment its value and let free market rules apply
Now, where is the next in the selling end. This will
proposition to the ensure that companies can get
innovation coming from? Where
should companies look at to
rural consumer the last mile connect at a
reduce distribution costs and reduced cost. Such partnering
Identifying financial can happen with two non-
attain the last mile presence.
services as another major growth competing companies or
Borrowing the term from the
driver, they have entered into a products from noncompeting
Australian Biz Wiz Peter
tie up with Bajaj Allianz to offer categories.
Sheahan, companies should
the latter's life insurance
look at the FLIP approach. This
approach calls for turning products to rural consumers.
The company is charging only The final stages of
conventional business ideas and
the rental and other basic innovation that will bring the
views on its head and getting
facility charges to Bajaj Allianz rural market to urban standards
counter-intuitive solutions for
for providing products at will be the ones that enable
business problems. Such
Aadhar. The increase in footfalls profitable presence of luxury
avenues open up by moving
is the driving motive here. Now goods in the rural shelfscape.
away from the traditional notion
the sourcing arm for Future Judging by the present pace at
of competition and identifying
Group's retail business, Godrej which the industry is chugging
vehicles for rural thrust.
Aadhar is a great study of how along, the utopian scenario
One such avenue will be organized retail is feasible and won't take too long to
facilitating the creation of an highly profitable. materialize. 33

Advert 'O real!

Dr.Tejas Bhat, Class of 2009

It took me a whole 2 page article endorsement from the content which offers extra value
in a reputed magazine to realize magazine. Unlike traditional as compared to a regular ad in
that I was actually reading a advertisements, they are not terms of entertainment or
cosmetically modified version designed to hard-sell brands. information. As the fast spread
of the good old advertisement These days, they make of the internet is redefining
for a car manufacturer. Turns advertorials so well, you can't advertising strategies, websites
out, advertorials are a rage this tell an advertorial from the and blogs are jumping into the
season and more and more editorial! The purpose of an advertorial bandwagon too. In
publishing houses are resorting advertorial must not be to fool short, the best thing about an
to them to bring in the extra the reader into believing that advertorial is its credibility.
moolah. For the uninitiated, they are editorials. For, if the
making an advertorial is really reader finds out the truth, he
s i m p l e . Ta k e a f r e s h might not take kindly to the fact The best thing
advertisement, peel it that he was being taken for a a b o u t a n
thoroughly of all catchy phrases, ride! The essence is to advertorial is its
add two cupful of words, a communicate to the readers
c o u p l e o f m a t t e r- o f - f a c t that it is an advertiser-placed
pictures and an “article-type”
heading. Add a pinch of positive
statistics, and Voila! You have
got an advertorial! If this was a
touch too dramatic for your
tastes, an advertorial, in simple
terms is an advertisement
designed to look like an editorial
or a news/magazine article.
These are less obvious, but
highly effective forms of
advertising, with quite a few
companies paying big bucks to
place their advertorials in
reputed publications.

An advertorial allows an
advertiser to tailor his or her
message to the magazine in
which it appears. This allows
them to blend in seamlessly into
the magazine content and thus
achieve a perceived


Advertorials can come in

various shapes and sizes. They
can vary from a very no-
nonsense-kind of advertorial,
such as those in journals
targeting doctors, to a glossy
spread in a men's magazine
complete with fashion photo
shoots. In its July 2003 issue,
Maxim men's magazine, well
known for its obsession with
jokes, booze and scantily
dressed women, brought
together all three in a special
section called ''Bite the Big
Apple'' in which a boring
business trip became something
else once the subjects of the
story opened a few bottles of
Miller Lite Beer. The section manufacturers who do not
was produced by Maxim's Advertorials allows advertise in a magazine
editors. Advertorials generally the advertiser to gradually realize that their
work well for products and products are featured less and
services where information sells
tailor their message
less in regular features and may
better than images. to the magazine in actually get negative publicity.
which they appear Although these are rare
Products and services instances, it is almost
frequently featured in an valuable information, and impossible to monitor the
advertorial form include provoking follow-up discussions content and style of
nutritional supplements, advertorials.
cosmetic procedures, There, however exists a
pharmaceuticals etc. In a study dark side to the advertorial To cut a long chase short,
conducted by AHMD scene. Approximately 8 out of a advertorials have the effect of
(Association of Healthcare sample of 40 are able to subtly grabbing the attention of
Media Directors, USA), one of distinguish between an the reader and making them
six pieces of creative (three advertorial and a regular feature. believe that instead of being
branded ads and three Advertorials are a common blatantly sold as a product, they
advertorials) and a feature in most reputed are being provided as valuable
questionnaire were mailed to a magazines in India. India Today, information that would guide
group of 300 primary care Outlook and Week all run them in making the right buying
physicians. The results show advertorial sections. But more decision. Advertorials, if rightly
that, in message credibility, often than not, advertorials do used, can be considered as an
advertorials were equally as not mention that they are paid effective part of the integrated
effective as branded ads. for advertisements or do so promotional mix, particularly as
However, advertorials were inconspicuously. A deeper a way of complementing hard
shown to be more effective than shade of dark is evident in the selling branded advertisements
branded ads in terms of beauty and fashion magazine with educational or
generating interest, providing industry. Beauty product entertaining topics. 35

Public Private Partnership in Wind Power

in India
Rituraj, Class of 2010

Introduction To sustain this tremendous same fact is reflected in the

growth led by infrastructure, comparison between the total
India is the one of the fastest
services and manufacturing, energy demand and energy
growing economies in the world.
India needs to be ‘Energy Self- availability in India. It is found
In the last five years, India has
Sufficient’. India’s energy that India has a total energy-
averaged a phenomenal 8.775% demand has been growing at a demand deficit of 10% as of
growth, as measured by GDP at far greater pace than its 2008 and this deficit is growing
constant prices. In spite of the economy. As a result, as seen in year on year at a cumulative
ongoing economic downturn figure 1, the gap between the annual growth rate of 7.29%
faced by the world, India’s GDP growth and power
growth rate is projected to generation has been
Energy Scenario in India
remain the second highest in consistently increasing since
the world, next only to China. the start of this century. The With an energy demand in
excess of 160 thousand tonnes
of oil equivalent per year and an
equally large amount of carbon
emissions, it is imperative that
we shift our reliance from fossil
fuels like coal and petroleum to
renewable sources like wind,
solar and biomass.

The share of renewable

sources in the installed energy
capacity stands at a mere 8.37%
at 12194.57 MW, while the fossil
fuels still account for the major
share of the energy
consumption in India.

India's energy
deficit has been
growing year-on-
y e a r a t a
cumulative rate of


areas, as well as jobs for people

who set up and maintain the
turbines or manage wind farms.

There have been many

significant changes in the wind
energy sector since the times
when we used to see small wind-
mills operating in isolated areas,
noisily producing little amount
of energy that could be used
only to draw water. Wind
turbines now are typically 100
Wind power is the largest benefits of wind power is that it times more powerful than early
energy source among the reduces the exposure of our versions and employ
renewable sources. According to economies to fuel price sophisticated materials,
the report on Wind Power by volatility. This is important for a electronics and aerodynamics.
theMinistry of Non- country like India that has to Costs have declined, making
Conventional Energy Sources of import a major part of its fuel wind more competitive with
India, installed wind power requirement. Wind power also other power generation options.
contributes more than 70% to helps diversify the economies of Modern wind turbines have
the renewable share of the rural communities as it provides been designed to reduce
energy capacity of India. new sources of income in rural aerodynamic noise. But, there
has been some opposition to
wind turbine installation for
Why Wind Power Wind power is the environmental, aesthetic, or
Wind is an inexhaustible source largest and aviation security reasons.
of energy and is one of the most among the
cleanest in terms of impact on
the environment. The turbines
c l e a n e s t State of Wind Power in India
used produce no harmful renewable In India, wind has the highest
emissions and use a perennial sources of energy potential among all renewable
source to generate power. The sources. The estimated wind
most important economic potential is 45 thousand 37

farms set up in India is for

companies like Suzlon Energy
Ltd, MSPL Ltd, Essel Mining
Ltd, Bajaj Auto Ltd, etc. A major
part of the electricity generated
for the corporate owners are for
captive purposes and the excess
is wheeled to the state
electricity board. The
component suppliers like Siva
Wind turbine India Pvt. Ltd.,
RRB Energy Ltd, Ghodawat
Industries (I) Ltd play a major
megawatts, out of which only account for more than 85% of role in the wind turbine set up
8% is being used at present. the total wind capacity of India. and maintenance.
Fi g u r e b e l o w s h o w s t h e
estimated and used potential of The wind power market in C haracter istics of Public
all the renewable sources. India is unique amongst the Private Partnership
current world wind markets.
Public Private Partnership, as
The Government has Here, It is the wind turbine
the name suggests, is a
identified 216 potential sites for manufacturers that are also the
symbiotic relationship
wind power projects in the project developers for the
between a private entity and a
country. These places have a corporate who were the owners
public or government body for
wind power density (WPD) of these wind-farms. The main
the completion of a project. The
greater than 200 W/m2 at a advantage that the corporate
main characteristics of PPP is
height of 50 mgal. If we consider derived from owning the wind
that there is a creation of a
the state-wise distribution of farms was the tax shelter
Special Purpose Vehicle and the
estimated wind-potential, as granted by the Government.
risks in the project are assigned
shown in figure below, there are More than 95% of the wind
to the party that is best suited to
nine prominent states that


Public Private Partnership in Wind

Power in mature PPP markets
One of the countries that
has used public private
partnership to develop its
energy sector, particularly the
wind-energy sector, is Spain. In
the eighties, there was no price
design and no defined contract
length in the wind-energy
sector. This was coupled with
high investment subsidy, as is
prevalent in India at present.
This subsidy was as high as 50 to
90%, so wind-farms were set up
handle the risk. This creates a the PPP pie. only by the corporate who were
‘win-win’ situation for both the interested in getting the
participating parties, as the On comparison of the subsidy. This led to slow growth
project is delivered on time various sectors according to the and as such the installed
within the allocated budget, in cost-outlay of the projects, the capacity of wind-farms was only
contrast to the delays and cost- energy sector accounts for only $ 70 MW. Since there was a lack of
over-runs in case only the 3.56 billon, which is just over proper price mechanism, the
Government undertakes such 13% of the total planned outlay prce-risks associated were also
project. for PPP projects. This is mainly high. Typical profitability
due to large investments during this time was around
Depending on the risk- required in the development of 20%, mainly due to the high
allocation, PPP projects can be highways and ports. So, PPP in investment subsidy.
of many types, a few of them are the energy sector in India is in a
Build-Operate-Transfer (BOT), nascent stage of development, During the nineties, the
Build-Operate-Own-Transfer but the number of such projects Spanish Government enacted a
(BOOT), Build- Operate- is growing. few laws in this sector and set up
Lease-Transfer (BOLT).

Following characteristics of
PPP make it ideally suitable for
infrastructure projects:

State of Public Private Partnership

in Energy sector in India
As on 21st November 2008,
280 projects had been
sanctioned to be completed via
the PPP route, out of which only
32 projects were in the energy
sector. The pie chart shows the
percentage of various sectors in 39

price mechanisms and contracts capacity. It has transitioned by financial-bodies like IIFCL,
on the guarantee of sale of through many stages of PPP in a IDFC. This can address the
electricity produced by wind- quarter century. major concern of financing of
power. The price design was wind-power projects. A PPP also
single-level, mainly margined Effective allocation of risks of Wind has immunity from changing
higher than the conventional Power through PPP government-policies, after a
tariff rates. The investment The various risks associated fixed policy framework is put in
subsidy was reduced in this with setting up of wind-farms in place. It also takes the local
period and was substituted with India can be effectively community and land owners
the higher tariff structure. This addressed through the PPP into confidence and hence
led to a decrease in the route, as has been seen in the avoids running into trouble from
profitability as well as risk of the case of Spain. The main risks their side. The unique
wind power projects that need to be mitigated are as characteristic of PPP project is
undertaken through the PPP follows: its in-time completion, which
route. There was a moderate ? High costs
growth of the installed capacity ? Te c h n o l o g y i n t e n s i v e
by 350 MW. projects The various risks
? Long payback period
It was in 1997 that the ? Local opposition
associated with
Government introduced the ? D e p e n d e n c e o n setting-up of wind
two-level tariff system. It also Government Policies for farms in India can
eliminated the subsidy for tariff structure be effectively
wind-power projects of capacity
over 5 MW, which reduced the In a typical public private
a d d r e s s e d
profitability of larger projects. partnership set-up, there is a through the PPP
But, the two-level price design, private player that often brings route, as was seen
which aimed at eliminating the w i t h i t t h e t e c h n o l o g y, in Spain
risk in the operation of wind- standardized contract and ‘best
farms, was highly successful and practices’ as experience gained
the installed capacity rose to in other PPP markets. The avoids cost-overruns. In the
astounding 8504 MW in just government as the second party case of wind-power projects,
seven years, from 1997 to 2004. of the PPP, allocates favourable escalation of cost is one of the
A uniform price formula for the tariffs and policies along with major concerns as it is capital
entire lifetime of the project concession on import duty and intensive. A Public Private
was proposed in 2004, which excise duty exemption. There Partnership in wind power
reduced the risks associated can also be provisions of soft- projects will also have a
with the setting up of the wind- loan from Indian Renewable economically viable tariff plan
farms. A minimum contract- Energy Development Agency through ‘Power Purchase
guarantee of five years was also (IREDA), IIFCL, IDFC and Agreement’, thus reducing the
introduced which further other such bodies. revenue-risk in the process.
reduced the risks. This was Considering these benefits
accompanied by a decrease in Once a PPP in wind power associated with Public Private
profitability of wind-power is in place, there can be a series Partnership, it is imperative
project which dropped to just of benefits that will help in that we go for the PPP route in
over 7%. But, the wind-energy driving the growth of electricity setting up of wind-power
sector in Spain is now in generated through wind-power. projects, if we want to bridge
maturity-stage of PPP lifecycle, Public Private Partnership can the energy-gap that is
with 15515 MW of installed get easy and priority-financing hampering the growth of India.


Life Insurance industry in India and the role

of Data Analytics
Kishore Pegu, Class of 2010

It has been a natural tendency India has 16% of the Insurance companies in the
for the human being to hedge world population developed world, where
against any unforeseen insurance has much higher
situation, and protect himself.
but only 1.68% of penetration, realize the huge
This has been going on since the world life potential of insurance industry
times immemorial, albeit in an insurance market in India. Add to it the fact that
unorganized fashion. If this describes the penetration of life the possibility of Foreign Direct
need to feel safe is so very innate insurance in India as ‘still Investment(FDI) cap in the
to the human mind then there woefully low’. India had 16% of sector rising up to 49% and we
must also be a business model the world population, but only have just another factor that
which captures this as an 1.68% of the world life holds promise of leading the
opportunity. This is exactly insurance market in 2006. India growth in this industry.
what the insurance sector does. is also far behind world averages Although currently FDI is
It feeds on the basic human in terms of insurance capped at 26%, it’s soon
need to feel secure. penetration, and insurance expected to be raised. This will
density. A mere 20% of the result in increased investment
Amongst the various forms insurable population aged 20 to by foreign companies, especially
of insurance possible Life 60 years is currently covered by by the foreign partners of
Insurance is the most life insurance. The average private life insurance
predominant in India. The low number of policies (life/non- companies. For instance, Max
life expectancy rate and dismal life) held by per Indian group is already in talks with its
public healthcare system has consumer is just 1.33 as against p a r t n e r, N e w Yo r k L i f e
only added to it being embraced 5.2 policies per consumer in Insurance to chalk out a plan to
even by the not-so-rich in our mature markets. increase the latter’s stake.
society. The life insurance Foreign companies who are
industry in India has seen a high As we can see from the interested in FDI have deeper
CAGR of 12% ever since the numbers, the potential for pockets compared to the
opening up of this sector to expansion of the market is huge relatively small Indian
private players in 1999. especially with rising per capita insurance companies. They
However with penetration income and a growing middle bring with themselves the ‘best
levels still low compared to class that is expected to practices’ distilled through
other developed countries, the constitute 32% of the total years of rich experience that
market size is expected to population in 2010. The they have had in this industry.
double in the next 5-6 years. A insurance penetration levels as a This augurs well for the
look at some of the reports from percentage of GDP is expected insurance sector because the
veritable sources would do well to grow to 6% by 2012 from the d e e p p o c ke t s a n d ‘ b e s t
to illustrate the case. current 4.8% which would practices’ of foreign partners
translate to a CAGR of 13% for can be dovetailed with the
The Capgemini World the industry in the next five awareness of the Indian psyche
Insurance Report of 2008 years. and marketing experience of 41

their Indian counterparts to these vital areas. amounts, schemes, pricing,

create a synergy which can claims, multiple client
increase the reach of insurance The role of Data Analytics relationships, medical history
in India making it more and family history and
Insurers have an abundance of
egalitarian. underwriting.
data across their organizations,
but most have not leveraged the
But, as an increasing This combination of
full potential of this data in
number of business houses volume and complexity is
customer acquisition,
enter the life insurance unusual; this makes it difficult
underwriting, claims servicing
industry, even survival is going to manually understand the
and customer management.
to be difficult for many data, and its trends. Thus, the
Insurers need to improve data
companies. In the face of such insurance business is ideally
collection, prioritize the
stiff competition, organizations suited for the application of
application of analytics across
need to make sure that they put statistical methods.
the customer life-cycle and
their efforts in the right places
build an analytics capability to
like retaining sales agents or Currently, use of statistics
create a sustained culture of
minimizing lapsation rate. This is largely limited to actuaries for
data driven decision making.
is where data analytics comes in, determination of the insurance
as it helps making informed, premium rates. Statistics can
The insurance business is
analytics driven decisions, in have wide applications in other
rich in data but is mired in its
departments of an insurance
The combination of c o m p l e x i t y. E v e n n e w
company. For instance, the
v o l u m e a n d companies less than 5 years old
agency department can use
have a million clients. Older and
complexity in the large companies e.g. LIC have
statistical methods for
Life insurance combating high agent attrition
over 130 million policies.
rates and hiring productive
industry makes it Insurance policies have a large
agents. Also, the marketing
difficult to manually amount of data, and they are
department can use statistics to
complex in structure, with
understand all the identify target customers for
variations such as benefits, face
cross selling a new insurance
data and its trends

There are many such

business problems in different
areas that can be tackled using
statistical approaches. These
Agency department
? Agency force attrition
? Insurance agent productivity
and agent success factors
Renewals department
? High lapse in the initial years
of the policy
Marketing & sales department
? Identification of customer
segment for cross-selling,
India Life Table ? Features to be added to a
new product and


understanding customer to determine the profile of a such possibilities waiting to be

needs, productive agent or an agent exploited by the sector.
? Identifying gaps in product likely to attrite. Predictive
mix, models can be built in To d a y ' s c o m p e t i t i v e
? Customer segmentation commercially available tools market has made it imperative
Operations department such as SAS using methods that every opportunity to gain
? Reducing turnaround times like binary logistic regression, competitive advantage be
of new business and policy classification trees or neural explored and used. The
owner servicing processes networks. critical link between good
? Fraud detection patterns decision-making and success
? Enhancing product has become more important
profitability It costs five times more to than ever before. When it
Let’s look at a few examples of acquire a new customer than comes to the business of
how data analytics can be used to retain an existing one. insurance, efforts to integrate
in some of these cases. Encouraging existing data analytics with the
customers to decision making process
spend more would be a step in the right
not only
profit margins
It is vital to set up
but also proper MIS systems
ensures that for capturing data
t h e apart from having
with the
dedicated teams for
customer is refining the quality
strengthened of data
and therefore
the customer direction. But, as with any
Agent attrition is less likely to stop paying analysis, the quality of data
premiums. analysis is only as good as the
Since the number of agents
quality of data itself. So, it’s
directly corresponds to an In this process, existing vital to set up proper MIS
increase in policy sales, it’s customers who are likely to systems for capturing data
very important to retain buy another product are apart from having dedicated
productive agents. Statistical identified and sales campaigns teams for refining the quality
tools can be used to look into are targeted towards of the data. Extensive data
agents’ history and profile the customers thereby increasing mining follows thereafter.
productive agents and also the cost effectiveness of the Achieving all these will get
predict which agents are likely campaigns. Let’s take the their noses in front in this
to leave in the near future. example, where the Insurance overly competitive
This will enable the HR Company knows which one environment by increasing the
department to take steps to thousand customers out of width and depth of its
retain the agent or the sales their one lakh customers have customer base. When all this
manager. teenaged children; they can happens, we can sit back and
target these thousand relax, without worrying too
Statistical tools like chi- customers with products much about the security
square goodness of fit test or tailored to teenaged children. needs. Now that’s what true
logistic regression can be used This was just one out of myriad development is! 43

Management Dilemma
Arvind Kuchibhotla, Class of 2010

While the debate whether concentrating on the Maslow’s assume that Maslow meant a
Management is an art or a theory of needs hierarchy. We’ll deeper meaning for each of the
science continues, it is just take a look at what it says. levels and not just take them on
interesting to look at the When the needs of a human face value. This will open us to a
thought processes that go into being are classified, it forms a world of an interesting
making Management a unique pyramid, starting with the interpretation. The hierarchy is
subset of Philosophy. This lowest end where the shown in the figure form.
article doesn’t claim that the physiological needs are
modern day principles have satisfied, followed by safety, The physiological needs
been copied or anything close to love/belonging, self-esteem and can all be put under the bodily
that, it just brings out some self-actualization. It is also requirements. Whether it
amazing coincidences which known, that Maslow proposed a comes to food, water, breathing,
actually enhance this claim. n e x t level of hierarchy later clothing etc, these all are the
o n , which is the self- needs to fulfill the bodily
There is no better example tran scendence. For a requirements, which form the
to start off, than by moment, let us bottom most part of the body

According to Maslow, when

the needs of a human being
are classified, they form a
pyramid, starting with the
lowest end- the
physiological needs
followed by safety,
love, self-esteem
a n d s e l f -


Sri Sankaracharya says that the soul is neither the sareera traya,
nor the avastha traya, nor the pancha kosa. Although the two
theories are not related at all,their approach is strikingly similar

and the soul put together. So, autonomy and achievement. include the soul (Anatma) are
this could be called the sheath The fifth and the final stage, is explained, which gives a
at the lowest level. the self-actualization, the goal thorough clarity before
of becoming what one aspires proceeding towards
The next level is about to, or one’s capable of, leading to understanding the soul. So, in
satisfying the needs of security happiness. that process of negation, He
and protection, both from the says that the soul is neither the
physical and the emotional Now, take a look at the sareera traya (the triumvirate of
harm. Even here, the mind is figure above. The bodies), nor the avastha traya
not involved to a great extent, interpretation follows next. (the triumvirate of the
and these needs are still experience states), nor the
associated with the body. The This figure is taken from pancha kosa (the five sheaths).
next level talks about satisfying the Tattva Bodha (Knowledge The first two are out of the
the need for affection, of Truth) by Sri Sankaracharya. scope of the article, so we look at
belongingness, acceptance, He describes this model, while the pancha kosa or the five
which deal with the mind to a figuring out what the Atma sheaths. The Atma comprises of
large extent, while the fourth (Soul) is. Here, the concept of these five sheaths, but they
stage is more about the negation is followed alone do not constitute the
intellectual ability satisfying immaculately, where the Atma, He says. So what are
the need for self-respect, components, which do not they? 45

The basic level is the or complete ignorance. At this the human nature, for even if
Annamaya kosa, or the food stage, man would have achieved the end results of the theories
sheath, which is born out of the what he was capable of, and is in cannot be agreed upon by
food, grown by the food, and a state of bliss. But, all these five everyone, the means towards
merges back into the earth in sheaths do not constitute the achieving them are great lessons
the form of food. So, the gross Atma, although the Atma to learn. It is because studying
body present is known as the comprises all of them. the analysis of any situation
food sheath. under philosophy provide
Our point of discussion is insights into the amazing
The next is the Pranamaya not to deliberate about the thought processes that have
kosa, or the vital air sheath. All Atma/Anatma, the attempt is to gone into, which take the
the functions of the body, such bring out the wonderful discussions to a higher level.
as the respiration, evacuation, coincidence that the two Now, having developed this line
circulation are performed in this models show. Although the of thought, if it is applied to any
sheath. Also, the letting out of theories are not related at all: other field, and especially
emotions such as tears of joy and one theory talks about the Management, the results are
sorrow, belong to this sheath. needs of a man while the other usually phenomenal, as seen in
aims to divide the human mind the example above. This theory
The third level is the into various stages, the has probably received a passive
Manomaya kosa, or the mental approach is strikingly similar. approval from a particular set of
sheath, which concerns with the Both the models divide the writers from Adam Smith to
mind, along with the physical problem into 5 stages, and offer George Soros, who have coated
and the sensory body. This is the explanation for all of them. The their books with a heavy tinge of
seat of emotions, which means final point in this comparison Philosophy, but have created
that the need for affection, though is something masterpieces, which are sure to
belongingness etc. arise from n o t e w o r t h y. M a s l o w h a d remain for years to come.
this sheath. proposed another level, known
as the self transcendence, which
Is Management a Science
The fourth level is the means that at the level of self-
or an Art? Well, Hume defines
Vijnanamaya kosa, or the actualization, man tries to go
Philosophy as “A system of
intellectual sheath, which is beyond himself, and that’s
thought based on or involving
responsible for the intellect, the exactly what the Tattva Bodha
such inquiry”, while Aristotle
thinking process, and the main concentrates on, realizing the
was so indulged in it that this is
player behind all the decisions true nature of the human soul.
what he said of it “The
we take. Functioning of this Now when this line of thought
acquisition of wisdom is
layer is responsible for the coincides with the philosophic
pleasant; all men feel at home in
progress professionally as well as thought, the results that come
philosophy and wish to spend
in the society. out are amazing, for there is a
time on it, leaving all other
crystal clear understanding on
The final level is the things aside”.
the issue being discussed.
Anandamaya kosa, or the sheath
of bliss, which is attained by Philosophy is a wonderful I hope I did not add to the
either the complete knowledge, area to explore and understand confusion!


The Twitter economy

Saurabh Sumeet Ajay, Class of 2011

Millions of dollars making good money.

have been invested in Mashable is the world's
developing social largest blog focusing
networking sites, exclusively on Web 2.0
digital online forums and Social media news.
and other Web 2.0 In March 2009, they
based content. Most launched a new form of
of these websites have social media advertising
a single source of module called Twitter
revenue –advertising. Brand Sponsors. Here, a
H o w e v e r, r e c e n t limited number of
studies have shown brands can have their
that most people do latest tweets appear on
not log on to social Mashable and curious
networking sites with visitors can then find
intentions of The $1 billion worth out more about these
shopping, and thus find the ads brands on Twitter. For example,
nothing but intrusive. This Twitter has no plans Mashable's first client, JetBlue
leaves us wondering about how to generate revenue Airways uses twitter to answer
mega social networking sites immediately in order everyone's flying-related
like Facebook and Twitter questions and posts news
to focus on gaining
intend to make big money, related to JetBlue passengers.
especially with so much VC stability of service In addition there are several
money riding on them! and further increase start-ups devoted to helping
its user-base companies manage their
According to tracking firm presence on Twitter and
comScore, the twitter website upon what it does with all the monitor how their brands are
now attracts a whopping 54 cash it has lying around, and being discussed. Evidently,
million visitors every month, when. there are a large number of
which is short of only its slightly companies which have already
older and much bigger rival So when exactly should b e g u n u s i n g Tw i t t e r ' s
Facebook, which has 300 million twitter monetize its assets? Let capabilities to earn revenues. So
registered users. While us put certain things in is Twitter itself ready to make
Facebook became cash-flow perspective. Federated Media, money? According to brand
positive in mid-September, the an independent company creator Brian Alvey, not yet, as it
$1 billion worth Twitter has no formed in 2005 with a view to faces scalability issues and
plans to generate revenue connect independent authors to plenty of “please try again later”
immediately in order to focus on marketers, launched screens. However, with the
gaining stability of service and Exectweets, a site that amount of funding it has
further increase its user-base. a g g r e g a t e s Tw e e t s f r o m received lately, it seems like
While these intentions are good, business executives. The site is Twitter is working hard to solve
the future of Twitter depends sponsored by Microsoft and is this problem. 47

That brings us to how it few SMS tweets, again, with information could be parsed and
could make money. Let's careful targeting. If Twitter depending on the most
compare its possible revenue does turn on SMS advertising, common words, themes and
models with of other they will have the largest phrases, a particular ad could be
networking sites. Facebook inventory of SMS advertising in displayed. For example, if a lot
recently said that their revenue the world. Such huge potential of people in Mumbai start
generation capability through would easily interest Google or tweeting about the latest Nokia
ads is larger than Google's. mobile service carriers. cell phone, ads about the
However apart from ads According to Dave Winer, the particular phone could then be
Facebook has another huge developer of weblogs and displayed in between regular
potential revenue source –its Syndication (RSS), a really tweets to all twitter users in the
applications concept. Millions ambitious Twitter could also region, all this without
have got hooked to the many design a cell phone which would disclosing the names of people
applications present on not only make phone calls, do who are discussing or who have
Facebook and it may be hard but SMSs and play MP3s but also bought the phone (lesson learnt
not impossible to get users to have the Twitter service built from Facebook's beacon-ad
pay a small fee to continue using right in! Even if does not get fiasco). This way, people who
them. Business networking site into the hardware business, it have already the bought the
LinkedIn has become the could enter a deal with phone, would not mind too
destination for job portals who TMobile, AT&T or any such much, and people who have not,
scour it for prospective carrier and charge a monthly fee will click the ad to know more.
candidates. It earns millions of to users for mobile access. For people who do not want to
dollars primarily through fees see ads, twitter can club its
from job sites. Coming back to Another way for Twitter to premium account features
Twitter, there are a few business make money is via (discussed earlier) with a no-ad
models it could implement, subscriptions, similar to Google feature for a little fee.
once it does get to scale. Let's Apps' Standard and Premier Monitoring and using personal
begin with obvious in-feed Accounts. It is estimated that 1- conversations is risky business
advertising. How would it be if 5% of all Twitter users would but if ad integration can be done
every 20th tweet was an pay for a professional version with caution in an unobtrusive
advertisement? Would it really that had 99.9999% up time, as manner, it can be highly
be that bothersome? Especially well as special features like rewarding and effective.
if it was targeted well? These storage for MP3 files, photos
ads could receive a huge and videos. Though the kind of However for now, Twitter
number of clicks. Besides, visual money this model would seems to be headed in the right
and display ads would generate is not substantial, it is, direction, just like Facebook. It
immediately catch the eye nevertheless, another source of is not worried about revenue
because Twitter pages are text revenue. and seems focused on attaining
based. SMS advertising is 'critical mass'- a loyal user base
another very lucrative business Pe r h a p s t h e m o s t of about 100 million. Once that
model. Twitter has gone mobile innovative business model is to mission is accomplished, and
in a big way with the launch of make use of all the information with unlimited capital, the ways
its Mobile Site running through Twitter and means of generating
Users can send and receive servers. People are discussing revenue are endless. Twitter's
tweets on their registered everything from cakes, clothes, business potential certainly
mobile phone numbers. Twitter cameras to cars with their cannot be expressed in 140
could slip in an SMS ad every friends via Twitter. This characters or less.


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