Google's Chrome shines with hope

By M H Ahssan

It was only a matter of time before Google's campaign for global domination and data control ventured into the realms of software operating systems. Its latest announcement takes aim squarely at its largest rival, Microsoft, which has been churning out the world's most popular computing platform for years. Love it or hate it, Windows runs on about 95% of the planet's PCs and sells over 400 million copies per year. Those are going to be hard targets to hit.

Google Chrome OS was introduced on the company blog this week along with a few paragraphs about the new vision the company has about people working on the web as opposed to their desktops. The new no-cost operating system will be aimed at netbooks, a rapidly growing market of lower specification, lightweight and smaller laptops. The system aims to be fast, simple, secure and available to consumers by the second half of 2010. The Linux-based kernel will be open source and will run on x86 and ARM chips, making it compatible with the majority of today's hardware.

Little other technical information is currently available; at the moment it is just a message from Google that people want their computers to be better. They want to get online quickly and access their e-mail and data instantly without having to wait for boot-up times, virus scans and browser loading. Hours spent installing and configuring software and hardware and worrying about updates and patches would also not be missed, according to the search company.

That message rings true for many, but there is also the huge problem of learning a completely new way of computing; people are used to what they have and they don't like change. The challenges for Google in this arena are huge. For years, corporations such as Sun Microsystems and IBM have been trying to vie for a slice of Microsoft's OS market. Free alternative operating systems such as Ubuntu, a version of Linux, have gained traction among the tech-savvy minority, but have yet to make an impact on the market as they are perceived as too geeky and a chore to learn.

Then there is the gargantuan issue of hardware compatibility, Microsoft has entire divisions devoted to working with hardware vendors to ensure that their products run smoothly on Windows (most of the time). Almost every software company offers a Windows version as its primary product. How many will Google convince to create a new product just for its new venture? Gaming is another huge industry that relies on computers running Windows; its market dominance casts a long shadow over those trying to compete. Additionally, a solid support base is another factor currently in favor of Microsoft, as anyone who has ever tried to call Google will agree.

Although the chips seem to be stacked against Google this time, nobody can dispute its dominance online. It practically owns Internet search and gains 97% of its revenue from online advertising. Its bid to extend this dominance into operating systems could prove successful providing it can convince the public that its new baby is worth the learning curve.

Google is also targeting Microsoft's Office suite with its own platform, which will extend from current web offerings including Google Docs and Gmail. Working in the "cloud", or the web, will take off without a doubt, but the issue of online security and data protection still looms large - few people will feel totally at ease with Google having complete control over all of their personal documents. So the desktop is likely to remain diehard.

Android, Google's mobile operating system, is gaining momentum although the company states that Chrome OS will be a completely separate project, as stated on its blog:

Google Chrome OS is a new project, separate from Android. Android was designed from the beginning to work across a variety of devices from phones to set-top boxes to netbooks. Google Chrome OS is being created for people who spend most of their time on the web, and is being designed to power computers ranging from small netbooks to full-size desktop systems.

Initial observations indicate that Chrome OS will be more of a Google-powered version of Linux that functions as an extension of Google's web browser. Every time you go online with it you will be giving Google your location, browsing habits, search patterns, ad revenue, and even your e-mail and data. This is exactly what the American company is after after, regardless of whether it at present has the authority to do anything with this information. You'll be using a Google-powered Internet, and that could be a dangerous thing.

The Google model of offering free software may ultimately prove decisive; the company could even afford to pay computer manufacturers to preload its operating system. This would subsidize the cost of the hardware, which is good news for the budget-conscious consumer and emerging markets.

Free software has not always been the best though - the appearance of Linux-loaded netbooks into the mainstream a couple of years ago is a good example. According to market research firm NPD, over 90% of US-based netbooks now run Windows XP. Apple on the other hand has completely missed out on the netbook growth market as the company's entry-level MacBook is just under a US$1,000. A Google-powered one would cost less than a third of that.

With Windows 7 just around the corner, Google's Android gaining ground and the recent Chrome OS announcement, the only thing we can be sure of is that things are about to heat up and the way that we compute is likely to undergo some major changes. Whether we welcome them or not is another matter.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Death of The Textbooks? Reshaping Traditional Education

Artificially intelligent software is reshaping traditional teaching materials—but it's unclear what the new technology will take away from the learning experience.

At a recent sit-down with executives representing one of the biggest players in the textbook industry, my colleague and I felt surprisingly out of touch.

The executives spent most of the meeting touting the evolving market, namely how their newfound allegiance to digital learning materials—rather than old-school physical textbooks—would place them at the forefront of the new wave of education technology.

VENTURE CAPITAL: Enterprising Reposition

By M H Ahssan

Tucked away on Pier 33 on San Francisco bay, KPG Ventures is among the many small companies in the area routinely eclipsed by the large venture capitalists (VCs) on Sand Hill Road. KPG makes seed-stage investments in start-ups, and had raised its second fund of $20 million in October last year. Partner David Hills, who joined the company at the same time, is as busy as ever in his career. He reads 15 business plans a week, and has made four investments already this year — three of them in new companies. The recession does not bother him and, in fact, does excite him as an investor. “I have been through five recessions, and they are always a good time to invest.”

If you talk to VCs or entrepreneurs in the US, or if you attend conferences on entrepreneurship, it is sometimes difficult to feel the world is in the throes of a recession. Mark Cannice, associate professor of entrepreneurship at the University of San Francisco, does a study of VC confidence every quarter here, based on what VCs think of the investment environment over the next 18 months. The index of this confidence has been steadily declining in the Valley for the past five quarters. It rose again for the first time in the first quarter of this year. He has also been tracking the VC confidence in China, where it did not drop in the previous quarter. Cannice has also found an interesting positive correlation between VC confidence and the IPO market. “There is now an expectation of a recovery in the venture environment,” says Cannice.

The recent news about the VC industry has been very bad. The amount of VC money invested in companies fell significantly in the first quarter of this year all over the world. In the US, it was down 47 per cent in the first quarter, according to the MoneyTree report from PriceWaterhouseCoopers (see ‘Hitting A New Low’ on page 30). VCs invested 50 per cent less in international markets (Europe, Israel, India and China) as well in the first quarter, according to Dow Jones VentureSource. In the Silicon Valley, the drop was 43 per cent, and that too because of a decline of 95 per cent in investments in clean tech. Entrepreneurs are, however, as active as ever. “Entrepreneurs are blind to economic conditions,” says Brent Ahrens, general partner at Canaan Partners. “You cannot stop them.” Many VCs too like investing during a recession. “It keeps the noise out of the system,” says Vish Mishra, venture director of Clearstone Venture Partners.

Entrepreneurs are particularly active in areas that are VCs’ current favourites: consumer internet, software, healthcare and life sciences, and clean tech. VCs such as KPG are a vital cog in the entrepreneurial machinery in the Silicon Valley, as they invest in early stages and thus help many start-ups get off the ground. KPG’s recent investments include the National Payment Card Association (NPCA), Lexy and Wowd. NPCA has a technology that eliminates credit card transaction fees. Lexy provides audio content on demand on any device. Wowd, in its early stages now, is developing a platform that would help one find the best content online. Started in 2006, KPG has made 25 investments in three years. It has seen two exits last year. Hills says that as an early-stage investor, he is always on the lookout for disruptive technologies, and consumer internet — where his expertise lies — is always a good place to look.

Consumer internet is attracting the attention of entrepreneurs and VCs for several reasons. It offers a myriad opportunities in terms of technologies and business models. It also provides the opportunity to be capital-efficient. So both the investments and exits in this space are marked by smaller deals — investments are less than $10 million, and exits usually less than $50 million and often less than $25 million. It also offers an entrepreneur the opportunity to exit even before a large VC investment.

Technology is still in a state of flux on the internet. Web 2.0 companies themselves are in their early stages, and many new start-ups are now transitioning to Web 3.0, and are at a stage known as Web 2.5. New search companies offer consumers and advertisers more focused content and services. And the mobile device, led by the iPhone, is providing a new medium for the advertisers. Not surprisingly, a report recently published by the Seattle-based investment bank Cascadia Capital identifies social media and mobile applications as the areas where entrepreneurs are most likely to make money.

The fondness of the consumer for the virtual world is inexorable— entertainment is cheap. Spending hours on a video game, for example, is much cheaper than going out for a movie. In a June 2008 study, the specialised market research company DFC Intelligence predicted the global video game market to reach $57 billion at the end of this year. It is also a sector that is least affected by the recession, and is spawning new companies. For example, a deal that caught attention in the Silicon Valley this month was the $4.5-million funding of Booyah by Kleiner Perkins Caufield & Buyers. Very little is known about Booyah, except that it is founded by some gaming industry veterans and that it promises a combination of immersive experience, social media and iPhone and iPod touch.

The gaming market is undergoing a shift in at least three aspects. First, the definition of a game itself is changing as more and more people are shifting from console-based to browser-based games. Second, the distribution model is changing. Earlier they were shrink-wrapped and sold through traditional channels; now an increasing number is being downloaded directly. Thirdly, the gaming industry is shifting from an upfront payment model to a subscription model. “The next three years will see more changes in the gaming industry than in the past 20 years,” says John Borchers, general partner at the VC firm Crescendo Ventures. Gaming is thus a big opportunity for start-ups.

The gaming and consumer internet industries go in close conjunction — and often overlap — with the media and entertainment sector, another area under the VC radar now. The print media is going through a difficult phase in developed markets and may never recover, but the digital media is in the early stages of its evolution, and attracting entrepreneurs and VCs. In particular, the movie industry is adapting technology in a big way. “The merger of Hollywood and technology has only started,” says Steve Bengston, managing director of PriceWaterhouseCoopers Emerging Company Services Group, which produces the MoneyTree report.

While new areas such as these come up, old areas such as enterprise software have ceased to interest VCs. However, VCs are still interested in certain kinds of software. Prominent among them are SaaS (software as a service), cloud computing and virtualisation, and the semantic Web. SaaS, in particular, is attracting attention as a good way. “We like (in SaaS) the ability to lower costs, target the small-and medium-sized businesses, and to push out software releases seamlessly through the internet,” says Vispi Daver, partner of Sierra Ventures.

Down, But Not Out
Outside IT, and probably overlapping with it, are the sectors that are still the hot favourites of VCs — clean tech, healthcare and life sciences. For the past three years, clean tech has been attracting large investments from the VCs (see ‘The Holy Grail Called Clean Tech’, BW, 23 March 2009). The sector has seen the steepest fall in investments in the first quarter of this year, but VCs are still upbeat on the sector as it is expected to grow continuously for decades.

One of the biggest problems of the sector is that some companies require large amounts of money; a start-up may require hundreds of millions of dollars in several rounds of funding. VCs are no longer keen to fund such companies. But many of them have already invested considerable amounts of money, and would like to see returns on the investments. Since all VCs are keeping aside money to invest in their portfolio companies — one reason why total investments have come down — we could see more investments in clean tech in the future after a lull.

One associates the word clean tech usually with a firm that is developing the next-generation solar technology or a new biofuel. However, it is a large area that is as much concerned with energy efficiency as it is on new and renewable sources of energy. Innovations such as a new software system to increase efficiency or a power management chip fall under this sector, and neither requires enormous capital. Large projects, however, may need to look for debt financing.

Like clean tech, the healthcare and life sciences sectors have been the hot favourites of VCs for a while. The pharma industry in the West has traditionally been very profitable. The sector becomes more attractive as the population in developed countries starts ageing. Despite a high failure rate, the life sciences sector is attracting firms developing drugs for cancer, and cardiovascular and neurological diseases. In fact, the declining new drug pipeline of large companies is seen as an opportunity for smaller players, who may not have the capacity to take their innovations to the market. Medical devices and diagnostics are also attracting attention.

Two weeks ago, in one of the largest rounds of VC funding recently, the New Jersey-based VaxInnate Corporation raised $30 million from several VCs to develop vaccines for various diseases, including influenza. It is developing a swine flu vaccine that will be available for testing in a few weeks. While the biotech funding dropped significantly in the first quarter of this year, well-known clusters such as the Bay Area and Boston held out better. With US President Barack Obama keen on healthcare reform, the sector is likely to attract large investments.

While these areas interest VCs the world over, there are specific technology areas in specific geographies that interest them. In India, for example, education and infrastructure are hot areas. And mobile applications, one area where Indian firms can develop globally innovative technologies. “There are plenty of opportunities in mobile applications for Indian companies, but it is not easy either,” says Mohan Kumar, executive director, India, of the Silicon Valley firm Norwest Venture Partners.

Going Small Is The Way Ahead
As entrepreneurs try their best to seek VCs for financing new companies, the VC companies themselves are undergoing a big change. On the one hand, they have not been raising funds. According to the National Venture Capital Association in the US, 40 funds raised $4.3 billion in the first quarter of 2009, compared to $3.5 billion in the last quarter of 2008. However, it represented a 39 per cent drop compared to the same period last year. The number of funds that raised money was the smallest since the third quarter of 2003.

The Valley, like many other places, is beginning to be filled with “VCs walking dead”, a jargon for firms that continue to be in business but with no capacity to make fresh investments. The returns for VCs have also declined over the years. However, many VCs and entrepreneurs also feel that it is a period of structural change in the industry, including the nature of investments. So we may see the end of an era where VCs used to invest a hundred million dollars in a single deal, and the beginning of an era where they invest tens of million dollars in a large number of companies.

One could argue that VCs have been raising a lot of money in recent times, and thus did not need to do so this year. More worrying for the VCs is the lack of exit opportunities. The US saw the first zero-IPO quarter after a long time. In the Silicon Valley, the number of public companies has been declining every year for the past eight years and now stands at 261, compared to 315 in 1994 (the Valley newspaper San Jose Mercury News has been keeping track since then). It shows a change in how VCs exit companies: from IPOs to mergers and acquisitions. VCs say that two-thirds of the exits are now through mergers and acquisitions.

The VC industry is generally cyclical: it has seen five-six cycles so far. However, the present events show a far deeper trend than a business cycle. The tech industry is maturing and is thus slowing down. It may no longer support billion-dollar VC-backed companies. VCs may thus have to look at building companies of a few hundred million dollars rather than billions of dollars. Huge returns may no longer be possible, with occasional exceptions, unless a new technology wave happens.

SMEs can make their key differentiator

By M H Ahssan

The rapid growth of the small and medium enterprises has led to an increase in the demand for IT solutions

The small and medium enterprises (SMEs) have become a key focus area for a majority of IT service providers who want to tap the growth potential of this market. A report by AMI Partners early this year has revealed that the SMEs in the country are likely to spend $9.7 billion on IT this year, an increase of 22% over the previous year. The vibrant and dynamic growth of the SME segment has also made a significant contribution to the GDP, industrial production and exports.

If we closely analyse, SMEs have complex business scenarios irrespective of their size. One of the most challenging tasks of the SMEs is to lower the total cost of operations and keep pace with market issues and developments. For most of the SMEs, monitoring global issues and dealing with complexities such as multiple currencies, changing demands and the continuous customer pressure on achieving scalable cost reductions.

Key Trends
Studies reveal that SMEs which outsource their IT infrastructure are utilising the technology resources that bring in additional top-line revenues while improving bottom-line results. SMEs are most likely to use cutting-edge technologies and approaches such as Software as a Service (SaaS). Analysts are of the opinion that the increase in use of hosted infrastructure models is enabling smaller companies to compete on an equal IT footing with bigger enterprises which have already made substantial investments.

SMEs are choosing a hosted infrastructure model as it provides organisations with state-of-the-art software solutions that can be implemented, while avoiding the large infrastructure costs and eliminating the recurring administrative resources as in traditional on-premise applications. The other area where the SMEs are focusing on is the regulatory compliances. Success for most of the small and midsized businesses depends a lot on the IT. Small companies cannot afford to make inappropriate investments in IT as a failure may also endanger both the profitability and the regulatory compliance.

Following are the key SME segments, their business requirements and the crucial role played by IT in their balance sheets.

Discrete Manufacturing (Engineering)
Discrete manufacturing companies make countable products that go directly to businesses and consumers, or components that are used by other manufacturers. The industry is often characterised by individual or separate units of production. Significant requirements in this segment are bills of material estimation, MRP runs, inventory management and order-wise profitability reports.

Some of the key challenges in the discrete manufacturing industry include customer order fulfilment, controlling and monitoring Work-In-Progress (WIP) of several work-orders simultaneously, periodic assessment and visibility of workorder profitability, getting real time information on WIP status and ensuring targeted delivery time.

The above challenges could be immediately answered by an implementation of an enterprise resource planning (ERP) solution. The ERP solution shall be able to effectively model the organisation structure, the flow of material and documents across functions. The ERP solution would enable the customer to have clear visibility of the different forms of the stock and the amount of working capital locked into different stages of production, along with the availability of the finished goods across warehouses and stocking points.

Thus the centralised data warehousing would lead to better monitoring and control of the data as well as easy retrieval of the same. The user friendly software modules would help in report generation and business analytics support different kinds of reports and give the management single window access to financial, manufacturing, logistics, supply chain and sales in a consolidated manner.

Textile Industry
The textile industry is one of the earliest to come into existence in India, and accounts for 14% of the total industrial production. Its contribution to the nation's exports is nearly 30% and it is the second largest employment generator after agriculture.

However, the industry has to address the challenges arising from fluctuations of consumer demands, high setup cost with respect to capital cost, the seasonal variation of natural raw materials for production, sourcing of the synthetic raw material pegged to the prices of petro products, multiple production stages and improper management of quality.

The critical problems of supply chain and integrated view of multiple functions could be handled by ERP implementation as it supports customer and supplier portals. The functional features of multiple warehousing facility and ability of the system to capture the lot and serial number of the inventory, allows the customer to track the flow of the inventory across multiple production stages. The solution helps to streamline the manufacturing process with the modules which have inbuilt features like planning and scheduling, shop floor execution, work order management.

Manufacturing module also supports businesses that have diverse planning policies like made to order, made to stock, and forecast to order. The purchase module, which has got features like supplier management, request for orders, purchase operations, subcontracting and vendor rating manages the full spectrum of sourcing activities, achieves efficient supplier management resulting in enhanced supply chain planning, thus leading to better management of operations.

The software also offers functionalities like business analytics and reports which helps manufacturers in analysing data and getting the overall view of respective functions. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Trading and Services
In the trading and services segment SMEs should have proper planning and maintenance of stock at different stocking points and manage the business with multiple billing and collections points across multiple customers.

Consolidated order planning and execution, with support for both centralised and de-centralised location management of either procurement or sales of the goods, tracking of materials intransit, proper warehouse management, stock valuation (actual cost) and managing sample sales are some of the critical requirements of this industry. The system also effectively helps the credit and aging management of the customers who are spread across locations. In short, the geographical spread is dramatically reduced through a virtualisation by the system while modelling the different locations. Hence, there is increased effective control on the overall operations, while individual locations have being provided adequate freedom to exercise within their delegated power.

Here, too, ERP can play an important role in streamlining the functionality of trading business. For example, ERP application helps in handling the pending receipts report based on the order date and in-transit report which would enable proper order, execution and planning in multiple locations. This enables faster deployment and quick and improved decision. It helps to streamline the business operations and facilitates multi location billing. The warehouses can be managed in a much more efficient manner. The warehouses can be divided into zones and bins that enable proper management of inventory. This would help in centralisation of the data that are available.

The application helps in maintaining an account of the materials that are in transit as well as of the materials that are lost in transit. It helps the business by providing visibility of the available stocks in different warehouses. It offers inbuilt functionalities like business analytics and reports which helps the trading houses in analysing data and getting the overall view of various functions. As the contemporary software packages are web architected they are useful for companies which are located at multiple locations. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Most of the challenges faced by the various SME industries are common in nature–lack of accessibility of real time information, inefficiency of supply chain management and expensive IT solutions. In the current scenario, for an SME to sustain in the market and remain successful, it has to work meticulously towards streamlining its business processes. And as discussed above the business process needs to be innovative and efficient enough to adapt to the market and business requirements. These integrated processes need not only include departments but also partners, suppliers and customers. And it can only be attained by using information technology which can support and drive business objectives. Consequently, this also enables to innovate and respond faster and adapt to the globally changing business conditions – a must for SMEs.

To conclude, the growth and evolution of the SME sector has led to an increase in demand for IT solutions. Many smaller companies are not satisfied with their existing disparate solutions and legacy systems and are showing a keen interest in IT solutions which provide maximum business benefits. Many of the CIOs in the SME sector are of the opinion that hosted IT services and Software as a Service (SaaS) would facilitate them to work more, spend less and gain remarkable benefits by concentrating on their businesses, rather than on managing IT. Last but not the least, this model will facilitate management of businesses to handle scale complexities better, and thus endow them with the foundation for innovation.

SMEs can make their key differentiator

By M H Ahssan

The rapid growth of the small and medium enterprises has led to an increase in the demand for IT solutions

The small and medium enterprises (SMEs) have become a key focus area for a majority of IT service providers who want to tap the growth potential of this market. A report by AMI Partners early this year has revealed that the SMEs in the country are likely to spend $9.7 billion on IT this year, an increase of 22% over the previous year. The vibrant and dynamic growth of the SME segment has also made a significant contribution to the GDP, industrial production and exports.

If we closely analyse, SMEs have complex business scenarios irrespective of their size. One of the most challenging tasks of the SMEs is to lower the total cost of operations and keep pace with market issues and developments. For most of the SMEs, monitoring global issues and dealing with complexities such as multiple currencies, changing demands and the continuous customer pressure on achieving scalable cost reductions.

Key Trends
Studies reveal that SMEs which outsource their IT infrastructure are utilising the technology resources that bring in additional top-line revenues while improving bottom-line results. SMEs are most likely to use cutting-edge technologies and approaches such as Software as a Service (SaaS). Analysts are of the opinion that the increase in use of hosted infrastructure models is enabling smaller companies to compete on an equal IT footing with bigger enterprises which have already made substantial investments.

SMEs are choosing a hosted infrastructure model as it provides organisations with state-of-the-art software solutions that can be implemented, while avoiding the large infrastructure costs and eliminating the recurring administrative resources as in traditional on-premise applications. The other area where the SMEs are focusing on is the regulatory compliances. Success for most of the small and midsized businesses depends a lot on the IT. Small companies cannot afford to make inappropriate investments in IT as a failure may also endanger both the profitability and the regulatory compliance.

Following are the key SME segments, their business requirements and the crucial role played by IT in their balance sheets.

Discrete Manufacturing (Engineering)
Discrete manufacturing companies make countable products that go directly to businesses and consumers, or components that are used by other manufacturers. The industry is often characterised by individual or separate units of production. Significant requirements in this segment are bills of material estimation, MRP runs, inventory management and order-wise profitability reports.

Some of the key challenges in the discrete manufacturing industry include customer order fulfilment, controlling and monitoring Work-In-Progress (WIP) of several work-orders simultaneously, periodic assessment and visibility of workorder profitability, getting real time information on WIP status and ensuring targeted delivery time.

The above challenges could be immediately answered by an implementation of an enterprise resource planning (ERP) solution. The ERP solution shall be able to effectively model the organisation structure, the flow of material and documents across functions. The ERP solution would enable the customer to have clear visibility of the different forms of the stock and the amount of working capital locked into different stages of production, along with the availability of the finished goods across warehouses and stocking points.

Thus the centralised data warehousing would lead to better monitoring and control of the data as well as easy retrieval of the same. The user friendly software modules would help in report generation and business analytics support different kinds of reports and give the management single window access to financial, manufacturing, logistics, supply chain and sales in a consolidated manner.

Textile Industry
The textile industry is one of the earliest to come into existence in India, and accounts for 14% of the total industrial production. Its contribution to the nation's exports is nearly 30% and it is the second largest employment generator after agriculture.

However, the industry has to address the challenges arising from fluctuations of consumer demands, high setup cost with respect to capital cost, the seasonal variation of natural raw materials for production, sourcing of the synthetic raw material pegged to the prices of petro products, multiple production stages and improper management of quality.

The critical problems of supply chain and integrated view of multiple functions could be handled by ERP implementation as it supports customer and supplier portals. The functional features of multiple warehousing facility and ability of the system to capture the lot and serial number of the inventory, allows the customer to track the flow of the inventory across multiple production stages. The solution helps to streamline the manufacturing process with the modules which have inbuilt features like planning and scheduling, shop floor execution, work order management.

Manufacturing module also supports businesses that have diverse planning policies like made to order, made to stock, and forecast to order. The purchase module, which has got features like supplier management, request for orders, purchase operations, subcontracting and vendor rating manages the full spectrum of sourcing activities, achieves efficient supplier management resulting in enhanced supply chain planning, thus leading to better management of operations.

The software also offers functionalities like business analytics and reports which helps manufacturers in analysing data and getting the overall view of respective functions. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Trading and Services
In the trading and services segment SMEs should have proper planning and maintenance of stock at different stocking points and manage the business with multiple billing and collections points across multiple customers.

Consolidated order planning and execution, with support for both centralised and de-centralised location management of either procurement or sales of the goods, tracking of materials intransit, proper warehouse management, stock valuation (actual cost) and managing sample sales are some of the critical requirements of this industry. The system also effectively helps the credit and aging management of the customers who are spread across locations. In short, the geographical spread is dramatically reduced through a virtualisation by the system while modelling the different locations. Hence, there is increased effective control on the overall operations, while individual locations have being provided adequate freedom to exercise within their delegated power.

Here, too, ERP can play an important role in streamlining the functionality of trading business. For example, ERP application helps in handling the pending receipts report based on the order date and in-transit report which would enable proper order, execution and planning in multiple locations. This enables faster deployment and quick and improved decision. It helps to streamline the business operations and facilitates multi location billing. The warehouses can be managed in a much more efficient manner. The warehouses can be divided into zones and bins that enable proper management of inventory. This would help in centralisation of the data that are available.

The application helps in maintaining an account of the materials that are in transit as well as of the materials that are lost in transit. It helps the business by providing visibility of the available stocks in different warehouses. It offers inbuilt functionalities like business analytics and reports which helps the trading houses in analysing data and getting the overall view of various functions. As the contemporary software packages are web architected they are useful for companies which are located at multiple locations. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Most of the challenges faced by the various SME industries are common in nature–lack of accessibility of real time information, inefficiency of supply chain management and expensive IT solutions. In the current scenario, for an SME to sustain in the market and remain successful, it has to work meticulously towards streamlining its business processes. And as discussed above the business process needs to be innovative and efficient enough to adapt to the market and business requirements. These integrated processes need not only include departments but also partners, suppliers and customers. And it can only be attained by using information technology which can support and drive business objectives. Consequently, this also enables to innovate and respond faster and adapt to the globally changing business conditions – a must for SMEs.

To conclude, the growth and evolution of the SME sector has led to an increase in demand for IT solutions. Many smaller companies are not satisfied with their existing disparate solutions and legacy systems and are showing a keen interest in IT solutions which provide maximum business benefits. Many of the CIOs in the SME sector are of the opinion that hosted IT services and Software as a Service (SaaS) would facilitate them to work more, spend less and gain remarkable benefits by concentrating on their businesses, rather than on managing IT. Last but not the least, this model will facilitate management of businesses to handle scale complexities better, and thus endow them with the foundation for innovation.

SMEs can make their key differentiator

By M H Ahssan

The rapid growth of the small and medium enterprises has led to an increase in the demand for IT solutions

The small and medium enterprises (SMEs) have become a key focus area for a majority of IT service providers who want to tap the growth potential of this market. A report by AMI Partners early this year has revealed that the SMEs in the country are likely to spend $9.7 billion on IT this year, an increase of 22% over the previous year. The vibrant and dynamic growth of the SME segment has also made a significant contribution to the GDP, industrial production and exports.

If we closely analyse, SMEs have complex business scenarios irrespective of their size. One of the most challenging tasks of the SMEs is to lower the total cost of operations and keep pace with market issues and developments. For most of the SMEs, monitoring global issues and dealing with complexities such as multiple currencies, changing demands and the continuous customer pressure on achieving scalable cost reductions.

Key Trends
Studies reveal that SMEs which outsource their IT infrastructure are utilising the technology resources that bring in additional top-line revenues while improving bottom-line results. SMEs are most likely to use cutting-edge technologies and approaches such as Software as a Service (SaaS). Analysts are of the opinion that the increase in use of hosted infrastructure models is enabling smaller companies to compete on an equal IT footing with bigger enterprises which have already made substantial investments.

SMEs are choosing a hosted infrastructure model as it provides organisations with state-of-the-art software solutions that can be implemented, while avoiding the large infrastructure costs and eliminating the recurring administrative resources as in traditional on-premise applications. The other area where the SMEs are focusing on is the regulatory compliances. Success for most of the small and midsized businesses depends a lot on the IT. Small companies cannot afford to make inappropriate investments in IT as a failure may also endanger both the profitability and the regulatory compliance.

Following are the key SME segments, their business requirements and the crucial role played by IT in their balance sheets.

Discrete Manufacturing (Engineering)
Discrete manufacturing companies make countable products that go directly to businesses and consumers, or components that are used by other manufacturers. The industry is often characterised by individual or separate units of production. Significant requirements in this segment are bills of material estimation, MRP runs, inventory management and order-wise profitability reports.

Some of the key challenges in the discrete manufacturing industry include customer order fulfilment, controlling and monitoring Work-In-Progress (WIP) of several work-orders simultaneously, periodic assessment and visibility of workorder profitability, getting real time information on WIP status and ensuring targeted delivery time.

The above challenges could be immediately answered by an implementation of an enterprise resource planning (ERP) solution. The ERP solution shall be able to effectively model the organisation structure, the flow of material and documents across functions. The ERP solution would enable the customer to have clear visibility of the different forms of the stock and the amount of working capital locked into different stages of production, along with the availability of the finished goods across warehouses and stocking points.

Thus the centralised data warehousing would lead to better monitoring and control of the data as well as easy retrieval of the same. The user friendly software modules would help in report generation and business analytics support different kinds of reports and give the management single window access to financial, manufacturing, logistics, supply chain and sales in a consolidated manner.

Textile Industry
The textile industry is one of the earliest to come into existence in India, and accounts for 14% of the total industrial production. Its contribution to the nation's exports is nearly 30% and it is the second largest employment generator after agriculture.

However, the industry has to address the challenges arising from fluctuations of consumer demands, high setup cost with respect to capital cost, the seasonal variation of natural raw materials for production, sourcing of the synthetic raw material pegged to the prices of petro products, multiple production stages and improper management of quality.

The critical problems of supply chain and integrated view of multiple functions could be handled by ERP implementation as it supports customer and supplier portals. The functional features of multiple warehousing facility and ability of the system to capture the lot and serial number of the inventory, allows the customer to track the flow of the inventory across multiple production stages. The solution helps to streamline the manufacturing process with the modules which have inbuilt features like planning and scheduling, shop floor execution, work order management.

Manufacturing module also supports businesses that have diverse planning policies like made to order, made to stock, and forecast to order. The purchase module, which has got features like supplier management, request for orders, purchase operations, subcontracting and vendor rating manages the full spectrum of sourcing activities, achieves efficient supplier management resulting in enhanced supply chain planning, thus leading to better management of operations.

The software also offers functionalities like business analytics and reports which helps manufacturers in analysing data and getting the overall view of respective functions. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Trading and Services
In the trading and services segment SMEs should have proper planning and maintenance of stock at different stocking points and manage the business with multiple billing and collections points across multiple customers.

Consolidated order planning and execution, with support for both centralised and de-centralised location management of either procurement or sales of the goods, tracking of materials intransit, proper warehouse management, stock valuation (actual cost) and managing sample sales are some of the critical requirements of this industry. The system also effectively helps the credit and aging management of the customers who are spread across locations. In short, the geographical spread is dramatically reduced through a virtualisation by the system while modelling the different locations. Hence, there is increased effective control on the overall operations, while individual locations have being provided adequate freedom to exercise within their delegated power.

Here, too, ERP can play an important role in streamlining the functionality of trading business. For example, ERP application helps in handling the pending receipts report based on the order date and in-transit report which would enable proper order, execution and planning in multiple locations. This enables faster deployment and quick and improved decision. It helps to streamline the business operations and facilitates multi location billing. The warehouses can be managed in a much more efficient manner. The warehouses can be divided into zones and bins that enable proper management of inventory. This would help in centralisation of the data that are available.

The application helps in maintaining an account of the materials that are in transit as well as of the materials that are lost in transit. It helps the business by providing visibility of the available stocks in different warehouses. It offers inbuilt functionalities like business analytics and reports which helps the trading houses in analysing data and getting the overall view of various functions. As the contemporary software packages are web architected they are useful for companies which are located at multiple locations. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Most of the challenges faced by the various SME industries are common in nature–lack of accessibility of real time information, inefficiency of supply chain management and expensive IT solutions. In the current scenario, for an SME to sustain in the market and remain successful, it has to work meticulously towards streamlining its business processes. And as discussed above the business process needs to be innovative and efficient enough to adapt to the market and business requirements. These integrated processes need not only include departments but also partners, suppliers and customers. And it can only be attained by using information technology which can support and drive business objectives. Consequently, this also enables to innovate and respond faster and adapt to the globally changing business conditions – a must for SMEs.

To conclude, the growth and evolution of the SME sector has led to an increase in demand for IT solutions. Many smaller companies are not satisfied with their existing disparate solutions and legacy systems and are showing a keen interest in IT solutions which provide maximum business benefits. Many of the CIOs in the SME sector are of the opinion that hosted IT services and Software as a Service (SaaS) would facilitate them to work more, spend less and gain remarkable benefits by concentrating on their businesses, rather than on managing IT. Last but not the least, this model will facilitate management of businesses to handle scale complexities better, and thus endow them with the foundation for innovation.

SMEs can make their key differentiator

By M H Ahssan

The rapid growth of the small and medium enterprises has led to an increase in the demand for IT solutions

The small and medium enterprises (SMEs) have become a key focus area for a majority of IT service providers who want to tap the growth potential of this market. A report by AMI Partners early this year has revealed that the SMEs in the country are likely to spend $9.7 billion on IT this year, an increase of 22% over the previous year. The vibrant and dynamic growth of the SME segment has also made a significant contribution to the GDP, industrial production and exports.

If we closely analyse, SMEs have complex business scenarios irrespective of their size. One of the most challenging tasks of the SMEs is to lower the total cost of operations and keep pace with market issues and developments. For most of the SMEs, monitoring global issues and dealing with complexities such as multiple currencies, changing demands and the continuous customer pressure on achieving scalable cost reductions.

Key Trends
Studies reveal that SMEs which outsource their IT infrastructure are utilising the technology resources that bring in additional top-line revenues while improving bottom-line results. SMEs are most likely to use cutting-edge technologies and approaches such as Software as a Service (SaaS). Analysts are of the opinion that the increase in use of hosted infrastructure models is enabling smaller companies to compete on an equal IT footing with bigger enterprises which have already made substantial investments.

SMEs are choosing a hosted infrastructure model as it provides organisations with state-of-the-art software solutions that can be implemented, while avoiding the large infrastructure costs and eliminating the recurring administrative resources as in traditional on-premise applications. The other area where the SMEs are focusing on is the regulatory compliances. Success for most of the small and midsized businesses depends a lot on the IT. Small companies cannot afford to make inappropriate investments in IT as a failure may also endanger both the profitability and the regulatory compliance.

Following are the key SME segments, their business requirements and the crucial role played by IT in their balance sheets.

Discrete Manufacturing (Engineering)
Discrete manufacturing companies make countable products that go directly to businesses and consumers, or components that are used by other manufacturers. The industry is often characterised by individual or separate units of production. Significant requirements in this segment are bills of material estimation, MRP runs, inventory management and order-wise profitability reports.

Some of the key challenges in the discrete manufacturing industry include customer order fulfilment, controlling and monitoring Work-In-Progress (WIP) of several work-orders simultaneously, periodic assessment and visibility of workorder profitability, getting real time information on WIP status and ensuring targeted delivery time.

The above challenges could be immediately answered by an implementation of an enterprise resource planning (ERP) solution. The ERP solution shall be able to effectively model the organisation structure, the flow of material and documents across functions. The ERP solution would enable the customer to have clear visibility of the different forms of the stock and the amount of working capital locked into different stages of production, along with the availability of the finished goods across warehouses and stocking points.

Thus the centralised data warehousing would lead to better monitoring and control of the data as well as easy retrieval of the same. The user friendly software modules would help in report generation and business analytics support different kinds of reports and give the management single window access to financial, manufacturing, logistics, supply chain and sales in a consolidated manner.

Textile Industry
The textile industry is one of the earliest to come into existence in India, and accounts for 14% of the total industrial production. Its contribution to the nation's exports is nearly 30% and it is the second largest employment generator after agriculture.

However, the industry has to address the challenges arising from fluctuations of consumer demands, high setup cost with respect to capital cost, the seasonal variation of natural raw materials for production, sourcing of the synthetic raw material pegged to the prices of petro products, multiple production stages and improper management of quality.

The critical problems of supply chain and integrated view of multiple functions could be handled by ERP implementation as it supports customer and supplier portals. The functional features of multiple warehousing facility and ability of the system to capture the lot and serial number of the inventory, allows the customer to track the flow of the inventory across multiple production stages. The solution helps to streamline the manufacturing process with the modules which have inbuilt features like planning and scheduling, shop floor execution, work order management.

Manufacturing module also supports businesses that have diverse planning policies like made to order, made to stock, and forecast to order. The purchase module, which has got features like supplier management, request for orders, purchase operations, subcontracting and vendor rating manages the full spectrum of sourcing activities, achieves efficient supplier management resulting in enhanced supply chain planning, thus leading to better management of operations.

The software also offers functionalities like business analytics and reports which helps manufacturers in analysing data and getting the overall view of respective functions. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Trading and Services
In the trading and services segment SMEs should have proper planning and maintenance of stock at different stocking points and manage the business with multiple billing and collections points across multiple customers.

Consolidated order planning and execution, with support for both centralised and de-centralised location management of either procurement or sales of the goods, tracking of materials intransit, proper warehouse management, stock valuation (actual cost) and managing sample sales are some of the critical requirements of this industry. The system also effectively helps the credit and aging management of the customers who are spread across locations. In short, the geographical spread is dramatically reduced through a virtualisation by the system while modelling the different locations. Hence, there is increased effective control on the overall operations, while individual locations have being provided adequate freedom to exercise within their delegated power.

Here, too, ERP can play an important role in streamlining the functionality of trading business. For example, ERP application helps in handling the pending receipts report based on the order date and in-transit report which would enable proper order, execution and planning in multiple locations. This enables faster deployment and quick and improved decision. It helps to streamline the business operations and facilitates multi location billing. The warehouses can be managed in a much more efficient manner. The warehouses can be divided into zones and bins that enable proper management of inventory. This would help in centralisation of the data that are available.

The application helps in maintaining an account of the materials that are in transit as well as of the materials that are lost in transit. It helps the business by providing visibility of the available stocks in different warehouses. It offers inbuilt functionalities like business analytics and reports which helps the trading houses in analysing data and getting the overall view of various functions. As the contemporary software packages are web architected they are useful for companies which are located at multiple locations. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Most of the challenges faced by the various SME industries are common in nature–lack of accessibility of real time information, inefficiency of supply chain management and expensive IT solutions. In the current scenario, for an SME to sustain in the market and remain successful, it has to work meticulously towards streamlining its business processes. And as discussed above the business process needs to be innovative and efficient enough to adapt to the market and business requirements. These integrated processes need not only include departments but also partners, suppliers and customers. And it can only be attained by using information technology which can support and drive business objectives. Consequently, this also enables to innovate and respond faster and adapt to the globally changing business conditions – a must for SMEs.

To conclude, the growth and evolution of the SME sector has led to an increase in demand for IT solutions. Many smaller companies are not satisfied with their existing disparate solutions and legacy systems and are showing a keen interest in IT solutions which provide maximum business benefits. Many of the CIOs in the SME sector are of the opinion that hosted IT services and Software as a Service (SaaS) would facilitate them to work more, spend less and gain remarkable benefits by concentrating on their businesses, rather than on managing IT. Last but not the least, this model will facilitate management of businesses to handle scale complexities better, and thus endow them with the foundation for innovation.

SMEs can make their key differentiator

By M H Ahssan

The rapid growth of the small and medium enterprises has led to an increase in the demand for IT solutions

The small and medium enterprises (SMEs) have become a key focus area for a majority of IT service providers who want to tap the growth potential of this market. A report by AMI Partners early this year has revealed that the SMEs in the country are likely to spend $9.7 billion on IT this year, an increase of 22% over the previous year. The vibrant and dynamic growth of the SME segment has also made a significant contribution to the GDP, industrial production and exports.

If we closely analyse, SMEs have complex business scenarios irrespective of their size. One of the most challenging tasks of the SMEs is to lower the total cost of operations and keep pace with market issues and developments. For most of the SMEs, monitoring global issues and dealing with complexities such as multiple currencies, changing demands and the continuous customer pressure on achieving scalable cost reductions.

Key Trends
Studies reveal that SMEs which outsource their IT infrastructure are utilising the technology resources that bring in additional top-line revenues while improving bottom-line results. SMEs are most likely to use cutting-edge technologies and approaches such as Software as a Service (SaaS). Analysts are of the opinion that the increase in use of hosted infrastructure models is enabling smaller companies to compete on an equal IT footing with bigger enterprises which have already made substantial investments.

SMEs are choosing a hosted infrastructure model as it provides organisations with state-of-the-art software solutions that can be implemented, while avoiding the large infrastructure costs and eliminating the recurring administrative resources as in traditional on-premise applications. The other area where the SMEs are focusing on is the regulatory compliances. Success for most of the small and midsized businesses depends a lot on the IT. Small companies cannot afford to make inappropriate investments in IT as a failure may also endanger both the profitability and the regulatory compliance.

Following are the key SME segments, their business requirements and the crucial role played by IT in their balance sheets.

Discrete Manufacturing (Engineering)
Discrete manufacturing companies make countable products that go directly to businesses and consumers, or components that are used by other manufacturers. The industry is often characterised by individual or separate units of production. Significant requirements in this segment are bills of material estimation, MRP runs, inventory management and order-wise profitability reports.

Some of the key challenges in the discrete manufacturing industry include customer order fulfilment, controlling and monitoring Work-In-Progress (WIP) of several work-orders simultaneously, periodic assessment and visibility of workorder profitability, getting real time information on WIP status and ensuring targeted delivery time.

The above challenges could be immediately answered by an implementation of an enterprise resource planning (ERP) solution. The ERP solution shall be able to effectively model the organisation structure, the flow of material and documents across functions. The ERP solution would enable the customer to have clear visibility of the different forms of the stock and the amount of working capital locked into different stages of production, along with the availability of the finished goods across warehouses and stocking points.

Thus the centralised data warehousing would lead to better monitoring and control of the data as well as easy retrieval of the same. The user friendly software modules would help in report generation and business analytics support different kinds of reports and give the management single window access to financial, manufacturing, logistics, supply chain and sales in a consolidated manner.

Textile Industry
The textile industry is one of the earliest to come into existence in India, and accounts for 14% of the total industrial production. Its contribution to the nation's exports is nearly 30% and it is the second largest employment generator after agriculture.

However, the industry has to address the challenges arising from fluctuations of consumer demands, high setup cost with respect to capital cost, the seasonal variation of natural raw materials for production, sourcing of the synthetic raw material pegged to the prices of petro products, multiple production stages and improper management of quality.

The critical problems of supply chain and integrated view of multiple functions could be handled by ERP implementation as it supports customer and supplier portals. The functional features of multiple warehousing facility and ability of the system to capture the lot and serial number of the inventory, allows the customer to track the flow of the inventory across multiple production stages. The solution helps to streamline the manufacturing process with the modules which have inbuilt features like planning and scheduling, shop floor execution, work order management.

Manufacturing module also supports businesses that have diverse planning policies like made to order, made to stock, and forecast to order. The purchase module, which has got features like supplier management, request for orders, purchase operations, subcontracting and vendor rating manages the full spectrum of sourcing activities, achieves efficient supplier management resulting in enhanced supply chain planning, thus leading to better management of operations.

The software also offers functionalities like business analytics and reports which helps manufacturers in analysing data and getting the overall view of respective functions. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Trading and Services
In the trading and services segment SMEs should have proper planning and maintenance of stock at different stocking points and manage the business with multiple billing and collections points across multiple customers.

Consolidated order planning and execution, with support for both centralised and de-centralised location management of either procurement or sales of the goods, tracking of materials intransit, proper warehouse management, stock valuation (actual cost) and managing sample sales are some of the critical requirements of this industry. The system also effectively helps the credit and aging management of the customers who are spread across locations. In short, the geographical spread is dramatically reduced through a virtualisation by the system while modelling the different locations. Hence, there is increased effective control on the overall operations, while individual locations have being provided adequate freedom to exercise within their delegated power.

Here, too, ERP can play an important role in streamlining the functionality of trading business. For example, ERP application helps in handling the pending receipts report based on the order date and in-transit report which would enable proper order, execution and planning in multiple locations. This enables faster deployment and quick and improved decision. It helps to streamline the business operations and facilitates multi location billing. The warehouses can be managed in a much more efficient manner. The warehouses can be divided into zones and bins that enable proper management of inventory. This would help in centralisation of the data that are available.

The application helps in maintaining an account of the materials that are in transit as well as of the materials that are lost in transit. It helps the business by providing visibility of the available stocks in different warehouses. It offers inbuilt functionalities like business analytics and reports which helps the trading houses in analysing data and getting the overall view of various functions. As the contemporary software packages are web architected they are useful for companies which are located at multiple locations. It also gives the management access to financial, manufacturing, logistics, supply chain and sales information in a consolidated manner, and thus equips them to make quick and informed business decisions.

Most of the challenges faced by the various SME industries are common in nature–lack of accessibility of real time information, inefficiency of supply chain management and expensive IT solutions. In the current scenario, for an SME to sustain in the market and remain successful, it has to work meticulously towards streamlining its business processes. And as discussed above the business process needs to be innovative and efficient enough to adapt to the market and business requirements. These integrated processes need not only include departments but also partners, suppliers and customers. And it can only be attained by using information technology which can support and drive business objectives. Consequently, this also enables to innovate and respond faster and adapt to the globally changing business conditions – a must for SMEs.

To conclude, the growth and evolution of the SME sector has led to an increase in demand for IT solutions. Many smaller companies are not satisfied with their existing disparate solutions and legacy systems and are showing a keen interest in IT solutions which provide maximum business benefits. Many of the CIOs in the SME sector are of the opinion that hosted IT services and Software as a Service (SaaS) would facilitate them to work more, spend less and gain remarkable benefits by concentrating on their businesses, rather than on managing IT. Last but not the least, this model will facilitate management of businesses to handle scale complexities better, and thus endow them with the foundation for innovation.