On Organizations and Lessons from the Industrial Revolution

The Industrial Revolution was possible because organizations could be built and managed effectively. Today too, problem #1 in business is creating the organization in the right way.

changing landscape, in the 19th century (photo credit: thomasgenweb.com)

The first time I saw this chart below, a light bulb went off in my head.

It shows the world’s average GDP per capita over the past thousand years. It is basically represents an average human’s economic productivity over time. Note: this is on a log scale.

source: http://www.j-bradford-delong.net/TCEH/1998_Draft/World_GDP/Estimating_World_GDP.html

I mainly want to talk about the last couple of hundred years in this chart, but let’s get a couple of things out of the way upfront. Firstly, the GDP estimates go back a million years, but most of human history is rather uneventful from an economic perspective. Secondly, the dip around 1300 AD is due to the “Black Death” plague that killed nearly a third of the world’s population, most devastatingly in Europe.

After the plague, productivity recovered with the population, and started improving as we kept getting a little better at what we did. But what made the line shoot up so drastically in the 19th century?

The Industrial Revolution happened.

Firstly, technology.

There were newer, more sophisticated machines that made large scale manufacturing possible, and there was power available to run these machines.

The textile industry is everyone’s favorite example. Historically, production of cloth used to be largely a domestic enterprise and sometimes a cottage industry. Farmers’ wives would spin the cotton at home, and the men would then weave it into cloth. It would take four to eight spinners to supply one handloom weaver. Enter the Industrial Revolution: at the time the textile industry was inventing the Flying Shuttle and the Power Loom, the steam engine was also being invented. And very quickly, the two came together to enable large factories where steam-powered machines would do the work of hundreds of people.

Secondly, people formed organizations.

The most important part (in my mind) of the Industrial Revolution was the rise of the business organization and of management as a function.

While the initial spurts of technological advancement led to the creation of many businesses, they were still run by one or a few owners or partners trying to do everything, and that could not scale. You could draw an analogy with startups today, but it wouldn’t be accurate as we do have access to management tools. Back then, it just didn’t exist. The railroad companies spearheaded the science and practice of management, being one of the largest organizations and requiring large numbers of people across different aspects of the entire operation to act as one unit. They realized they could organize into departments and appoint managers who planned tasks and supervised the workers that carried out those tasks.

Organizations of an unprecedented size and scale could exist because of this, kicking off many self-fueling virtuous cycles, and not just enabling co-ordination across a large enterprise but also dramatically improving processes and workforce utilization. This is what made the right side of the chart possible.

While it seems like a blip in history, this took time: nearly two hundred years. It completely elevated what we as a species are capable of, but also came at a great societal cost (large scale unemployment and severe exploitation of those that were employed).

And it hasn’t ended: that line is only going up (and perhaps with different kinds of costs).

Now, based on all this, I’m going to posit:

The key to all progress lies in creating scalable organizations.

Misallocating Entrepreneurship

There is an interesting example that elucidates this point. This article — India is a much more Entrepreneurial Society than the United States (and that’s a problem) — talks about the problems when a society cannot scale its organizations:

India is a much more entrepreneurial society than the United States. That may seem surprising since India is poor and we typically associate entrepreneurship with being rich but it’s clearly true. Only ~15% of Indians work for a firm compared to approximately 90% of US workers.

It digs into why it can be a problem.

Entrepreneurship in India isn’t a choice, it’s a requirement. Indian entrepreneurship is a consequence of India’s failed economy. The problem with developing countries is not that they lack entrepreneurs but that entrepreneurs cannot grow their firms large enough to become major employers.

Entrepreneurship, like other factors of production, can be misallocated. India has great entrepreneurs but their hard work, creativity, and risk taking is being wasted building tiny, stunted firms.

Entrepreneurship, like other factors of production, can be misallocated.

But our culture is becoming more individualistic, in all aspects of society. In business, everyone wants to be the entrepreneur, and is looking for “non-entrepreneurs” to recruit to their cause. And it has never been easier to start a company — limited liability and easy access to capital, distribution and technology have made sure of that.

Perhaps the optimal size of the firm will change in response to these forces, but I don’t see evidence of that yet — quite the opposite, if anything. Perhaps this chart above will sober up for a bit, or perhaps technology (general AI?) will render people irrelevant in the scheme of things. Until then, building high-functioning, scalable organizations that fit into the cultural mood will have to be the foremost problem company-builders need to solve.

(Huge thanks to Michael Dearing for showing me this chart for the first time, and opening up the first principles of management for me. I highly recommend his General Management course.)

18/04/201718/04/2017

Diversity with Collaboration Unlocks Innovation and Drives Business Growth

“Diversity is an intellect multiplier, especially when the diverse groups can collaborate well” – Mark Sareff

This year the International Women’s day was a different experience for me, no panels stating gender diversity facts most people are painfully aware of. Instead I had the proud privilege of being invited to do a fireside chat and explore new dimensions of diversity and its impact on innovation and business growth.

We are familiar with dimensions of diversity we are born with — gender, age, race etc. but less familiar with the dimensions we acquire in our lifetime — culture, life experiences, domains worked in, education background etc. These interesting dimensions set your thinking patterns, beliefs and problem-solving approaches.

Diversity is an intellect multiplier but, only when diverse groups can collaborate. We need a common language that helps diverse groups come together and collaborate. We need an inclusive environment that fosters diverse perspectives without judgment… here’s where design thinking comes in!

Design thinking in its application celebrates diversity, when done well allows you to go broad try many, diverse approaches before narrowing down to one solution. It can also change how people work together for the better, introducing a deeper level of collaboration, appreciation of diversity and creativity.

Sharing a few key tools to help you create an inclusive environment that fosters diverse perspectives and hence innovative solutions:

1. Don’t brainstorm; think Independently, together While we are not against brainstorming, we believe brainstorming can lead to HiPPO decisions (Highest Paid Person’s Opinion) and can exclude out-of-the-box thinking because the facilitator or the group naturally judges all ideas being generated. Instead have everyone think independently and write down their ideas individually and review every single idea. Similar ideas get grouped together, no idea gets left behind or judged right away. Instead we build on existing ideas to make them more diverse and disruptive. It is a powerful process that celebrates diversity and creates an inclusive environment for disruptive ideas to form and persist.

2. Narrow ideas using clear criteria – The 2×2 tool is a narrowing tool, allows you to choose ideas that the team will filter down to. The team identifies 2 key criteria to narrow ideas (ideally, customer benefits) that would make massive impact on the business. Ideas are then plotted against those dimensions relative to the benefits it brings to the organization versus making Caesar-like decisions. Again allowing diverse teams and ideas to collaborate well hence leading to innovation and business growth.

3. Facilitating large group dialogues – The World Café is a structured tool intended to facilitate collaboration, initially in small groups and then linking ideas within a larger group to access the collaborative and collective wisdom in the group. Each person interprets the world differently, based on his/her perception. Sharing the viewpoints of others is essential for understanding alternatives and adapting strategies to deal with environments. Environments that recognize the contribution of all will foster a strong commitment to achieve common goals.

Diversity offers different experiences and novel perspectives, leading to better decision making and problem solving. It opens up new conversations pushing the boundaries on unrestrained thinking which enables breakthrough innovations.

At Pensaar, one of the things we celebrate is the differences we all bring to the table. Each of us comes with unique experiences having worked in varied industries and lived very different lives. It allows us to recognize each other’s strengths and learn from each other while also being sympathetic to each other’s weaknesses. Our different experiences and perspectives help us foster innovation to beat and not just meet the needs of our increasingly diverse customer base.

So much has already been written about this amazing topic, go here to read more:

· To Make Diversity Work You Need Design Thinking

· HBR’s How Diversity Can Drive Innovation

· 10 Companies Around the World That Are Embracing Diversity in a BIG Way

· Why diversity matters

12/04/201712/04/2017

Dear founder, have you got your contracts right?

Most probably a bad contract is at the heart of the Stayzilla (SZ) and Jigsaw Advertising (Jigsaw) dispute that’s a hot topic of discussion for the members of India’s fast growing startup ecosystem. Jigsaw supplied advertising related services, SZ did not pay. SZ announced intention to “reboot” and Jigsaw used its might to register cheating case against SZ. Cheating is a criminal offence as opposed to a payment dispute that routinely falls under civil law. I have raised several ethical dilemmas in this situation in my last post. Here I wish to focus on contracts and enforcing contracts.

Indeed “enforcing contracts” in India is an uphill fruitless endeavor. In the 2017 World Bank report on “Ease of Doing Business”, India ranks 172 out of 191 countries on “enforcing contracts”. A quick comparison with China (a frequent object of our obsession) on “enforcing contracts”, put things in stark contrast.

Dispute resolution time: India (47.3 months) vs. China (13.5 months)

Dispute resolution cost: India (40% of claim amt.) vs. China (15% of claim amt.) – though the amount varies by states in India

Quality of judicial processes index: India (9) vs. China (14.5) – higher number is better

Evidently, we are far from the frontier on this measure of doing business. India also ranks such low on other important measures like (number in bracket is India’s rank out of 191 countries reported) – paying taxes (172), trading across borders (143), and resolving insolvency (136).

Small startups in the initial stage of testing market to entering growth phase have little wherewithal to divert precious little resources to fight legal cases that proceed at snail’s pace and hog bulk of managerial and financial resources of a startup. While overhauling the justice delivery system is very long term project, the minimum startups can do is to create and govern contracts in a more deterministic manner.

Common problems with contracts

A mistake in a contract can undermine its legality and affect your ability to enforce it. The party more adversely affected by the mistake would almost always seek to repeal or cancel the contract. Overall, a problematic contract results in poor outcomes like – business delays and waste of resources.

Relying on an oral contract

Promises are part of the business life. But promises can be easily broken, such is the human nature. You put in superhuman effort to build your business so you would want to be assured that your business is protected against failed promises of your co-founders, employees, suppliers and partners. Only a written contract is enforceable under law. Writing a contract also forces you to think through issues that would instinctively not come to your mind.

Another side effect of not having a contract is the risk of losing whatever IP your company possess. Probably only valuable thing startup has in early stage is some form of IP. Consider the scenario – a few part-time founders without any written contract are burning mid-night oil to get a product on the market. Soon one of the founder changes mind about entrepreneurship or gets interested in some other idea. He or she decides to walk away – without assigning the rights to his work. You are stuck without the IP and literally without your company. I have seen this happen a few times and those startups just shut shop without even going to market. Without a contract, there is no negotiating ground or legal recourse.

Not capturing the negotiated terms in final contract

Negotiation is usually an iterative process with multiple revised proposals and discussions. So, when the final contract is in sight three things happen: One, even if there is lack of clarity on some point, that is allowed to linger hoping it will somehow go away. Two, in case of a missing term or incorrect data in last proposal, it is not corrected or rewritten and signed with the contract. Three, even when somethings are orally agreed they do find a place in final written contract. These “minor” indiscretions cause major pain when a contract dispute goes before a judge. One it is almost impossible to prove oral agreements in absence of concrete evidence. Two, in case of an essential missing term, the judge is likely to impose some “reasonable” terms that might be far from what one party had envisaged in the original contract.

Unclear contracts: contracts that do not spell out clearly –

what constitutes performance failure or a breach of contract?

what are the ways to terminate the contract for both the parties?

what will be the dispute resolution mechanisms (before you decide to file a legal suit)?

what happens if a startup is taken over or gets merged with another. Do the contracts get assigned to the new entity?

Creating a legal enforceable contract

What is a contract:

a contract is an agreement between at least two parties, each of which promises to do or not to do something. Contracts can take the form of either written agreements or oral contracts, although some types of contracts must be in writing to be legally enforceable. Additionally, parties often have trouble proving aspects of oral contracts, which makes them difficult to enforce.

What a contract is NOT:
A handshake or verbal deal, non-binding Letter of Intent (LOI), non-binding Memorandum of Agreement (MOA) or Memorandum of Understanding (MOU), Terms and Conditions on the back of invoices without reference / incorporation, RFP’s or RFQ’s, Proposals, Schedules or Orders with no terms and conditions.

What is a basic enforceable contract:

At the most basic level, a contract requires a seller to make an offer to a buyer, acceptance of the terms by the seller, and consideration where each party gives up something of value. E.g., a seller usually gives up a good or a service and in return, a buyer usually gives up money. In addition to these elements, courts will also look at several other considerations when determining the enforceability of contracts, for example, mutual assent, capacity and consent and legality.

Mutual assent: Often called the “meeting of the minds,” mutual assent requires that both parties understand what the contract covers. The goods and / or services being contracted must be described unambiguously so there can be only one understanding in the minds of the two contracting parties.

Capacity and consent: Capacity requires that the parties in the contract be legally capable and competent enough to enter into the agreement. For example, a mentally disabled individual cannot contract, and while minors can agree to a contract, in most cases they can void the contract before reaching the majority age. Consent means that both parties entered the contract freely and without duress or undue influence.

Legality: To be enforceable, a contract must cover legal activities and not violate public policy. In other words, two parties cannot form a contract requiring one party to complete an illegal act nor can either party recover damages for breach of such a contract.

Other basic clauses in a contract:

Price, quantity, and delivery date

Payment terms, interest, and penalties for late payments

Warranties, remedies for defects, and returns

Indemnification, liability, and disclaimers

Lead-times and changes in orders

Governing law

Waivers

Know the Indian Contract Act of 1872

This act governs the enforcement of contracts in India. If either party fails to perform their part of the contract, these laws provide the basis for enforcing contracts and providing damages to wronged parties. The act was passed by British Indian government in 1872. This law is based on British common law. It determines the circumstances in which promises made by the parties to a contract shall be legally binding and the enforcement of these rights and duties.

Or Consult a lawyer

If you are not well versed with the legal issues, drafting your business contract can be risky leading to much grief later. For most tech founders, law is like Greek and Latin – difficult to learn or understand. The law is made of multiple statues enacted by the legislature and is layered by the “case law” developed by the judicial system. It is complex. Therefore, it makes sense to get a lawyer to create legally enforceable templates for the different types of contracts.

10/04/201710/04/2017

Startups – new problems of governance and ethics

On March 14,2017, Chennai police arrested an Indian startup founder and CEO on charges of defrauding a supplier of Rs.17.2 million. The available information revealed that the startup had not paid one of its suppliers for its advertising services for over 1-1/2 years. When the startup announced plans to shut down (CEO called it “rebooting”), the supplier filed a “criminal complaint” against the founder CEO as well as co-founder with Chennai Police. The police was still on the look out for the co-founder who appeared to have gone underground.

The news of arrest fueled by electronic media news and blogs spread like wildfire in the startup ecosystem. Most of the opinion and claims based on half-truths, blamed the supplier for the overkill. It was believed that supplier used its political and police connections to escalate the dispute from “civil” to “criminal” in nature thereby resulting in the immediate arrest of the startup CEO. The doubts were also raised on the legality of the arrest process in view of the person arrested being CEO of a “limited liability” business. The supplier’s camp had pointed out the startup was well funded having raised its “C” round of $13.5 million only in May 2016. It was believed the startup had money but was not paying its dues – amounting to intention to cheat.

More than a hundred Indian startup CEOs across India, including the biggest startup poster boys and unicorns petitioned India’s Home Minister. They submitted a jointly signed statement pointing to the impact of such arrests and asking for fair and speedy trial. They specially talked about the dampening effect on the morale of majority of startups who anyway operated in a “not very conducive” business environment – almost bordering on being hostile. A website (help-yogi.com) was setup where the well-wishers can show some love for the CEO.

Meanwhile, the arrested CEO had been twice denied bail while his co-founder is still missing. It appeared a long haul for the CEO as the law in India took its own sweet time to dispense justice, if at all. Meanwhile a few questions arise that we must find good answers to.

One, what was wrong with the startup actions if any? There was no documentary evidence suggesting the startup disputed payment because of any performance deficiency on part of supplier. The startup CEO had only three weeks before acknowledged availability of funds and his intention to use it in new avatar after current operations were shut down (referred to as “rebooting”). Were investor VCs aware of the problem (thru their periodic reviews) and advised the CEO on it? Do VCs have a role at all in guiding the investee on corporate governance or business ethics?

Two, was the police action beyond reproach? What guided them to register a “criminal case” where most of the times payment disputes fall under “civil law”. Was there undue influence on police to take such action?

Three, were supplier’s actions proper? Was it fair to use the contacts in government machinery (as alleged) to escalate the matter and get the CEO arrested? What can frustrated small suppliers do when payments are not made to them in time as agreed or are delayed forever? Does the lax justice delivery system in India justify supplier’s unconstitutional actions – like using local politician to mediate or indulge in laughable activity of sending across voodoo dolls (as alleged)?

Finally how can we create a better business environment within the startup ecosystem despite the business and legal environment that we know exists in India? Some suggestions have been made recently such as – a credit rating agency for startups, mandatory external supervisory boards for every startup (of certain size? Only the funded ones?) and more transparency and standardization in startup operations (employment conditions, shutting down ops, sexual harassment at workplace etc.)

If you have still not got it, the situation mentioned in this blog relates to Stayzilla and Jigsaw Advertising.

04/04/201704/04/2017

Inadequate liquidity for Indian Startups

Recently was having a conversation with a Private Equity friend and was trying to explain the challenge that has captured my imagination and full attention, ie exits for software product startups in India. He felt that the data about the exit structural deficit that I was trying to point out felt too bearish to be true. My counter argument was that my intent is not to sound bearish but instead be a realist, after all acknowledgement of a problem is first step to solving one. Post that conversation I thought should put this data out publicly so that through crowdsourcing can at the very least improve my understanding if it is off by wide margins.

India VC vs Exits

India Software Products VC (in $m)

2012	2013	2014	2015	2016*
$801.00	$1,021.00	$4,883.00	$6,526.00	$2,419.00	$15,650.00
147	123	173	330	223	996

India Software Product M&A (in $m)

2012	2013	2014	2015	2016*
$205.00	$308.00	$799.00	$1,350.00	$1,339.00	$4,001.00
43	39	59	137	113	391

Source iSPIRT M&A Report https://www.slideshare.net/ProductNation/india-technology-product-ma-industry-monitor-an-ispirt-signalhill-report?ref=http://startupbridgeindia.com/

Israel VC vs Exits

Israel Software Product VC (in $m)

2012	2013	2014	2015	2016*
$1,878.00	$2,404.00	$3,422.00	$4,307.00	$4,775.00	$16,786.00
567	667	684	706	659	3283

Israel Software Product M&A (in $m)

2012	2013	2014	2015	2016*
$8,149.00	$3,704.00	$4,493.00	$6,462.00	$6,782.00	$29,590.00
74	81	109	98	86	448

Source IVC Report, http://www.ivc-online.com/Portals/0/RC/Survey/IVC_Q4-16%20Capital%20Raising_Survey-Final.pdf

Above data indicates that Israel was able to generate 1.8X of the money that went in while in India in the same period it was 0.2X. The right comparison is exits from 2012-2016 with VC investments from 2005-2009, iSPIRT report does that comparison but results are even less encouraging.

Exits follow a power law distribution, however in India it seems like a power law’s power law.

Not only is the volume of exit a challenge but also the structure, any ecosystem exits follow a typical power law. For every $1 bn exit, there are ten $100m deal, for every $100m there are hundred $10m deals.

Top 7 deals in India account for ~$2.5b of the $4b in exit. About 250 of 391 deals total a deal volume of $97m which means the size of an acqui hire i.e in long tail is about 0.5m, which is inadequate even for an angel investor (in other ecosystem long tail is >$10 m, hence being referred to as power’s law power law). Lack of many $10-100m deal means there is a missing middle of the long tail.

Source iSPIRT M&A Report https://www.slideshare.net/ProductNation/india-technology-product-ma-industry-monitor-an-ispirt-signalhill-report?ref=http://startupbridgeindia.com/

Anything in the data above that does not feel kosher ?

iSPIRT M&A Connect program takes a multiyear view to design interventions that can address the middle and long tail of the market coordination challenge.

13/03/201717/03/2017

Innofest Nagpur, March 2017

TiE Nagpur and iSPIRT – two iconic initiatives, committed to building a great startup ecosystem for startups in India, came together to create magic at the Nagpur Innofest on the 5^th of March 2017. Innofest is a platform where innovators can connect with enablers, experts, mentors to build, create, connect, improvise & explore. It’s a movement on ‘Innovation’ in India.

The first Innofest of 2017 was held at Nagpur, with over 150 slated to attend the event. However, the organisers were pleasantly surprised to cater to over 250 people that eventually attended the event. The keynote addresses were made by Sharad Sharma, Co-Founder iSPIRT and Nagaprakasham, who is an investor. There were multiple workshops during the entire day.

Over 10 interesting hardware products were showcased at the event. Right from a 3D printing machine, collision-detecting devices, IoT based tracking devices, ultrasonic sensors, drone technology to the very unique e-funnel.

Nagaprakasham talked about the trend of creating copycat technologies and emphasized how innovation must ensure that newer technologies are able to touch more and more Indian lives. India’s strength lies in its humongous manpower, ample farmers, cheap labour and last but not the least, its vast natural beauty. And they all must be leveraged for innovation.

Subinder Khurana, held a session on Product innovation, where he talked about the essential ingredients of innovation. He pointed out that every venture must have a story of its own that is inspiring enough for not only the customers, but also family, friends, investors and other collateral stakeholders.

On the concept of disruption, he clarified that breaking something is easy, but it must be done creatively. Has some new technology being leveraged? Is there a good story around it? Is some equilibrium being challenged, which will add value to the customers?

Sharad Sharma spoke about IndiaStack and why it will be a critical step in helping creating new innovations for Bharath, he also explained about the building blocks as part of IndiaStack which include Aadhaar. He also spoke about how SAAS will be for India as Cyber Security is for Israel. He spoke so passionately that later during an audience interaction, Shashikant Choudhary, TiE Nagpur President felt that the entire stage was shaking and the podium would fall off. We had Radhesh Kanumury, Country Lead, Global Entrepreneur Program, IBM India Ltd having a fire side chat with Prajakt Raut. Radhesh spoke on the various technology trends giving good insights about them along with examples of innovative Startups working on those areas.

Another session, led by Prajakt Raut was on creating Business Plans. According to him b-plans are critical indicators of the real status of the business as it gives us a framework for assessing the business. The plans give us early warning signals of something that is not going right. It is important for every Founder to know the answers to these questions: What problem or opportunity are we addressing? (The market/ target audience). How are we addressing it?

How are we planning to do it? (Organisations & operations planning) what skills are required? (What are the competencies that are required to handle the business). Why are you doing it?

We also held the iKen Workshop which was facilitated by Rakesh Debur and Kavita Arora of Bangalore Makerspaces joined us to mentor the innovators. This entire activity was possible because of the support of TiE Nagpur and the people of Nagpur who joined us on a Sunday.

Some of the innovations showcased…

Traxafe is an advanced, tiny IOT based tracking device for kids, elders and cars. It’s based on GPS, GSM and BEACON technology connected with a user-friendly app to keep track of your loved ones.

E-Funnel is an electronic fluid gauging device. It measures any quantum of fluid flowing through it. All the information information of every fluid filling can be accessed through a mobile app or through our website on your desktop. It will be available for different variants of diesel generators, trucks and buses.

ISCREAM is a device which can perform numerous operations from detecting vehicle

collision to analysing the vehicle analytics.i-Scream is assisted with our IoT-based crash sensor and emergency response software which helps us to both keep a track on you and make you feel safe at the same time.

11/03/201715/03/2017

How Indian millennials live, work and play

“Normal is not something to aspire to; it is something to get away from”

In today’s age, almost all of you would have heard about the generation of millennials. Most of the people tend to identify them based on their years of birth, but frankly speaking it is their lifestyle that speaks much louder. Well, are you ready to go on a short tour de reconnaissance? Let me help you in decoding and simplifying how do these people (especially in India) live, work and play. But before we delve into that trinity, it is pertinent to reflect on their background and how did they evolve.

The count of Indian millennials in total would come out to be around 0.6 billion (depending on whichever approach that you take for calculating), so the question of not taking notice goes out of the window! There are a lot of factors (both internal and external) that have shaped the millennials into who they are –

They were the first ones to get personal laptops as they matured into their school days and entered college campuses

Owning personal electronic gadgets allowed them to experience and perceive the peers of other geographies via TV series like Friends, The Big Bang Theory and more.

Social networking seems to come naturally to them but in actuality, they have lived through the full spectrum starting from the basic ones like Orkut to the more mature ones like Facebook and now the downright crazy ones like Snapchat.

Living

Thanks to the low cost android smartphone boom and the perennial 3G/4G connections in the Indian urban economy, literally every one of them owns one and can’t imagine a moment without it.

This has perpetuated all parts of their daily life – from tuning the body clock to phone alarms, to booking the first cab to office, to ordering their lunches online, to casually browsing through shopping portals, to listening to music all day long, to finally ending the day with of chatting and posting.

And no surprises, that in order to save cost (primary reason), 82% of them still live in their parents’ home.

Working

Since their life is social, why should work be any different? And that is why we see almost of the organizations adopting the tools like Slack, Workspace, Skype and more.

Not only that, but most of the people are working completely on these networks alone! Their business would shut down if that social platform goes for a toss.

Another interesting fact is that they are hungry and broke a lot. And I really mean a lot. For many of the younger ones, foregoing food for a fancy purchase seems like a no-brainer affirmative. Since they have a lifestyle to portray to the society and the aspirations are pretty high, so short term urges like sleep are easily forgotten.

Playing

Since embracing the screen age, the problem of finding ‘friends’ is pretty much over. It is a different thing altogether that they may not even know the name of the person living next door.

This has also changed the spending and purchasing behavior. Around 55% of them never feel the need to own a vehicle, and in fact are counting on technology to replace the whole notion of owning a car. This goes in line with the point that earlier, young college kids (US culture) mostly bought a car in order to show off to their friends, and now those friends are mostly virtual or online.

How Indian Millennials live & spend

If you carefully observe the trends and how the age is evolving, you can see that we have now clearly entered the age of social commerce. An age where shopping and spending money is not a solitary activity (albeit in a few utility cases), but it becomes a collaborative affair. An age where peer pressure determines to a lot of extent, where we eat, drink, party, travel or live. An age where social network and payments mingle and become indistinguishable for most of the cases.

The wheels are in motion, and like we all know, the evolution cannot stop or reverse. It is bound to happen and it will be a mixture of aspects that you may come to appreciate and some that you may not.

P.S. Disclosure, I am a millennial myself, building a company in the domain of ‘Social P2P Payments’ for this generation of Indian millennials.

Cheers, Rohit Taneja

10/03/201710/03/2017

Indian E-commerce: Moving on from GMV

It has been a nervous month for the professionals working for internet and e-commerce companies in India. Shutdowns and layoffs have been the flavour of the month, and business models have come under scrutiny. The effects of recent events at Stayzilla and Snapdeal have not been limited to job losses only. Weighed down by these developments in the sector, Rakuten, the Japanese e-tailer, has puts its India plans on the back-burner.

Stayzilla, an alternate and homestay aggregator, has shut operations. Investors including Nexus Venture Partners and Matrix Partners have invested USD 33 million across multiple rounds in the company. The founders have promised to bounce back ‘with a different business model’.

Snapdeal, announced that it will lay-off about 600 employees from the company including from its Vulcan (logistics) and Freecharge (payments) business divisions. The company has so far raised USD 1.75 billion from investors which include global heavyweights such as Softbank, Kalaari Capital, Temasek, Alibaba Group and eBay. However, Snapdeal reportedly is left with less than enough cash to survive the next 12 months. The merger talks with Paytm, facilitated by the common investor Alibaba, are not murmurs anymore and seem to be the logical next step in many ways. A very honest and important insight on the business model emerged from this episode, in which the founders admitted to ‘doing too many things’ and ‘diversifying and starting new projects while we still hadn’t perfected the first or made it profitable’.

The above incidents highlight the fact that Indian e-commerce in 2016 has been significantly different from its ‘glory days’ in 2015. GMV growth in 2016 was flat, even though long term prospects remain intact for now. The year-end sales were also impacted due to the demonetisation exercise carried out by the government. The cash on delivery (CoD) transactions, which account for approximately 50% of total GMV, were severely impacted due to the lack of availability of the new currency notes.

Figure 1: India e-tailing GMV (USD mn)

Source: Company data, IAMAI, Euromonitor, Credit Suisse

GMV, as the supreme emperor of metrics, has lost its sheen and the challengers which have come to the fore include revenue per customer (function of number of orders per year, value per order and commission), net promoter score (a measure of customer satisfaction) and overall user monetisation (including alternative sources such as advertising as well as new service offerings such as hyperlocal services).

The sustainability of business model is back in focus as a tool to evaluate potential winners and losers. Throwing money at the customers as discounts has not worked out very well for a lot of players. There has been a definite move towards trying to find other means of retaining customers. Going forward, winners are most likely to be companies that provide a differentiated customer experience. An obvious example is Amazon Prime which now brings more personalized experience to the company’s customers. Flipkart (Flipkart Assured) and Snapdeal (Snapdeal Gold) have similar offerings to enhance the stickiness of their customers. While ‘Flipkart Assured’ has seen limited success so far, Amazon Prime, launched at a very attractive price point of INR 499 per year, seems to be more suited for success going forward. Amazon has also clubbed its Netflix challenge – Prime Video offering with Amazon Prime subscription. With these offerings, the companies are trying to take focus away from discounts and towards customisation, quick delivery, consistency and reliability of shopping experience.

The control over supply side is a key element of constructing an enhanced and consistent experience for customers. Logistics is one of most prominent cost items for ecommerce firms, and depending on the category and value of the goods being delivered, could be 10% to 20% of GMV.

In India, the number of Amazon fulfilment centres has grown to 27 by the end of 2016. Shipping from stores is less efficient than from dedicated fulfilment centres. Amazon is looking to replicate their success in North America where they have invested billions in network of fulfilment centres. It has more than 75 such centres in North America, covering 25 US states. This gives Amazon an easy two-day reach over the entire US. Snapdeal has opened 6 logistics hub during 2016, with an estimated investment of USD 300 million. Paytm, flush with a USD 200 million funding from Alibaba, is reportedly firming up plans for a significant strategic investment in a logistics firm to improve its deliveries process.

The key growth drivers for e-commerce in India remain in place. There is a large aspirational population, faster and wider internet access, a never before push on digital payments and an opportunity to further penetrate the offline organised retail market. Nevertheless, the year 2016 has been a reality check. The Indian players have had to review their business models and take some tough calls to focus on sustainability. While the market may continue to be volatile in the short term, with more potential shutdowns and/or consolidation in the offing, we can now be more confident that the firms that do survive will turn profitable soon.

This is a guest post by Arvind Yadav,

Principal at Aurum Equity Partners LLP.

09/03/201714/03/2017

Going Digital – A simple framework

Today, everyone talks about going Digital. Renowned strategy and customer experience consulting firms have renewed themselves as Digital Transformation agency. Softskill trainers have become Digital marketing consultants. Large industrial conglomerates have become Digital industrial company by a creating a platform for Digital aficionados to develop custom apps.

New roles such as Chief Digital Office, Data scientist, Experience designer, Digital evangelist and many more. What are these roles to do with? Where should I start my Digital journey?

Here is a very simple framework!

Going Digital

Remember!

To keep up the Brand promise,always deliver

Speed (Adopt Agile & DevOps)

Accuracy & Authenticity ( Create Cognitive / Sentient Systems)

Codify ‘Trust’

Courtesy

1. Book titled ‘Disrupting Digital Business’ – Ray ‘R’ Wang
2. Book titled ‘Leading Digital’ – Didier Bonnet
3. eBook titled ‘Digitally Remastered’ – CA Technologies

Guest Post by R Ragavendra Prasath, a volunteer for iSPIRT. An avid reader, wannabe entrepreneur and Digital enthusiast…! He tweets @ragavendra1

09/02/201708/02/2017

How limited access to paid tools as a startup made me realize the need for a community

When I started out as an entrepreneur the journey was fueled by big dreams that were perhaps a bit too daring. It wasn’t smooth sailing and early days were tough. Life in a startup is dotted with challenges that can be overcome only by sacrifice.

Bootstrapping required a lot of restraint – both professionally and personally. Leaving a good-paying job at Zoho and trying to build a company meant cutting a lot of corners. We had to forgo luxuries, back out from family & vacation time, self-inflict pay cuts and moved into an apartment-turned office.

However, the biggest gripe was lack of access to the tools and services we loved. From basic necessities like Mail or CRM solution to universally used tools like Photoshop and Invision seem like a luxury when bootstrapping. As the saying goes ‘Nothing good comes for free’. We were pushed to try and find open-source alternatives. But they were nothing but painful compromises! It hurt us a lot – we couldn’t get things done in the same timescale as we could’ve.

A lot of products, tools and services do have offers but there were none tailor-made for the struggling startups. We had to make do with the free stuff and somehow managed to get our product out! Our product attracted funding and things slowly started to change and got to a better place. However, we still remember the struggles of our startup life!

Here is a small tribute to startups and the struggles we face:

Somewhere amidst the mad rush of shifting to our new office and redesigning our logo, I realized that it’s time I gave back to the startup community. The easiest option was to provide a free trial extension for startups but it rather made sense to initiate a change!

Every solution, product or service a startup requires is most likely what another startup is working on and if we are able to set up a mutual sharing, we can surge ahead as a single startup ecosystem!

This is the idea behind #RespectStartups, powered by Zarget, for the startup community. It is an opportunity for every startup, no matter how small, to make an impact and reach out in a big way. I personally urge every entrepreneur to look at this as an opportune moment to give back to the community.

Share your offers and claim the ones you need at www.respectstartups.com

Voice your opinions about the movement with #RespectStartups on social media.

Let’s say “No!” to startup sacrifices! Let’s march ahead as a startup ecosystem…

Guest Post by Arvind Parthiban, Co-founder & CEO of Zarget. He loves travelling, is a foodie and is crazy about football, a Chelsea fanatic. With 12 years of experience in the SaaS industry, now into startup life.

01/02/201731/01/2017

Are AI and Automation dirty words for some?

Man being replaced by machines has been a topic very well documented in our academic and social history. While, designing machines that can replicate human intelligence is ‘the dream’ for many, the idea has seen its fair share of resistance from anxious workers afraid to lose their livelihood. It would be a mistake to think that the phenomenon is only very recent. The Luddite movement, which began in Nottingham in 1811, was named after a disgruntled weaver who broke two stocking frames in a fit of rage. Destruction of machinery, as a form of protest, was carried out throughout England by groups of English textile workers and self-employed weavers. Since then, the term ‘Luddite’ has become a reference to someone opposed to industrialisation, automation, computerisation or new technologies in general.

Back to the 21st Century, Infosys’s human resources head Krishnamurthy Shankar has revealed that the company had “released” 8,000-9,000 employees in the last 12 months due to automation of lower-end jobs. The employees are not necessarily jobless and have been retrained and absorbed to carry out ‘more advanced projects’. The company also reduced its hiring in the Jan to December 2016 period to 5,700 compared to 17,000 in the first nine months of previous fiscal year. Infosys is not alone in their journey towards automation. Most Indian and global IT services companies are investing in automation of processes in their core businesses such as Application Management, Infrastructure Management and Business Process Management (BPM).

India’s IT giants are leaving no stones unturned to fill the gaps in their digital portfolio of products and services. The subjects of Internet of Things, Cloud, Artificial Intelligence and Automation figure high on each company’s organic strategy and also in their shopping list for inorganic growth (Table 1).

Table 1: Select Digital Acquisitions by Indian IT majors

Acquirer		Target	Value (USD mn)		Brief
Infosys	Panaya			200	Provider of automation technology for large scale enterprise software management
Wipro	Healthplan Services			460	A technology and Business Process as a Service (BPaaS) provider in the U.S. Health Insurance market
Wipro	Appiro			500	A services company that helps customers create next-generation Worker and Customer Experience using the latest cloud technologies
Infosys	Skava			120	A provider of digital experience solutions, including mobile commerce and in-store shopping experiences to large retail clients
Tech Mahindra	The BIO Agency			52	UK-based digital transformation firm
Tech Mahindra	Target Group			164	A provider of business process outsourcing and software solutions

Automation is heralding the age of Industry 4.0 which is characterised by a diminishing boundary between the cyber and physical systems. In October 2016, World Bank research announced that Automation threatens 69 % of the jobs in India, while 77% in China. Google’s AI research lab, Google Brain is working on building AI software that can build more AI software. I wouldn’t blame anyone if they started thinking about the Skynet from Terminator or the writings of James Barrat – Our Final Invention: Artificial Intelligence and the End of the Human Era.

As per research by Gartner, IT process automation (ITPA) is very underpenetrated (only 15-20%) and will move towards maturity over the next 5-10 years. Most leading vendors in the IT services space have launched an automation platform to boost delivery efficiency.

Table 2: Automation/ AI Platforms of Indian IT Players

Company	Platform	Offerings
Wipro	Holmes	An artificial-intelligence platform built on opensource computing aimed at optimising resource utilisation and reducing costs
Infosys	Aikido	Enables creation of intelligent robots that can resolve incident related to customer orders
TCS	Ignio	An Artificial intelligence-based automation platform which automates and optimizes IT processes within an organisation.
Tech Mahindra	Carexa Uno	Customer care, with agent virtualisation, analytics, assisted interactions and digital channels.
HCL Technologies	DryIce	A digital service exchange platform enabled by ServiceNOW

Source: NASSCOM, Edelweiss

Platforms based on novel technologies will minimise the human effort required. Are the coders coding away their jobs then? Thankfully, there are learned people who believe otherwise. As per NASSCOM, the future may not be as dire. There is a distinct possibility that repetitive and labour intensive jobs such as data entry and testing may get completely automated, but there will be augmentation of cognitive jobs. New roles will emerge which will focus on training, learning and maintenance requirements of AI systems. Indian companies will also need to invest in re-training its employees or importing talent in the short term. In the long term, a joint effort with technology schools such as IITs and IISc will be needed to build a supply chain of talent. 65% of Google DeepMind’s hires were directly from academia.

The Indian IT services sector is worth approximately USD 150 billion, and it is largely export dependent. The Indian players need to enhance their digital capabilities to compete globally. Automation is a key area of this digital growth and so is the evolution of skilled workforce and their job profiles. The fear of technology destroying all the jobs is as unreasonable now as it was in the 18th century. Also, it is evident from history that technology has always led to creation of more jobs than it has destroyed.

The workforce engaged in IT services by nature is flexible and open to evolving work profiles. Workers in some other sectors may not have that option, especially at the jobs requiring less complexity. HDFC bank just announced that it has witnessed a head count reduction of 4,500 due to efficiency improvements and attritions in the last quarter alone. The Bank is planning to install up to 20 humanoids named “Íra” at its branches in the two years to assist customers. Ira has been developed by Kochi-based Asimov Robotics and the company has already received queries from airports, hospitality industry and retail chains to deploy similar humanoids. It would be a good move for all professionals in all sectors to ask themselves – “Can a Robot do my job?”, and upgrade their professional skills accordingly.

This is a guest post by Arvind Yadav,

Principal at Aurum Equity Partners LLP.

30/01/201731/01/2017

Union Budget 2017 : How’s it Set to Impact These #5 Key Domains in India

Alright, before I take the plunge into revealing what I expect from the impending budget, let’s take a quick glance at numbers on how the Government has fared since its inception:

Modi’s flagship Make in India initiative launched to create employment & self-employment saw huge traction with India’s gross FDI flow jumping by 27% a.k.a $45 billion in 2015-16, an all-time high.
Jan Dhan Yojana witnessed 11.5 crore Indians opening bank accounts, that’s getting 99.74% households bankable.
Under the Swachch Bharat initiative, a total of 31.83 lakh toilets have been built between April 2014 and January 2015, 25.4% of the target. World bank has also invested $1 Bn in PM’s pet project.
In Feb 2016 alone, under the Skill India initiative, 3,222 training centres were opened, more than 55 lakh people trained and 50% placed.
Nasscom had launched the “10,000 Startups programme” in 2013 in which 700 tech-driven startups were set up. After the launch of the Startup India, Stand up India initiative by 2015, the number had increased by 70% to around 1200. It is expected, there will be a 75% increase in the number to 2100 by 2020.

All said and done, looks like NDA government has fared decently in their term thus far and as the run up to the elections in 2019 rapidly advances, this year’s budget is going to be epic!

For starters this is going to be the first time that a Union Budget will be passed in February. The reason is concrete! When a budget is declared in March, it gets passed by both the houses only by mid-May thus delaying the entire process. By having a budget in Feb, the govt is making sure that it’s passed and ready to be implemented before the start of the new financial calendar.

Secondly, thanks to the demonetization move, digital commerce has been given a massive push. Furthermore, a year after PM Modi launched the visionary ‘Startup India Campaign’, there’s a lot of heat building up in the startup community which is expecting a series of initiatives that will be in their favor. 2017 is surely poised to be an exciting year.

1. For Startups

Widening of tax-free regime from the current 3 years to 5 years along with easier procedural clearances. Considering startups take a while to register profits, this move will promote entrepreneurship and innovation.
The government may also make regulations on FDI and ease institutional investment while also reducing governmental charges and taxes on it. In the long run, this will help in solving the capital need for startups since, majority of funding for startups come from venture capital funds that rely heavily on foreign investments.
With the Start-up initiative at the fore, we can see a new set of concessions on employee stock options, unlisted securities and convertible instruments.

2. Womenpreneurs: Easy access to funds

When it comes to women entrepreneurs, though, the government has been supportive in promoting women entrepreneurship, what most of us need is an easy access to funds. Additionally, since the implementation of GST will be on table for this budget, the government will come up with the new rationalized tax structure. We, women entrepreneurs, should definitely be a part of consideration in corporate taxes and loans.

3. Definitive SOPs, tax rebates, indirect taxes

The sole goal of demonetization was to put India on the path towards a cashless economy. Keeping this in mind, the Budget should include definitive SOPs and tax rebates to encourage and boost e-payments. Moreover, to achieve the goal of financial inclusion, the government should also rationalize indirect taxes and charges levied with respect to digital payment transactions and further incentivize companies operating within this space. To adapt to the need of time, government should also rationalize income tax provisions including provisions related to employee tax benefits such that payments/documents in the digital medium are treated at par with physical instruments.

4. Corporate taxes

I’m even looking at the reduction of corporate tax rate from 35 to 25% percent for startups and companies in the digital payments ecosystem. Transactions worth trillions are done in India yearly. Of these, hardly 10% are on digital platforms. The government must take more concrete steps to make digital payments ubiquitous. This budget should announce measures to upgrade digital infrastructure across the country. Steps should be taken to promote digital literacy and connect cities, towns and villages with high-speed internet networks.

5. Digital payment

While, the government has pushed for digitalization, post the demonetization move, I believe a lot still needs to be done on promoting digital payments. For instance, the government needs to reconcile and even reduce all indirect taxes on digital payments to nil. The government needs to work on a concerted effort to cut the payment gateway and bank charges on online transactions. Only then would people be truly incentivized to pay online.

The sector wants more tax concessions for customers and shopkeepers who go digital. The incentives can come in the form of income tax, service tax etc. What the budget can offer is extend the nuggets of sops on e-payments through UPI, add a dash of income tax rebates on e-payments and facilitate retailer-rebates on grocery bills, LPG payments, bus or metro card recharges and so on. The government has already introduced waiver of service tax on debit and credit card transactions of up to Rs 2,000.

In conclusion…

2016 had witnessed several markdowns in India’s ecosystem and I’m definitely looking forward to the budget and what it has in store.

Guest Post by Dr. Som Singh, Entrepreneur, Investor and founder of Unspun Consulting. This post was written for the Entrepreneur India magazine.

24/01/201724/01/2017

What the U.S. can learn from India’s move toward a cashless society

Looking from Silicon Valley upon the progress that India has made in building a digital infrastructure, I am in awe. The U.S. tech industry fancies itself as the global leader in innovation, yet India has leapt far ahead of it. Silicon Valley’s tech investors hype complex technologies such as Bitcoin and blockchain. But India, with simple and practical innovations and massive grunt work, has built a digital infrastructure that will soon process billions more transactions than these do.

India is about to skip two generations of financial technologies and build something as monumental as China’s Great Wall and America’s interstate highways.

Though few people in the West know of Aadhar, it has been the largest and most successful I.T. project in the world. There was widespread skepticism that a billion people could be provided with a verifiable digital identity, yet it has occurred, in a short six years. Hundreds of millions of people who were doomed to live in the shadows of the informal economy can now participate as equals in the global economy. Thanks to Jan Dhan Yojana, they also have bank accounts; these already haveRs. 69000 crores in deposits.

The reason investors are pouring billions of dollars into technologies such as Bitcoin is that they provide a secure way of linking a person to and recording a transaction. But Bitcoin requires massive, wasteful, computing resources to do what is called mining: transactions’ mathematical verification. And this complex computing infrastructure needs constantly improvement as it hits transaction limits.

The simple design of India’s digital payments infrastructure, Unified Payments Interface (UPI), allows banks to transfer money directly to each other based on an Aadhar number or mobile-phone number plus pin. Yes, this doesn’t have the anonymity of Bitcoin, but I would argue that anonymity is mainly for money laundering and tax evasion—which need to be eliminated. There is almost no overhead in UPI, and transactions happen within seconds rather than the 10 minutes that Bitcoin takes.

In the U.S., we pay an indirect tax of 2–3% on consumer transactions because of the use of credit cards. Companies such as Visa, Mastercard, and American Express don’t even manage the money or provide banking services; all they do is to act as an intermediary between banks. The merchant has the responsibility of verifying the identity of a customer. With UPI, India doesn’t need credit cards or middlemen, it can build the next generation of finance.

The instant and non-repudiable proof of identity that Aadhaar’s know your customer technology, e-KYC, provides, gives India a big advantage. Most people in the U.S. have drivers licenses and social security numbers. But these are not verifiable with biometrics or mobile numbers, so complex verification technologies need to be built into every financial system. Indian entrepreneurs building applications don’t need to worry about all this.

Going beyond money, India Stack provides a digital locker through which to store and share personal data such as addresses, medical records, and employment records. With this, the government is providing a public service that is the digital equivalent of roads and electricity. I don’t know of any other country that has anything comparable; India will soon have the digital equivalent of super-highways.

There are all sorts of benefits. For example, the opening of a mobile-phone account is a lengthy process everywhere, because telecom carriers must verify the user’s identity and credit history. With India Stack, all it requires is a thumbprint or retina scan and permission to share digital documents. The typical villager presently has no chance of getting a small-business loan, because he or she does not have a credit history or verifiable credentials. With India Stack, he or she can share digital copies of bank statements and utility-bill payments, and life-insurance policies and loans can receive instantaneous approval.

Nandan Nilekeni is right when he says that these advances “represent the biggest advance globally in public digital infrastructure since the Internet and GPS”. In an email to me, he predicted that they will “lead to a leapfrogging on many fronts, including a digital financial platform for a billion people which does not require cards, POS machines or ATMs but will be entirely driven by what is in your hand—your finger and your phone”.

Prime Minister Modi has taken a lot of fire for demonetization. This is understandable, given the hardships and the disruption to the economy that it created. But it was a bold move and one that will produce tremendous long-term benefit—because it will accelerate the push to digital currency. India has the opportunity to enter an age of transparency and be at the forefront of digital technologies.

Nobel Prize–winning economist Joseph Stiglitz said in Davos that the U.S. should follow Modi’s lead in phasing out currency and moving toward a digital economy, because it would have “benefits that outweigh the cost”. Speaking of the inequity and corruption that is becoming an issue in the U.S. and all over the world, he said “I believe very strongly that countries like the United States could and should move to a digital currency so that you would have the ability to trace this kind of corruption”.

Yes, India is ahead and America can learn from it.

Guest post by Prof. Vivek Wadhwa, Distinguished Fellow, Carnegie Mellon University Engineering at Silicon Valley. Former entrepreneur. Syndicated columnist for Washington Post. 

18/01/201718/01/2017

eKYC – Know Your Customer unassisted using Aadhaar, OTP and Face Biometrics

Context

Know Your Customer (KYC) is essential for obtaining Financial, Healthcare, Insurance, and Telecom services around the world. In the Indian context, until Aadhaar opened up its APIs, KYC was a laborious process costing billions to services providers and inconveniencing customers with a mountain of paper identity documents. The thoughts here are confined to the Banking sector but applies to other sectors equally.

eKYC “assisted”

With the advent of electronic KYC or eKYC using the Aadhaar biometrics platform, things haven’t changed a lot. It certainly has reduced paper documents. However, eKYC is still done in “assisted” mode – meaning either the customer has to be present at the Bank or a Bank Executive has to reach the customer to collect the biometric data. Besides, in most Banks, a paper trail is still maintained despite the biometrics data – reasons best known to themselves. What was costing the Banks earlier is what is costing today – perhaps more with the new biometric devices and the cost to maintain them.

eKYC “unassisted”

The Reserve Bank of India (RBI) took a significant step in December 2016 to allow opening of deposits and borrower accounts using OTP based eKYC, albeit with some restrictions (RBI notification on 08 December 2016, Chapter VI – Customer Due Diligence (CDD) Procedure – Clause 17 and 38 amendments). This has opened up the opportunity to provide this service to customers at the comfort of their homes at a vastly reduced cost to Banks. This would satisfy the two-factor authentication needed by RBI and would suffice to open an Account. However, with increasing volumes (500 million eKYCs projected for 2020 by UIDAI), and the possibility for this service to be abused through third party fraud, this would need additional authentication to ensure that the person completing the transaction is who he really says he is (as close to a physical check).

eKYC “unassisted” with three factor authentication – Aadhaar, OTP and Face Biometrics

To solve this particular problem, FRS Labs rolled out the “Atlas eKYC” solution – fully integrated with Aadhaar – with face biometrics as the third factor of authentication (watch the 60 second video here). While the face is captured by UIDAI as the third biometric element (fingerprints and IRIS being the other two), RBI has not mandated the use of face for biometric authentications – for reasons that face is considered not as unique as fingerprints and certainly not IRIS – and the false acceptance rates (e.g. twins) could be high and that people’s faces change over time – but as always research contradicts this notion and there are plenty of evidence to prove that face is a reliable biometric feature. And it can only get better.

Notwithstanding, RBI has not specified that face could not be used if a commercial organisation wishes to do so as additional factor of authentication to protect their businesses and consumers, so long as the mandatory 2 factor authentication is in force. In a similar tone, RBI has not ruled out authenticating customers using their voice (another biometric element not in Aadhaar). ICICI Bank and Citibank have rolled out voice biometrics to authenticate customers to call centres is a case in point – It is still two factor authentication (the registered mobile phone as the first factor and the consumer’s voice as the second factor of authentication). Therefore, there is a great opportunity here for Banks to provide face biometrics as the third factor of authentication for secure “unassisted” OTP based eKYC without the need for biometric devices. I can only begin to image the convenience for consumers and cost savings for Banks.

Author: P. Shankar – Founder & CEO of FRS Labs.

12/01/201713/01/2017

On-Premise or On-Demand Product Modeling: cloud is in your court

Do you sound familiar with the situation explained below?

You started out with a Custom Off-the-Shelf (COTS) CRM product suite, but your user adoption changed dramatically, owing to Scale and Technology Transformation, thus leaving you to think over to a new deployment model. Or perhaps, you purchased your Point of Sale (POS) system many years ago and now decided that it is time to switch to mobile network retail solution. The cost of maintenance could be high or you feel it is time to minimize CAPEX. All of these situations put you in a position to find the need of solving heavy infrastructure concerns and thus make business operation lean, which at the same time must not disrupt the business continuity. Often, an overwhelming task.

Any business transformation is not easy for organizations to adopt and there are pain points associated with it. Be it the On-Premise products/applications behaviour that has gone outclassed or the products/applications dispensability – that require changed approach to position the organization competitively. For specific business functions with high need of control over such products/applications and data even at the price of higher management efforts and slightly more time to market, organizations are accelerating towards the possibilities of cloud adoption. Thus cloud has become a serious business proposition slab from products perspectives.

When deciding to implement a new business management product, there are many factors that need to be considered. Up until the beginning of this decade, choice of deployment, how to deploy and where to deploy – was NOT one of these considerations. Nowadays, most evaluations of solution / product / application platforms include the question of – whether to model the platforms “On-Premise” or “On-Demand”.

Most enterprises are tending to evaluate if putting the buck on hosting applications on the cloud is the way forward or not. The answer to this difficult question really depends on the technology landscape of the company and the complexity of operations. For example, a new age start up or an ISV may consider a “Cloud First” model, where all the infrastructure, applications and products may deem suitable to be migrated to the cloud. This greatly simplifies the IT model for that company and allows a provision of leveraging a pay-for-consumption based model. In turn, it results into the galvanization of resource costings, achieving a business flexibility in the initial stages of start-up formation, thus relieving a surplus of cost for low hanging fruits. However, enterprises with legacy applications and investments in existing datacentres should evaluate key considerations before moving to the cloud model.

I underline the below top five considerations associated with product suite selection and how both On-Demand and On-Premise deployments impact upon them. These considerations are broadly categorized as the following:

User empowerment
Investment timeline and Total Cost of Ownership (TCO)
Data sensitivity
Availability of internal IT resources
Integration

There are always two sides of the coin while arriving at a business decision of: if in-house infrastructure model will suit for business applications or a SaaS model.

Where expensive take, long implementation times, debilitated user augmentation, inflexible licensing plans might be taking the sheen off the On-Premise journeys, that may have left vast quantities of product suites sitting unused on shelves; In contrast, SaaS journeys provide a ‘pay per use’ subscription model, no IT infrastructure to maintain in-house, better user uptake and shorter deployment periods – could appear a bright oven to cook.

Where security and uptime concerns and criticisms about the lack of customisation on SaaS model derive some amount of restraints, On-Premise models can be configured to fit exact business requirements and might suit better large organizations that have complex integration needs.

Where the SaaS model eliminates the need for provisioning of systems upgrades (with upgrading the entire technology stack – the database, the servers, the operating system, the system integrations, etc.) for the company against the service provider – the On-Premise computing products allow the possibilities of having complete control over the data and information– thus, to be able to access information at any time without restriction.

While ROI is effectively recognized quickly with On-Demand model, many thoughts also seem to appear that the recurring monthly fees involved in the invoicing approach make them a bit more expensive option than On-Premise models in the long run.

Forrester Research has pointed out that although On-Demand product suites eliminate big initial investments, they can however include monthly substantial fees, such as for industry-specific functionalities, additional storage fees, integration with On-Premise applications, etc.

But it could also be equally argued that long-term TCO of On-Premise product suites is equally unknown. Can you guarantee how much you need to budget for additional servers and storage in five years? Or how costly the next upgrade project is going to be? And as you need an in-house IT resource to manage and maintain those systems – will that head count go up or down?

Some organizations hurry up towards adopting a ‘cloud only’ approach, assuming cost savings are a guarantee. But not all applications are meant for the public cloud, and moving them may cost more.

Choosing On-Demand or an On-Premise product modelling solutions can be tricky, especially since both have pros and cons and can ultimately dictate successes of the enterprise. Whatever direction that the organizations decide to go in, relates to what the end user customer experiences show up in the end revenues.