Indian Political Economy – a crazy balancing act


When Pranab Mukherjee was selected as the presidential candidate by Congress, the first thought that crossed my mind was that Manmohan Singh can now do something right about the economy.  But given elections are just 2 years away – I seriously worry if populist measures will overtake good economic decisions.

India is a diverse country, and is not known to elect a politician based on economic brilliance. There is a good reason for that – the wealth accumulation is only with a small percentage of the population. Not enough votes will come in any constituency from those rich people. Added trouble is that several of the “haves” choose not to go to voting booth on election day. Lot of other things win elections – religion/caste , free benefits from government , subsidies and so on are the messages that win elections. The one other thing that wins elections is fierce loyalty to some political families.

The loyalty factor is kind of silly when taken to extremes. The most obvious case is the “Gandhi” family. Jawaharlal Nehru was India’s first prime minister. There were many other capable and eminent people who could have been the prime minister – but Gandhi liked Nehru the best. Nehru ruled several years, his daughter Indira Gandhi ruled several years and her son Rajiv Gandhi ruled after that. The current chief of Congress is Rajiv Gandhi’s wife, who is an Italian by birth – Sonia Gandhi. Her son Rahul Gandhi is an MP, and at some point after Manmohan Singh’s tenure – he will surely rule the country.  Every opportunity they get, the congress leaders will make a shout out for Rahul Gandhi to be the next Prime Minister.  What might not be well known to people outside India is the fact that Indira Gandhi had no blood relation to the father of the nation M.K.Gandhi. She took the last name of her husband Feroze Gandhi . You might wonder if a country with a billion people can only be led by one family. Well – that is how India works for the most part.

Economics in India from the time of Nehru was based on socialist principles. It led to what was called License Raj. Government decided which companies can get a license for what business, regulated prices, prevented lay offs etc. Nehru and his finance ministers wanted a “planned economy”.  C Rajagopalachari was an opponent to this idea – and the term license Raj was his creation, with a reference to the British Raj that India suffered through many decades. I think Nehru probably did not want a pure USSR type model, given that private business houses did flourish in India. But this policy led to India never exploiting its potential for 4 decades. I can be wrong – this was all before I was born, and my knowledge is all through reading and college classes and so on.

Wealthy families with ties to politicians got many such licenses.  And just like politics – business also had a few “first families” who grew by leaps and bounds when the rest of the country suffered.  Preamble to Indian Constitution states that it is a socialist republic. And a challenge in supreme court to change that was turned down. Not sure how many people remember this – but it was Feroze Gandhi who first unveiled a lot scandals involving business houses and politicians – including the LIC scandal that gave the Nehru Government its first black eye.

So throughout the first 40+ years of independence, India had a very closed economy.  The current Prime Minister Manmohan Singh was a Reserve Bank Governer and then the Dy Chairman of planning commission in the 80’s. So he has seen first hand the mess associated with the closed economy and failed policies. When he was brought into the parliament on a congress ticket, he was whom Narasimha Rao chose as finance minister.  He was the FM till 1996 – I remember that clearly since that is when I finished my college. It was fascinating to see several economics lessons from childhood being banished by a visionary Finance Minister and Prime Minister and the economy being opened up.

Looking back, I can imagine why Nehru and his colleagues believed India needed to depend on internal markets for its development. Their generation had to fight all their life to end the British rule in India. And British, and many others came to India on the pretext of trade. So international trade probably was not the most palatable thought for those leaders.  But since rupee was not convertible – there wasn’t a lot that private citizens could do in case they differed with the government’s idea of how an economy should work.

Although I did not realize at the time – I now believe Rao’s and Singh’s hands were forced.  And to give credit where it is due – the idea of reforms started with Rajiv Gandhi, although  the execution of the reforms only started with Rao in power.  There was practically no forex reserve in the country at a time in 1991 that India pledged Gold and got a bailout by IMF. Smartly, the government moved swiftly in deregulating most industries. They did stop short  of making this 100% liberalized – defence, alcohol etc continue to be regulated.

When Manmohan Singh was RBI Governor, Pranab Mukherjee was the FM. All I remember about that time is that they managed to not draw the last installment of the IMF loan that was available to them – which is admirable.  So, essentially Pranab was Manmohan’s boss. Fast forward to the time Pranab was the FM in Manmohan’s cabinet – and Manmohan was his boss, at least in theory. I don’t think he really deferred to the PMO on anything related to Finance.

Manmohan Singh never contested a Loksabha election. He was always nominated to Parliament through Rajyasabha. I think it was a wise move on his Party leadership’s part. He is not a politician – he is an economist and an administrator. There is no guarantee that he would have won an election had he contested. Pranab on the other hand is a career politician.  His genius in politics is at the same level as Manmohan’s is in economics.

His tenure as FM was not the best this time around – especially the retroactive taxation that he pushed through that was horrible , and drove a lot of investment away. Proof of the pudding is in the eating – and that pudding is not sweet any more. The economy is not growing all that much – and a lot of blame rests on the FM. And this is what Manmohan Singh needs to clean up, and in quick time.  When Pranab quit as FM to contest presidential elections, Congress seems to have decided to keep the FM role with Manmohan Singh as an additional responsibility. India needs an economist in that driver’s seat now. This is a great decision.

There are many areas where some action needs to be done quickly. With a coalition ministry, I wonder if there is a lot he can get away with, but here are 4 things that come to top of my mind .

1. Government Spending – this is not a new problem by any stretch. But it is out of hand , and it needs to be trimmed.

2. Tax reform – even if nothing else gets done on this front, the retroactive taxation policy should be killed pronto. Without that, there is no way more capital will flow into India

3. Cutting subsidies – probably going to be the hardest to do in India, especially with elections due in 2 years. There is very little chance that Manmohan Singh will be PM next time due to his age, so now might be a good time to bite the bullet and get it done.

4. Controlling inflation – when some things are regulated and subsidized, and some are not, it is hard to both grow and minimize inflation.  For example – If the LPG and Diesel fuel subsidy goes away, prices of everything will increase overnight. It will take some time for the market to find its equilibrium. On the other hand, if it is not done – growth will be affected.  Hard to balance when election is just 2 years away.

The next 2 years will be interesting to say the least !

 

 

 

 

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Shelf life of innovaton


To begin with – I wonder if someone will argue with me if I just say “there are only so many original ideas in this world”.  I am sure someone would – I can think of a few people I know on social media who hold a different view. In any case – I firmly believe original ideas are limited.

But is innovation a term to define an original idea? I am not sure – partly because I am not a scholar in English language.  I cannot draw a firm difference between invention and innovation when it comes to an original idea. The idea of invention and innovation is to improve something in general.

If someone comes up with a cure for cancer – we will probably call it an invention. And when the next person comes up with an even better way to cure cancer – it gets called an innovation, or less charitably – an improvement. And the judgement passed on this is not done by the cancer patient who got cured or the doctor who treated the patient. It will be done by authors, analysts, scientific community etc – all of whom are a degree or two or more separated from what actually happened. Whether we call it invention, miracle, innovation, minor improvement or a waste of time and money all depends on the eye/tongue/keyboard of the beholder.

What is innovation then?  It is a comparison to status-quo, isn’t it? If I do something better today than yesterday, I have done some innovation. But will anyone other than me agree that it is innovation? Should I wait to call it innovation till I find a few more people to agree with me? If making money is key – then yeah, I suppose a few people should agree with me. These should be buyers, people who influence buyers etc.  This also explains why vendors shout out about innovation before any customers benefit from their wares. Good for them.

What is forgotten in this dialogue (err..monologue since I am the only one “talking” here now) is the time dimension of innovation – or more accurately, the shelf life of innovation.  So I and a few others get to agree that what I just produced can be called innovation.  And someone is willing to pay money to get it. As time progresses, I keep tweaking my product (to keep getting some money to earn a profit, to fund new projects, to go to Australia to watch a boxing day test match and so on) . Will each tweak be called innovative? Or because I did innovation once, will I continue to be known as an innovator?

From the money point – there are two ways I can make money. I can charge money for tweaks by charging a maintenance fee (the type SW companies do) or I can bring a new version every now and then and convince customers to (optionally) pass down old ones and buy new ones (like car companies, Apple etc do).  As a customer, I prefer the former model where I get everything I need for a smaller price tag every year, as opposed to spending money (equal to or more than original investment)  again to buy the next version.  Companies who charge a maintenance revenue are tagged with “improvements” and companies that make you buy the new version all over again are tagged “innovators” or even “inventors”.  Am I the only one who thinks this is strange?

For me as a vendor – if making money is my prime objective, the latter model is probably better.  Of course I cannot do this one product – I will need a portfolio of products so that no one product can sink the ship if it fails to sell. I also need a brand that holds significant value and loyalty. Car companies and Apple have proven that this is a workable model. I have several friends who have bought iPads every time Apple had a new model. I also know many friends who for generations have bought Chevy, Ford or BMW.   I don’t have any friend who buys cars from Chevy, Ford or BMW every time there is a new model though 🙂

This model is rarely seen in software side. The successful companies like IBM, SAP, MS all have made excellent software – used by millions of users for their daily jobs. Their solutions have long shelf life. And they charge a maintenance fee to provide improvements and support over time.  They also come up with new solutions that fetch more upfront money than the annual maintenance.  But since they don’t make people buy new models every few months – they almost never get any credit for innovation like Apple from the analyst/blogger community.

The criticism on”incremental-ism” is not without merit – customers are not always given sufficient “big enough” changes all the time. Vendors need to address that. However – it is not as if customers use what is available already all the time either. If I take SAP as an example – very few customers take time to find out what is available to them in Enhancement packages that they can use to improve their business process.  And only a few go on all the way to implement it unless forced by laws and regulations etc.  Vendors know this – so they strike a balance on how much they will improve existing products vs invest in new ones. Of course when they come up with new ones – there are people (like me) who will question its maturity.  There is no easy answer here.

One last thing – adding “disruptive” to innovation. I believe this idea of “disruptive innovation” came from Clay Christensen.  I do agree it is a neat idea. Where I differ from some other people is the frequency at which disruption can be done without losing efficiency of doing business.  I cannot get my head around the notion of a business surviving technology disruptions every year in the name of innovation. But listening to some experts on the topic – and resisting the temptation to name names – I constantly get this feeling that they expect customers to be friendly to this idea of constant change.  I know a CIO who had to fight more than a year to convince his company to let go of on-premises MS office and go to a cloud based office 360 solution. I doubt he can fight 5 such battles a year.

Just when I was all tired about the innovation – I spoke to an ex-colleague on phone. He says that the need to be innovative is so yesterday. His company is now moving on to be inventive.  That is the new cool kid now it seems. At least can we go back and talk about “Synergy” or something again , or is retro not cool anymore either?

 

 

Happy First Birthday SAP HANA !


So on Monday, Hana celebrates first birthday ! I will be in Palo Alto to be part of the celebration.  It is amazing that one year has passed since the GA announcement came for HANA. Looking back over the last year, SAP can definitely be proud. They put their heart and soul into it – from Hasso, Jim, BIll and Vishal to all the way down the labs and sales organization hierarchies.

I have had many discussions with Hasso and Vishal on Hana in the past couple of years. Their passion is infectious – and they have an excellent vision on where Hana will take SAP to.  Vishal has a rockstar team – and I know most of them, and that talent runs deep many layers down the hierarchy. Engineering for Hana is definitely in good hands – and as time progresses, it will only get better.

Hype or not – last year showed  the power of good PR and marketing. Jonathan Becher deserves major kudos for this. Same goes for the global communications people under Hubertus Kuelps and Mike Prosceno. Without their extreme effort, Hana probably would not have had the coverage it got amongst analysts, bloggers etc. The power of social media was fully utilized for HANA – probably more than any other product before it.  It is now in a state where if someone has a question about HANA on twitter, some one from the ecosystem can clarify most of the times without needing an SAP person to jump in.

On the sales front – they got the best GM for the job in Steve Lucas. He is a solid leader and an excellent communicator, and is supported by an amazing team. They are going all out to sell Hana to customers. And from what I have seen – they have all the support from Enslin, Poonen and other big executives.

SAP also got around to enabling HANA developers on the cloud. That is a great step in the right direction. Another thing that excites me a lot is the set of Hana start up companies that SAP is supporting. Again – a great step.

The one area I am not equally happy about is SAP education for HANA. I saw somewhere that 2000 people are certified. I seriously doubt even if half those people can hold their own in a HANA project. Education needs to keep pace with product, not lag it . Parts of SAP like the CSA team have done a fair bit to help partners keep pace, but that is not sufficient. If education does not contribute in a significant way – several of those projects that start now will end in disasters next year, and none of us want that. I was extremely happy to talk to Marcus Schwarz few days ago. He is the SVP leading SAP education. He understands this better than me, and he is doing all he can to turn this around.

Last I heard , they have about 350 Hana customers and about 140+ live installations.  That is not bad for a product that is only a year old by any stretch. The question is how much of acceleration will Hana see in 2012 and beyond? Will it be what moves the needle for SAP in a big way in terms of  revenue and profit?  I am cautiously optimistic.

Hana works now as one of the possible databases for BW.  There are apparently something like 17000 BW installations around the world.  If half of these customers will switch their databases to hana – that itself will make the investment SAP made in HANA worthwhile.  But that is not easy to pull off for many reasons

1.  Other DB vendors will do all they can to prevent erosion of their instal base. And they are all bigger companies than SAP with more money to throw at communications and product development. Interestingly, they are all good partners of SAP too. So it will be a fun dance to watch from the cheap stands.

2. Not all BW installations have the prospect for a big sale due to size of DB. So SAP will need short sales cycles to get them to act. This is not easy in several cases since SAP has not actively sold BW in the past. I haven’t seen a lot of SAP sales people articulate value of BW on HANA in a convincing manner.

3. Kind of related to above, and it is about SI partners. Despite the top leaders trying their best – partners have not really had a significant role in HANA yet. Unlike SAP themselves, SIs have articulated BW before and this is their game. By not removing the hurdles for SIs, SAP will slow down the uptake of HANA as a BW database. This is changing, but not at a pace I would like to see.

4. Although I have no real idea why – it was clear this past week on twitter that several people, including some SAP Mentors and big customers of SAP, still think HANA replaces BW.  Steve Lucas posted an excellent blog, and I wrote parts of it. https://www.experiencesaphana.com/community/blogs/blog/2012/06/13/does-sap-hana-replace-bw-hint-no but that did not seem to help since questions keep coming on twitter. I also did a podcast with my DSL buddies on this topic – http://dslayer.net/dslayer/view/130-big-data-hana-vs-iq and guess that did not help either . I guess this will not get solved easily when SAP influencers themselves are not clear on the details.

5. Some of the HA questions did get answered after Hasso’s keynote showed a live demo. But there are plenty of people who need more convincing on data center sturdiness of Hana. SAP needs to step up its efforts big time on this front – and fast.

6. SAP also needs to articulate the IQ vs HANA some more. Generic statements doesn’t help. Listen to the podcast link above and listen to Clint and the DSL guys.

By end of this year, SAP will announce ECC running on HANA in some form.  On the sales and communication side – SAP will hopefully manage to fine tune its act with BW so that they can go all out for ECC. In my view, ECC on HANA is not a big deal really for customers. Not everything in ECC will benefit from having HANA as the DB. Some long running batch jobs etc might improve – but I cannot imagine the majority of ECC functionality benefiting from HANA. However, for HANA to gain credibility as a pure database compared to Oracle, DB2, MS etc – it needs to work on ECC. And for that reason – I think it is necessary for SAP to get HANA on ECC right.

Finally the quest for the killer apps continue. BPC on HANA so far is the best application I have seen, and that will evolve more with time. But given the developer and start up enablement – I hope this is just a temporary issue.

So – Happy First Birthday SAP HANA ! I am looking forward to celebrating with everyone at Palo Alto and Monday, and many happy returns of the day.

 

SAPPHIRENOW 2012 – View from the top, with Joseph A Bellissimo of IBM


In my last post, I had included 2 videos I did with John Leffler of IBM. This time, I am including a short video with Joseph (Jay) A Bellissimo .

Jay Bellissimo is the Managing Partner of the Global SAP practice at IBM Global Business Services.  He grew his career up the ranks via the technical path. He started in COBOL programming etc back in the day, and was a strong expert in SAP Basis from early 90s. He ran the COE for SAP when it was first founded. As he progressed in his career and became a Partner, he started taking up several business leadership roles including Geographic, Sector and Service Area ones. Jay has a truly international career – and has spent many years living in different countries and working with our global customers in various industries.

A lot of SAP technical consultants , including me at some point too, have wondered if there is a future for them in this field. People like Jay and Chuck Kichler (our CTO – and with whom I am planning to shoot a video soon) are prime examples of folks who had successful careers by taking the technical route.

I caught up with Jay right after the keynotes, and my friend Kris Ferrari shot this with her flipcam inside a conference room in the show floor. Huge thanks to my buddy Dennis Howlett for his editing expertise. I enjoyed the conversation a lot, and I hope you will find his perspective valuable too.

 

SAPPHIRENOW 2012 – Interview with John J Leffler of IBM


Added: 1/6/2015 John Passed away on 3rd January, 2015 in an unfortunate accident, while vacationing with his family. My tribute to him can be found here https://andvijaysays.com/2015/01/05/rest-in-peace-john-leffler/

Most of you know that I work at IBM. IBM is probably the biggest partner of SAP globally – on Hardware, Software and Services. I have spent a good part of my SAP consulting career in IBM Global Business Services, and I have several mentors who are IBM executives. I have looked up to them for many years, and have derived a lot of value from their insights. I was curious to see if these folks would be open to share their perspective with the larger ecosystem so that a few others can get the benefits that I got by listening to them analyze the SAP market, and explain their views on career growth. Of course there is an aspect of IBM getting some potential good press as a result, which I don’t deny for a second.

I reached out to one of my favorite leaders – John Leffler, to see if he has an interest in such an initiative. He agreed in a heartbeat, and we decided to shoot this while we were at SAPPHIRENOW 2012 in Orlando, FL. Kristina Ferrari , another IBMer and dear friend volunteered to shoot it with her flip cam.  It is an unedited version – and an amateur production 🙂

John Leffler is the Managing Partner for IBM’s North American SAP consulting  practice and takes care of our relationship with some of the top customers globally, and used to run the global practice till very recently. He has been in the SAP field longer than any one else I know, and has seen the SAP consulting market evolve from its first days. John grew his career from being a functional consultant, and then as Project manager and then a regional leader and about 12 years ago, he started leading the whole practice across the world.

John is big about differentiation in the market – and hence he readily throws all his weight behind the innovation agenda of our SAP practice. I can vouch first hand how much support he has given to the practitioners who explore innovative ideas in the realm of SAP solutions. John is a great supporter of co-innovation between SAP and IBM, and have actively sponsored several such initiatives in the past.

So without boring you any more with my commentary, here is the interview . Let me know what you think. If you have questions for John, let me know and I will try to find answer.

Here is a bonus video where John and I discuss how to develop an SAP consulting career in IBM. I originally shot this right after the video above for my colleagues in IBM’s SAP practice. But I thought there is enough material in this to pick the interest of folks outside IBM too.

I am planning to do a few more of these with IBM and SAP executives going forward, if I see an interest from you folks.

If it is not thanksgiving day, will you not say “thank you”?


Or conversely, if you say “thank you”, does it mean you are celebrating “thanks giving day” ?

I am jetlagged – and this is the thought that strangely came to mind today morning as I was on my 3rd cup of coffee. I attribute it to a bunch of emails I read yesterday night, and a few phone calls I attended today morning. You know who you are – and you are responsible for what follows in this rant – for good or bad.

Totally rhetorical question for most people – and I hope none of you who read this fall into the minority who will answer differently from the rest.  Yet, most of us to some degree are hung up on certain days to do certain things.

When I first moved to US for my job – my manager was a French guy. Few days before thanksgiving – someone asked him at lunch on what was his plan for thanksgiving. His reply was ” You know I am French, right? . We don’t need a specific day in the year to say thank you ! “.  He wasn’t joking – and the guy who asked the question really felt bad. Totally awkward for me sitting at the same table.

When I grew up in India, there was no such thing as celebrating father’s day, mother’s day, valentine’s day etc. We did have Christmas, Independence day etc.  Now – I see Indians celebrate valentine’s day et al the same as US and other countries. But not having grown up in a time when this was a big deal – I find it hard to feel anything special on these days. I call my parents every few days and meet them as often as I can, and hence have no reason to remember when Father’s day or Mother’s day is. However, my daughter who was born in US and goes to school in US is growing up believing it is a very special day – and of course I humor her and play along.  It is fascinating to say the least watching how 2 people of Indian origin – me and my kiddo – have such diversity of perspective.

There is an economic aspect of this that should not be lost on us. Companies that do their business based on sales of Greeting cards, chocolates and flowers probably make billions of dollars every time such a “day” is celebrated. And they do a good job with advertising – I have seen the impact it has on my own little daughter. These companies have successfully bred a sense of guilt in her that it will be terrible if she doesn’t buy a card or a chocolate for daddy and mommy on these days.  I am ok with it as long as she does not get an idea that the only day she needs to think of daddy and mommy are on father’s day and mother’s day.

On the work front – the thing that gets my goat in a similar manner is the abuse of the word “innovation” . There is no limit to what companies do to proclaim to the world that they are innovative.

Why is it difficult to admit that there are only so many original ideas in the world, and that if every one had such ideas – no idea will have a marginal utility bigger than others to qualify as innovation? By all means try to find the next big idea – please don’t stop doing so, but please please try to resist the temptation to shout out at every step of the way that “we are innovating”.  No – you are just working, whether it is an innovation or not will be known after the fact when customers get to judge it.

I have long held the view that the only folks qualified to judge innovation are customers – not vendors, and not analysts, and not book authors, and not me. It is not innovative if customers don’t attest it as such.  And hence I would love to live in a world where vendors do not talk about innovation happening in labs, and where bloggers and authors and analysts don’t get all high and mighty and start judging what is innovative and what is not.

I also believe strongly that innovation should not be confused with being new. It is not as if innovation started 2 years ago – and hence any thing old is not innovative. To my mind – if something has withstood time, it is extremely innovative.  I think it is beyond stupid when people say things like “how much of this company’s revenue is coming from new products”. What world do these people live in?  If innovation needed to be new – you would have thought that the poster children of innovation such as Google would have moved past income from search and adwords, Apple from ipods and Macs, and so on. Also, who are we to say if innovation is earth shattering or incremental?  If I did not open up games that have higher resolution – I would not be able to differentiate easily between last 2 versions of iPad. Does that mean the latest iPad version is not an innovation? No – it is innovative, since customers bought plenty of it.

One last rant on innovation before I brew another kettle of coffee.  What is the deal with “innovation days” ? So Google (and 3M before them) had an idea that one day a week should be devoted to pet projects. Good for them – does that mean everyone else who tried got a big benefit? did aping that make any one else a lot more  innovative? How did it work for Google itself – did it open up avenues whereby other streams of revenue matched or came close to the money that the search business brings home?  And what has company shouted from roof tops that “we are doing ( choose one or more from <open, closed, terrific,…>) innovation ”  and then followed up with something customers agreed was innovative?  The ones we celebrate as innovative – at least as much as my jet lagged memory can be jogged – have never announced before hand that they are innovating.

And that is it – I need that 4th cuppa NOW !  After that I need to work on the innovation agenda for my new role 🙂