How to contain inflation?

Inflation is a common phenomenon experienced by every country in the world. This phenomenon is acceptable as long it is there in the limits. When it grows beyond the limits, it has serious implications on many things. Particularly millions of common people in developing countries are effected. Governments round the world should take proper measures to prevent this evil force from rising its ugly head.

Inflation in India is currently hovering around 12.5 %. Many times Government of India in unison with Reserve Bank of India has taken many measure to contain this. Even then, unfortunately it is growing. There are two types of indices in India used to measure inflation. They are Consumer Price Index (CPI) and wholesale Price Index (WPI).

Growth in inflation is attributed to availability of excess credit in the market. Government was under the impression that if the excess credit is removed from the market, Inflation will be contained. Increase of Reverse-Repo rate is one such measure to remove excess credit from the market (For definition of Reverse Repo rate, go to comments). There are many instances where RBI has increased this Reverse-Repo rate during its periodic review. In the name of this, every bank has increased the interest rates on the money lent by them. As a result of this, one thing that has happened for sure is the EMI of the loans (particularly housing loans) has increased by 50 to 70 %. Inflation continued to rise. Does this mean that government does not know the root cause for inflation? or the quantum of increase in Reverse-Repo rate is not sufficient to contain inflation?

Inflation the un-flattener...

Thomas Friedman said that 'The world is Flat' . He explained the ten flatteners in his book. One of the ten flatteners being the Outsourcing and offshoring. The prime motive that aided the growth of outsourcing and offshoring is cost cutting. The outsourcing has caused backlash in USA. Benefits of outsourcing are so strong that media rating agency Nielsen forgo the tax breaks provided by Florida state government.

Inflation - the Un-flattener...
The reason for cost difference is mainly because of the availability of cheap labor in countries like India, Philippines, Mexico, China etc. India is known to outsourcing destination. Inflation has increased the cost of living around the world. This increase in cost has narrowed the cost difference between US and outsourcing destinations.

The other day i read an article on how inflation has changed the business dynamics of furniture business-owner. He used to purchase raw material in one country and have it shipped to a different country, where the product is manufactured and shipped to United States. Of late, because of inflation the difference of the cost for producing it in United States and else where in the world. He now started producing it in United States.

Also, some of the major banks in Europe who outsourced their IT work to India and other countries are now toying with the idea of having work transferred to Europe. Is the world un-flattening?

Beauty of IT Industry… Prepares people to face change and not run away from it…

Every project that you deal is unique in its own way. Though every company has a broad strategy in place to deal with projects, they have to tweak their strategy while dealing projects individually to to cater unique requirements of each project. The topography of the industry is very rough because of competition from other service providers.

Previously projects use to last long. Vendor's job in that case was relatively easy. Once it bags a project it can guarantee revenue for good amount of time. In the present day, a big project is broken into pieces based on functionality, technology, phase of project etc. These pieces are awarded to vendors who are specialists in their domain. This way they will be getting the best product by combining the best of all.

In the current scenario, vendors should be more watchful and see the project does not over run in terms of budget or schedule. To ensure this, every company needs to develop competency in every aspect of delivering a project.

These days, because of fragmentation of big Projects, each project lasts for relatively short time. Bagging a project will only guarantee revenue for a short period. To sustain revenues for a long time, companies should constantly win projects and deliver projects successfully. Winning projects constantly demands changing the strategies frequently to meet the need of the hour.  If the strategies are not changed, then they are lost in the evolution. Because of the short-term projects, companies need to change their strategy very often. This makes people working in IT industry face any change. Change is always draconic.

Of late, every industry is experiencing this phenomenon of fast change. Every industry needs people who can face change and not who can run away from change. They definitely look for people who have deftly handled change. I am sure all other industries look for people with IT background in future.

Teradata, Netezza, The HP Oracle Database server…

Traditionally a query was processed sequentially. As the need for trend analysis grew, it is required to query tables with large volumes of data. As a result these queries took longer time. With the use of the various optimization techniques, the query processing time was reduced. But by the time we rejoice the benefits of this improvement, volume of data to processed increases and we are back to square one.

A typical Data warehouse contains large volumes of Data. Traditional oracle database could not handle this data. Oracle 8i, 9i, 10g etc. are designed for better performance of transactional system. I see that off late companies started using Teradata, Data Allegro, Netezza etc. for implementing their BI solution.

What makes Teradata different? Parallel query processing, fallover mechanism, distribution of data across AMPs makes it process query parallelly and return results in less time.

Is this the end? Reducing the query process time is always a good thing to cheer. Oracle’s claim of The HP Oracle Database Server being fastest on earth is a good news to big organizations with large BI environments. The system consists of

How is the query time reduced? Data is stored in the form of blocks on the hardware. When database processes a query, it fetches all the data blocks from the hardware and then processes the query. When the size of the table is huge (which is typically the case with BI solutions) lot of time is taken in transferring the blocks from hardware to database. Oracle bypassed this part and instead took the query to hardware and processed it at the hardware level. The end result is then passed to database. This results in saving the time for transferring data blocks from hardware to Database. This makes Oracle Exadata database as the fastest database in the world.

Architecture of The HP Oracle Database server: There will be three grids, grid of Database, grid of Fusion middleware and grid of storage servers. The connection between the storage server and DB is infiniband pipe as that can practically transfer data at 1 GB/sec.

Importance of cost-cutting for an organization

Importance is explained with the help of an example. A company XYZ Ltd. has a revenue of 100 units with a profit percentage of 10 (Profit = 10 units). Let us say the company saved 1 unit as a result of minimal saving measures. Now the total profit is 11 units.

To have the same increase in profit by doing more business, the business has to be increased by 10 percent. Increasing business will require a great deal of overhead and increase of expenditure. Increase in profit through cost-cutting is a simple process to show increasing margins.

In cases where the markets are saturated, increase in business will be lot more challenging. It requires extensive work on the organization's part. Under such circumstances, simplest way to show increase in profits to wall street is to implement cost-cutting measures.

Save more for better tomorrow…

Importance of Persuasion…

Persuasion is important art. We use it in many ways in our daily life. A salesman persuades customers, team member persuades customer, a boy persuades his girl-friend etc. I will be talking about the use of this technique for business persuasion.

People into field of sales know the importance of Persuasion. Many times customer may not be interested in listening stories about our product. As a salesman one has to initiate thought process in customers’ mind about the product. This is the first step in the  process of persuasion. There are many other steps that has to be followed to persuade the customer successfully. They are mirroring the customer, timing etc. These are well explained in the following article.

Persuade with Subconscious techniques

Fall of Markets…

Central banks of Europe, Canada, Japan and US have infused 300 billion dollars into market to address the fall of major banks. The noble acts are not gaining the confidence of the investors. Governments should hear the voice of investors. They should come out with a detailed estimate of the damage and remedies to correct the damage.

As Fed chairman Ben Bernanke told, it is time for the Congress to take a serious look at the issue and act promptly and proactively. Billions and Trillions of investors’ wealth is at stake. Crude prices are retracing the growth trajectory, depreciation of dollar. It is high time for governments to take stern action and gain investor confidence.