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pratibimb

Volume - 1, Issue – 1 December, 2010

Student’s
Initiative
Editor’s Corner

Editor
Rahul Garg

Co-Editor
Rohit Kumar

Creative Designer
Sulagn Patanaik

Members
Anupam Chaplot
Hima Sachdeva
Khushal Puri
Preetha D.
Varun Sunil

2
CONTENTS

MARKETING
Ambush your way through
Ankur Gajjaria | TAPMI 4
nteractive Branding
Paritosh Kashyap | TAPMI
19

INTERVIEW
Rashmi Bansal, Author of Stay Hungry Stay 10
Foolish

FINANCE
Review of the Basel II system in light of the 7
global financial crisis
Girish Shetty | TAPMI

Pair Trading
Sulagn Patanaik | TAPMI
29

SYSTEMS
Email Day
Madhusudan Rao | AVP, Mahindra Satyam 9
Potential of e-Judiciary in India
Mayank Saxena
15

Cloud Computing 26
Rahul Garg | TAPMI

HR
Leading through learning in crisis
Priscilla Nelson and Ed Cohen 11

OPERATIONS
Just in time training systems 23
J.Krishnan | TAPMI
3
Contents

Marketing Finance Systems


4 | Ambush your 7 | Review of the 9 | Email Day
way through Basel II system in
light of the global 15 | Potential of e-
Judiciary in India
financial crisis

29 | Pair Trading

19 | Interactive
Branding

26 | Cloud Comput-
Interviews ing
HR
11 | Leading
through learning
in crisis

Operations
10 | Rashmi Bansal,
Author of Stay Hun- 23 | Just in time
gry Stay Foolish training systems

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Pratibimb | Nov. 2010
Marketing Mania

AMBUSH YOUR WAY THROUGH


Ankur Gajjaria | TAPMI

Building up to the start of the FIFA World attach themselves to a desirable property or
Cup 2010, Nike (30.2%) had more than event. When effectively performed, ambush
double the share of buzz (references to Nike marketing can confuse the customer and
in online English language messages related to makes them mistakenly associate the non-
the World Cup) than its closest competitor sponsor with the event/property, thereby di-
and rival Adidas (14.4%). Carlsberg (3.9%) minishing the benefits of sponsorship for the
had created almost four times the buzz related official sponsor of the event.
to the World Cup than that of its competitor

Budweiser. Moreover, Nike and Carlsberg


Who does Ambush Marketing?
were able to achieve these heights even though
they were competing against the Official part- Usually Ambush Marketing is done by the
ners of the World Cup. So how did they competitor of the official sponsor of the
achieve this amazing feat? All this was possible event. It was referred to as ―Parasite Market-
only due to the unique marketing strategy fol- ing‖ by John Bennett of VISA, referring to
lowed by these two companies – Ambush the ambush efforts of American Express Com-
Marketing. pany. Nike did it to Converse in 1984 Olym-
pic Games, so did Qantas to Ansett Australia
Ambush Marketing
in the 2000 Summer Olympics and Wendy‘s
So what is Ambush Marketing? Ambush Mar- implemented the same to the McDonald‘s in
keting represents efforts by non-sponsors to the 1994 Olympic Games. Like a parasite,

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Pratibimb | Nov. 2010
Marketing Mania
Ambush Marketing also associates itself with did this in the Los Angeles Olympics when
an unwilling host and takes nourishment from Fuji Film was the main sponsor) or another
it. It has been described as clever, innovative, sub broadcast of the event like the highlights
upstaging, unethical, devious, deceptive and or the replays.
cunning by various experts. But there is one
Consumers are not offended by products that
thing common to all the Ambush Marketing
ambush during an event
efforts that have been mentioned above and
many others – It works! A study on New Zealand students has found
that consumers do not get offended by am-
Why is it done?
bush marketing being resorted to by brands
There are 3 main reasons due to which com- that already have a strong association with the
panies resort to ambush marketing: main theme of the event, like Nike‘s strong
association with football and ―Mars Believe
Rising cost of sponsorships
Campaign‖ for the 2006 World Cup. On the
Adidas spends more than $125 million every other hand when brands that do not have any
year for sponsoring the FIFA Global deals and relation to the central theme of the event try
the top six teams in world football and these to associate themselves indirectly with it; they
costs are increasing every year. So all the can lead to negative reactions by the consum-
brands that are not associated with the official ers because such brands are perceived like hav-
event try to jump onto the bandwagon by us- ing jumped onto the bandwagon without giv-
ing other means to associate themselves with ing it much prior thought.
the event (Nike used a ―Write the Future‖
Changing attitudes within the industry
viral campaign using football stars like Didier
Drogba, Wayne Rooney, Ronaldinho etc. be- Companies have realized that it is almost im-
fore the FIFA World Cup 2010) by either possible to stop competitors that have strong
sponsoring the telecast of the event (Kodak associations with the central theme of an event

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Pratibimb | Nov. 2010
Marketing Mania
from publicizing their relation to the theme World Cup was scored by a Nike shoe worn
and it has now become a game where the ‗Tit by Andreas Iniesta. The good thing in this
for Tat‘ strategy has to be adopted. A state- playing field is that there is ample scope for
ment by an Adidas executive on the efforts of all the competitors for fighting it out to win
Nike to ambush the World Cup Soccer event one battle or the other.
in New Zealand summarized the current sce-
References:-
nario in this highly competitive market, ―They
ambush us; we ambush them‖. 1. Janet Hoek and Philip Gendall, ―Ambush
Marketing: More than just a commercial
Conclusion
irritant‖, Entertainment Law
Ambush Marketing is here to stay unless
2. Joe Thomas, ―Avoiding a Red Card‖,
properly defined laws governing the references
Marketing Magazine 28 April 2010
that a competitor / non sponsor can refer to
an event are brought into the playing field. All 3. ―Do brands risk alienating fans by pro-
the brands will try to associate themselves moting events they don‘t support‖, 9
with the event in some way or other in order June 2010 Marketing Magazine
to gain some mind space of the consumer. It is
4. Matt Townsend and Holger Elfes,
similar to the type of associations that Adidas
―Adidas‘ Big Money defense Against
and Nike did to relate themselves with the
Nike‖, 13 May 2010 Business Week
winner of the FIFA World Cup 2010; Adidas
said that the Jules Rimet trophy was won by a
team that was wearing its official jersey while
Nike said that the final winning goal of the

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Pratibimb | Nov. 2010 Finance Frenzy
REVIEW OF THE BASEL II SYSTEM IN LIGHT OF
THE GLOBAL FINANCIAL CRISIS
Girish Shetty | TAPMI
The recent financial crisis has brought to light calated, it shows that large institutions should
the fragility of the financial system. Part of in principle face more stringent capital re-
the blame for the crisis is directed at the Basel quirements than the smaller ones.
II system which was projected as a modern-
Another new feature of the Basel II system is
ized version of the original 1989 Basel regula-
the principle of ―self-regulation‖ by which
tions, which demanded banks to keep a mini-
large banks with sophisticated risk manage-
mum of 8% of certain assets in capital. The
ment systems can monitor and control their
critique of the Basel II system lies in certain
own risk. An Internal Credit rating system is
features that were introduced as an improve-
used by banks to rate the counterparties of the
ment to the original Basel system; but ended
Bank. The issue with such an Internal Rating
up making the banking system more vulner-
system is that Banks have a bias or would
able.
think twice before downgrading the credit rat-
One of the features of the new Basel II system ing of a counterparty with which they have
is the two-tier risk management system which had a long working relationship. Banks would
is based on the size and sophistication of the have a tendency to overlook a below average
bank being regulated. Although aimed at mak- financial performance because the risk of los-
ing the banking system more stringent, it has ing an esteemed counterparty by lowering the
provided freedom for big banks to leverage credit rating and subsequently lowering the
themselves more than the small banks. As the amount of exposure of the bank with the
recent global financial crisis has proved that counterparty is too high. Many banks have an
market worries regarding large banks have es- Internal rating system which comprises of
qualitative and quantitative factors. Al-
though quantitative factors hardly leave
any room for maneuvering, the major bone
of contention is how the counterparty is
rated based on the qualitative factors.
Here, the rating is dependent on the per-
spective of the person responsible for rat-
ing the counterparty. Although such rat-
ings undergo a large amount of supervi-
sion through the various hierarchy levels,
it would ultimately reflect the rating that
the bank wants the counterparty to have
based on the relationship that it wants to
maintain with the counterparty.

Also, capital requirements of the Basel ac-


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Pratibimb | Nov. 2010 Finance Frenzy
cords are cyclical in the sense that it tends to the application of the Basel II regulations was
increase in a downturn when losses reported limited as many financial institutions deferred
by a company are common occurrence. This the application of the framework to 2008.
acts as a handicap to the companies in terms
In response to this, the Basel committee has
of lending which in turn impacts the liquidity
revolved around implementing steps that
in the financial markets and thus acts as a trig-
would focus on strengthening the resilience of
ger point towards a financial downturn.
the Banking Sector and also work towards an
The Global financial crisis has exposed the International framework for liquidity risk
inherent deficiencies in the Basel accord but measurement and global standards for moni-
the true extent of the contribution of the sup- toring counterparty credit risk. It is also im-
posedly flawed Basel II regulations towards portant that the Central Banks work together
the global financial crisis cannot be estab- towards these improvements in a cohesive
lished because the implementation of Basel II manner so that global framework regarding
has not been done in a uniform manner across regulations can be established that can prevent
all markets. The process of implementation in such a crisis in the future.
the United States was slow and was intended
to complete only around 2010. In Europe,
due to the onset of the Global financial crisis,

Inviting Articles
“If there's something you want to read, but it hasn't been written yet, then
you must write it.” -Anonymous
Typewriters have replaced pen, computers have replaced typewriter. But
the power of words still sustains because it is not dependent on the technol-
ogy but the acumen of person who write them. Here we invite all the best
brain from various b-schools to come and showcase their knowledge and
acumen.

The articles can be on any field of business from Marketing, Finance, Op-
erations, HR to Systems. You can send us articles on:
Recent developments or trends in any of these fields.
Articles covering latest trends, innovative practices, strategies etc. in
the global perspective.
Apart from above, creative works in relation to any of the fields will
be equally appreciated.

The best entry will receive a letter of appreciation and a cash prize of Rs
1000/-. The format of the file should be MS Word doc/docx.

The last date of receiving all entries is 15th November, 2010. Please send
your entries marked as <ARTICLE NAME>_<SENDERS’
NAMES>_<INSTITUTE> to:

9
Pratibimb | Nov. 2010
Systems Corner

EMAIL DAY
Madhusudan Rao | AVP, Mahindra Satyam

On the day of 27th March, observed through- fact not required to be resolved by you, if the
out the world as Earth Hour, I feel there is a person responsible for the task explained in
necessity for all professionals to observe an the mail has done his job properly.
eMail Day. Why?
Agreed that there cannot be a perfect environ-
All those who have an email must have defi- ment – people differ and their performances
nitely noticed spam in their email. This is usu- vary. But, what is required is the simple execu-
ally mails from individuals who want to try tion of one‘s responsibility. If each individual
and inject harm (in any way possible) to you takes it upon himself to ensure that he carries

or your email-account. out his role (especially the tasks in his con-
trol) to the best possible extent, the number
But, what I am trying to highlight here are the
of emails that officers at higher levels receive
mails sent by those whom we work with in
will automatically decrease.
our organizations. Those who might be re-
porting to us or those whom we need to work In fact, this article talks about including Email
with for a common purpose. Audits in one‘s appraisal. Wonderful idea!!!
This is a must for all office-going people. As
What I have noticed and I am sure this will be
the number of emails and the storage require-
your experience also – mails keep coming at a
ments increase, the number of administrators
fast pace (the higher you are in the organiza-
to maintain the systems should also increase.
tion and the larger team you lead, the more
mails you receive) - in the eight hours (or If we do not control our usage, I am sure in
more) that you spend in the office, you will the next 1-2 years we will be soon conducting
spend almost 60% reading & responding to an eMail Day the very way we are doing the
mails. I am sure most of these emails are in Earth Hour today.

10
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Pratibimb | Nov. 2010
Interview

RASHMI BANSAL
Author of ‗Stay Hungry Stay Foolish‘

1. Share with us some unforgettable mo- son? Is MBA over hyped


ments in your journey right from being a or recession has made
graduate from IIM A to the youth icon as the glow to fade away?
well as bestselling author.
MBA is a stepping stone
Every moment in the journey of life is to be and not an end in itself.
cherished. But, some which stand out in my That's what bschoolers
memory: should always remem-
6th Aug 1989: My first article was published ber. What is your goal after MBA? What is
in 'The Indian Post' newspaper your motivation, beyond money? What is
6th Dec 1992: I decide not to take placement your contribution to society? Only if you an-
after attending the ERI (Exploring Roles & swer these questions will you have a satisfying
Identity) course at IIMA and outstanding career.

15th Aug 1995: First edition of JAM maga- 4. Can entrepreneurship be taught in MBA
zine is launched at Malhar, St Xavier's college colleges?
festival
Definitely students can be exposed and en-
19th Aug 1999: My daughter Nivedita is couraged to the idea. If not immediately after
born passing out, this will induce some to take up
2nd July 2009: 100,000th copy of Stay Hun- entrepreneurship a few years down the line.
gry Stay Foolish sold
5. How easy/difficult it is to follow the likes
2. Writing books requires lot of patience and of Kalyan Varma (who quit Yahoo to pursue
many lows and highs comes during the jour- his interest in wildlife and photography and
ney. This can be termed equivalent to a high discovered a love for nature and conserva-
position in the organization. What are your tion), to quit a dream
experiences and how can one overcome these? job and follow your
heart?
Passion and perseverance are the two most
important qualities - whatever you do in life. If you truly believe in
Success is not instant - whether you are in something, you find a
management or a creative field you have to way to do it. You will
grow as an individual, as a professional, to not get sidetracked when
achieve something in life. others call you foolish
because the call within
3. Your first book was based on MBA's but
you is so strong and
this time Non-MBA's, although both focus
clear.
on entrepreneurship. Is there any specific rea-

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Pratibimb | Nov. 2010
Interview
6. An entrepreneur working as manager, is Everyone cannot be an entrepreneur in the
he/she a mismatch? Shall he/she think of sense of starting their own business. But each
his/her own venture and not focus on the ex- of us can treat the job we do with a sense of
isting position? complete responsibility and ownership. That
will create its own magic.

Beat the Market


To invest or not to invest, that is the question that always haunts investors. The stock markets are
too volatile and it‘s not easy to predict the movement of stocks. To reduce the risk and to increase
the accuracy of their decisions investors look forward to stock analysts.

Here in ‗Beat the market‘ we give you an opportunity to prove your mettle in stock market analysis.
You have to pick any 2 listed companies from BSE and analyze their stock movements till 12 th of
November. On the basis of fundamental and technical analysis you need to give us your share price
estimate of these two stocks on 26th Nov.

Prize Money, Criteria

Rules:

You can pick any stocks but the stocks should be from different industry

You need to send the details about the stock you pick and your analysis in a PDF file

You need to send us file by 23:59 PM, 14th November, 2010

You may analyze in a team of not more than 2 members

The file should not be more than 5 pages long including cover page, the cover page should
contain the team name, team members name, Institute name, contact number

Format of file name should be BTM_<TEAM_NAME>_<INSTITUTE_NAME>

Mail the file at <email_id>

12
Pratibimb | Nov. 2010
HR Buzz
LEADING THROUGH LEARNING IN CRISIS

Priscilla Nelson and Ed Cohen | Adapted from their new book,


RIDING THE TIGER: Leading Through Learning in Crisis, pub-
lished by ASTD Press, May 2010

Priscilla Nelson is President and CEO of American Society for Training and Develop-
Nelson Cohen Global Consulting (http:// ment ranked us number one in their annual
nelsoncohen.com). While at Satyam she 2007 BEST Award list of companies. We
was Global Director of People Leadership. were the first organization outside of the
United States to receive this honor; and we
Ed Cohen is Executive Vice President of had journal articles, numerous interviews, and
Nelson Cohen Global Consulting (http:// keynote presentations and requests to add to
nelsoncohen.com). While at Satyam he was our beautiful canvas of success.
Chief Learning Officer. Then, without warning our canvass was taken
from us. Our dreams were shattered in an in-
stant. We watched as our Taj Mahal of learn-
The canvas we were painting was a collabora- ing began to crumble. On January 7, 2009,
tive effort, a true partnership. We were part- Ramalinga Raju, the Founder and Chairman
ners in developing world class leader. Our of Satyam Computer Services disclosed the
inter-and intra team diversity made us actions that would cause our company‘s fall
stronger, with team members from Nigeria, from grace. Those of us who were sharehold-
Germany, Greece, Columbia, Sweden, the US ers saw our investments disappear like a tsu-
and of course India. We all learned from the nami into a pool of financial destruction. We
contributions from one another and blended all looked on in disbelief as the news emerged.
our diversity of thought, diversity of culture Up to that moment, we were all immersed in
and diversity of ethnic origin, to find the planning and delivery of learning.
strengths of each which contributed to the
whole. We knew we were part of something There we were, close to 50 of us huddled in
really big. The vision for learning as a strate- this small conference room, watching the tele-
gic differentiator was clear. Possibility and vision, shocked beyond belief. The screen
probability filled our canvas. The path was displayed a photo of Ramalinga Raju on the
unobstructed…or so we believed. It was hard right and a graph depicted the falling stock
work; we put in long days and even some eve- price on the left. The value of our stock
nings and weekends. We‘d had measured sig- plummeted in less than five seconds, drained
nificant business impact and had won numer- like an hour glass with the grains of sands
ous international recognitions. We created pushing to the bottom. The reporter began
best practices and next practices that were be- reading the letter.
ing proliferated to diverse industries all over
―It is with deep regret, and tremendous bur-
the world, and were the masterminds of a new
den that I am carrying on my conscience, that
model to build global leaders faster. The
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Pratibimb | Nov. 2010
HR Buzz
I would like to bring the following facts to iconic brand of ―India is IT‖. Putting the
your notice.‖ We watched in disbelief as the scale and impact of Satyam‘s downfall in
news emerged. The letter indicated that for proper perspective was The Economist‘s cover
the most recent quarter ending September story ―India‘s Enron‖; Business Week Maga-
2008, the bank balances had been overstated zine featured Raju on the cover with the head-
by close to USD $81M and that there was line ―From Icon to I Con‖.
more than $265M in liabilities not accounted
As an Indian-headquartered organization, Sat-
for.
yam was entrenched in a hierarchical, largely
How could this be true? Just last week there patriarchal culture. Servant attitude was the
had been an article in the paper indicating that norm. Decisions were made by the most sen-
we had an excess of $1.6 B in cash. The re- ior leaders or those with perceived authority
porter continued, ―The gap in the balance due to longevity or seniority with the organi-
sheet has arisen purely on account of inflated zation. Since 2005, a sea-change had oc-
profits over a period of last several years. curred, or so we thought, from this patriarchal
What started as a marginal gap between actual to a consensus oriented leadership culture.
operating profit and the one reflected in the That is until communication from our foun-
books of accounts continued to grow over the der, Ramalinga Raju, diminished in the
years.‖ We later found out this deception has months prior to the fateful confession. Em-
been going on since 2001 and that it added ployees were lost without direction and only a
up to more than $2.5B. What would happen few leaders had the courage to step forward.
to everything we had created, our Taj Mahal
During a corporate crisis, it‘s critical that lead-
of Learning?
ers rapidly and proactively convert emotions
―Every attempt made to eliminate the gap into actions. Everything speeds up—change
failed. As the promoters held a small percent- while constant is even more prevalent. Emo-
age of equity, the concern was that poor per- tions, processes, demands, measures, increase
formance would result in take-over, thereby as more is expected from everyone. Everyone
exposing the gap. It was like riding a tiger, juggles the daily needs of the business, cares
not knowing how to get off without being for the wounded, and concurrently help to
eaten.‖ pick up the shattered pieces. Leaders must
concurrently take care of themselves and eve-
―Under the circumstances, I am tendering my
ryone else. This takes time, patience, empa-
resignation as the chairman of Satyam and
thy, and willingness to shift priorities. Lead-
shall continue in this position only till such
ers need to lead ―out loud‖, be transparent,
time the current board is expanded. I am now
maintain their integrity and be approachable.
prepared to subject myself to the laws of land
and face consequences thereof.‖ After Ramalinga Raju‘s confession, the entire
situation was surreal. We instantly went from
Yet, around the world, Satyam employees
hero to zero. So began the journey towards a
were not prepared to subject themselves to the
new strategy for leaders that included behav-
consequences. Tainted, disgraced, beleaguered,
iors, competencies and expectations to control
scam hit, scandalized, fraudulent, crisis ridden
the damage and rebuild that which could be
were the adjectives used to refer to the once
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Pratibimb | Nov. 2010
HR Buzz
rebuilt. Leaders went on auto-pilot when it talk about where they were when the news
came to business management. However, these first came out. Go out to lunch with your col-
same leaders were unsure of how to handle the leagues, take a walk together, gather in a con-
people and relationship issues. They went to ference room to share stories—togetherness is
work assessing the situation, implementing healing.
customer retention and shoring up the busi-
ness. Their focus on the people and relation- React, pause, and then, respond.
ship dimensions of the situation was far less. The typical reaction to crisis is fight or flight.
It was not due to lack of desire. It was more Each of us must face our own inner and exter-
about the lack of comfort that comes from nal turmoil. Each of us must decide how to
having to communicate, empathize, and sup- respond to what has happened. No matter
port people throughout a difficult time. The your ultimate response, it will be the right one
approach that works best in this situation is as long as it stems from integrity, an open
leading through learning. It is simple and heart, and seeking to understand. No one has
powerful. Leverage learning to assist leaders the right to judge anyone‘s choices.
with the complicated people and relationship
dimensions of the business. Start by develop- Even when you don‘t believe there is
ing a set of leadership guidelines. Here is an much to say, there is much to say.
overview of eight of the guidelines we devel-
Hold daily updates. Even when there wasn‘t
oped to communicate, teach, and coach lead-
much news to report, people still have ques-
ers as they weathered the storm.
tions. They feel connected by being able to
We will NEVER get back to normal. have regular access to their most senior lead-
ers. Even when people are repeating your
Normal? What‘s normal? The organization words to each other and to you, keep commu-
you knew prior to these turbulent times will nicating. This consistent and continuous mes-
never return. Can‘t imagine why anyone would saging will prevent the rumor mill from being
even want to return to ―that normal.‖ Life for able to have any fuel.
all of us will never be the same. Yet, there is a
new road ahead, even though we are yet to Now is not the time for Hide ‗N Seek.
find it; it will be there.
BE VISIBLE. Now is not the time to hide
Find ways to take care of each other. away at home or in your office. Open your
doors, get up from your desk, walk and talk
Look for ways to take care of each other. First with people. Let them know you care. About a
and foremost, express your feelings. Allow week ago, one of my colleagues sent me this
other to express their feelings without judg- quote authored by benami (i.e. I tried to find
ment. Words like hurt, cheated, shock, disbe- out who wrote it and couldn‘t). "They don't
lief, sad, anxious, ―how did this happen‖, and care how much you know until they know
―am I going to lose my job‖ will be spoken. how much you care." Listen, empathize, share
Let them flow. People need to verbalize their your advice, provide words of comfort or just
thoughts and feelings to work through them. be there. Yes, you may be injured; we all are.
Now is the time to come together in commu- As leaders we must be there to inform, com-
nity. Bring everyone together and have them
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Pratibimb | Nov. 2010
HR Buzz
fort and provide strength for others. one works!

Leaders are human too. Take care of your emotional, physical


During turbulent times we all go through a
and spiritual well being.
lot. We are hurt, damaged, worried and that‘s Your health - emotional, physical and spiri-
just the tip of the emotional iceberg. Some- tual - is very important now. Don‘t put any of
times, you may not be at your best. On a re- them on hold. You will feel like ignoring your
cent day, no matter what anyone did, it did own needs, but don‘t. Calm your mind at
not please me and I let them know. You will night and get a good night‘s sleep. If you need
have good moments and bad moments. Re- to talk to someone, seek a counselor or a
member, leaders are human too. If you express coach. Start or continue an exercise routine.
anger or act out as a result of your own tur- Be more mindful of your diet. And, look for
moil, soon as you realize it, apologize and the comfort that comes from following your
move on. Do not beat yourself up or see your- own spiritual path. Continuously remind
self as less than. yourself and your people of this simple yet
profound message, told to us by Howard
Spend time with children.
R i c h m o n d M . D .
Does it seem out of place advising leaders to (www.howardrichmondmd.com), ―Don‘t let
spend time with children during a crisis? Not the news of today undo the successes of yes-
really when you think about it. Children do terday or tomorrow.‖
not carry the same burdens as adults on their
Following these guidelines, using them in
shoulders, they live more for today, for now,
coaching conversations and integrating them
for the moment and especially younger chil-
into learning messages is one way to have im-
dren are constantly playing. They may sense
pact that is long remembered when the com-
your sadness or your turmoil and if you allow
pany finally emerges from the darkness.
yourself, you will soon be running around
with them. The time will pass and you will
have a much needed mental break. Try it, this

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Pratibimb | Nov. 2010
Systems Corner
POTENTIAL OF e-JUDICIARY IN INDIA
Mayank Saxena

The performance of any Government can be and an e-committee has been formulated.
tested by the efficiency of its judicial system. This committee has initiated steps for the
The Indian judicial system is known for its computerization process of the Supreme
impartiality, independence and justice- Court and other courts. However, we should
oriented approach. The first duty of any court not limit the advantages of IT by mere com-
is to do justice, but in the process to perform puterization, but capitalize on the other bene-
it in the most democratic fashion. Today new fits of IT in a phased manner as per the feasi-
frontiers are challenging its capabilities and its bility and maintain user friendliness for judges
way of functioning. India currently is facing and advocates who would be the main users
shortage of ―Judicial Officers‖ to handle the of this system. In order to have an effective
number of cases that have been filed and have eJudiciary System, the following steps might
accumulated over time. The seriousness of help:
this situation should be realized and the Gov-
Initially, proper training regarding the use of
ernment should pro-actively use Information
IT should be imparted to judges and advo-
Technology (IT) to make eJudiciary an inte-
cates before capitalizing on the benefits. Their
gral part of its judicial system.
reluctance to accept this change can be de-
eJudiciary can be defined as a judiciary system creased if the long-term perspective is taken
that uses internet and electronic documenta- into consideration.
tion from the time the case is registered till it
With the help of interconnectivity, the data
is disposed off with judgment and can be used
can flow to a central computer from where
again for future reference. An ideal eJudiciary
"Certified Copies" of the concerned docu-
system for any country at a given point of
ments are made available. Further, cause lists,
time should be compatible with the socio-
names of the judges, court numbers, name of
economic factors of that country at that point
the advocates etc. should be available on the
of time.
internet and the information should be up-
The increasing backlog of cases is a threat to dated regularly. This step could reduce the
our judicial system; official figures revealed personal interface of citizens and business
from the Home Ministry‘s Department of with public service providers, cutting delay,
Justice states that the Allahabad High Court bureaucratic red tape, corruption and harass-
had around 1.09 million pending cases and ment besides increasing the speed of response
the Supreme Court of India had a total of
The information to the general public can be
39,780 civil and criminal pending cases at the
made available through information kiosks in
end of 2007. In the Indian context, this is a
an unbiased manner so that the underprivi-
clear violation of ―Right to Speedy Trial‖ as
leged sections of the society can access infor-
conferred by Article 21 of the Constitution of
mation as and when required.
India. The Supreme Court has realized this
17
Pratibimb | Nov. 2010
Systems Corner
Beyond this, the presence of crucial witness work. A plan to provide required infrastruc-
through video conferencing can be used on a ture and concentrate on capacity-building,
wider scale; it has already been started in some judicial process from filing to execution, and
regions. finally making the information available
online between the courts, prosecuting and
The medium of the Internet can be used for
investigating agencies, prisons, land-records
filing of cases, bail applications, serving of
and registration offices is also underway, lead-
notices etc. This will enhance transparency
ing accelerated disposal of civil and criminal
and accountability by making information
cases. Our former President, A.P.J. Abdul
available to citizens through
websites, reduce information
monopoly, simplify processes
and empower citizens to put
pressure on public officials to
deliver performance

The paper records of the pro-


ceedings are difficult to track,
store, manage, produce and
reproduce on desired occa-
sions; in some cases, these
could be destroyed due to
natural calamities and their
reconstruction might not be
possible. Under such a cir-
cumstance, the court has no
other option but to acquit the
accused. An electronic record
is not only durable but can be
easily tracked, stored, man-
aged, produced and repro-
duced as well.

The Indian Government has


realized the advantages of eJu-
diciary and taken some vital
steps towards it. Presently, the Photo By: Michael Lehman
Supreme Court has under-
taken "e-courts" efforts in three phases as a
Kalam, had suggested the creation of e-
mission mode project under the National e-
judiciary by establishing "Judicial e-
Governance Plan (NeGAP) to link about
Governance Grid" from the district courts to
15,000 courts from the District Court to the
the Apex Court in order to cover the whole
Supreme Court through a Wide Area Net-
judicial system in the country. There are some

18
Pratibimb | Nov. 2010
Systems Corner
provisions in the IT Act, 2000 which are in- sides eJudiciary, there are about 1,600 Gov-
evitable for the smooth functioning of the jus- ernment services readily available over the
tice system like legal recognition of e-records, internet in Singapore. This plays a key role in
legal recognition of digital signatures and re- developing Singapore‘s knowledge-based
tention of e-records. There are some High economy and at the same time provides effec-
Courts whose websites display the daily cause tive services that engage citizens and enhance
list, the judgment delivered and information Government transparency
that is useful to the citizens.
The system of eJudiciary exists in India; it
There are some crucial challenges, which the however needs to be updated and upgraded to
Government needs to resolve in order to have meet current challenges and technological
a proper eJudiciary in place. The biggest chal- needs. The Government needs to test various
lenge is the lack of ―E-readiness‖ on the part standards and policies over a period of time to
of senior judges and advocates who are com- make them compatible with Indian socio-
fortable with the traditional mode of impart- economic realities. India and its populace
ing justice. The implementation of IT shall (both rural and urban) would need to acclima-
bring along challenges related to security of tize themselves to a digital environment; the
data and infrastructure, which shall be re- future is moving towards a completely online
solved with time as the system matures. Ini- environment. The standards set by foreign
tially, the Government might be reluctant to countries, particularly developed nations, must
invest in the system but if it considers the re- not be followed blindly rather they must be
turn on investment with a long term horizon made compatible with the Indian environment
introducing IT will be lucrative for the pre- before the application can take place. eJudici-
sent judicial system. ary is not just the computerization of stand-
alone back office operations: it is a means to
The impact of an effective eJudiciary can also
fundamentally change how the Government
be seen in developed countries like Singapore,
operates and dispenses justice and implies a
which is currently well known for its eGov-
new set of responsibilities for the governmen-
ernance model and long regarded as one of the
tal machinery.
world‘s least corrupt countries. The e-Courts
System of Singapore has incorporated cutting
edge technology to provide for the most con- Mayank Saxena, after completing his Engineering
ducive and effective courtroom environment. from NIT, MBA from Symbiosis, Pune, Course
It has seen the implementation of leading in Bremen University, Germany and gaining pro-
technologies like Digital Transcription System fessional experience as Industry Analyst in Multi-
National Consultancy, he is currently mentoring
(DTS), Electronic Queue Management Sys-
students at Under-Graduate and Graduate Levels.
tem (EQMS) and Electronic Signage System
(ESS) to improve the efficiency of cases in the
new Supreme Court building. The Supreme
Court uses its web portal to improve accessi-
bility to justice by providing more informa-
tion on court procedures and judgments as
well as services in a user-friendly manner. Be-

19
Pratibimb | Nov. 2010
Marketing Mania

INTERACTIVE BRANDING
Paritosh Kashyap | TAPMI
The term ―Marketing‖ might have been nology penetrated individual households, cou-
coined during the dawn of the 20th century pled with a plethora of popular Websites, So-
but the idea has been prevalent since thou- cial networking sites, E-portals, Online com-
sands of years. Similarly, customers are also munities etc., the realm of marketing is under-
not a recent phenomenon; they would have going a new paradigm shift. Now the cus-
been active since the first transaction was tomer is not only the central focus of the mar-
made. In the past century, the realm of mar- keting strategy, but is also the most active
keting underwent constant evolution as a dis- player of the branding exercise conducted by
cipline. In the individual firms.
initial days,
Interactive
marketing was
a push con-
Branding
cept, where American Mar-
there was a keting Associa-
constant ten- tion(AMA) de-
dency on the fines a brand as a
parts of the "name, term,
firms to push sign, symbol or
their prod- design, or a com-
ucts/services bination of them
to the custom- intended to iden-
ers. In 1953, tify the goods
with ―Neil and services of
Borden‖ coin- one seller or
ing the term ―Marketing Mix‖, (4 Ps of mar- group of sellers and to differentiate them
keting that is: Product, Price, People & Pro- from those of other sellers‖. In reality, brand
motion) marketing took a leap as a discipline. is much beyond that. Brand resides within the
In the 60s, Theodore Levitt came up with the hearts and minds of customers, clients, and
theory of ―Marketing Myopia‖ that for the prospects. It is the sum total of their experi-
first time attempted to consider seriously the ences and perceptions, some of which you can
Customer Factor in marketing. In the coming influence, and others you cannot. These days
years, the significance of customers in the for- with the help of Websites, E-manuals, E-
mulation of marketing strategy by individual brochures, Multimedia presentations, Click-
firms kept on increasing and 4Ps of marketing able add banners etc., the interactivity between
got transformed to the 4Cs (Consumer, Cost, the customers and the firm has increased
Convenience, Communication). In the 21st many fold. While the customer gets a better
century, as computers and the internet tech- brand experience, the firm understands the
20
Pratibimb | Nov. 2010
Marketing Mania
behavior, interests and tastes of the customer Crisis in Mass Marketing
in a better way. These interactive tools can
also provide a good insight into the cus- Given below are some of the statistics that
tomer‘s geographic location as well as demo- describe the crisis in mass marketing:-
graphic profiles. Only 18% of TV advertisements create
positive ROI
The new age customer
Average return on every one dollar spent
The new age customer is very different from on advertising using mass media was just 54
his/her previous counterparts. He is much cents
more intelligent, confident and has much
more understanding of various kinds of prod- TV advertising cost has increased by
ucts & brands. A stereotypical new age cus- 256% in the past one decade
tomer1, assumed to be exposed to n number of
90% of people who can skip TV ads do
media channels, is much more tech savvy and
skip it
internet friendly way. It can be assumed that
the new age customer has a high sense of indi- 65% of people believe that they are con-
viduality and in this age of consumerism, buy- stantly bombarded by TV ads
ing for him/her is a very involving and fun
Only 14% of people trust TV advertise-
driven process. There are around 1.96 Billion
ments
internet users 2 across the world. 90% of the
internet users know at least one social media 56% of people avoid buying products
and every social media user is connected to from company who they think are advertising
195 friends on an average. There are 133 mil- too much
lion blogs enlisted in the blog directory
―Techorati‖. These facts explain the power Advantages of Interactive branding
and influence of the new age consumers. The
probability that a new age consumer is also an With the help of better music, videos,
author of a blog, which he uses to reflect his texts and pictures it engages the customers
view points, is very high. He might also be a more effectively.
thought leader in the social media sphere he With the help of Web 2.0 platform there
influences. He could be a critic who uses these
can be a direct communication between the
media platforms to criticize a product he
firm and its customers. Customers can com-
doesn‘t like, or could be a brand ambassador
municate their requirements, expectations, re-
who uses these media platforms to promote a
sponses and of course, their judgment to
brand he follows. The strengths and skills that
firms.
have been acquired by the new age customers
cannot be discounted by marketers. These Web 2.0 platforms provide effective plat-
customers need to be involved actively in the forms for the customers & consumers all
branding processes. around the world to come together and col-
laborate.

Clicks on web pages can be traced back to

21
Pratibimb | Nov. 2010
Marketing Mania
get insights about the profile, location, choices Social Media
and behavior of customers.
Social media websites like Facebook, Orkut,
With the help of tools like ―Google Analytics‖ BlogSpot, LinkedIn etc. play a very important
large amount of data collected over a period of role in Interactive branding. Social media are
time can be analyzed and processed to derive cost effective, have a wide range and better reach
consumer behavior pattern. and can boost immediate sales by engaging the
These tools help in figuring out the degree of customers. Social media provide platforms for
involvement of individual customers. Data like like-minded people to interact with each other
time spent on web pages, comments posted, and irrespective of the geographical boundaries. One
the no. of revisits made, give a very clear-cut un- of the biggest advantages of social media is that
derstanding of an individual customer‘s involve- they help in communicating the right message to
ment with a brand. This can help firms in pro- the right audience. Given here is a table that de-
filing their customers. scribes the influence of some of the most popu-
lar social media websites, with the help of latest

statistics.
In comparison to regular mass media such as
news papers, magazines, and television commer- Implementation of Interactive branding
cials, these web based applications and platforms
are much more economical. Interactive branding is a relatively new concept
and there is a dearth of strategic models to im-
In the time of economic downturns, when the plement it. One of the models that explain it is
regular advertisement budget gets cut down, In- the ―COCHA‖ model.
teractive branding can provide an economical
and effective alternative. Concept: Any online material needs to have an
appropriate concept - a concept that communi-
cates the brand essence and tells the brand story
well.

22
Pratibimb | Nov. 2010
Marketing Mania
Content: It should have a very engaging content fective ways are required. Interactive Branding
with a right mix of text, images, videos, music, provides one of the ways to achieve this. It helps
software etc. that can help Fig 2: The figure de- the new age customer to interact directly and
picts the 5 Cs of Cocha model users interact collectively with the firms. The new age custom-
with it. ers, who are equipped with the best of media
Channel: Rather than being a monologue me- tools and gadgets and have much more knowl-
dium (click ads), it should facilitate communica- edge in contrast to their previous counterparts,
tion between the website and the users. This can just don‘t want to have a passive role. They want
be implemented with the help of social media, active involvement in the brand building process.
chat gadgets, e-mail etc. This further signifies the importance of
―Interactive Branding‖. Having said this, it does
Context: Should target the right customer at the not mean that regular mass media channels are
right time and right place. Should fit their inter- not important, they are surely going to exist but
est and use their language. the time has come where firms need to have a
right mix of regular branding tools as well as
Consumer: It should facilitate firms to extend
innovative tools like ―Interactive branding‖
and tighten the communication link with the
target consumer base. Consumer bases can be
defined with the help of profiles, communities,
References:-
tastes, needs, motivations etc. 1. World Internet Usage And Population Sta-
tistics, Internetworldstats.com, June 2010,
Conclusion http://www.internetworldstats.com/
The new century heralds a paradigm shift in stats.htm
branding. In the current economic crisis, where 2. InSites Consulting, 13 Mind-Blowing Facts
advertising budgets are getting cut down drasti- On Social Media 2010, Omgzam.com, Janu-
cally and mass media channels are losing their ary 2010, http://omgzam.com/13-mind-
effectiveness day by day, firms need innovative blowing-facts-on-social-media-2010/
ways to promote their brand. Innovative ways to
engage and capture target customers in cost ef- 3. Phillip Winn, State of the Blogosphere
2009 : Introduction, Technorati.com, Au-
gust 2009, http://technorati.com/
blogging/article/state-of-the-blogosphere-
introduction/

23
Pratibimb | Nov. 2010
Operations Bonanza
JUST IN TIME TRAINING SYSTEMS
J.Krishnan | TAPMI
It will be useful to examine the traditional
Introduction
model in order to arrive at answers to such
It is often said that a leader is only as good as questions.
his followers. Thus, it becomes important that
The traditional model usually delivers a stan-
the team you lead is good enough and capable
dardized content, in a discrete time and place
of rising to the challenges posed by the fast
and in a passive setting. Most
paced and dynamic environment
often, a professor in a lecture
today. It is for the same reason, that
hall imparts knowledge to a
training, learning and
large number of students, who
development assumes great
may be engaged in dis-
importance today for every
cussions but are mostly
organization. We all
passive. The lecturer
understand that training
also uses a one-size-fits
is the essence of
- all approach, since the
adding value to the
content of the
human resources
lecture remains
in a firm.
the same for
However, the ROI each student
on traditional regardless of his
training systems or her individ-
have always ual needs. This
remained suspect. model has
More often than worked well for centu-
not, the managers ries in part because it is
wonder whether efficient for teachers.
companies are getting
Its focus is on teaching
true value for the money
rather than learning
and they suspect whether any
where as the effective
actual knowledge transfer is taking
ness and utility of such knowl
place via CD and classroom training
edge transfer methods remain
sessions. However, as managers, it
suspect as more often than not,
becomes critical to see to it that such
the employees rely only on experience and less
huge investments made must have the desired
on the learnings, to be applied when the situa-
payoff. How do we ensure the effectiveness
tions arise. Research shows that 70% of the
such that these become a strategic investment
information learnt on training courses is for-
more than a routine expense?
gotten by the time the need arises.

24
Pratibimb | Nov. 2010
Operations Bonanza
Just In Time Training for example, a manager going through a deci-
sion support system incorporating an educa-
Just In Time Training (JITT) is a new man- tional component and is asked a question
agement education paradigm that changes the about "demand elasticity‖. If the manager
traditional approach. This model attempts to doesn‘t fully understand the concept, the sys-
go from being a supplier-driven system that tem immediately introduces a learning module
works efficiently for the teacher to a consumer that explains the concept before returning to
-driven system that works effectively for stu- the decision framework.
dents, making learners
active participants in Hence education
the educational process. comes at the same time
The new model as its application in the
focuses on learning real world ("the test")
rather than on teaching. anytime and place.
It provides a person with the For a work place to shift from
information they need for doing
atraditional model to the JITT, it will
their job just when it is required,
require a shift in the learning paradigm
thus shortens the time between learning and culture along the following di-
and application. Often in the form mensions:-
of e-learning, this training can be
delivered to the user‘s place From Standardized to Cus-
of work, meaning training tomized Educational
can be delivered when Content: Where tradi
and where it is required. tional programs offer
standardized content
Companies can make
calcified in specific
use of technology to create
courses, the new paradigm
just-in-time learning and decision support sys-
should offer customized knowledge tailored
tems that harness and disseminate the knowl-
to the backgrounds, interests, learning styles
edge of the organization and help employees
and motivation of the student.
work well and help managers take better deci-
sions while learning. This model achieves its From Passive to Active Learning:
goals by moving from standardized to cus-
tomized content, from discrete time and place The classroom model of education, and even
to anytime and anyplace delivery, and from some CD-ROM and online programs are
passive lecture models to interactive and ap- based on a broadcast model in which knowl-
plied learning. Instead of squeezing managers edge from the presenter is communicated to
and employees into the constraints of educa- the student. The new model is active, exp eri-
tional programs, the new model focuses on ential learning in which students are exposed
designing education tailored to the real-world problems and challenged to
to the needs of students. find solutions in context.

Let‘s see how it works in practice. Suppose, From Fixed to Fluid Time and Place: Tra-

25
Pratibimb | Nov. 2010
Operations Bonanza
ditional learning is delivered in a specific loca- learning becomes the means to an end, which
tion at a specific time, presumably to amortize is to assure that the organization can consis-
the "set-up" time for a course. The new tech- tently provide value by adapting to and driv-
nology allows students to learn anytime, any- ing change in the turbid and dynamic environ-
place and in any increment of time. ment.

Institutions need to change their educational


References:-
models to deliver this just-in-time learning.
1. Jerry & David R., JIT Education: Learning
JITT as the Panacea in the Global Information Age, knowl-
edge.wharton.upenn.edu, August 2000,
However, this doesn‘t mean that the tradi- http://knowledge.wharton.upenn.edu/
tional model should be completely done away article.cfm?articleid=236
with. JITT is not a panacea and comes with
its own drawbacks such as the following:- 2. Larry Brown, Just in Time Training, altus-
corp.com, May 2009, http://
1. JITT is usually web based and it usually www.altuscorp.com/uploads/documents/
makes too much training available when Legal%20Management_WSGR%
time available is limited. This is partially 20Article.pdf
true if the training is not specifically tar-
3. J. WoodFord, Point of Use Information,
geted to the requirement.
vega-group.com, April 2004, http://
2. The place of work is not always the best www.vega-group.com/assets/
place to learn, with the possibility of dis- documents/1000021Cjustintime.PDF
tractions being much greater. Taking a 4. Jason A Collins & Jim G., Inspectable user
user away for a training course can often models for JIT workplace training,1997
remove the distractions and engender a
better mental state for learning.

3. There could also be an issue with people‘s


learning styles. If the users want to learn
through practice (without the knowledge),
this can reinforce their desire to complete
the task. In this case, the use of simulated
task practice may encourage the user to
look for the information before attempt-
ing the task.

Combining localized, face-to-face interactions


which are a part of the traditional model
along with the more customizable and port-
able components that comes with the JITT
systems can make the learning systems much
more powerful than when each are taken in-
dividually. One needs to understand that
26
Pratibimb | Nov. 2010
Systems Corner
CLOUD COMPUTING
Rahul Garg | TAPMI
centers.
Introduction
Broadly, clouds have been classified into 3
Did you upload your photos on any social
types: public, private and hybrid clouds. Pub-
networking site, this week, to share it with
lic cloud is one in which a service provider
your friends? Where, do you think, these pho-
builds resources and makes them available to
tos get stored? Do you use Windows Live
the general public. It may be free of cost or
SkyDrive to store your files? Where do you
offered on a pay-as-you-use basis. Private
think are all those mails that you sent to or
cloud is made available only to specific or-
received from your friends?
ganizations. It is maintained by the vendor or
There are many such instances where the stor- the organization itself. Hybrid cloud is main-

age is on virtual machines and you can access tained by both the internal as well as external
the stored content anytime without storing it service providers.
on your computer. Similar is the concept of
‗Cloud Computing‘, an emerging technology. Who should go for Cloud Computing?
Cloud Computing can be defined as a net-
Small companies having limited capital can
work driven utility, to provide applications
use Cloud Computing to have their data-
over the internet or, for hardware and soft-
centers on a rental basis. Amazon charges
ware support from large datacenters.
$0.15 to $0.18 per GB-month of data stored
Cloud Computing has the potential to revolu- on Amazon EBS snapshots. Data transfer in
tionize the IT industry. The services offered Amazon EC2 is free as of now while moving
over the internet are also referred to as SaaS data out over internet costs $0.08 to $0.15
(Software as a Service), hence, cloud comput- per GB.
ing is confined to datacenter hardware and
Any company which is not willing to risk
software. Developing a datacenter is a capital
blocking large capital in hardware, that may
intensive process. Through cloud computing,
become obsolete later, can opt for Cloud
you do not have to own the whole datacenter,
Computing, to reduce the risk.
though you can use the services and capacity
as and when needed, hence, saving a lot of Companies which face variable demand of
capital that is required for building such data- hardware and software can use Cloud Com-

27
Pratibimb | Nov. 2010
Systems Corner
puting to fulfill peak demands. capacity, the cost of losing a customer does
not only include the lost profit but also the
What is the advantage for Cloud Com- repeat orders from the lost customers, loss of
puting providers? reputation in the market, etc. To mitigate this
risk, cloud computing provides an advantage
Economies of Scale: The cost of operating a of adding extra capacity at very low costs and
very large datacenter can come down to 20% in nearly negligible time.
of the cost of operating a medium size data-
center, per unit capacity. This is possible be- Thwart of DoS Attacks: One more way of
cause of low power costs, low network band- network unavailability could be through De-
width and less fixed costs per machine. nial of Service (DoS) attacks, a contrived ef-
fort of a person or a group to prevent an
Existing Investment: Large companies which internet site or service from functioning. Bo-
already have huge datacenters can use them for gus network bots are produced to overload
providing support to other companies also. the server and make the website unavailable.
Most of Amazon‘s web services were initially Through cloud computing, the instances to be
developed for its own use. handled can be increased by adding the servers
Increasing Customer Base: Not only does and thwarting the effect of DoS. Adding to
cloud computing help the companies using it, this, such an attack is likely to cost higher to
it can also help providers in increasing their the attacker than the victim.
customer base and may result in additional Cost Advantage: Through usage based pricing
business as well. model, the capital required at any point is very
Site Advantage: Cloud computing datacenters low and hence the capital can be invested in
are purposely located at locations which have other useful activities.
the advantages of low costs of electricity, la- After making a few modifications in the equa-
bor, plant and property costs etc. Clients lo- tion given by Berkeley, we deduced that a user
cated in metro cities have to pay exorbitant should go for cloud computing when,
amounts to run their own datacenters, which
cloud providers take advantage of and make UserHoursCloud X (Revenue – CostCloud) ≥
their datacenters available at lower prices. UserHoursDatacenter X (revenue – Variable Cost
per hour – Fixed Costdatacenter/Utilization)
Advantages of Cloud Computing for Flexibility: The hours you use the technology
the users may vary on a day to day basis and you just
need to pay for the hours used. In case of set-
Risk Mitigation: Though the overall cost of
ting up an individual datacenter, the capacity
cloud computing may be higher than the cost
should be enough to serve the customers dur-
of setting up your own datacenter over the
ing peak hours. Thus on average days, the
useful life of the datacenter, there are other
datacenters are 5 - 20% utilized. Planning for
intangible advantages which make cloud com-
puting an invaluable proposition. Real de- the peak usage requires lock-in of more capi-
mand has huge crests and troughs. During the tal. Animoto, a web application which con-
peak demands which exceed your datacenter verts photos, video clips and music into amaz-

28
Pratibimb | Nov. 2010
Systems Corner
ing and unique videos, made the service avail- ing the data to more risk. Owing to this belief,
able via Facebook. The Cloud Computing companies do not share the sensitive data over
First 1 GB per Month $0.00 per GB
Up to 10 TB per Month $0.19 per GB

Next 40 TB per Month $0.15 per GB

Next 100 TB per Month $0.13 per GB

Over 150 TB per Month $0.12 per GB

services provided by Amazon Web Services


made Animoto to scale from 50 servers to the cloud server. But cloud computing center
can be as secure as an in-house datacenter.
3500 servers owing to 750000 sign-ups in
You may also store encrypted data on cloud.
just three days within one month of the
launch. During peak hours, almost 25,000 Non-Availability: Any system is liable to fail
people tried Animoto. You can imagine how and cloud computing providers are not an ex-
ception to this. Amazon EC2 offers up to
difficult it would have been if Animoto had to
99.95% reliability. However, if your own
handle all the users from its own datacenter. datacenter fails, the recovery or the risk could
not be passed to others. In case of cloud com-
Challenges puting, the risk could be passed to other net-
work providers. A possible way to avoid this
Data Transfer: One of the greatest challenges could be the use of multiple network provid-
of cloud computing is in transferring data. ers.
Data transfer is free until November 1, 2010, Hence, the advantages and a few challenges of
but it would cost $0.10 per GB later. the emerging technology of Cloud-computing
have been put forth. How this technology is
The table below gives the charges of transfer- used in future, remains to be seen.
ring data out of EC2 server in Asia-Pacific.
References:-
Thus, the charge of transferring data from
EC2 server varies between $120 and $190 1. Michael Armbrust, Armando Fox, Rean
which will be further increased by $100 for Griffith, Anthony D. Joseph, Randy H.
transferring into EC2. This problem looks Katz, Andrew Konwinski, Gunho Lee,
worse when we consider the time taken for David A. Patterson, Ariel Rabkin, Ion
transferring data. Through easy calculations, Stoica, Matei Zaharia, Above the Clouds:
we can show that for transferring 1 TB of A Berkeley View of Cloud , UC Berkeley
data with a 20 Mbit/sec internet connection, Reliable Adaptive Distributed Systems
it would take nearly 4.5 days. When the data Laboratory, February 10, 2009
to be transferred increases and when we are 2. Jason, Amazon.com CEO Jeff Bezos on
expecting quick outcomes of that data, cloud Animoto, animoto.com, April 21, 2008,
computing looks like an unviable option. One http://animoto.com/blog/company/
way to overcome this problem could be by amazon-com-ceo-jeff-bezos-on-animoto/
transferring data to the server location using 3. Amazon Elastic Compute Cloud
hard discs, through shipping, courier etc. (Amazon EC2) http://
aws.amazon.com/ec2/
Security Issues: Usually people think that
cloud computer offerings are publicly expos-
29
Pratibimb | Nov. 2010 Finance Frenzy

PAIR TRADING
Sulagn Patanaik | TAPMI
―Markets can remain irrational longer of whether this relationship is
than you can remain solvent‖ done on the security or portfolio level.
-John Maynard Keynes. This is what every investor looks out for.
Whether the market is bullish or bearish I
Scary isn‘t it? How often did
should get profit.
you curse yourself for investing
in a stock which plummeted In a market-neutral strategy, the return on the
into the abyss? portfolio is the sum of returns on the securi-
ties that are held long and those that are held
How often you question the
short. Net performance for the overall portfo-
integrity of ‗Efficient Market
lio will be close to zero because for every
Hypothesis‘? You are not alone.
move up or down in the long portfolio, there
Every investor dreams of having
will be an offsetting move in the opposite di-
a portfolio which will always
rection for the short portfolio. But in a man-
be on the greener side no matter
aged market-neutral portfolio long portfolio
which way the Sensex or Nifty moves. Is it
gives us higher returns in a bullish market and
feasible to have such a portfolio? Welcome to
short outperforms long in a bearish market.
Pair Trading!
This creates a consistently positive return re-
Pair Trading gardless of market conditions. We can achieve
market neutrality by either making equal
Pair trading is a non directional, relative-value
amount of investments in both the long and
investment strategy that seeks to identify two
short shares, called Share Neutrality. The
companies with similar characteristics whose
other way is making the portfolio beta neutral.
equity securities are currently trading at a
price relationship that is outside their histori- Now the big question coming to your mind
cal trading range. This investment strategy would be HOW to select stocks which will
entails buying the undervalued security while make your portfolio market neutral and you
shorting the overvalued security, thereby can do pair trading . The first step involves
maintaining market neutrality. selecting the right pair.

Market Neutrality Selecting the Pair


A A trading strategy that de The first and most important step in pairs
rives its returns from trading strategy is to find pairs. Pairs are trad-
the relationship be- ing instruments (stocks, options, futures, cur-
tween the performance rencies, bonds, etc.) which show great correla-
of its long position and tion; that is the price of one moves in same
the performance of its direction as the other. For stocks, pairs can be
short positions, regardless shares of two companies in same (or related)

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Pratibimb | Nov. 2010 Finance Frenzy
industry. For options, it can be options on Gretl to perform the test. Now once we have
highly related stocks. For futures, it can be two stocks which are co-integrated we are
mini and full-size contract or can be futures ready for the fun.
of related (same) industries. And for forex
it can be currencies of countries having
good trade relations.

Before selecting a pair I would Trading Strategy


suggest that you should select
a sector first. One of the most popular strategies, which
Being a software engineer Wall Street veteran‘s use, is trading on Ratio.
my instincts made me select I collected historical data from NSE for the
the IT sector .After that you last 2 years on my selected pair. Then I ap-
identify stocks which have very plied the following steps on the data:
high degree of correlation. Ratio of price of two shares forming the
For this you need to find the correlation selected pair was calculated over last
coefficient between all the possible twenty four months
pairs that can be formed in that Average of ratio over last twenty four
sector. Pairs having a correlation months was calculated
coefficient of more than 0.95 are good candi-
dates. Standard deviation of the above series was
A test for Co-integration can be then carried calculated
on the potential pairs. ―If two or more series Upper bound is calculated using the fol-
are themselves non-stationary, but a linear lowing formula:
combination of them is stationary, then the
series are said to be co-integrated‖ UB = Mean + SD

The term co-integration was coined by Engle Similarly lower bound is calculated as fol-
and Granger. Let yt, and xt be two non sta- lows:
tionary time series. If for a certain value g, the LB = Mean - SD
series yt – γxt is stationary, then the two series
are said to be cointegrated. Some real-life ex- Trading Signal
amples of co-integration in economicsare con-
sumption and income, short-term and long- Since we know that both the stocks are co-
term rates, the M2 money supply and GDP. integrated, their ratio should be mean revert-
ing. In simple terms if I notice that the price
Yt -Yt-1 = -α (Yt-1 - γXt-1) + ratio is at a point which is quite far from the
Vt is the co-integrated historical mean I expect it to revert back to
series with α as the co- mean.
integration co-efficient.
Once the mean, upper bound and lower
Co-integration can be bound are calculated we track for trading sig-
tested using much available software. I used nal to enter into transaction. Entry signal is

31
29
Pratibimb | Nov. 2010 Finance Frenzy

triggered when the current ratio of price Price will come down and Polaris will move
crosses either the upper bound or lower up. If ratio crosses the lower bound then we
bound from inside the band. A trade signal to Long Oracle and Short Polaris. In each case,
we exit trade when the ratio crosses mean.
exit is triggered when the ratio crosses back
from outside the band towards the mean of I entered trade on 12th may 2010 when the
the band and crosses the mean. ratio was less than the lower bound. On 25th
May 2010 the ratio increased to 12.31 and I
The above graph shows the historical ratio had a profit of 5.87%. The same day, ratio
(Oracle/Polaris) over last 2 years. When the crossed the mean of 5.72 which was the signal
ratio crosses the upper bound then I short the to exit from the trade. The below graph shows
numerator i.e. Oracle and Long Polaris. This the Nifty movement in same period
is because the ratio will revert to mean as the
two stocks are co-integrated. Hence, Oracle In spite of the Market fluctuation I could
make a profit of 6 % in 12 days. Thanks to
DATE ORACLE POLARIS RATIO RETURNS RETURN %

12-may 2024 185.7 10.8993

14-May 2125 181.55 11.70476 729.1 3.65

17-May 2123 178.1 11.92027 905.4 4.53

18-may 2100 175.55 11.9624 928.1 4.64

19-May 2055.5 172 11.95058 897.3 4.49

20-May 2074.3 171.55 12.09152 1015.6 5.08

21-May 2050.45 172.45 11.89011 847.75 4.24

24-may 2081.65 172.55 12.06404 998.35 4.99

25-may 2052.95 166.65 12.31893 1173.45 5.87

26-May 2075.65 174.1 11.92217 884.65 4.42

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Pratibimb | Nov. 2010 Finance Frenzy

Pair Trading! money in the stock market. You only have to


be more right than wrong.‖
But pair trading brings with itself its own
risks. Extensive data mining should be done to
select the right pair. But still the forces of
―Greed and Fear‖ will play its role. One ad-
vice to all the investors ―You don't have to be
absolutely right on a trade in order to make

33
T. A. Pai Management Institute
Manipal - 576 104
Karnataka, India
Phone: 91 820 2701000
Tele Fax: 91 820 2570699
e-mail: tapmi@tapmi.edu.in
www.tapmi.edu.in

34

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