Innovation and Execution

Innovation is one of the keys for any business's success. Secondly, if you are emulating any successful product early with competing quality, then you can see the success. There were many companies executed well and shown very great results. As there is always emulation new innovations happen, you have to keep innovating things and execute well to succeed in business. Innovation is needed not only in Product but in everything that we do.

Recently Apple announced their Q3 2011 results. They have shown 82% revenue growth in Q3 Y-O-Y. The iPhone sales count increased by 143% and iPads 182%. At the same time their iPod growth was 32% and Mac was 17%.

If you see the history of Apples revenue, after the initial success, they suffered many years until Steve took charge. Steve Jobs faces ups and downs during his initial stages. They didn't grow much until 2005. There comes their new innovation iPhone entered into the market. After the release of iPhone, they were growing year over year. In 2010, they released the iPad with the touch based similar to iPhone.

They made an exceptional growth in the first half of 2011 and the credit goes to Steve. Even though the tablet PCs are in the market, the innovation they made in the UI/Touch based and their perfect execution, brought them the success.

The other company that has shown great growth by mere execution is Google. Even though their main product is Search with unique algorithm and a great innovation, their AdWords is the main revenue bringing product. AdWords is a replica of the ad model invented and introduced by Overture.

Google copied that business model and introduced it in early 2000. They executed very well and keep introducing new models and new schemes like AdSence into AdWords. Their aggressive improvements and the reach of the search made them to grow exponentially. In addition to this, Yahoo was using the AdWords for Yahoo marketing for some time that added value to the AdWords growth. In 2003, Yahoo acquired Overture and moved to their own Ad hosting service. But they were not able to compete with AdWords and merged it with Microsoft Adcenter.

Today AdWords is the major revenue contributor to Google. More than 80 % of the revenue of Google is from AdWords. Even though Android is picking up momentum, it has not yet reached the great revenue mode.

Google has reduced their inventions (Google Labs is stopped and most of the Google projects are stopped after Pages taken over as CEO), they are concentrating on the existing market and they want to grow by executing well. This(reducing the experiments) might be a wrong move but they may excel as their execution is exceptionally good.

The third example is Nokia vs Samsung. Nokia was dominating the phone world in the early and mid-2000. But after the introduction of iPhone, they didn't change and they are almost lost the battle. At the same time Samsung keep themself adopting to the latest changes and they were keep releasing various models competing with iPhone, they were able to perform (even though they are facing legal issues).

Saravanan

Credit Card Processing Flow

In the cloud world, setting up an on-line shop is one of the core business activities. Recently there were many cloud applications like Zoura, Magento, etc. Setting up an on-line store and connecting it with a payment gateway/processor has become easy now. There are many providers provide API to integrate payment gateway/processor to our on-line shop. Some of the providers are

• PayPal,
  
• Merchante Solutions,
• Authorise.net
• CyberSource
• ChasePaymentTech
• Paymentonline
• Zoura
• CCAvenue
  

The payment may be one time payment or recurring payment. The payment process is happening in two steps Purchase Authorization and Settlement

Purchase Authorization Process

In the Authorization process, the users' credit card validity is checked in addition to the availability of fund in the credit card. The following are the steps.

1. Customers will add the product to the cart in the online shop and checkout.
2. He will provide the credit card details and proceed to checkout.
3. The transaction will be send to the payment gateway by the Merchant's shop.
4. The Payment gateway route it to the Processor.
   
5. The Processor will send the transaction details to the Issuing bank (Visa/Master/AMEX) and validate the card details and check the availability of funds.
6. The issuing bank returns the Transaction result to the Processor.
7. The processor routes the result to the Gateway and from there the result is sent to the Merchant's shop to proceed for the further action (shipping of goods or decline message).

Capture and Settle Flow

In the Settlement process, the issuing bank will settle the amount to the merchant's bank.

1. Merchant request the payment gateway for the settlement of the transaction.
2. The gateway sends the request to the processor.
3. The Processor sends settlement payment details to Customer's credit card Issuing Bank; at the same time the Processor sends payment details to Merchant's Acquiring Bank.
4. The Issuing Bank includes the Merchant's charge on the Customer's credit card statement while the Acquiring Bank credit's the Merchant's account
   

Fraud Transaction

In many online shops, the big challenge is the fraud transactions. Even if we have the secured websites (SSL Certificate enabled), there will be many fraud transactions happen. To minimize this, we can enable the AVS (Address Verification Service) check enabled. In AVS check, the address mapped to the card also will be validated. In addition, we can check the Card Security Code (CVV2 for Visa and CVVC for Master and CID for AMEX). This is one of the good check against fraud. In the store this field should not be shown (show it as password ***).

PCI Compliance

The store should be PCI compliant to do online transaction. There are Four levels in the PCI for merchants.

Level 1: Visa/MasterCard transactions totaling 6 million or more per year. This level also includes anyone who has been caught with a data security breach.

Level 2: Transaction levels between 1 million and 6 million.

Level 3: E-commerce transaction levels between 20k and 1 million.

Level 4: E-commerce transaction levels up to 20k. This includes all merchants processing 1 million transactions per year, regardless of what channel they are in.

We have to scan the servers through approved vendors and we have to submit the Assessment Questionnaire, which may be self or by the approved vendors based on the level.

Online shop should not store the credit card. If you want to store the card details, you must have a higher level of PCI compliance with the scanning of servers with physical periodic auditing by approved vendors.

Saravanan

Companies Performance vs US Economy

In spite of turmoil in the US economy, the US companies are performing extremely well in quarter ending June 2011. Already Google announced a record breaking 32% growth (9b) y-o-y. Infosys has shown 30% growth y-o-y and 10% q-o-q.

Today EMC a SaaS based end to end solution provider announced their Q2 result. They ended this quarter with 4.9 b. They have grown by 20% y-o-y and their profit is 28% y-o-y. Their US revenue is 2.5 b grown by 17%.

Apple has 28b revenue in Q2 2011 and a profit of 7.3b. This is their record sales and profit in any quarter. The revenue growth is 82% y-o-y and profit growth is 125% y-o-y.

The iPhone and iPad no. of sales made a record triple digit growth. iPhone sales increased by 143& and iPads sales increased by 180%. The iTunes growth is 32% and Mac growth is 14%. Even though their growth is not substantial in Mac, they have shown a big growth from the new innovations.

The main sales of iPhones and iPads are from China. They have created more online stores this year and mainly out side US. Apple is projecting their growth in terms of number items sold than the amount. This shows they are foreseeing their maintenance revenue (easy money) from upgrades. As they are charging for the upgrades and appliance, it is going to be substantial in future.

Many companies are showing growth this year in spite of the economic problem. What is the difference between the Govt. and these companies? What is missing in US administration? How do these companies making money? How can Govt. gain learning from these companies? Many hows and whats are there.

The main difference is these companies are keep innovating things and are moving fast on their execution. Govt. still has the old policies and keeps trying old failure things. Over and above they wait for things to happen. In the cloud world if you are not innovative or if you are not executing well survival it self is a big question mark. It is not for the Govt. it is applicable for everyone.

We can say companies are small compared to the Govt. How can you compare both? I don't want to do an apple to apple comparison. Govt. should learn from the type of changes made by these companies to grow. Apply similar strategy that is applicable for the Govt. Do changes in the policies and execute fast. We can bring it back. It may take time, but we will have a long term solution. By doing temporary solutions, we are postponing things that will bring us a calamity.

Excellence Matters

What ever we do we want make it perfect. Is perfection gives the completion of work? Not so.

When we do things perfect, our mindset will be on timing, more concentration on the work that we do by ignoring the long term vision, more stress, and un-satisfaction in the work we delivered.

When we work for excellence, we can do it with enjoyment, we can think on high level and we will be working in a relaxed way. We will have flexibility and adaptability in our work, there will be a continual progress and learning and more over we will have work satisfaction.

In the recent, we were doing a major shift in our office. I was responsible to deliver one of the major activities. There was a heavy pressure in our work. Many unexpected issues creep up. We were able to solve all the issues. Still we are working on some surprises. And we have confidence in completing it and learn out of it.

We had a good satisfaction and the team members are relaxed. They have done an excellent work. Still many issues are open and I am very confident that they will complete it.

At the same time, there is another project that I am handling in parallel. In that project we are concentrating on perfection of all small small items and it is dragging like any thing. I have complete dis-satisfaction in the progress and there is a big delay in it.

Of course there are too many dependencies in that but when we work on excellence, our mind set will be work on big picture and will progress continuously and learn many things.

How to move from perfection to excellence?

• Get the real picture of the work and do it in small steps.
• Prioritize the work and identify the important work items.
• Delegate the work and set the expectations.
• Get guidance from the experts on the different areas of the work where you lack expertise.

Saravanan

Google Announced the Q2 2011 results

Google today announced their Q2 results. They completed the second quarter with 9.026B, the highest ever. In the last three years, google has done 1%-2% growth from Q1 to Q2. This year they did 5% growth. Their Y-on-Y growth is 32%.

It was expected that Google will do around 8.6B in Q2. And it is a great surprise for the new CEO Larry Page.

The AdWords made 18 % growth which is lower than the comp any growth. US revenue is 46% and the rest of the world revenue is 54%. This is the lowest US quarterly revenue percentage in the last three years. Their UK revenue is flat.

Google increased their headcount this year by 2,450, this is the biggest increase in Google history. Larry Page said, 2011 is going to be the year of maximum recruitment.

Their performance shows there is no threat for them by the US economy situation.

Saravanan

US economic situation worsening

In spite of the best week (June last week) for stock market, and improvement in the stock market, June had a drop in the jobs in US and the unemployment problem is creeping up. The US just added 18,000 jobs in June. The unemployment percentage increased from 9.1% in May to 9.2% in June. This is the max. after Dec 2010.

The unemployment percentage is more than 16% including the "Discouraged Workers" who were stooped looking for job or under employed. Th unemployed numbers increased from 8.2M in Q2 2008 to 13.9M in Q2 2011. This doesn't include the discouraged workers. The highest was 15.3M in Q4 2009.

In 1930, the unemployment was 24% which includes "discouraged workers". The present situation is heading towards that. In the last 16 months, there were 2 million jobs created and 8 million people last their job. This is one of the worst situation US is facing in the past few decades.

In addition, the US debt is now 14.3 trillion and the bills for payment is crossing the debt ceiling. Once the debt ceiling is reached, US treasury can not auction the Treasury notes, bills, and bonds. Either they have to default, in which case, consequence in US economy will be significant or they have to increase the debt ceiling.

US Congress has raised the debt ceiling TEN times in the last 10 years. In 2008 and 2009 alone, they have raised the debt ceiling FOUR times. US government has no money to pay the bills on August 2011. Before August 2nd 2011, they have to increase the debt ceiling.

Even if they increase the debt ceiling, they have to control their spending and increase the internal revenue otherwise they will reach the debt ceiling soon as their budget deficit is around 1.5 trillion every year.

They have to

• Cut in their gov. spending
• Cut their Defense spending
• Healthcare spending
• Do proper Tax changes
• Increase the internal revenue
• and more...

As the economic drop has happened over a period of time, the recovery will not happen over night. It will take few years for them if they work on right ways to improve it. If they still work on short term solutions, it is going to be a great depression for US.

Saravanan

Wall Street closes maximum in two years

June last week is very good for US stocks market. Dow Jones closed July 1st week as the best week in last two years. We are seeing increase in NASDAQ index for many companies. The increase was helped by the manufacturing data that eased the concerns about slowing growth.

Google NASDAQ index increased from 474 to 521 in last week of June. This is 10% growth in the last one week.

Similarly we are seeing steady growth for BMC. It was at at 51.64 on July 24th. From there it moved to 22.79 on July 1st. CA improved by 7% in the last week. HP growth is 6% in the last week. Apply up by 5%. The CISCO has gone up by 6%. It was performing very poor in the last few months.

Solarwinds index steadily increasing in the last one year. The price was low at 12.42 in July 2010 and it is increased to 25.92 in July 1st 2011. This gives the hope that this year the market will recover in the second half.

Saravanan

Is it good to study Plus two Vocational group?

My friend's son is an average student and so he put him in vocational group as it is easy for him to perform. He did exceptionally well and got a very good marks in +2 vocational course.

I was asking my friend not to worry as the score is enough for his son to get BE civil in good one of the Chennai colleges. In spite of that, he tried many engg. colleges for admission and all didn't give him seat as he is a vocational student. The pity thing is he wants BE Civil.

At last he got admission in Adiyamaan College of Engineering (Management Quota). I was very confident that he will get on merit. When Anna University announced the ranking, he got 200+ ranking.

Today he attended the Anna University Counseling. There was vacancy in BE Civil in almost all Chennai Engg. colleges. but he gave Adiyamaan Engineer college as the only preference and got admission on merit. He was happy that he got through merit.

I used to predict things on intuition. Most of the times it will happen. Recent past it is not working out as I loose concentration on analyzing things. But this one worked.

Saravanan