Budget Expectations

February 2010

Vol 02 | Issue 06 | Rs.50

As the Finance Minister gets set to present the Union Budget for 2010-11, DCC highlights the expectations and perspectives of some key execs in the IT fraternity:

Biju Nair

CFO, Four Soft

Diwakar Nigam Managing Director, Newgen Software

S Rajendran CMO, Acer India

Gautam Ghosh Country Manager India, ViewSonic

SR Nautiyal MD, Spark Technologies

Alok Bharadwaj Sr Vice President, Canon India

Saket Kapur

MD, Green Vision

Kalyanaraman D President, Tally Solutions

Shriram Krishnamachari Head – Channels, Adobe Systems

Naresh Wadhwa

President and Country Manager - India and SAARC, Cisco

Vikas Khanvelkar Managing Director, DesignTech Systems

Puneet Datta

Assistant Director – Marketing (BIS), Canon India

Vinnie Mehta

Executive Director, MAIT

R S Rethinasamy CFO, Aditi Technologies

Alok Gupta MD, Softmart

contents

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Vol 02 issue 06 | february 2010 Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Editorial Editor: Sanjay Gupta Sr. Correspondents: Charu Khera (Delhi), Soma Tah (Mumbai) Design Sr. Creative Director: Jayan K Narayanan Art Director: Binesh Sreedharan Associate Art Director: Anil VK Manager Design: Chander Shekhar Sr. Visualisers: PC Anoop, Santosh Kushwaha Sr. Designers: Prasanth TR & Anil T Photographer: Jiten Gandhi Brand Communication Product Manager: Ankur Agarwal

As the Finance Minister gets set to present the Union Budget for 2010-11, DCC highlights the expectations and perspectives of some key execs in the IT fraternity.

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SPECIAL REPORT

25

“A huge focus would be on middleware”

TIME TO ACT

The right set of Data Loss Prevention (DLP) tools can put a stop to the rampant data breach incidences among businesses and help them take a proactive approach to protecting business-critical data

best of biz

Creating Lasting Value

Sandy Carter, VP, Channels, IBM Software Group

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Burzin Dubash dwells at length on ways to optimise procure-to-pay cycle of companies

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channel q&a

“We focus on areas that attract maximum customers” Saket Kapur, MD, Green Vision

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“Value-add has become a muchabused term.”

PS Neogi, President, Redington India

VENDOR SPEAK

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“We will focus on data centres and BFSI verticals in 2010”

Jitendra Gupta, Manager—India and SAARC, Extreme Networks

Sales & Marketing VP Sales & Marketing: Navin Chand Singh National Manager - Events and Special Projects: Mahantesh Godi (09880436623) Business Manager (Engagement Platforms) Arvind Ambo (09819904050) National Manager - Channels: Krishnadas Kurup (09322971866) Asst. Brand Manager: Arpita Ganguli Co-ordinator - MIS & Scheduling: Aatish Mohite Bangalore & Chennai: Vinodh K (09740714817) Delhi: Pranav Saran (09312685289) Kolkata: Jayanta Bhattacharya (09331829284) Mumbai: Sachin Mhashilkar (09920348755) Production & Logistics Sr. GM Operations: Shivshankar M Hiremath Production Executive: Vilas Mhatre Logistics: MP Singh, Mohd. Ansari, Shashi Shekhar Singh Channel champs Sr Co-ordinator - Events: Rakesh Sequeira Events Executives: Pramod Jadhav, Johnson Noronha Audience Dev. Executive: Aparna Bobhate, Shilpa Surve OFFICE ADDRESS

regulars

Editorial.......................................................... 03 TRENDS.............................................................. 06 analysis........................................................... 28 Guest expression........................................... 30 Analyst Speak................................................. 38

advertisers index IBM...................................................... Inside Front Cover EMC................................................................Back Cover Intel.......................................................Inside Back Cover iBall.............................................................................5,9 Rashi Peripherals.............................................................7 K7................................................................................11 Supertron......................................................................13 Jupiter..........................................................................15 Quick Heal....................................................................17 Meganet.......................................................................21 Abacus.........................................................................33 Priya.............................................................................37

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cover illustration

DIGIT CHANNEL CONNECT

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february 2010

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design : prasanth t r

editorial

What Will the Gov Do? P

sanjay.gupta@9dot9.in

With the Union Budget round the corner, the industry is hopeful of extended support.

resentation of the Union Budget is a time when most industry lobbies in the country make their pitches to the finance ministry to ensure the maximum possible allocation to their respective segments and to get as much tax benefits as they can get. India’s IT industry has thus far been quite fortunate in the sense that it has benefited greatly from tax exemptions and other incentives offered by the government, especially to the exporters.

Still, there are many areas where both hardware and software segments are looking forward to further sops in order to emerge stronger from the recent slowdown as well as to smoothen out some nagging anomalies in taxation that still exist. A lot of industry execs who have contributed their expectations and perspectives on the upcoming budget in our cover story this fortnight, for instance, say that the government must continue with the stimulus of the countervailing duty reduction to the current 8 per cent. Some other key points raised by them include clarity on GST (Goods and Services Tax), problems arising from simultaneous imposition of service tax and VAT (Value Added Tax) on sale of software licenses, withdrawal of SAD (Special Additional Duty) on imported items and, of course, continuation of tax exemption for export units under STPI (Software Technology Parks of India) scheme.

With the Budget only a few days away, we will soon

get to know which demands are met and what remains to be addressed.

But there are certain things that the government of India must keep in mind when allocating moneys if it’s serious about taking IT in the country to the next level.

Power situation and broadband are what immediately come to the mind. The number of broadband subscribers in the country still languishes somewhere around 7 million – whereas the government had declared 2007 as the year of broadband. Most industry pundits have time and again said that higher broadband penetration will boost PC and overall IT consumption significantly.

Unfortunately, the pipe still remains a pipedream.

Another area that needs government attention is hardware manufacturing. When was the last time we heard of something new on that front?

It’s high time the government put its money where it often puts its mouth.

SANJAY GUPTA Editor Digit Channel Connect

sounding board sounding board

n SR Nautiyal, MD, Spark Technologies The IT hardware market is not growing at a level it should, even though prices have already come down. I request the concerned agencies to come up with a consistent and motivating budget, which will drive the growth of the IT industry. The economic slowdown of last year has somewhat affected corporate investments. The budget should facilitate companies to retain more investible funds for modernization and expansion. n Saket Kapur, MD, Green Vision We need to have consistency and stability in the taxation and duty structure. And with the kind of economic scenario the industry is facing, it will be really great if the stimulus package is continued. I don’t feel that the industry should look at unrealistic demands from the taxation point of views but there should be no additional taxes. n Alok Gupta, MD, Softmart

Write to the Editor E-mail: editor@digitchannelconnect.com Snail Mail: The Editor, Digit Channel Connect, K-40, Connaught Place, New Delhi 110 001

Software ESD/Paper (in the name of the end user) license developed in or outside India should have only service tax, and no VAT should be included in it. TDS on Software ESD License sales should be fixed at maximum 1%, since the margins are only 3%-4% when sold by software dealers.

DIGIT CHANNEL CONNECT

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february 2010

trends Live webcast for COMPASS IT show

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or the first time, there would be a live webcast of the IT exhibition - COMPASS 2009-10. The mega event would be held at the Netaji Indoor Stadium, Kolkata, from March 12 to 15, 2010.

“The entire four-day event, which draws over 1.2 lakh visitors, would this time be accessible to the `virtual visitors’ across the globe. There are many people who are unable to visit the IT show each year personally. This time they can log in to visit the 20 pavilions and 100 stalls offering various IT products, services, solutions and special discounts,” says Pawan Jajodia, Chairman Exhibition Committee, COMPASS 09-10.

“This is a rare initiative by COMPASS since very few events in India are webcast live,” Jajodia adds.

One has to register with www.compass.liveevent.in and log in for a virtual trip

of the COMPASS IT show online. A 20 member special team of professionals will be instrumental to execute the webcast. There would be around seven cameras, anchor s, engineer s and support staff providing live audio-visual feeds for the webcast from 10.30 am till 7.30 pm daily during the exhibition.

Prior to the actual event, visitors can get the details of all the participants of the COMPASS IT show. A dedicated home page would host all the details of the participants, including special interviews that would help visitors get an idea on the range of products, services, solutions and incentives that would be available and showcased at the show. COMPASS is targeting various schools and colleges to popularise its webcast. Many visitors who look for specialised products and services would be able

Zotac partners Neoteric for motherboards

Z

Pawan Jajodia

to plan out their visit to the show in advance and save time. Post event, the entire COMPASS IT show video would be accessible online for 50 days.

“Webcast would be a good brand building exercise for COMPASS IT show and also enable us to reach out to a global audience that was earlier not possible. There has been a deluge of new IT products and ser vices in India which the companies and multinationals are looking forward to exhibit at the COMPASS IT show.

This year’s theme is ‘Xplore Digitally’ in keeping with the global trend,” Jajodia adds. n

Brocade, McAfee to deliver network security solutions

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rocade and McAfee have entered into a partnership to deliver a broad set of fully interoperable network security solutions. As part of the partnership, Brocade will work in conjunction with McAfee to integrate critical security capabilities into the Brocade family of networking products.

The pairing of Brocade networking products with McAfee’s security capabilities enables customers to deploy and maintain highly reliable and secure network environments – from endpoint to the edge and the core – that are protected against a wide range of security threats, including malicious activities, data breaches, network intrusions and policy violations.

As a part of an open technology architecture approach, Brocade and McAfee are collaborating on a set of jointly designed, interoperable solutions developed specifically to address the network security needs of enterprise customers.

These solutions are being delivered under a new agreement that enables this first phase of a multi-year relationship between the two companies. The next stage will involve extending the network management integration to further utilise metrics and security intelligence information. n

DIGIT CHANNEL CONNECT

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FEBRUARY 2010

otac International has announced its exclusive partnership with Neoteric Infomatique for distribution of motherboards. The partnership will help Zotac establish and distribute their range of motherboards to untapped territories of India. Neoteric will drive this business for Zotac independently using its network of partners across the country in close coordination with the Zotac product team.

Commenting on the tie-up, Manish Rambhia, DGM, Neoteric says, “In a short span of time, Zotac has established itself very well amongst the Indian channel community and now with this tie-up, we will take this to a new level through our network of branches all across India.”

Deepak Gupta, Country Manager, Zotac – India sounding exuberant says, “We are certain that we have found the right partner in Neoteric to grow the business in India and look forward to working together.”

To create awareness for the brand in the channel and end user community, Neoteric and Zotac plan to carry out marketing activities that include promotions, road shows in upcoming markets, in shop branding and many other activities. All Zotac motherboards distributed

by Neoteric will carry a three-year carry-in warranty. n

850W Black Edition power supply unit from XFX XFX has added “power” to its product line-up with the introduction of the XFX 850W Black Edition Power Supply Unit (PSU).

Designed specifically for the high performance gamer, the 850W Black Edition PSU supports multiple high-end graphic cards.

Introducing the product, Kapal Pansari, Director – Marketing, Rashi Peripherals, said, “XFX 850W PSU is a natural progression to the XFX line of graphics cards. XFX is known worldwide for its products, especially graphics card, to the gaming community, and adding a superior power supply further strengthens that bond with the gamers. A lot

of PSUs are available in the Indian market, but none provide the true 850W power, leaving the consumers wanting for more. With XFX 850W PSU consumers will get the real power that will help them utilize optimum power of their GPUs.” Rated for a combined, continuous output power of up to 850 watts at 50 degrees Celsius, the XFX 850W BE PSU outperforms lesser quality PSUs. Crossbreed engineering featuring both fixed and modular cables provide users with both exceptional performance and superior flexibility. n

trends MSI extends retail reach in India

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icro Star International (MSI) announced that they will further enhance their retail reach to make their range of consumer notebooks easily available to a wider customer base. In a customerfriendly move, the company has tied up with large format retail (LFR) chains including Croma, Reliance Digital and Big Bazaar across several cities.

Under the retail push, the notebooks will be displayed at dedicated MSI-branded counters in the LFR stores.

Moreover customers will be able to browse and access detailed product literature, while trained personnel will on hand to explain product features and help customers derive an “MSI experience” before making their purchase decision. Tony Yang, MD of MSI India says, “The LFR stores will bring new availability for MSI’s industry-leading notebooks to a wider consumer base.

They will help buyers make more informed decisions by acquainting them with the capabilities and unique features of the different models.”

MSI had initiated their LFR programme on a pilot basis with 30 Croma stores across major metros, last month. This arrangement is now expanding to more than 43 Stores across 10 cities including Delhi, Mumbai, Cochin, Ahmadabad, Chennai, Bangalore, Hyderabad, Gurgaon, Ghaziabad and Rajkot. MSI will be retailing the stylish and award winning X-Slim series of notebooks as well as their Classic series through the Croma outlets.Further, MSI has already begun rollout of similar retail programme through Reliance and Big Bazaar stores. MSI notebooks are available at more than 20 reliance stores across ten cities, and another 21 Big Bazaar outlets in Delhi, NCR and Mumbai. The ultralight U-series netbooks are placed in the Reliance Digital and Big Bazaar outlets.

Johnny Lin, National Product, Sales and Marketing Manager for MSI India informed that similar tie-ups with other retail chains were on the anvil. “The tie-up with these large retailers will strengthen MSI presence in India. The brand aims at leveraging an environment where the customers can have a firsthand experience of MSI latest technology before buying it. Similar kind of tie-ups will be rolled out with more outlets within next 6 months,” adds Lin. The MSI retail outlet programme is driven by increasing consumer demand. Some months ago, MSI had established its first branded retail access point for its entire range of laptops, in Delhi’s IT trade hub – Nehru Place market in collaboration with its channel partner Sun Computers. That arrangement is also being expanded with coming up of another branded retail point in partnership with Technology Next.

The MSI retail outlet programme through LFR chains and co-branded individual stores will expand the number customer access points in India from 90 today to about 300 by the end of 2010. n

DIGIT CHANNEL CONNECT

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FEBRUARY 2010

ECS launches motherboard for gamers

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litegroup Computer Systems (ECS) has launched the P55H-A Black Series motherboard based on Intel P55 Express chipset supporting high-performance Intel Core i5 and Core i7 processors.

The LGA 1156 socket motherboard is ideal for gamers setting up a feature rich system on a tight budget. The ECS P55H-A supports CrossFireX for blistering fast graphics as well as Intel’s features such as Turbo Boost technology, which overclocks CPU opportunistically based on the temperature, current and power settings. This is enhanced by DDR3 1333MHz memory support, for fast data throughput using a maximum of 16GB in 4x DDR3 DIMMS. The ECS P55H-A motherboard has all the functionality that a gamer needs as a power user. Features include 4x DDR3 slots @1333MHz, an eSATA port for external storage, IDE SATA with RAID 0,1,5 & 10 support to allow for large storage capacity , 8x USB external ports+ 6x USB internal for ample connectivity options, 8 Channel Realtek AL888S HD Audio with SPDIF out for full and rich sound options to bring your games and audio needs to life. It has Gigabit LAN

for fast and secure internet connectivity, and 2x PCIe x16 (2nd Generation) slots for dual graphics CrossFireX capabilities. The MOSFET region has a 6-phase high quality PWM, which regulates the voltage to maintain clean power to your CPU, while the Dragon style heat sinks ensure stability and extra cooling for your chipset and components.

In addition, the P55H-A has a plethora of exclusive ECS technology such as the M.I.B. II OC BIOS utility that assists beginners to overclock effortlessly and the unique eJiffy Linux solution which once selected from the BIOS can allow you to by-pass your OS and access eWeb (Internet access), ePix (Picture interface to view pictures) and ePal (chat messenger program) directly within seconds of turning on your PC. It can be accessed in multiple languages. Also included in this Black series product are the innovative 4E design features: Easy Clear, Easy Debug, Easy Attach and Easy buttons, which make the P55H-A motherboard very easy and convenient to use, while the newly added intelligent power saving (IPS) indicators help make sure green power saving are within everyone’s reach. ECS P 55H –A is available through Rashi Peripherals at Rs 9,900 with three years warranty. n

HCL launches PVC free notebook

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CL Infosystems has unveiled PVC-free HCL ME Series 40 notebook. The eco-friendly ME notebook has been designed and manufactured with materials completely free of harmful chemicals like Polyvinyl Chloride (PVC), a hazardous toxin, absence of which makes recycling of electronic products safer and environment friendly.

George Paul, Executive

Vice President, HCL Infosystems said, “HCL ME Series 40 is another step towards a green revolution in the IT hardware industry.

We at HCL Infosystems have always been an environmentally responsible corporate and one of the few companies the world over with an official commitment to sustainability in our vision and mission statement.”

The new notebook is based on the Intel Core 2 Duo processor and apart from being eco-friendly is also

loaded with features such as: • Split ME, where one can share their data without worrying about file size.

• Lock ME, that prevents data theft from the system.

• Secure ME, an effective tool which can be used to lock any application installed on the PC e.g.

Internet Browser, Adobe, Power point etc.

• Encrypt ME, which allows the user to encrypt their data.

HCL ME 40 notebook is available for Rs 41,500. n

trends BFSI rapidly adopting and investing in IT: Springboard

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he Banking, Financial Ser vices and Insurance (BFSI) IT ser vices market in India is expected to grow from $1.6 billion in 2009 to $2.7 billion in 2013, growing at a CAGR (compound annual growth rate) of 14.2 percent, says Springboard Research.

Springboard’s report – ‘The Indian IT Ser vices Market for the Banking, Financial Services and Insurance Ver tical’ notes that this intensely competitive market remains fragmented between a large number s of Sanchit Vir Gogia services providers.

“Although the BFSI vertical in India is maturing in terms of adoption and usage of IT, it continues to be price sensitive. ‘Hard to please’ Indian CIOs are becoming as demanding as their global counterparts, consistently expecting vendors to offer a ‘fresh approach’,” says Sanchit Vir Gogia, Senior Research Analyst for Services at Springboard Research. “Now, the key challenge for IT vendors moving forward will be to keep pace with end user demand for rapid innovation,” Gogia adds.

Springboard obser ved that there is a ‘great rush’ to step-up customer service levels and companies in the BFSI space have been rapidly investing in IT to work towards fulfilment of this objective. With increasing competitive pressure, it is getting harder for BFSI enterprises to ‘win and keep’ customers. The move to adopt CRM solutions and customer focused technology is driven by the increasing need for maintaining and enhancing customer relationships.

Business Intelligence (BI) is yet another key priority for BFSI enterprises which helps to identify and capture potential customers.

Organisations in India are also using highend analytics to indentify fraud and money laundering. Given the critical nature of the solution, Springboard believes BI and AntiMoney Laundering (AML) solutions will have significant growth in the Indian BFSI marketplace in the next 2 to 3 years. n

Blue Coat intros Professional Services Partner Program

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lue Coat Systems has introduced the BlueTouch Professional Services Partner (BTPSP) Program, an advanced service offering that enables partners to increase their service attach rates and margins by delivering professional and consulting services. The BTPSP Program supplements the BlueTouch Support Partner Program by providing the tools, certification and training that partners require to develop strategic, consultative relationships with their customers.

The BTPSP Program is a two-level program that offers a variety of professional services, including network design; installation and configuration of Blue Coat products; testing and migration from staging to production-ready environments; migration and upgrades; and management and monitoring. Additionally, certified partners can participate as subcontractors in professional services engagements that are managed by Blue Coat. The BTPSP Program is part of the Blue Coat Channel Advantage Program and is available for all Premium, Elite and higher level partners.

“As a certified BlueTouch Professional Services Partner, we have the technical expertise and access to Blue Coat’s knowledge to help our customers maximize the return on investment in their Application Delivery Networking infrastructure,” said Andrew Lev, Group Senior Vice President Marketing, Alliances and Channels at Integralis.

“With this program, we are complementing our trusted advisor services with a valuable consultative approach that allows us to share our expertise and ensure our customers’ networks are optimized to best serve their business requirements.”

The BTPSP Program provides two levels of partner certifications: BlueTouch Professional Ser vices Par tner and Master BlueTouch Professional Services Partner. Additionally, the program offers individual certifications in the key Application Delivery Networking specializations of visibility, acceleration and security. Certified BlueTouch Professional Services Consultants are certified in the acceleration specialization and at least one other.

“With the new Professional Services Partner designation, Blue Coat has created an offering that enables partners to increase service attach rates and margins while building more strategic relationships with their customers,” said Jim Harold, Vice President of Worldwide Channel Sales at Blue Coat Systems. n

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FEBRUARY 2010

cover story

Budget As the Finance Minister gets set to present the Union Budget for 2010-11, DCC highlights the expectations and perspectives of some key execs in the IT fraternity

Expectations ALOK BHARADWAJ

SR VICE PRESIDENT, CANON INDIA

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e would expect the stimulus package that the government has announced (countervailing duty, CVD tax reduced from 10-8%) to continue for some time as the investment climate has improved.

B2C business looks good but B2B business needs to scale up further.

I would also expect in the budget the correction of the anomaly in a few IT products categories like printers on abatement. The government had amended the duty structure basis from value based to retail price based with an abatement of 20%. This abatement is quite low and the industry still requires the support of the government to increase it to 30% so that freight reduction of 10% can be passed on to the consumers. Also, more thrust needed on infrastructure development.

DIGIT CHANNEL CONNECT

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FEBRUARY 2010

cover story

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ooking at the current market scenario, industries have started coping up from the negative impact of global slowdown, but unfortunately the Indian IT hardware industry is not doing that well as compared to other industry verticals. So, first and foremost the government should continue the stimulus package for this industry. We also expect clarity on the roadmap for GST. However, to sustain hardware manufacturing in the country for the longer run, it is critical that taxation structure should be stable. While the Indian GDP growth this fiscal is growing, the market for desktops is showing negative growth. This factor should be looked into seriously in order to drive the growth.

We have also recommended that the 8% excise duty/CVD on all VINNIE MEHTA IT products–computers, peripherals and components - be mainEXECUTIVE DIRECTOR, MAIT tained as is. It should be ensured that the IT product value chain has a seamless CENVAT chain. The output/finished products at no stage should be at lower excise duty/CVD than the inputs/components. Further, it is strongly recommended that the rate of service tax be aligned to that of the excise duty/CVD to avoid structural anomalies. Currently the service tax is pegged at 10% while the rate of excise duty/CVD is 8%.

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do expect this budget to be more reformatory in terms of implementation of Direct Tax Code and GST. I would expect a Phase 1 plan introduced in this regard as this may be implemented in stages over next two years or so. Hence it is very unlikely there may be changes in tax rates in both Direct and Indirect taxes. However, I do expect a gradual shift in Corporate tax downwards around 28% and moving towards 25% in the coming years to align with DTC plans. In brief, a positive forward looking budget is expected.

I would say this budget will be very neutral to IT industry.

In India we are never motivated to enter into a space where we build IP and brands and sell globally. India should build more IP and market products globally. It has always been a challenge to do that. However, with the help of Government, there should be incentives by ways of grant or incentives for software product companies building IP for the country. These companies should be showcased and marketed by Government through its various channels.

BIJU NAIR

VIKAS KHANVELKAR MANAGING DIRECTOR, DESIGNTECH SYSTEMS

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he whole of last year vendors like us have been paying service tax as VAT (or CST) on software sales. This I believe is not correct for our industry segment. Our end customers are also ending up paying more. This budget should bring more clarity on this aspect.

Service tax on services and software will have impact on our vertical. So, I would say that this parameter should be carefully looked upon. Any taxation which affects auto Industry will have similar (positive or negative) impact on our performance also.

Last but very importantly, STP benefits should continue for a longer time.

Service tax on IT/Engineering services should remain at same level.

CFO, FOUR SOFT

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he duty structure should remain stable. It becomes very difficult for the industry to introduce newer price structure on regular time intervals. We expect stability and consistency from the Budget 2010. We are still living under the huge negative impact of global recession – and the IT industry is no different.

The IT hardware market is not growing at a level it should, even though prices have already come down. I request the concerned agencies to come up with a consistent and motivating budget, which will drive the growth of the IT industry.

The economic slowdown of last year has somewhat affected corporate investments. The budget should facilitate companies SR NAUTIYAL to retain more investible funds for modernization and expansion.

MD, SPARK TECHNOLOGIES As one of the sectors critical to India’s emergence as the next economic superpower, the IT sector has considerable expectations from the Budget. The extension of the tax benefits beyond 2011, under the Software Technology Parks of India (STPI) scheme would enable the Indian IT sector to compete with other countries globally and sustain its global edge. These incentives will help the small and medium businesses in particular, a key growth sector that accounts for 40% of the exports made from software technology parks.

DIGIT CHANNEL CONNECT

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FEBRUARY 2010

R S RETHINASAMY

CFO, ADITI TECHNOLOGIES

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expect the budget to provide a smooth transition from STPI to SEZ regime with simplified process, reusable capital assets and manpower resources. I also expect better clarity on the tax benefits under SEZ in accordance to the proposed Tax Code.

cover story

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he budget should provide a strategy for investment led growth and stimulate demand through fiscal measures.

Though the industry is conscious of the problems of fiscal deficit, the government should pursue its focus on fiscal consolidation after the economy has recovered strongly.

While the corporate tax burden needs to be cut, the budget should make provision for investments in education, secondary and vocational in particular, broadband, infrastructure and the power sector, all of which are critical to socio economic growth of the nation. The government must create a National Technology Acquisition Fund to increase technology infusion in micro, small and medium enterprises (MSME). In the Education NARESH WADHWA sector for instance, while rightful importance is being attributed PRESIDENT AND COUNTRY to the basic foundation of education through programmes like MANAGER - INDIA AND the Sarva Shiksha Abhiyan (SSA), the focus on secondary educaSAARC, CISCO tion should increase. Also, budgetary allocation towards technology that makes distance learning initiatives viable would help to ensure access to quality education and vocational courses in remote rural areas.

One also looks forward to budgetary allocations towards some major e-governance projects, executed under the PPP (Public Private Partnership) model. Projects for citizen services should be given due importance.

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he year 2009 was a good year for Canon despite uncertainties faced by many sectors in the industry. However we expect 2010 to continue to be very strong in terms of performance as far as the consumer electronics industry is concerned.

The industry expects a reduction of 30% in the corporate tax due to the introduction of Direct Tax Code (DTC) suggesting a 25% rate. We hope that the tax concessions received by us last year continue to stay through the new year as this will give us the added boost to achieve the growth rates projected before the slowdown hit the economy.

Apart from the above we foresee the government strengthening its focus on the rural sector with greater fiscal incentives, rural employment and various other rural incentive programmes. These steps would surely go a long way in giving the rural economy and rural demand a greater boost. We expect that policies of the government should be such that they result in higher disposable incomes in the hands of customers so that they loosen up their purse strings and it results in higher sales.

ALOK GUPTA MD, SOFTMART

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e urgently need finality and clarity on the taxation applicable on Software based products. There could be one option where GST is to be applicable from 1st April 2010. Till GST becomes applicable we would require better clarity on Taxes applicable on software in different forms.

Software ESD/Paper (in the name of the end user) license developed in or outside India should have only service tax, and no VAT should be included in it. TDS on Software ESD License sales should be fixed at maximum 1%, since the margins are only 3%-4% when sold by software dealers. I would definitely demand that there should be no VAT applicable on software licenses.

PUNEET DATTA

ASSISTANT DIRECTOR – MARKETING (BIS DIVISION), CANON INDIA

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e need to have consistency and stability in the taxations and duty structure. And with the kind of economic scenario the industry is facing, it will be really great if the stimulus package is continued. I don’t feel that the industry should look at unrealistic demands from the taxation point of views but there should be no additional taxes apart from the existing taxation structure. I strongly feel that at this point of time, industry cannot digest any new tax on IT hardware or software.

Another interesting and very important viewpoint I have is for the assembled PC market. I believe that the Government should take a relook on their existing policies regarding the SAKET KAPUR assembled PC market. As this area could be a big stream for MD, GREEN VISION Indian employment generation and Indian entrepreneurship development. IT hardware segment is something which is very important area for the overall growth of the industry. And this segment is still under the impact of recession, so we request the Government to look at the IT hardware segment carefully as it needs to grow.

DIGIT CHANNEL CONNECT

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FEBRUARY 2010

KALYANARAMAN D

PRESIDENT, TALLY SOLUTIONS

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he primary expectation from the Union budget is that GST would get implemented in this period. This would certainly stimulate most sectors of the economy not simply through a cost saving, but through a simplification of commerce. This is also the belief from Tally, which truly believes in the power of simplicity.

cover story

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DIWAKAR NIGAM

MANAGING DIRECTOR, NEWGEN SOFTWARE

he IT/ITES sector has been the fastest growing segment for Exports and has also been the largest job creator in the country. With downturn in the US economy, business has been tough and appreciation of the Rupee has not helped.

The Industry needs an Extension of Tax Holiday by five years in existing STPs. The new SEZ scheme has not caught on, and is also not viable for small and medium software companies. Hence extension of tax exemption for five years is a must.

One of the major problems being faced by Software Product companies is confusion related to tax. The question is whether it is Excise or Service Tax that is applicable on Software Products.

There is need for clarity and there is urgent need for clear guidelines and notification.

T

he key demand is to issue a clear definition of customized software in contrast to packaged IT software. Also, to recognize that IT software (customized or packaged) could be sold as a shrink-wrapped box, paper license or Internet download. The major problem is simultaneous imposition of service tax and VAT on sale of software licenses. Double taxation has increased costs.

There also needs to be a reduction or removal of excise and CVD on packaged software because packaged software is in no way a threat to the local IT industry. Channel partners are facing huge working capital issues as customers started slashing TDS (tax deducted at source) on the invoices raised by channel partners on software that’s sold in the country. At 10.3 percent TDS, partners are facing huge complications. TDS has to be reduced significantly/ removed.

SHRIRAM KRISHNAMACHARI HEAD – CHANNELS & DISTRIBUTION (INDIA AND SAARC), ADOBE SYSTEMS

U

nion Budget 2010-11 has already spurred great expectations and discussions. The Government has plenty of issues to take into notice in order to come up with an ideal budget plan that meets everyone’s expectations. We are looking forward to a budget that provides stability and does not result in disruptive changes. The key issues from our perspective include: n Continuity of the uniform 4% VAT till such time that the GST gets implemented. A disturbing trend noticed is that of different state governments moving away from the ‘accepted, uniform 4% VAT level’ - this varies from 5% to even 12.5%! n Continuity of the present duty structures - the IT hardware industry witnessed a de-growth in 2009 (compared to 2008). In an emerging and growing economy like India, this is unacceptable and unaffordable. Thus any attempt to increase duty rates (excise or otherwise) would be counterproductive. n Removal of 4% SAD on imported items to avoid overflow for local manufacturing. Otherwise this CENVAT credit piles up without any opportunity for utilisation. MRP based valuation should be removed under both Excise & Customs for IT hardware items. The dynamic nature and the rapid pace of technology make the task of MRP quite meaningless.

S RAJENDRAN CMO, ACER INDIA

DIGIT CHANNEL CONNECT

16

FEBRUARY 2010

GAUTAM GHOSH

COUNTRY MANAGER - INDIA, VIEWSONIC

I

don’t expect that this budget would be very populist like the earlier one.

Probably our finance minister will have to take some hard steps towards financial reforms. The spiralling food price index needs to be addressed as high priority.

The proposition of withdrawal of SAD is overdue. We are expecting some action on the same. Secondly the abolition of Central VAT is needed. This is most essential to help free flow of goods from one state to another.

special report

Data Management

IS

DATA A COST OR A

HIDDEN OPPORTUNITY? Learn how to make information work effectively for your business GEETAJ CHANNANA

D

ata in an organization is like blood in the body. It has to be purified continuously, pumped regularly and it must reach all the correct organs in the body in time to ensure that all body functions are being performed seamlessly. One blocked artery and the chain is broken, and the body collapses.

Your business works in the same way. If you can ensure that your data is secure, and moves freely to the right people in the organization on time, it will result in a machine that is running smoothly. It will also ensure that the intervention, when required, comes at the right time.

To gauge the way companies use their data and convert it into opportunities, we conducted two surveys – the first asked people how they stored and used their data and the related challenges. The other was on business intelligence tools and their effectiveness in making the right business decisions.

DIGIT CHANNEL CONNECT

18

FEBRUARY 2010

special report 80%

Data Management

Challenges in Managing data

80% 70%

30% 20% 10% 0%

Providing anythime, anywhere access to data

26%

37%

More than ahalf of the respondents were from companies with more than 500 employees. About 40 percent respondents were from companies that had revenues of more than Rs. 2.5 billion. Most of these companies were owner driven, and technology related decisions were taken by the CEO, President or owner of the company.

More than 50 percent of these companies are also forward looking and ready to adopt new technologies.

We will be quoting results from these surveys through the story.

Creating Data Even an advertisement from a leading technology company on television talks about the amount of data we are creating daily in the world. It is more than all the information in American libraries. A regular company is no less.

There are so many kinds of data that an organization produces or has to use.

It is data about customers, logistics, transactions, products, manufacturing and supply chain.

This data is not only important for your business but for people outside too. Be it your customers, vendors or the government. All require you to store, process and safeguard your data in a certain manner. There are many statutory and compliance related regu-

DIGIT CHANNEL CONNECT

20

ANISH TRIPATHI GRANT THORNTON

Technology should work as an enabler for achieving specific business goals.

59% Network storage on a file server

40%

Vendors provide a Hanuman approach in ERP systems.

How do you store data in your organization

60% 50%

26%

34%

ASHOK MALHOTRA, METTLER TOLEDO

17%

Other

0%

31%

Off site data center

10%

Local storage with computer

20%

Network of storage servers

30%

Ensuring effective data backup and recovery

40%

50%

Greater quantities of data (Data Explosion)

50%

More types of data and documents (data proliferation)

60%

60%

Ensuring that the data is secure, and only the right people have access to it

70%

10%

lations that come into play too.

And you need all this data converted into information at the right time to take effective business decisions.

Like with the body, you need to have the right fitness level before you start playing a sport – you need to store and secure your data properly before you start making business decisions.

Keeping Data Organized Data Management starts with aggregating the data of the organization and storing it in the right way. In this age of information the amount of storage needed has increased multifold. Close to 50 percent of companies surveyed have 100 to 500 GB of storage to manage, and about a third have more than 1.5 TB of data.

The challenges posed by this deluge of data are immense. There is also the attendant risk that this free flowing data can result in espionage, data leakage and data loss. Resulting in loss of business and opportunities.

Close to 60 percent companies store their data on file servers, with some using storage farms. But, the worrisome point is that over one third of the companies surveyed still use personal computers for storage.

These companies are the ones that are likely to be the hardest hit by a data

FEBRUARY 2010

Awareness of business intelligence (BI) solutions and tools No 46%

Yes 54%

loss incident. That is because it is difficult to manage and backup data from individual computers. Add to this the fact that recovery mechanisms for a PC are pretty rudimentary. Eighty percent users lose their data because of hardware failure, which is a lot more common in notebooks and desktops.

This is also the place where data turns into a cost. The cost of securing it and that cost that arises when you lose that data.

Thus, consolidating data in servers is a good option. Some companies are also dabbing with desktop virtualization. It helps in eliminating desktop computers altogether and processes all the data on a server, thus considerably decreasing the risks related to data loss.

Preventing Data Loss You can either have a vaccine for a dangerous disease or take a medicine to cure it. Similarly for your business you must have a two pronged strategy of security and disaster recovery.

Companies feel that the biggest challenges in managing data are effective backup and recovery (60%), and ensuring that the data is safe and right people have access to it (57%). Thirty one percent think that data proliferation is the biggest challenge for them.

Twenty eight percent organizations admit that they have been affected by data loss. Forty four percent of the surveyed companies say that they have been able to recover the lost data less than 75-percent of times, when data loss has happened.

Businesses must understand that losing data when you are growing at a fast pace can hit you harder than you can imagine. It is like blowing a tire while accelerating a really fast vehicle. You will end up losing more than what you may have gained by prioritizing project delivery over data backups.

Converting Data into Intelligence Once you have secured your data and have the right processes for backup, the next step is to make it work for you. This involves giving access of the right data, to the right people, at the right time. This is where Business Intelligence comes in.

Hans Peter Luhn, an IBM researcher, used the term Business Intelligence (BI) for the first time in an article written in 1958. He defined the objective of BI as

special report “the supply of suitable information to support specific inactivities carried out by individuals, groups, departments, divisions or even larger units.”

The keyword here is ‘suitable information’. Having access to data is not enough. There should be a correct context to it. Correct data in the right hands at the right time can be extremely valuable.

We did a survey of more than 100 business and technology leaders from mid-tier companies to determine the awareness of specialized BI tools, the type of tools being used and understanding their utility. We found that more than half of all the responding companies were using an ERP. Many felt that it is difficult to integrate reports from various systems. More than a third thought that the reports they were currently getting were either too detailed, out of date or incomplete.

This means that even after investing a large sum on an ERP system, organizations were left wanting for information. Most people who use ERP dashboards also use a BI system or plan to use one.

Does it mean that the ERP implementation is inadequate? Anish Tripathi, Par tner, Markets and Strategic

Services at Grant Thornton says, “The vendors provide a Hanuman approach in ERP systems. They give clients the full mountain and it is up to the client to figure out what he needs.” He adds,” There is no need of a BI product if the ERP vendor has done a good job.”

This reiterates the need to add context to the data, otherwise a senior manager is just crushed by the deluge of data and cannot draw any effective insights from it. Rather, the data overload results in loss of important figures and subsequently, wrong decisions.

Ashok Malhotra, Managing Director, Mettler Toledo India is going to implement a BI system even though he already has a robust SAP implementation in place. He says, “SAP gives us raw data and not insights. BI as a tool will help us use the data from SAP to improve future decision making and optimize current resources.”

According to the survey more than 20% business leaders think that transactional data in the organization is not available to the right people.

Tripathi adds,” It is not at the right time too. It is a design fault and the business leaders are also to blame because the thinking is also outsourced to the IT vendor. Most of the time the client

Data Management starts with aggregating the data of the organization and storing it in the right way.

In this age of information the amount of storage needed has increased multifold.

Data Management

does not demand the right thing.”

That makes it even more challenging to implement a BI system than it is to implement ERP. According to Malhotra, the biggest challenge that people face while implementing BI is that, “People should know what they want to get out of the system.

The technology should work as an enabler for achieving specific business goals.” Before you go ahead and implement a BI solution, it is important to get your business objectives in place and ensure that you have specific goals that you would want the BI system to achieve. Also, it is important to make fine tuning a continuous process.

As Tripathi puts it, “Lack of fine tuning is the reason why people get disillusioned after a point of time and cease to get benefits from the system.”

As the survey points out, BI is a great tool that can benefit businesses immensely, but it is important that the implementation is fuelled by correctly defined business objectives, and the tool is tuned periodically to ensure that its productivity is maintained.

Data, thus, is also like your girlfriend. Treat it well if you want a peaceful and prosperous life; abuse it at your own expense. n

DIGIT CHANNEL CONNECT

21

FEBRUARY 2010

channel q&a Green Vision

“WE FOCUS ON AREAS THAT ATTRACT MAXIMUM CUSTOMERS” ­Saket Kapur, MD, Green Vision Kapur shares his journey of making Green Vision one of the most admired channel companies in India in an interaction with Charu Khera DCC: Can you please recall the journey of Green Vision since its inception days?

Green Vision was incorporated in 1990. Launching a company back then was very different from what it is today.

The words like ‘private equity’, ‘raising capital’, etc were not part of the dictionary because economically, India was in a transition phase. The paradigm for business, especially entrepreneurship, meant the owner doping the entire work himself. This is exactly how Green Vision was started.

My primary investment in the company was my experience. I cannot calculate my progress in terms of my annual turnover; rather I consider my own as well as my organisational development to be the progress. From a oneman’s show, we have now gone into many functional departments.

DCC: In a highly competitive world, the biggest challenge is to retain customers. What are the strategies you follow to attract customers?

The word ‘strategy’ appears a little calculative because when we deal with customers, we do not have a strategy in mind. One should be particular about the strategies and mould things as per the situation.

Customers need warmth and special attention. For us, customers are more than a mere source of capital and we try to make them feel so. We understand their requirements and help them buy the product of their choice by presenting before them the best of deals. We educate them and not push them into buying from us. The idea here is to strike

DIGIT CHANNEL CONNECT

22

a healthy relationship with customers so that they always come back with a positive feel good factor. Being ethical is another way that can help one retain customers and sustain business.

DCC: The tough economic conditions gave enterprises extra time to sit back and strategise their business. Do you agree?

Our economy is cyclical and I would say that recession is again a phase of that economy. There will be ups and downs and it is up to an individual as to how he reacts to a particular situation.

We too utilised this phase to sit back and strategise and have been able to chalk the vision for our organisation for the next five years and thus, I believe that slowdown brought a positive change for Green Vision.

During the normal working times, we often do not get time to trace the growth of our business, but slowdown gave us the opportunity to do so and also identify our core areas of competence.

We tried to focus on retaining customers by providing them timely services, irrespective of the tough times. We realised that we need to be prepared to avoid such slowdowns in future. And above all, we tried to understand that such things cannot really bog us down.

DCC: From the channel community perspective as a whole, what are the key challenges that partners face in the IT business?

IT business can be categorised into three broad areas – networking, computing and services. Networking was the least affected by the slowdown whereas

FEBRUARY 2010

My primary investment was my experience.

I cannot calculate my progress in terms of my annual turnover; rather I consider my own development as well as the development of my organisation to be the progress.

computing segment saw a major transition. There has been a drastic shift from the local brands or assembled segment to multi-national players. Desktops have been replaced by laptops/note books or netbooks. Partners who deal in assembled PCs or sourcing components can face a tough time ahead. For one whose role is limited to buy a branded PC and sell it to customers, their reach as well as margins are expected to reduce.

Therefore, this shrinking of margins poses a major threat to the channel business because there is no scope for benefits and value-adds for the partners.

Services, on the other hand, is one area where channel is sure to survive and succeed. Almost five years back, a customer would take maintenance contract for his IT infrastructure, whereas today the trend has changed – rather than investing in hardware or software, they recruit system administrators/ IT professional or even outsource their entire IT infrastructure. But due to this, large contracts have almost got finished - this is a challenge in the services sector.

DCC: What has been your key focus?

Customers need warmth and special attention. We educate them and not push them into buying from us.

As for now, ever y area where customer can increase our productivity is the key area for us to focus. We work for our customers’ needs and requirements and therefore it becomes our sole responsibility to focus on the areas that can attract the maximum customers.

Remote Infrastructure Management Services (RIMS) is one of our key areas.

We do not specifically provide RIMS; we employ this tool to remotely support our native customers only. n charu.khera@9dot9.in

channel q&a Redington

“Value-add has become a much-abused term.”

PS NEOGI, President, Redington India

Neogi talks to Muntazir Abbas about the challenges that Redington, one of the fastest growing distributors of IT products in India, faces and the road ahead in distribution DCC: What are your key supply chain challenges?

As a key Supply Chain Solution Provider to the IT Distribution Industry, our constant challenge is to educate both channel partners and vendors on the “cost vs value” elements of the various components of the services being extended by us. The main challenge is containing the cost of various services that we provide while maintaining a competitive offering to our business partners. Supply Chain Management is a space intensive and manpower intensive service and the quality that we can offer in this area is directly proportional to the value that our customer is willing to attach to it.

DCC: How do you structure your support system to serve small-town channel partners for issues like warranty and replacements?

Warranty and warranty related replacements are offered strictly as per vendor policies and guidelines. We do have a division - Redington Reverse Logistics Centre (RRLC) - which supports the vendors through a toll-free number which provides a single point contact for all warranty related logistics issue.

Partners can log their warranty related requirements with RRLC, which would co-ordinate and guide them at each step of the process, as laid down by the vendor.

DCC: Most of the distributors today provide value-added services. How do you differentiate your offerings?

“Value-add” has become a muchabused term, being used too lightly. Also,

what is “value add” today becomes a “norm” tomorrow. The largest valueadd that all the National Distributors are providing to all the business partners are deployment of Capital for extending credit and maintenance of Stocks across the huge geographical spread of the country.

Nevertheless, as the channel graduates more and more into solution selling and the vendors look at extending the reach of their Enterprise Solutions to beyond Tier-1 cities, Redington has deployed skilled resources to train partners and help them propose and configure solutions to the end-customers. We represent the vendors’ extended arm in the SME segment in this respect.

Unfortunately, obtaining sufficient value for this investment, both from partners as well as from Vendors is increasingly a challenge.

DCC: What are the trends in the movement of volume products in smaller cities?

The trend is very well-established.

Penetration in Tier-2, -3, -4 cities is on continuous increase. These cities have demonstrated growth even during the period of economic slowdown over the last 12 months.

DCC: Redington had said that it would set up an NBFC to offer credit. Please update us on this?

Our 100% owned NBFC, Easyaccess Financial Services Ltd, has been in existence since January 2008 and over that past two years, nearly 100 of our largest channel partners have availed Working Capital funding from it. EFSL

Supply Chain Management is a space intensive and manpower intensive service and the quality is proportional to the value that our customer is willing to attach to it.

THE LARGEST VALUE-ADD THAT ALL THE NATIONAL DISTRIBUTORS ARE PROVIDING TO ALL THE BUSINESS PARTNERS ARE DEPLOYMENT OF CAPITAL FOR EXTENDING CREDIT AND MAINTENANCE OF STOCKS.

is strictly governed by RBI regulations, being subjected to regular RBI audits and there are specific documentation requirements that the partners would need to comply with.

DCC: What are the key benefits from your Automated Distribution Centre (ADC) in Chennai? It is learnt that your company is planning for more such centres?

The ADC at Chennai is operational.

The next four are planned at Kolkata, Delhi and Mumbai. The key benefits are Economics of scale, Consolidation of Regional warehouse space during a single GST regime, and Ability to extend efficient 3PL services.

DCC: How are you placed vis-à-vis traditional competitors and other logistics companies?

There is no point in comparison with other logistics companies as we are still not into large scale 3PL services. As compared to our competitors, I would only state that we provide quick and easy access to our partners across all geographies in India, for most run-rate products that we carry.

DCC: How is your move to diversify into lifestyle products paying off?

Our diversification into Lifestyle, Digital Products and Consumer Durable has helped us tremendously in addressing a completely different market segment. Our “non-IT” portfolio is growing at a very rapid space and it is likely to more than double its revenue this fiscal, as compared to FY 2008-09. n editor@digitchannelconnect.com

DIGIT CHANNEL CONNECT

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FEBRUARY 2010

vendor speak Extreme Networks

“ We will focus on data centres and BFSI verticals in 2010” ­Jitendra Gupta, Country Manager—India and SAARC, Extreme Networks

Gupta discusses with Charu Khera the key verticals that Extreme Networks plans to tap into this year through support from its channel partners DCC: Can you brief us about your distribution structure in India?

Extreme Networks follows two model distribution approaches – Global Alliances like Avaya, Ericsson & Siemens who sell as well as bundle Extreme products with their convergence solutions and then there are channel partners, SIs who focus on the enterprise space. We also have a direct sales team in Delhi, Mumbai, Chennai and Hyderabad.

DCC: Extreme Networks launched its Partner Programme in India in 2009. Under the same, the company appointed 20 SIs across India. Do you plan to make further enhancements to the programme?

The partner program offers four levels of partnership - Diamond, Platinum, Gold and Silver. These titles are awarded to partners based on the sales and presales skill set, revenue commitment and service capabilities.

Our channel policy is to work with selective partners and thus, we do more with less - same like our products. The Partner Program is built on value, innovation, and commitment.

Presently, we have 30 odd partners in India and in 2010; we will add new partners in the new territories so that we can have a wider reach in the country.

Also, in 2010, we will focus on enabling our partners with the latest technologies by conducting various boot camps as well as webinars. There are excellent opportunities in India and we need to convert these into business through our channel partners.

DIGIT CHANNEL CONNECT

24

DCC: Throughout 2009, Extreme Networks tried establishing itself in the Converged Enterprise and Carrier Ethernet market. How successful have you been and how well-equipped are your partners to help you achieve these results?

We have different partners working in Carrier Ethernet and Converged Enterprise segments. In the last six months, we have introduced around eight new models for the segment and all products are aimed and researched to solve “Business Problems” with superior technology.

To maintain the pace with technology, we need the constant support from our channel partners. For the same, we believe in providing them certification courses of our products. These training and certification are web-based courses and are a must for them to retain their partnership levels.

DCC: What are some of the key channel initiatives planned for 2010? Also, please share your expansion plans.

Throughout 2010, we will reward our partners who have made the necessary investments in training, technical and sales competence. Furthermore, to motivate the sales team we have introduced “Purple Point” incentive program for signed partners. A major agenda is to conduct a national level partner meet.

Our expansion plans are twofold as India is a very important market for Extreme Networks in the APAC region.

We therefore will continue to strengthen our presence with selected partners in the metros and state capitals.

FEBRUARY 2010

To maintain the pace with technology, we need the constant support from our channel partners. For the same, we believe in providing them certification courses of our products.

These training and certification are web-based courses and are a must for them to retain their partnership levels.

Apart from this, we are in the process of identifying partners in cities where we do not have direct presence. We are also leveraging our distributors’ strength in tapping B- and C-class cities.

DCC: Which market segments or verticals will you focus on in 2010?

We have been quite successful in verticals such as Education, Government, Te l e c o m , S e r v i c e P r o v i d e r s , Manufacturing, PSUs, Hospitality and Healthcare. With the new range of products, in 2010 we will be strongly pitching for Data Centres & BFSI verticals as well.

DCC: What are some of the challenges you face in channels?

Most of our partners are used to fighting against the so-called ‘branded giants’ and they are very confident technically about our products and solutions, which helps them in converting competition accounts. But with the new partners, it is a bit of challenge.

DCC: Please comment on the latest trends in next-generation data centres.

The adoption of virtualisation and outsourcing of infrastructure to managed hosting and cloud providers is driving demand for high performance and increased scale in the data centre network. Today, hosting companies and enterprises alike are scaling their data centres to realise the benefits of a virtualised infrastructure and cloud-based applications and systems. n charu.khera@9dot9.in

vendor speak IBM

“A HUGE FOCUS WOULD BE ON MIDDLEWARE”

lower in DB2 Express. We are also focusing on prepackaged and preconfigured appliances with plug-and-play software architecture like Lotus Foundation and Tivoli Foundation. We are also stepping up our public cloud offering like Lotus Live.

Sandy Carter, VP, Channels, IBM Software Group

DCC: What kinds of tools do you provide partners?

In an interview to Soma Tah, Carter talks about some of the key partner initiatives in India DCC: What are your new partner initiatives in India?

We have started a unique concept of business partner-led territory in India, where a partner actually is the go to market lead for a typical set of clients spread across different geographic locations. They do the business development for IBM Corporation for the specific accounts across different geographic territories.

We have introduced this concept of Software Value Plus to help

partners maximize profits by reselling IBM software, based on the clients’ needs and their investment in skills.

DCC: Do you focus on any specific verticals or kinds of partners?

We are looking for dif ferent types of partners who have proven expertise and focus in specific industry verticals. A huge focus would be on IBM middleware and we are trying to tap the ISVs for this. Similarly, we

are looking at service providers and system integrators who have industry-specific skill sets and business knowledge to cater to different industry verticals.

DCC: What solutions do you plan to deliver to SMBs?

We have a lot of products in our portfolio that hit the SMB sector. For example, DB2 Express, mainly because of the storage and performance in respect to the cost incurred which is comparatively

We a r e b a n k i n g o n o u r collaborative partner strategy to support our growth plans a great deal. Additionally, we are also using Lotus Community, where the partners can pick up communities based on their interest and collaborate on their skill and knowledge. We are also using social networking sites like Twitter and LinkedIn for exchanging information and growing business connections.

We are also allowing them to use a collaborative partner dashboard which they can leverage to pull information online. n soma.tah@9dot9.in

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FEBRUARY 2010

best of biz Working Capital

CREATING LASTING VALUE

Burzin Dubash dwells at length on ways to optimise procureto-pay cycle of companies

W

orking capital is the cheapest and the most accessible finance available. It provides businesses with the crucial opportunity to pay down costly debt and regain borrowing headroom. A focus on working capital can help management drive transparency and accountability throughout the organisation. Most companies focus on reducing debtor days, delaying vendor payments and/or bringing down inventory instead of taking a more holistic view while managing working capital.

Create long-term value. Focusing on working capital management provides companies the opportunity to create lasting value. Working capital is a lens through which management can examine an organisation’s productivity

DIGIT CHANNEL CONNECT

26

FEBRUARY 2010

and efficiency. Implemented correctly, working capital management will make companies much stronger tomorrow than they are today. In order to drastically improve management of working capital, companies need to take a crossorganisational view of the cash-conversion cycle, including procurement to pay, forecast to fulfillment and orders to cash cycles. They need to break down and evaluate individual components of each element of the cashconversion cycle and then bring about lasting changes in how cash is managed.

Holistic approach. The fundamental problem with enhancing working capital management is that typically the whole function doesn’t come under a single person. The responsibility for procurement, inventory management, customer

contracting, credit management and logistics are with different parts of the organisation, with often competing agendas. If companies want to shrinkm the cash-conversion cycle, they need to get everyone in the supply chain—from procurement to production and treasury through to customer service, working together and thinking like a CFO. In my previous article, I had talked about the three key processes that could be optimised in almost every enterprise to release that precious working capital.

While I had dealt with inventory management previously, I will look at some strategies of optimising the procure-topay (P2P) cycle in this article.

Effective management of the P2P cycle is one of the easiest ways for businesses to improve cash flow, and a regular review of policy and procedures in this area also helps in identifying further opportunities to deliver hardcore rupee savings. Creditor management is about maximising the period from purchasing goods and services to paying for them, thereby reducing working capital requirements in the business. This objective of maximising the credit period must be carefully balanced to ensure relationships with suppliers are not damaged and stock levels optimised.

The accounts payable profession (if that’s an appropriate term to use) is unregulated though there are international standard-setting bodies, an example of which is the International Accounts Payable Professionals (IAPP), an association of more than 5,000 members in the US, Canada, the UK and other countries. What is interesting is that as part of its Professional Standards Framework, the IAPP has established a new definition of the accounts payable function: Accounts Payable (AP) is a strategic, value-added accounting function that performs the primary non-payroll disbursement functions in an organisation. As such, the AP operation plays a critical role in the financial cycle of the organisation. AP enables an organisation to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the entire payables process. In addition to the traditional AP activities whereby liabilities to third-party entities (suppliers, vendors, taxing authorities, etc.) are recognised and paid based on the credit policies agreed to between the company and its suppliers, today’s AP departments have taken on much wider roles, including fraud prevention, cost reduction, workflow system solutions, cash flow management, internal controls and vendor (supply chain) financing. So

best of biz Working Capital let’s examine how businesses and their AP professionals can do justice to the following objectives:

Create cross-functional responsibilities Our experience has shown that companies can best manage working capital by creating cross-functional teams with the CFO as the “overall sponsor”.

This helps create a common view and shared responsibility for outcomes. Team members need to collectively agree on cash targets and key performance indicators (KPIs). This ensures that every team is held accountable to each other and also to the organisation. Also, it is critical that non-performance is properly dealt with; reward and compensation need to be tied to these collectively reached cashflow targets and KPIs.

Have a clear AP policy All companies should set a clear policy on creditor management that will underline their approach to sourcing and negotiating terms and conditions. That policy should take account of optimal stock holding levels (including the importance of holding buffer stocks to avoid stockouts) and timing of other cash flows within the business. The purchasing strategy should be aligned to business goals and priorities should be set.

Is price the most important issue, or is certainty of supply or quality of product paramount? Determining the key drivers for the business will guide you in your approach to managing AP.

Negotiate credit smartly Your ability to optimise the credit period will be driven by a range of factors, including the relative importance and dependence of your business on particular suppliers and their dependence on your business as a customer. Where goods required in the business can be sourced from a number of suppliers there may also be opportunities to negotiate favourable terms with existing or new suppliers—who will be keen to retain or win you as a customer.

Reduce number of suppliers By reducing the number of suppliers by striking up key strategic sourcing partnerships, companies can usually negotiate better payment terms, and greater reliability in terms of product quality and supply, while decreasing the AP workload and the risk of payment errors. However, care must be taken to ensure that overdependence on too few suppliers does not carry too high a risk.

Partner with your suppliers Partnering with your suppliers is by agreeing to pay them on set dates— which could assist in negotiating extended credit terms for yourself.

Stockholding considerations will be important in negotiating with suppliers, in terms of the holding costs to both your business and the supplier. Better terms can often be agreed by negotiating purchasing agreements where commitments to take set (or minimum) quantities at set dates are made, thereby enabling your suppliers to better plan their production schedules.

Boost fraud prevention and detection measures AP fraud techniques have increased in recent years, as more people have learnt to penetrate AP systems and make fraudulent transactions. Companies now must protect themselves against a variety of AP fraud techniques. In response to these security issues, leading companies establish systematic antifraud controls that focus simultaneously on fraud prevention and detection. Key fraud prevention and detection measures include the following: n

Publishing a clear code of ethics regarding financial fraud; n

Segregating AP job functions so that no individual employees can single-handedly authorise and access payments; n

Employing stringent controls to monitor AP applications; n

Managing vendor master files closely to reduce potential for payment error and fraud; n

Using data analytics to constantly monitor key AP trends; and n

Performing random procurement audits.

Use compliance efforts as process improvement opps As an integral part of corporate finance operations, AP departments are likewise heavily engaged in compliance efforts.

Rather than viewing this as a burden, however, forward-looking AP departments use compliance efforts to build world-class performance. It is important that management takes a step back periodically to critically review their operating processes and strive to bring in greater efficiencies and controls leading to an overall improved AP function.

Strategies for bringing in efficiencies in your AP process n

Automate or eliminate steps in invoice

processing. n Leverage technologies such as opti

BURZIN DUBASH

Today, many electronic apps are available to integrate the procurement, receipting and payment activities and to make less burdensome the need to re-key invoice information or to match invoices with receipts manually.

All companies should set a clear policy on creditor management that will underline their approach to sourcing and negotiating terms and conditions. That policy should take account of optimal stock holding levels and timing of other cash flows within the business.

cal character recognition (OCR) and work-flow systems to digitise invoice documents. n

Integrate ERP systems; use electronic invoice matching applications. n Implement a No-PO (purchase order)

No-Pay policy. n

Use electronic fund transfers for justin-time payments to maximise your credit terms. n Rationalise payment terms to a few

standard periods. n Rationalise payment-approving

authorities. n Keep your payment date commitments

to your vendors. n Explore payment discounts from your

vendors. n Eliminate disputes; create a single

point of contact within the organisation with whom vendors can interact to resolve their disputes. n R educe er rors; overpayments,

payments made to the wrong vendors, fake invoices, or even late payments are a common problem for payables. n T rain personnel; provide your

accounts payable staff with regular formal training. Too often, the AP process breaks down precisely where invoice processing begins. Companies commonly find themselves spending a lot of time tracking delinquent invoices or re-keying information erroneously into the AP database. Worse yet, suppliers sometimes add to the confusion by issuing a single invoice for multiple shipments or in some cases, multiple invoices for the same shipment, thus making the task of matching invoices to receipts difficult.

As a result, companies end up wasting time correcting invoice errors, delaying the entire payment process.

Fortunately, companies that apply best practices have found a way to circumvent the problem by leveraging information systems and redesigning the AP process to automate or eliminate steps in invoice processing. Today, many electronic applications are available to integrate the procurement, receipting and payment activities and to make less burdensome the need to re-key invoice information or to match invoices with receipts manually. And, with most of the routine transaction processing tasks in AP becoming automated and process driven, AP professionals can take part in more value-added activities, including being a catalyst for cost-control efforts while at the same time ensuring strict compliance with the organisation’s procurement policies. n Burzin Dubash is Executive Director, Axis Risk Consulting.

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analysis

Oracle-Sun organized just after closing the deal, Oracle President Charles Phillips told customers and analysts, “Spending on research and development will surge to $4.3 billion from $2.8 billion in the prior year.” In Ellison’s words, “the proof will be in the pudding in the integrated products we deliver to our customers.”

Ellison went on to say at the event, “The combined company will be able to produce everything that businesses use in their data centers, from semiconductors and operating systems to computer servers, databases and accounting software.”

The company has been trying to boost market confidence through such forward-looking statements, but customers and partners are anxious to see the results. “We run a good part of our business on Sun and Oracle. We are intrigued to see what advantages may be gained from partnering with a single vendor who has a complete vision for how to support our technology,” the Oracle website quotes David Buckholtz, VP of Enterprise Technology and Quality at Sony Pictures Entertainment as saying.

Impact on the Indian market

In Search of SUNSHINE With the Oracle-Sun mega merger finally coming through, customers and partners are anxiously waiting for the fog surrounding it to dispel SHWETA VERMA

A

s one of the world’s top business software makers takes over one of the leading hardware stalwar ts in a whopping $7.4 billion transaction, the technology industry has been agog with unprecedented expectation. Unprecedented, because a pureplay software giant, Oracle, has bought a hardware-dominant player, Sun Microsystems.

Recently, with the acquisition being cleared by the European Union and

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with Oracle CEO Larry Ellison finally putting to rest all doubts about the deal, the industry is looking forward to what happens next. That is, how the process of integrating Sun into Oracle actually takes place. This is important for the customers as well as channel partners of both the companies.

Indications to the future roadmap of the combined entity are beginning to appear, even though a lot of clarity is still required from top management.

For one, Oracle is going to up its research spending. At a recent event

The anxiety has spilled over to the Indian market as well, with different partners viewing the situation depending on their stakes in the two companies.

Many customer s of Sun have decided to hold their future investments. “The market situation is very tough. Customers are quite fearful,” says Anindya Sinha, Manager, Accel Frontline, one of Sun’s solution providers in India.

Ranjan Chopra, Managing Director, Team Computers, also expresses his apprehension: “The situation is not very clear. I hope MySQL doesn’t suffer.” Chopra is voicing the same concern that many in the computing world have about the open-source database that Sun acquired some time back and which is now in Oracle’s kitty.

With Oracle already a domineering player in the database market, people fear that acquisition of MySQL will jeopardize innovation.

And then, there are those who express doubts on the synergies between the two companies. “Why should a software company take over a hardware company?

I don’t understand. The product lines are so different, the sales approach is different,” asserts Ranjan Sukumar, Business Head,

analysis Oracle-Sun Relitronics, a mid-size channel partner of Sun in India.

Oracle has not yet issued any specific directions with respect to the Indian market and any delay in doing so will only add to the worries. “We have not received any roadmaps so far. I guess we’ll have to just wait and watch,” says Chopra.

“The company is working out something and we hope to hear something soon,” adds Sukumar.

Sources in Oracle India say, “It is too early in the transaction to say anything specific with respect to the Indian market. The integration process has just begun and it will take at least a month before we can say anything.”

Shift in channel strategy The strategic changes outlined by Oracle at the global level will obviously have repercussions on India. The statements issued so far indicate a shift in channel strategy. While Sun depended largely on channel partners for its sales, Oracle believes in going direct, at least to the bigger customers.

In a presentation on Oracle’s business and technology roadmap for this acquisition, Phillips stated, “We want more strategic, direct relationships with our largest customers. Our model is for our largest, most strategic customers that are making huge investments with us -- they deserve to have a direct relationship with us.”

The shift applies to Sun's 1,700 largest customers. Oracle plans to organise Sun's sales force into three areas of product specialization - servers, tape and storage - following the specialisation model of Oracle.

Although Oracle says it will continue to rely on partners for sales to mid-market customers, the emphasis will be on working with resellers that provide integration services and other “specializations” as Oracle does now with its software resellers.

How this global and strategic shift in channel alignment reflects in India is still not clear but partners don’t seem to be very upbeat. “You can’t handle software and hardware products in the same way,” says Sukumar.

We have not received any roadmaps so far. I guess we’ll have to just wait and watch. I hope MySQL does not suffer.”

RANJAN CHOPRA, MD, TEAM COMPUTERS

Chopra of Team Computers puts it more severely. “In my opinion I have found both organizations very inwardlooking and not very channel-friendly,” he says.

The shift in channel strategy has even prompted some to consider moving towards rival companies.

According to IBM Global Services, it has been contacted by several Sun resellers over the last two months or so.

However, there are many who would want to wait before taking any such decision. Sinha says, “We have been loyal to Sun for a long time. We can’t switch so easily; we would want to wait and watch for some time.” Seconding him is Sukumar, who says, “We have a majority of our customers in the Education sector, where the deal hasn’t impacted much of our sales. So, we would want to continue.”

Till the actual results of the acquisition start showing or until the company breaks its silence, the anxiety among customers and partners will continue to prevail. n editor@digitchannelconnect.com

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guest expression guest expression

Data Centre

Cloud Computing

Power Distribution in Data Centres By following a few golden rules of how power is distributed, organisations can save big time in the overall costs incurred in data centres RAJESH SANWATSARKAR

A

s data centres strive to become highly available as well as efficient, an important aspect of the entire data centre infrastructure that needs special attention is their power distribution strategy.

Traditional ways of distributing power to the racks are being constantly challenged with power densities as well as power consumption costs among data centres constantly rising. A recent study conducted by IDC found that the number one challenge facing data centres today is power/cooling. In this study, more than half of the respon-

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dents are taking a serious look at how to reduce data centre costs by controlling power consumption. In addition, an EPA study mentioned that the power consumption costs of a data centre can account for as much as 30 percent of a company’s IT budget.

According to a study by the US Environmental Protection Agency, 20% of the operational cost of a data centre is for energy and 60 billion kilowatt hours are used annually to operate data centres within the United States alone. IDC research says by 2010 the expense to power and cool the worldwide installed base of serv-

ers is expected to grow to $44.5 billion, equivalent to 70% of new server spending. Growth of data centre energy consumption within APAC increased at a rate of 23% between 2003 and 2005, compared against 17% for Western Europe, 14% in the US, and 14% in Japan.

Clearly, understanding and controlling energy costs will help meet business objectives. Beyond controlling energy costs, IT administrators are always being asked to find ways to make IT operations more productive, while at the same time improving availability. Technologies that can

guest expression Data Centre IN A NUTSHELL n A well planned rack level power

distribution strategy is impo tant to ensure continuous power to all IT equipment and to monitor and control power consumption. n Proper consideration should be given to the electrical, physical as well as the manageability characteristics of the PDUs. n Electrically, IT equipment should be chosen to run within the 200 – 250 range whenever possible. n When loads within a rack exceed 5kW, a 3-phase PDU should typically be chosen while a 1-ph PDU is good enough for loads below 5kW. n Physically, PDUs need to be easily installable and they need to have the appropriate number of outlets to power all equipment. n Remotely manageable PDUs with switching and metering capabilities provide the ideal feature set for highest levels of availability as well as data centre efficiency.

effectively monitor and control what is going on within the IT infrastructure while at the same time reducing staff workload can help focus resources on what’s really important to the business and impact on the environment.

Challenges faced Increasing energy costs are becoming the nemesis of every IT organization, with these costs robbing money from more productive business purposes.

Engineers are required to make many trips to the data centre site to recycle the power so that SLAs can be maintained, and MTTR reduced. It has become very difficult to accurately assess whether additional equipment can be safely added to an individual equipment rack or to a data centre. This further adds to difficulty indentifying power wasting devices and lack of granular power control. There is a need for environmental, real-time power consumption analysis, pre-emptive alerts monitoring that give complete understanding of hot and cold spots within the data centre, allowing for the optimization and tuning of air conditioning assets.

Major power distribution considerations To overcome such challenges and support GREEN Power Management one must discuss how to choose the appropriate power distribution products at the rack level. Interestingly enough, several of these consider-

ations also help data centre operators manage and control the largest portion of data centre power consumption, which are the actual IT loads.

Voltage to run all the IT equipment: Most modern day IT equipment typically requires 1-ph power to operate.

However, most IT equipment can accept voltages within the range of 100V – 250V. It is recommended that customers choose the higher voltage means a lower current draw for the equipment which translates into lower losses and better efficiency. Industry studies have revealed that running servers at higher voltages can bring as much as two percent efficiency advantage to the servers alone. Counting the added benefit of lower cooling, the real gains might be as high as three percent to four percent. In view of this benefit, several enterprise level UNIX, blade servers as well as large networking switches are being built with power supplies that can only accept 200 – 250V. Electrical circuits within the rack: Most IT equipment today comes with dual redundant power hence data centre operators should plan on bringing a minimum of two sets of completely independent circuits (N + N) into each rack coming from different power sources handling anticipated load capacity of the rack.

Load densities >5KW / rack, customers should consider bringing 3-phase power to the rack level which provides several benefits. This helps on Lower cost of cabling and higher reliability of electrical infrastructure using rack-mount PDUs with phase level metering. Reducing the circuit can help in maximizing the air flow both under the raised floor and within the racks keeping IT equipment from overheating. Increased rack scalability can also help in plugging in more equipment in the future.

Physical characteristics of power distribution units: One must consider three physical characteristic for rack mount PDUs like Form, Type and Number of Outlets. The Form factor the IPDU’s are either vertical or horizontal within 1U of rack space. Most modern day IT equipment are standardized with an IEC input power connector and modular input cords except for customers in North America have some equipment that has a hardwired input cord with a NEMA plug.

The PDUs should have the appropriate number of outlets required to power

RAJESH SANWATSARKAR

IDC research says by 2010 the expense to power and cool the worldwide installed base of servers is expected to grow to $44.5 billion, equivalent to 70% of new server spending. Growth of data centre energy consumption within APAC increased at a rate of 23% between 2003 and 2005, compared against 17% for Western Europe, 14% in the US, and 14% in Japan.

all IT load within the racks and we should keep in mind the power supply redundancy.

Other Important features within power distribution units: In order to ensure the highest availability levels for all mission critical equipment, it is important that data centre operators consider power distribution units that have metering as well as switching capabilities.

PDUs having metering and current thresholds capability protect rack from overloading and also helps datacentre operator to gauge actual power consumed which helps in appropriately sizing the upstream electrical infrastructure when adding new racks.

Optimizing the electrical infrastructure improves the efficiency of the entire power chain, thereby cutting down on the power consumption costs.

Remote recycle, turn ON/ OFF is required for non-responsive servers or network equipment when in hung or distress situation. This helps to minimize the downtime keeping operational costs low by reducing the number of expensive trips to the physical location of equipment.

Several modern day servers are equipped with embedded service processor technologies such as IPMI, Dell’s DRAC or HP’s ILO. But still switched PDU solutions provide several other enhanced capabilities that are important to improve the availability of the loads. Some of these features are Sequential startup, shutdown and Electronic over-current protection: Remote management of power distribution: In order to make the maximum utilization of monitoring and control features and to help realize the vision of a “lights-out” data centre, it is important that switched and metered PDUs can be managed remotely.

One must consider that Remote management should have centralized, secure and single window to manage console and Intelligent Power Device Units (iPDUs). PDUs should work in OUT-OF-BAND management and should be give global integrated view of all PDUs within the data centre.

PDUs should have features of auto discovery and grouping capabilities for outlets, which ensures that the power to the entire server can be recycled.

Rajesh Sanwatsarkar is Regional Manager - West and Industry Specialist (BFSI), Avocent India.

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guest expression guest expression Online Fraud Cloud Computing

O

nline fraud has developed into a sophisticated underground criminal operation that continues to evolve every day. Much like a real-world business, fraudsters offer products and services for a profit; they fight to gain competitive advantage and market share, are continually innovating to improve their offerings and meet customer needs.

This article will examine how the fraudster underground operates, the intricate supply chain which supports it, and how it continues to evolve.

Job specialisation

Watch

Your Click!

Just as companies use advanced security, cyber criminals, too, keep upping the ante on innovation. Here is an inside look at how the fraud underground operates ARTHUR W COVIELLO, JR

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Harvesting: The fraudster underground is a marketplace for selling compromised credentials and tools and services used in the commission of fraud. Harvesting is the process of collecting credentials and personal information from online users. A harvester works to steal and collect compromised credentials with the intention of reselling them to other fraudsters to cash out. Harvesters leverage technical infrastructure and tools such as phishing kits, trojans, ATM skimming devices, and advanced infection delivery platforms.

The technology and methods used to harvest credentials have evolved dramatically in the last few years, and continue to advance in order to circumvent established security measures employed by organizations and consumers. The infrastructure developed and used by harvesters today offers great scalability and a high degree of customization per specific target. The cost to deploy an attack has also decreased. Zeus has been the most predominant Trojan since last year and sells for $1000.

Amateur fraudsters can purchase the more modest Limbo Trojan for $350.

Cashier: Harvesters steal credentials and sell them to Cashiers. The goal of a cashier is to develop the operational infrastructure and strategy to empty a victim’s account without leaving any traces. Cashiers are likely to practice in the service industry, offering services to enable other fraudsters to cash out credit cards and bank accounts.

Cashiers utilize complex networks and often recruit bands of money mules. A money mule is a person that receives funds into their accounts, withdraws the money, and sends it overseas to the fraudster, often through a money transfer provider. Mules can also be

guest expression Online Fraud Technical Infrastructure Tools

Hosting

Harvesting Fraudster

Delivery

Operational Infrastructure Mules

Drops Monetizing

Communication via fraud forum / chat room

Cash out Fraudster Arthur Coviello, Jr

User account The fraud ecosystem consists of harvesters who collect stolen data and cashiers who use the data to empty a victim’s account.

used to receive and reship goods that are purchased online with a stolen credit card or account.

Money mule recruitment networks and “mule herders” – managers who control the network of mules – are a specialized service offered for sale within the fraud underground. Many mule recruitment scams are sent through spam attacks that direct the user to websites that offer allegedly legitimate jobs to perform money transfers. People apply for a position described as a “money transfer agent” or “regional manager.” In reality, honest people (and in some cases, dishonest people) are hired to become part of the fraud and money laundering cycle. They move cash that originates from compromised bank accounts, from one criminal to the other. Depending on the amount of money laundered, a mule will receive a small commission.

Cashiers in the underground are also evolving phone fraud services to cash out accounts by taking advantage of inherent weaknesses in the Call Centre. A new service uncovered by RSA shows fraudsters offering professional call services that can spoof any number in the United States and also offers cash out in multiple languages.

The service costs $12.00 and allows phone numbers to be customized depending on the state where the account holder resides and enables fraudsters to accept incoming calls, posing as the genuine account holder.

Innovation and technology As organizations continue to strengthen security and awareness of online threats increases, fraudsters are left to continue developing new

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ways to launch attacks. Through a combination of advanced technology, new distribution channels and social engineering techniques, fraudsters have continued to innovate in order to work around these challenges.

Phishing and fast-flux networks: Phishing is the process of attempting to acquire personal information from online users through communication such as email. Despite its lack of sophistication, phishing still remains widely popular in fraudster circles because of its low execution cost and the fact that little technical knowledge is required to set up an attack. Fraudsters can buy phishing kits for just a few dollars.

In 2009, the number of phishing attacks detected by the RSA AntiFraud Command Centre grew an astounding 66% over the number of attacks detected in 2008. But because the lifespan of phishing attacks gets shorter and shorter, fraudsters have had to innovate and develop new ways to launch phishing attacks such as fast-flux networks.

First used by the online gang Rock Phish, fast-flux is an advanced Domain Name Server (DNS) technique that utilizes a network of compromised computers, known as a botnet, to hide the true origin of the server that hosts phishing and malware websites. The botnet acts as an army of proxies, or middlemen, between the victim and the website. Exposing and shutting down attacks hosted on a fast-flux network is difficult as the server hosting the attack hides behind a cloud of compromised computers, thus the IP address is constantly changing. Of the tens of thousands of phishing attacks identified by RSA in 2009, 44% were hosted on fast-flux networks.

FEBRUARY 2010

A harvester works to steal and collect compromised credentials with the intention of reselling them to other fraudsters to cash out.

Harvesters leverage technical infrastructure and tools such as phishing kits, Trojans and ATM skimming devices.

In 2009, the number of phishing attacks detected by the RSA AntiFraud Command Centre grew an astounding 66% over the number of attacks detected in 2008.

But because the lifespan of phishing attacks gets shorter and shorter, fraudsters have had to innovate and develop new ways to launch phishing attacks.

Trojans: A Trojan is a form of malicious software (malware) that typically resides on a user’s computer. Unlike phishing which can be identified by online users, a Trojan resides invisibly in the background, waiting to facilitate unauthorized access to a user’s computer system. Trojans such as Zeus and Limbo follow a website session in real-time so there are no visible cues.

In other cases, they are capable of injecting additional HTML fields – for example, those requesting credit card numbers and PIN codes – in order to harvest supplementary data.

It is estimated that one in 100 computers is infected with a Trojan.

In addition, fraudsters are able to evade Anti-Virus (AV) systems more easily and operate testing labs to test their Trojans against leading AV software. When a signature is developed to defend against a specific Trojan, the fraudsters simply build a new variant.

Drive-by-downloads: Historically, phishing and Trojans have been recognized as two unique means of attack.

However, the combination of phishing and Trojans is becoming more prevalent among fraudsters. This is accomplished through what is known as a “drive-by download” and social engineering plays a key role in the success of these attacks. A typical ruse used by fraudsters is to take a current topic of high interest. Fraudsters send emails to unsuspecting users directing them to view a video or read a news article.

When users click on the link or the video, they are infected with a Trojan.

Man-in-the-browser (MITB) attacks: RSA has recently seen an increasing number of MITB Trojan attacks against financial institutions. An MITB attack enables fraudsters to perform unauthorized online transactions by hijacking a user’s online session in real-time, and intercepting and changing the user’s online transactions in real-time. Unlike a phishing attack, where the user is directed to a fraudulent website, an MITB attack occurs when the user accesses the website of a targeted organization and initiates an online transaction – independent of being triggered by a prompt such as an e-mail or other notification. A Man-in-the-Browser attack is harder to detect as it is done in the browser and closer to the user rather than on the traffic stream. n Arthur W Coviello, Jr is Executive VP, EMC Corporation, and President, RSA, the Security Division of EMC.

guest expression Identity Theft

TOP

10

IDENTITY THEFT PREDICTIONS FOR 2010

The new year begins with new challenges. Here is a guide to the existing and emerging identity thefts for 2010 ROBERT SICILIANO

1 2

More scams: The recession will lead to more scams.

Whenever the US has faced a difficult time, thieves have found a way to use the problem to their advantage. I’ve never seen more variations of old scams and such a wide range of sophistication in newer scams.

Job scams: Criminals will take advantage of increasing unemployment rates by tricking desperate people searching for job listings.

These fake job listings and work-at-home scams will result in

job seeker providing Social Security Number (SSN) and other important details to the criminals.

3

Low-tech desperate identity theft: There will be an increase in the number of individuals – who have no criminal history – beginning to explore the crime of identity theft for financial gain. For these thieves, it will be about quick money. Once desperate people wreck their own credit histories, they will start to use SSN for easy access.

These new identity thieves will take advantage of low-tech methods

such as stealing credit card numbers, dumpster diving, making phone calls, or phishing for credit card numbers.

These techniques may also include placing ads in auctions to lay their hands on credit card numbers or cash.

4

All-in-the-Family identity theft: Desperation will lead to more ‘allin- thefamily’ cases, as well as the fraudulent use of numbers belonging to close friends, roommates and fellow workers. It has long been documented that a significant percentage of identity theft cases are perpetrated by people close to the

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guest expression Identity Theft victim. We predict that this number will increase during these tough economic times.

5

Child identity theft: The ITRC has noted that nearly 10 percent of its case load, for the past six months, involved child identity theft issues. These cases often involve more varied components of identity theft than ever before. Some people have finally realised that a child’s SSN can be used for more than just opening a line of credit.

6

Medical identity theft: While not a new crime, this will ref lect the distress of those who have become unemployed. High insurance premiums, growing individual medical insurance costs and the inability to afford insurance or medical care will cause a spike in this area of identity theft. The Social SecurityAdministration has noted an increase in uninsured people using the coverage of a friend, relative or even a

DIGIT CHANNEL CONNECT

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stranger to get medical care.

7

Insider identity theft: In the coming year, identity theft will increase due to the failure to follow simple security protocols in the workplace. This will create opportunities for thieves to gain access to personal identifying information retained in databases or paper files. Additionally, the lack of computer security measures and the increasing skill levels of hackers will lead to larger and more financially harmful breaches. These thieves are also educating young protégées on high-tech methods to access secured information and will likely continue to coordinate malicious attacks from their jail cells.

8

G ove r n m e n t a l i d e n t i t y theft: More individuals will discover that they have become identity theft victims as they apply for gove r n m e n t s c h e m e s .

Not only will their own SSN be used,

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THERE WILL BE AN INCREASE IN THE NUMBER OF INDIVIDUALS – WHO HAVE NO CRIMINAL HISTORY – BEGINNING TO EXPLORE THE CRIME OF IDENTITY THEFT FOR FINANCIAL GAIN. FOR THESE THIEVES, IT WILL BE ABOUT QUICK MONEY. THE METEORIC RISE IN SOCIAL MEDIA USE HAS ALSO CREATED A LAUNCH PAD FOR IDENTITY THIEVES. SOCIAL MEDIA IDENTITY THEFT HAPPENS WHEN SOMEONE HACKS AN ACCOUNT VIA PHISHING, CREATES INFECTED SHORT URLS OR CREATES A PAGE USING PHOTOS AND THE VICTIM’S IDENTIFYING INFORMATION.

but they may be temporarily denied benefits due to the fraudulent use of their child’s SSN. This type of identity theft will also include complications with the IRS, Social Security Administration, Departments of Motor Vehicles, Medicare and Welfare.

9

Criminal identity theft: The number of cases of criminal identity theft will continue to grow. This type of crime is defined as the use of an individual’s personal information to avoid being tied to their own criminal record. In the current environment, the effects of criminal identity theft on the victims will be more apparent with the loss of employment, loss of benefits and the increased number of arrests of victims ranging from failure to appear warrants for traffic citations all the way to felony level crimes.

10

Social Media identity theft: The meteoric rise in social media use has also created a launch pad for identity thieves. Social media identity theft happens when someone hacks an account via phishing, creates infected short URLs or creates a page using photos and the victims identifying information. My prediction for 2010 is that the increase in social networking activity, along with a user’s failure to implement security and privacy settings and protocols, will lead to an increased exposure of not only the user’s personal information but possibly that of their friends.

Bottom line, there will be an increase in identity theft crimes and the number of victims over the next two years unless significant changes are made in information security. Our most important asset is our identity. And we are functioning under a completely antiquated system of identification.

When state governments agree with federal agencies on effective identification and industry comes together, only then will a secure environment will prevail. n Robert Siciliano is an expert on personal security and identity theft as the CEO of IDTheftSecurity.com.

analyst speak

Application Acceleration application delivery; availability, security, and performance,” said Nitin Bhat, Senior Vice President - ICT, Frost & Sullivan. “On the cloud computing front, the study showed that whilst perception towards cloud computing as a business enabler is encouraging, security and access control are key challenges that could potentially affect an enterprise’s willingness to embrace cloud computing as a viable business tool in the immediate future.”

The study, conducted in the fourth quarter of 2009 across Australia, China, Hong Kong, India, Singapore, and South Korea, surveyed large enterprises’ attitudes on a range of topics such application delivery, application security, application acceleration, and cloud computing.

Overall findings

The Agenda for Agility A recent Frost & Sullivan survey of Asia Pacific IT executives underscores the need for proactive approach to application delivery and cloud computing

F

5 Networks, an application delivery networking provider, recently announced the results of a Frost & Sullivan survey that looked at enterprise views towards application delivery and cloud computing with respect to their business needs as well as their understanding of the technology drivers behind these needs.

Commissioned by F5, the survey found that CIOs and senior IT decision makers in Asia Pacific (APAC) recognize the importance of Web applications in driving their businesses, and that their strong recognition of the seriousness of Web-based attacks makes security a top concern. However, the survey also exposed a need for more awareness about the differences between traditional network-based vulnerabilities versus Web application attacks as there appeared to be some confusion among respondents about the capabilities of network-based firewalls versus Web application firewalls.

Also, the findings revealed a preference for utilizing more bandwidth to overcome Web application performance issues.

Since adding bandwidth does not overcome latency issues caused by physical distances between source and destination,

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this potentially means that the prevalent issue of application latency remains unresolved for many enterprises.

Further, the study shows that customers see an important association between cloud computing and business agility putting an onus on aspiring cloud services providers to assure enterprise-level availability, security, and performance.

“Applications are the lifeblood of enterprises today, and it is essential that decision makers take the right approach that includes creating strategic points of control that give complete visibility.

Whether application protection, high availability, or performance, the business objective can only be achieved when the solutions are part of an overall Application Delivery Networking strategy that ensures full visibility and control of end-to-end traffic between users and application servers,” stated Song Tang Yih, Vice President of APAC, F5 Networks.

“As technology convergence continues unabated in the IT realm, the concept of a Server Load Balancer has rapidly evolved into a converged Application Delivery Controller capable of offering more capabilities on top of its base function and dominated by the three pillars of

FEBRUARY 2010

The survey found that CIOs and senior IT decision makers in Asia Pacific recognize the importance of Web applications in driving their businesses, and that their strong recognition of the seriousness of Web-based attacks makes security a top concern.

Interest in unifying application delivery capabilities on a single platform is high: Seventythree percent of CIOs and senior decision makers want two or more integrated features on a single platform. Top of their list are Global Server Load Balancing (GSLB) and security.

Mismatch between the perceived enterprise needs and the corresponding technologies deployed: Bandwidth dependence and fallacies still exist. Forty-four percent believed that simply utilizing more bandwidth is the best way to boost application performance levels. What’s more, application security is still not well understood.

Sixty-one percent believed that network firewalls can prevent Web attacks, and twenty-three percent indicated that their existing IDS/IPS deployments are forms of protection against Web attacks.

Cloud computing is viewed as the next generation application delivery channel: Enterprises believe that cloud computing will increase their agility and scalability in a cost-effective manner. However, more than half cited security issues as a key barrier to adoption of cloud computing.

The survey was commissioned by F5 to understand end-user perceptions about application delivery and cloud computing with respect to their business needs as well as their understanding of the technology drivers behind these needs. The survey consisted of around 300 enterprises, spanning six markets, and included five verticals—financial, telecommunications, government, manufacturing, and IT. The executives who participated were mainly IT executives who played an influencing role in the purchasing decisions for IT infrastructure. n