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Abhinav Agarwal

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Updated: 43 min 6 sec ago

Junk Viz - When More is Less

Thu, 2015-01-15 04:41
There are examples of junk visualizations, and then there are examples of junk charts that just take your breath away.

The Indian news portal, FirstPost.in, which describes itself as a "trusted guide to the crush of news and ideas around you", published a story titled Shivraj set for massive victory in Madhya Pradesh: Survey | Firstpost, which has this chart (link to the image) - take a minute to study it. Then study it again. It is no optical illusion or card-trick being played here.

The estimated voteshare of the INC (Indian National Congress) party goes up from 37.6 to 44%, and yet the bar goes DOWN! Ditto for the BJP, whose vote share goes up from 32.4% in 2008 to an estimated 33%, and yet the bar goes DOWN!
If you started to think that the bars had somehow been switched, the third group - BSP - is drawn correctly.
And then you have the "OTHERS" - which plots an estimated vote share of 16% at where the 14% mark would fall.

The maker of this chart should be congratulated for getting so many things wrong in one simple bar chart.

(Thanks to Kumar for first sharing this chart with me.)

BI Mobile HD Universal App Released

Thu, 2015-01-15 04:41
A new version (11.1.1.7.0.1879) of the Oracle BI Mobile HD App was released to the Apple iTunes App Store on Wednesday. This release has several new features of note. This updated version also fixes some issues that were reported in the update that went out late last week on the 28th of June.

  • All users are recommended to upgrade to this version of the BI Mobile HD app. There were login issues with the iPad version of the earlier app and orientation issues with the iPhone app. Both issues were noticed almost immediately after the app went live on the App Store and development traced these to a problem with the configuration of the app uploaded to the App Store. 
  • Users will notice that this is app now supports the iPhone (and iPod) device also. Therefore users will see this app on their iPhone when they search for it on the App Store. 
  • There is now a demo server available for use with the BI Mobile HD app. This is available on both the smartphone and tablet versions of the app. This server is available on the Internet, so customers do not need to use any proxy or VPN settings to access this server. A connection to the demo server is pre-configured on the BI Mobile HD app, so you can access the server immediately after installing the app on your device. 
  • This version of the app is supported and certified for use with Oracle BI versions 11.1.1.6.2BP1 (released in July 2012) or higher, including 11.1.1.7.0 (April 2013) and 11.1.1.7.1 
  • If you are using Oracle BI version 11.1.1.5.0 (or any of the bundle patches for 11.1.1.5), you must continue to use the existing Oracle BI Mobile app (the latest version if 11.1.1.5.0.130403) on your iPhone and iPod devices. We do not expect to support Oracle BI versions prior to 11.1.1.6 on the new BI Mobile HD app. 
  • There is a redesigned home page experience on the iPad version of the BI Mobile HD app. 
  • Users can now set their default starting configuration on the iPad version of the app – whether they want to begin with the “Favorites” or "Most Recent" or "Dashboards – from the Settings panel. 
  • A "first-time help" overlay screen is displayed when you launch the app for the first time after installing it. If you need to get back to this screen subsequently, you can do so by selecting the "Show First Time Help" option from the Catalog page. 
  • The iPad version of the app contains a Settings "backstage", an area for you to customize the app and to manage server connection settings. 
  • The minimum iOS version supported on the BI Mobile HD app is iOS 6 and above.

Best wishes!
Abhinav
Bangalore, July 4, 2013

Lying with Charts - Global Warming Graph

Thu, 2015-01-15 04:41
Global warming is a serious yet controversial enough topic without bringing in bad data visualizations practices into it. The Wonkblog on the Washington Post has an article titled, "You can’t deny global warming after seeing this graph". The post reproduces a chart prepared by the World Meteorological Association that plots global temperatures by decade. While the data shows that the last decade, 2001-2010, was the hottest on record, the graph uses a broken Y-axis that begins at 13.4°C instead of starting at zero. The chart does not hide this fact, and you can see that the chart's Y-axis starts at 13.4°C, but the most visually prominent piece in the graph is, well, the graph! And it screams the message that global temperatures are going off the charts - it's time to panic. There is no denying that we as a world need to get serious about investing in alternative and renewable sources of energy like solar, wind, and even nuclear, but this graph is just plain bad.



The data: (from the web page):
Decade    Global temperate in °C
1881-1890 13.68  1891-1900 13.67
1901-1910 13.59
1911-1920 13.64
1921-1930 13.76
1931-1940 13.89
1941-1950 13.95
1951-1960 13.92
1961-1970 13.93
1971-1980 13.95
1981-1990 14.12
1991-2000 14.26
2001-2010 14.47
How the data appears in a bar graph if plotted with the Y-axis starting at 13.4:

How the data appears in a bar graph if plotted with the Y-axis starting at 0.

For time-series data I think the line graph is much better suited as a data visualization. The same data if plotted as a line graph:First, with the Y-axis starting at 13.4:
And now with a normal, unbroken Y axis that starts at zero:

When you resort to such gimmickry to buttress your point, it not only hurts your credibility but also harms the cause.
Update: what if we decide to plot the inter-decade differences in temperatures as a percentage difference? Would that make a difference? Perhaps, but here again, the choice of scale you use makes a huge difference in perception.
Using a scale to maximize differences.
Using a scale that ranges from -10% to +10%

Using a scale that ranges from -100% to +100%:

Update: in response to my tweet, Kaiser Fung kindly critiqued my post here.

OBIEE 11.1.1.7.131017 Bundle Patch Now Available

Thu, 2015-01-15 04:41
A new bundle patch for Oracle Business Intelligence became available last week. This is OBIEE Bundle Patch 11.1.1.7.131017, and is available on the following platforms:
  • HP-UX  Itanium
  • IBM AIX on POWER Systems (64-bit)
  • Linux x86
  • Linux x86-64
  • Microsoft Windows (32-bit)
  • Microsoft Windows (64-bit)
  • Oracle Solaris on x86-64 (64-bit)
It is applicable to all customers running OBIEE versions 11.1.1.7.0 and 11.1.1.7.1



Patch 17530796 - OBIEE BUNDLE PATCH 11.1.1.7.131017 (Patch) is comprised of the following patches, which are not available separately:
  1. Patch 16913445 - Patch 11.1.1.7.131017 (1 of 8) Oracle Business Intelligence Installer (BIINST)
  2. Patch 17463314 - Patch 11.1.1.7.131017 (2 of 8) Oracle Business Intelligence Publisher (BIP)
  3. Patch 17300417 - Patch 11.1.1.7.131017 (3 of 8) Enterprise Performance Management Components Installed from BI Installer 11.1.1.7.0 (BIFNDNEPM))
  4. Patch 17463395 - Patch 11.1.1.7.131017 (4 of 8) Oracle Business Intelligence Server (BIS)
  5. Patch 17463376 - Patch 11.1.1.7.131017 (5 of 8) Oracle Business Intelligence Presentation Services (BIPS)
  6. Patch 17300045 - Patch 11.1.1.7.131017 (6 of 8) Oracle Business Intelligence Presentation Services (BIPS)
  7. Patch 16997936 - Patch 11.1.1.7.131017 (7 of 8) Oracle Business Intelligence Presentation Services (BIPS)
  8. Patch 17463403 - Patch 11.1.1.7.131017 (8 of 8) Oracle Business Intelligence Platform Client Installers and MapViewer



You will also notice that the bundle patch is now named in a "YYMMDD" format; i.e. the fifth place now tells you when the patch was released. This calendar date numbering scheme has been initiated with the 11.1.1.7.131017 bundle patch.
As usual, please go through the Readme and other instructions before deciding upon an installation schedule and decision.
Monday moods.Abhinav,Bangalore, Oct 28, 2013

Using R to Unlock the Value of Big Data, by Mark Hornick

Thu, 2015-01-15 04:41

Using R to Unlock the Value of Big Data, by Tom Plunkett, Mark HornickThis is a brief (approximately 80 pages) introduction targeted at users with an intermediate-level exposure of R and who want to get a quick look at working with R with Oracle's products. Strictly speaking, this is not an introduction to R, nor is this an R tutorial. It is, very specifically, an introduction to R as it integrates with and relates to the Oracle Database, the Oracle R Distribution, and the Oracle R Connector for Hadoop. The main chapters are "Using Oracle R Enterprise" and "Oracle R Connector for Hadoop", which have sixteen and seventeen examples, respectively, to help you get started.



Oracle provides "Oracle R Enterprise" (ORE), that "overloads R functions that normally operate on data.frames and pushes down their execution to Oracle Database, where transformations and statistical computations are performed on database tables. ORE introduces ore.frame objects that serve as proxies for database tables and views."

Connected with ORE is ROracle, which is "an open source R package now maintained by Oracle." "Oracle R Enterprise uses ROracle for connectivity between R and Oracle Database. ROracle has been re-engineered using the Oracle Call Interface (OCI)"

And finally there is the "Oracle R Connector for Hadoop", which "provides an R interface to a Hadoop cluster, allowing R users to access and manipulate data in Hadoop Distributed File System (HDFS), Oracle Database, and the file system."

So, if you are new to R or need to dive deeper into R, then this is not the book for you. If, however, you need to work with R for big data and enterprise applications, or integrate R with the Oracle Database and/or its Data Mining capabilities, then you should take a look at this book.

Disclosure: I am an Oracle employee and work with its business intelligence product management group. I have reviewed this book in my personal capacity, and this review does not represent Oracle in any way.
ISBN-10: 0071824383
Print ISBN-13: 9780071824385
E-Book ISBN-13: 9780071826273

Buying information:
Amazon: US | UK | CA | IN, Kindle e-book: US | UK | CA | IN, Indie Books, Powell's, Flipkart

Kindle Excerpt:


KindleReader.LoadSample({containerID: 'roraclebook', asin: 'B00DPG5LLO', width: '500', height: '600', assoctag: 'abhinav-20'});


OBIEE 11.1.1.6.12 Bundle Patch Now Available

Thu, 2015-01-15 04:40
Over the weekend, and this does happen to be a long weekend in the US, on account of Labor Day in the US, Bundle Patch 11.1.1.6.12 for Oracle Business Intelligence was released, and is now available for download from the My Oracle Support portal.


This bundle patch is available for "all customers who are using Oracle Business Intelligence Enterprise Edition 11.1.1.6.0, 11.1.1.6.1, 11.1.1.6.2, 11.1.1.6.2 BP1, 11.1.1.6.4, 11.1.1.6.5, 11.1.1.6.6, 11.1.1.6.7, 11.1.1.6.8, 11.1.1.6.9, 11.1.1.6.10 and 11.1.1.6.11." (OBIEE 11g 11.1.1.6.12 is Available for Oracle Business Intelligence Enterprise Edition and Oracle Exalytics (Doc ID 1580502.1))
The constituent patches of this patch set (bundle patch) are:
  • Patch 16986663 - 11.1.1.6.12 (1 of 7) Oracle Business Intelligence Installer (BIINST) 
  • Patch 16986677 - 11.1.1.6.12 (2 of 7) Oracle Real Time Decisions (RTD) 
  • Patch 16986644 - 11.1.1.6.12 (3 of 7) Oracle Business Intelligence Publisher (BIP) 
  • Patch 16986692 - 11.1.1.6.12 (4 of 7) Oracle Business Intelligence ADF Components (BIADFCOMPS) 
  • Patch 16986703 - 11.1.1.6.12 (5 of 7) Enterprise Performance Management Components Installed from BI Installer 11.1.1.6.x (BIFNDNEPM) 
  • Patch 16986558 - 11.1.1.6.12 (6 of 7) Oracle Business Intelligence: (OBIEE) 
  • Patch 16986723 - 11.1.1.6.12 (7 of 7) Oracle Business Intelligence Platform Client Installers and MapViewer

White spaces and Map Views

Thu, 2015-01-15 04:40
When working with Map Views, you can choose to collapse the map formats panel on the left.

When you do that, the panel is hidden, but white space is displayed on either side of the map view, where the panel used to be.

Currently there is no option to remove this white space through a UI setting.

However, if you are brave enough, you can remove this white space by editing the analysis XML, which is available under the "Advanced" tab of your analysis.
For the Map View in question, search for the "" property, and set the "width" value to zero. In this case below, you will see the width is set at 220 pixels. The "display" attribute has a value of "false", which is expected, since we have chosen to hide the formats panel.

So, after you set the value to zero (the number 0), click the "Apply XML" button, and return to you "Results" tab. You should see that the formats panel continues to be hidden, but now the white space is no longer there, and the entire space is being utilized by the map in the Map View.

A word of caution. First, if you edit the Map View and choose to display your map formats panel, the panel will pop back, and if you hide the panel, the white space will return. So this  hack is more of a final adjustment to apply to your analysis, when you are done with all the changes you want to make to your map view or map views.

That's it.

As far as hacks go, this is an easy one. It is also, as hacks go, unsupported, so you know the drill - not supported, not guaranteed to work, and you're on your own if you do decide to try it out. So, please, exercise your caution and discretion when applying this hack.

I trust you're enjoying the Oracle OpenWorld conference, currently underway in the beautiful city of San Francisco.

Abhinav,
Bangalore, Sep 25, 2013

Introduction to the BI Mobile App Designer

Thu, 2015-01-15 04:40
Oracle launched a brand new addition to its Business Intelligence Mobile solution - BI Mobile App Designer, which lets you create stunning, interactive mobile apps, literally within minutes. Apps created run on mobile devices running a reasonably modern mobile browser - that can handle HTML5 and jQuery - and are available on both smartphone and tablet form factors.



Here's a short introductory video I recorded (the direct URL):


Creating your first app with the BI Mobile App Designer

Thu, 2015-01-15 04:40
While creating sophisticated mobile apps that provide a rich feature set takes time, expectedly, what is wonderful about the recently launched Oracle Business Intelligence Mobile App Designer is the fact that you can be up and running without requiring a week-long training and a Master's degree in Computer Engineering.

Here's a short video I recorded on creating your first app with the BI Mobile App Designer (the direct URL on YouTube). A note of caution, and an apology of sorts - the audio in last few seconds of the video dramatically jumps up in volume. This is because I recorded these last few seconds later, and used different audio settings. I should have normalized it. I live, and I learn.




In fact, Oracle Partner Rittman Mead have introduced a QuickStart for Oracle BI Mobile App Designer package - "a five-day, fixed-price and fixed-scope engagement" - to help customers "deploy line-of-business mobile BI apps for any device, in five days." (Disclaimer: this is neither an endorsement nor a plug. I am  pointing out the availability of this new service from an Oracle Gold Partner).

Have you checked out all the useful BI sessions at Oracle OpenWorld in San Francisco?

Best!
Abhinav,
Bangalore, Sep 25 2013

BI Mobile HD App 11.1.1.7

Thu, 2015-01-15 04:40
Finally got around to writing my long overdue post on the new BI Mobile HD app. To get on with it, without much ado, not to loiter, and all that... here goes.

The new BI Mobile HD app, version 11.1.1.7.0.2094, can be downloaded from the Apple iTunes App Store (link to app preview page on iTunes).
If you already have the BI Mobile HD app installed on your iOS device, you should get an App Store notification on the availability of an upgrade. Note, that since this version is available only for iOS version 6 (and above), if you are running an older version of iOS, you will not get a notification, and will not be able to download it. If you check the Wikipedia iPhone page (link) you will see that the iPhone 3GS and later devices support iOS 6. As far as the iPad device goes, if you check the Wikipedia page (link), iPad 2 and later devices support iOS 6.



If you search for it from your supported iOS device, you will find it as the second result. The first is also an Oracle BI app - the Oracle Business Intelligence Mobile app, but that is for OBIEE version 11.1.1.5. The BI Mobile HD app is now a Universal app, and is therefore available on both smartphones and tablets. I will follow up with a post on the iPhone version later (yes, I will). Downloading and installing is a straightforward process. Tap to install. The app size is 16.1MB, and once downloaded, takes a few seconds to install.

The single biggest change you will see out of the box once the app launches is the presence of a "demo" server connection. So you can run the app without having to configure a connection. Which is very convenient. Tap to select it and the app will connect to this "OBI Mobile Public Demo Server". This server runs on the Oracle Cloud, and therefore accessible from the public Internet.

The second change is that you have a help screen to, err, help, first-time users get familiar with the interface and controls of the app. While the user interface is simple and intuitive, this screen does a good job of summarizing the different ways you can launch and navigate to the different parts of the app.

Yes, landscape and portrait orientations are well and truly supported, so flip your device this way and then that.

The other point to note is that the panel of menu navigation tabs (check this post on the first iteration of the HD app last year) at the bottom of the app - "Recent", "Favorites", "Dashboards", "Local", and "Search" - have been replaced by a slide-out navigation bar. Also, you can access the "Settings" screen by swiping right.


So, if you do launch the "Settings" screen, you will notice several new things. The first is that you can now choose where in the App to begin when you launch it - in the "Recent" tab, or the "Favorites" tab, etc... The second is that you can also choose how your content preview thumbnails should be displayed. That is, apart from the "List" and "Carousel" options that have existed, a third option - "Grid" - has been added. For what it's worth, I find that the grid layout presents more data - especially if you have the preview thumbnails generated for the content.


The carousel view continues to be useful to see which content you have accessed most recently, placing it front-and-center on your app. The swipe gesture works as before for navigating through the carousel.
Inside your content, you will notice that the Dashboard Page dropdown has been replaced by a touch-enabled flat list. You can tap any page title to switch to that dashboard page, but also swipe left or right to view other pages - if there are more pages than can be displayed at the same time. The current dashboard page is indicated by a blue color for the page and a subtle arrowhead below the page.

Coming back to the Settings screen, it is now easier to select a wallpaper - simply tap and the wallpaper is selected and immediately applied. You can see how the wallpaper looks like from within the Settings screen.
Then there is the option to select which screen you begin on - that I covered above. The option to select the format in which attachments are created when you email content from within the app lets you select three options - no attachment (i.e. only a link is included in the body of the email), HTML, and PDF.
The last row shows you your server connections, the first one being the demo server connection - that you cannot edit, and the remaining are connections you've defined.

 
New functionality introduced in the 11.1.1.7 release, including fixed headers and fixed sized dashboard sections work on the HD app also. So you can use the tap-and-drag gesture to move content within fixed sections, as well as scroll through content for views with fixed headers. Oh, and by the by, the double-tap gesture now works to maximize most views (not sure which it does not maximize for, but works for most of the views).


Another new enhancement (enhancements are by their nature "new", so here's an example of a tautology) introduced in the 11.1.1.7.0 release of OBIEE was support for Map Views as detail views in master-detail linking. This support is not the full-blown detail support that is available for other views, and I will elaborate in a separate post, but basically you can now set up Map Views to listen to master-detail events on a specified channel. So, if you were to tap on the axis label in the bar graph on the left, on say, "USA", then the bar graph on the right and the map view both respond to that event. In the case of the map view, it zooms in and redraws itself based on the bounding rectangle for the USA.
And for Brazil, and so on...

The double-tap to maximize gesture that I talked about -  
And this is an example of a Map View with a bubble (proportional symbol) format with a feature theme underlain - the feature theme is based on a metric at the county level, and thus you have more than three thousand color-coded polygons.

A similar example, but this time with an image format with a heatmap format based feature theme. The heatmap format is based on district population figures.
And finally, an example from the Airlines data sample app with airline routes plotted as line formats. The lines in a Map View can be color-coded based on a measure and their size varied on a second measure. This is very much similar to how proportional symbol formats in Map Views have also worked since 2010.
 
And this is an example of such a proportional color-coded line format. You can tap on destination and origin airports to get a popup of the selected metric, and then use the underlying feature-theme based color format for additional context.


Abhinav,
Bangalore, Sep 26 2013

HBR and Junk Charts

Thu, 2015-01-15 04:39
Even the best can get it wrong. Only sometimes though, one hopes.
The venerable Harvard Business Review gets data visualizations horribly wrong. They have a post on Facebook where they contrast the costs of cancer treatment in the US and India.

The cost in the US is $22,000 on average, while in India it is shown as $2,900 (I would dispute this figure, as it looks very low).
The ratios is 7.58:1 (22000÷2900)



If you measure the heights of the two circles shown to represent these costs, the ratio comes out to approximately 7.2:1. It is not completely accurate, but it is still close enough that we can ignore it.

However, when using a bubble or circle to compare two values, we are implicitly using the areas of the circles to base our comparison on.
In case you have forgotten your geometry, the area of a circle is Π×r2 (i.e., pi times the square of the radius). Using this, the ratio of the areas of the two circles is 55:1! Yikes.
Put it another way, HBR is saying that if cancer treatment in the US costs $22,000, then in India it should cost $400. Or, if it costs $2900 in India, it should cost $159,500 in the US. Either way, this is wrong.


Vishal Sikka's Appointment as Infosys CEO

Thu, 2015-01-15 04:38


My article in the DNA on Vishal Sikka's appointment as CEO of Infosys was published on June 25, 2014.

This is the full text of the article:


Vishal Sikka's appointment as CEO of Infosys was by far the biggest news event for the Indian technology sector in some time. Sikka was most recently the Chief Technology Officer at the German software giant SAP, where he led the development of HANA - an in-memory analytics appliance that has proven, since its launch in 2010, to be the biggest challenger to Oracle's venerable flagship product, the Oracle Database. With the launch of Oracle Exalytics in 2012 and Oracle Database In-Memory this month, the final chapter and word on that battle between SAP and Oracle remains to be written. Vishal will watch that battle from the sidelines.



By all accounts, Vishal Sikka is an extraordinary person, and Infosys has made what could well be the turning point for the iconic Indian software services company. If well executed, five years from now people will refer to this event as the one that catapulted Infosys into a different league altogether. However, there are several open questions, challenges, as well as opportunities that confront Infosys the company, Infoscians and shareholders, that Sikka will need to resolve.

First off, is Sikka a "trophy CEO?" There will be more than one voice heard whispering that Sikka's appointment is more of a publicity gimmick meant to save face for its iconic co-founder, Narayan Murthy, who has been unable to right the floundering ship of the software services giant. Infosys has seen a steady stream of top-level attrition for some time, which had only accelerated after Murthy's return. The presence of his son Rohan Murthy was seen to grate on several senior executives, and also did not go down too well with corporate governance experts. Infosys had also lagged behind its peers in earnings growth. The hiring of a high-profile executive like Sikka has certainly restored much of the lost sheen for Infosys. To sustain that lustre, however, he will need to get some quick wins under his belt.

The single biggest question on most people's minds is how well will the new CEO adapt to the challenge of running a services organisation. This is assuming that he sees Infosys' long term future in this area of services. Other key issues include reconciling the "people versus products" dilemma. Infosys lives and grows on the back of its ability to hire more people, place them on billable projects that are offshored, and then to keep its salary expenses low - i.e. a volume business with wafer thin margins that are constantly under pressure. This is different from the hiring philosophy adopted by leading software companies and startups around the world - which is to hire the best, from the best colleges, and provide them with a challenging and yet flexible work environment. It should be clear that a single company cannot have two diametrically opposite work cultures for any extended length of time. This, of course assumes, that Sikka sees a future in Infosys beyond labor cost-arbitraged services. Infosys' CEO, in an interview to the New York Times in 2005, had stated that he did not see the company as aspiring beyond that narrow focus. Whether Sikka subscribes to that view or not is a different question.

In diversifying, it can be argued that IBM could serve as a model. It has developed excellence in the three areas of hardware, software, and services. But Infosys has neither a presence in hardware - and it is hard to imagine it getting into the hardware business for several reasons - nor does it have a particularly strong software products line of business. There is Finacle, but that too has not been performing too well. Sikka may see himself as the ideal person to incubate several successful products within Infosys. But there are several challenges here.

Firstly, there is no company, with the arguable exception of IBM, that has achieved excellence in both services and products. Not Microsoft, not Oracle, not SAP. Sikka will have to decide where he needs to focus on. Stabilize the services business and develop niche but world-class products that are augmented by services, or build a small but strong products portfolio as a separate business that is hived off from the parent company - de-facto if not in reality. One cannot hunt with the hound and run with the hare. If he decides to focus on nurturing a products line of business, he leaves the company vulnerable to cut-throat competition on one hand and the exit of talented people looking for greener pastures on the other hand.

Secondly, if Infosys under Sikka does get into products, then it will need to decide what products it builds. He cannot expect to build yet another database, or yet another operating system, or even yet another enterprise application and hope for stellar results. To use a much-used phrase, he will need to creatively disrupt the market. Here again, Sikka's pedigree points to one area - information and analytics. This is a hot area of innovation which finds itself at the intersection of multiple technology trends - cloud, in-memory computing, predictive analytics and data mining, unstructured data, social media, data visualizations, spatial analytics and location intelligence, and of course, the mother of all buzzwords - big data. A huge opportunity awaits at the intersection of analytics, the cloud, and specialized solutions. Should Infosys choose to walk down this path, the probability of success is more than fair given Sikka's background. His name will alone attract the best of talent from across the technology world. Also remember, the adoption of technology in India, despite its close to one billion mobile subscriber base, is still abysmally low. There is a crying need for innovative technology solutions that can be adopted widely and replicated across the country. The several new cities planned by the government itself presents Sikka and Infosys, and of course many other companies, with a staggering opportunity.

Thirdly, the new CEO will have the benefit of an indulgent investor community, but not for long. Given the high hopes that everyone has from him, Sikka's honeymoon period with Dalal Street may last a couple of quarters, or perhaps even a year, but not much more. The clock is ticking. The world of technology, the world over, is waiting and watching.

(The opinions expressed in this article are the author's own, and do not necessarily reflect the views of dna)

Flipakart's Billion Dollar Sale, And A Few Questions

Thu, 2015-01-15 04:35
My article on Flipkart's Billion Dollar Sale and an article that appeared in a business daily on the preparations that went into it was published in  DNA on December 29, 2014.

This is the full text of the article:
A Billion Dollar Sale, And A Few Questions, by Abhinav Agarwal, published in DNA, Dec 29 2014An article published on an online news portal (reproduced from a business daily) claimed that "Flipkart's 'Big Billion Day' was planned over more than 700,000 man hours (six months of work put in by 280 people over 14 hours every day) to get the back-end systems ready." This is a stupendous achievement by any yardstick, and all the more creditable given that Flipkart's infrastructure is nothing to scoff at to begin with, and which is rarely known to keel over during traffic surges. Despite all this preparation however, Flipkart didexperience issues during its big sale, which led to its founders issuing a public apology - an act of entrepreneurial humility that was well appreciated by many.

The article states that Flipkart "clocked a gross merchandise value (GMV) of $100 million". But what is "GMV"? According to Investopedia, Gross Merchandise Value, abbreviated as GMV, is "The total value of merchandise sold over a given period of time through a customer to customer exchange site. It is a measure of the growth of the business, or use of the site to sell merchandise owned by others." But there is some confusion as to what GMV actually means. This arises from the fact that GMV is not a standard accounting term. For instance, a search for "GMV" or for "Gross Merchandise Value" on the web site of The Institute of Chartered Accountants of India throws up zero results. GMV's definition differs based on each e-commerce vendor's assumptions. Therefore, if an item's price is marked at Rs 100, and Flipkart sells ten such items for Rs 70 each, is the GMV 700 or Rs 1000? Let us be generous and assume that GMV refers to the total sale value, before discounts - that would make it easier for Flipkart to claim they clocked in a hundred million dollars in GMV. Plus it is the logical thing to do - from a marketing perspective.
Next, the average discount offered at leading e-commerce sites like Flipkart can be 20%, 30%, or even touching 40% in some cases. It is generally understood, that at least for items like books, wholesalers get a discount of 40% off the list price from publishers. This can be lower for other categories of goods like electronics (retailers do not get the Apple iPhone at 40% off the list price - at least one hopes so!), but can be higher for other categories like clothes. Therefore, assuming a discount of 40% (on the higher end), it means that for the hundred million dollars worth of GMV, Flipkart's cost for those goods was 60 million dollars. Assuming they passed off 20% of the GMV as a discount to the end customer - and discounts were generally higher than 20% during that sale period, it leaves them with a gross profit of twenty million dollars, into which they have to squeeze all their costs, to be profitable. Hold that number in your mind for a minute.

Let us now take a closer look at the other statement in the article's sub-heading, which says, "Flipkart's 'Big Billion Day' was planned over more than 700,000 man hours (six months of work put in by 280 people over 14 hours every day) to get the back-end systems ready." If Flipkart, as the article claims, took 700,000 man hours (the politically correct phrase would be "person-hours", but we will grant the author of the article some leeway here), that translates to a little over $20 million that the company spent on this sale in getting its network infrastructure scaled up. How? My assumptions are, and there are many, many assumptions here, that the base salary for the Flipkart employees that worked on this initiative is Rs 26 lakhs per annum (yes, yes, more on this later). Second, I have taken a year as having 2080 work-hours (52 weeks, times 40 hours per week). Third, I assume that the loaded cost adds 50% on top of a person's actual salary - or Annual Guaranteed Pay (AGP) as is also sometimes referred to. Fourth, I take Rs 65 to a dollar as my exchange rate (the exchange rate was lower a couple of months back; the numbers would look worse - for Flipkart - if I were to use those). Using these assumptions, at an aggregate level, this means a hundred and thirty crores rupees, or US$20 million. You can see the calculations, and the assumptions, in the figure at the end. Hold this second figure of $20 million in your head.



Compare the two figures now. For a maximum gross profit of 20 million dollars from their big billion sale, Flipkart had to spend the same sum on upgrading their hardware and network infrastructure to deal with the traffic to their web site. Ignoring other fixed costs, did Flipkart make money, any money at all from their sale?

One could argue that there are many assumptions in my calculations, and I do agree that there are several. You can plug in your own numbers and the mileage will surely vary, but not by much, I expect. I have used three different sets of numbers (see below)



Second, the argument could be made that these are not contractors who are paid by the hour, and many worked for "over fourteen hours every day" - which is not uncommon for young, passionate employees working at hot startups (I regularly clock in 12 hour workdays, and I am no longer young, nor do I work for a start-up!) On the other hand, I could argue that Rs 26 lakh is not that wildly off the mark a figure, given that Flipkart recently made offers to fresh graduates at IIT-Kharagpur where the average salary offered was Rs 20 lakh - for engineers with zero work experience. Not everyone working on the preparation for the Big Billion Sale would have been a fresh-out-of-college greenhorn. The loaded cost factor could be more than 50%, given that Flipkart would be handing out stock options to its employees, and having other on-premise perks (the role model for all young startups seems to be Google).

But to fixate on the specifics of any one number here would be to miss the wood for the trees, in a manner of speaking. It is not the main point of my post either. The article itself reveals two hidden points. The first is that this article in the business daily is a successful implementation of a company's PR or marketing department getting its point of view across to a news organisation, not in the form of a press release, but as a news article. It lends an air of neutrality and credibility even as it presents the company's point of view, in an unquestioned manner. There is no mention of the article being a paid advertorial. Second, it also serves as an eloquent advertisement for Flipkart's formidable computing prowess and infrastructure. To that end, it serves as a signal of intent to its competitors, especially Amazon, that Flipkart won't be found wanting when it comes to competing with the big bad daddies of the global e-commerce world. In the end, however, the inescapable question remains - to drive its top-line, is Flipkart caught in a situation where the more it sells, the more it loses? Is it finding it difficult to get economies of scale? Or is it still in the growth stage, where margins and profits take a backseat to marketshare and growth? With more than a thousand crores in annual revenues, if one of the most successful e-tailers in the country finds itself in this bind, the other, smaller players will find the going much tougher. Is the online e-commerce space headed for a brutal shakeout in 2015?
Views expressed are the author's own