Monthly Archives: August 2008

CSI Pune Lecture: Overview of Business Intelligence and Data Warehousing – 27 Aug 2008

Computer Society of India – Pune Chapter presents a lecture series on Data warehousing. This is the first lecture in that series:

What: Overview of Business Intelligence & Data warehousing by Vibhas Joshi, head of R&D at SAS R&D India.

When: Wednesday, August 27th, 2008, 6:30pm to 8:30pm
Where: Dewang Mehta Auditorium, Persistent Systems, Senapati Bapat Road
Entry: Free for CSI Members, Rs. 100 for others. Register here.

Details – Overview of BI & Data warehousing

Concepts of data warehouse, data marts, OLAP and data mining, understand relationship between transactional systems and data warehouse.

About the Speaker – Vibhas Joshi

Vibhas is with SAS R&D india as Head R&D , Program Manager – Industry Intelligence solutions, Member of Management Team.
Vibhas holds a Masters degree in Physics from the University of Pune, a Diploma in Computer Management from Jamnalal Bajaj Institute as well as a Masters in Management Studies from University of Pune. He is certified PMP.

He has over 25  years of experience in the IT. He has special skills in General Management, Program Management, Project Management, Software Product Development, Requirement Engineering, Database Management, Software Development Methodologies, and Infrastructure set-up.

Vibhas has conducted numerous training programs covering Project Management, Requirement Management and Software Engineering.

Vibhas in the course of his assignments has worked in the following business domains: Banking, Financial Services, Insurance, Manufacturing, Telecom.

For more information about other lectures in this series, and in general other tech events in Pune, see the tech events calendar at upcoming.

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PMC launches participatory budgeting

The Pune Municipal Corporation has a scheme to include citizens suggestions in the budget for the year. Anybody who has an idea for work that can be carried out in their ward/locality can download a form, fill it out and submit it at their ward office / nearest multi-utility citizen kiosk location / citizen facilitation centre.

Only projects that pertain to a neighborhood or locality and do not involve city level infrastructure may be suggested; the suggested work has to be under ward office purview. The suggested project cost should preferably be within Rs. 5 Lakhs. Examples of kinds of work that you can suggest are: Pavements / Water Supply / Drainage / Bus stop (in consultation with PMT) / Parks and Gardens (only repair works) / Bhawan (only repair works) / Public Toilets / Lights (Road / Traffic) / Roads (only Resurfacing). Example of kinds of work that are NOT acceptable are: Pedestrian Bridge / Speed Breakers (prohibited by Supreme Court) / Garden (new provision) / constructions on the land not owned by PMC.

Deadline for the form / maps submission is 10th September 2008.

All citizens should take a copy of the submitted project form to the office and make sure to get a form ID and ‘receipt’ of the submission.

Obviously, not all the suggestions will be accepted. However, various groups and NGOs will be monitoring the process to try and ensure that at the very least, information about why projects were accepted or rejected will be made available to the public after the budgeting process is over.

For more information, see the entry for participatory budgeting in the Pune Government wiki. In general, the Pune Government wiki is a very interesting place to hang out. It is just a few weeks old, and there is already a lot of interesting information already uploaded there.

There is only partial “tech” content in this post, since technology is being used to disseminate the information (the wiki, and downloadable forms). There are also plans afoot to make some of the submitted proposals browseable on a map of Pune, with the help of Pune-based SadakMap. However, forms still have to be submitted in person – that process has not gone online yet. Hopefully, that can happen next year.

Please help make this initiative a success. Forward this article to people you know who might be interested.

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Business plan competition for students – funding up to Rs. 1 crore

Symbiosis Institute of Business Management (SIBM), Pune, is running Endeavor 2008, a business plan competition (open only to students). So if you are a student with an interesting idea looking to get visibility, guidance, and possibly lots of money, hurry, because the last date to submit entries is 24th August.


“SIBM Endeavour 2008” provides a platform for budding entrepreneurs with
viable Business Plans to meet seed funds and venture capitalists through the
“SIBM Endeavour Business Plan” contest. This contest is a 3 month long
business plan contest with 4 rounds. Every participating team can expect to
gain from the contest. Individual mentorship, Elevator Pitch for top 40
b-plans, cash prizes, and above all, funding of upto Rs. 10 Million (from Seed
Fund Advisors Pvt. Ltd.).

Our panelists for this contest are:

  • IndiaCo Ventures Capital Ltd.
  • NEA-IndoUS Venture Capitals
  • SEED FUND Pvt. Ltd.
  • NEN Online

Last date for Executive Summary: 24th August – 2008

Cash Prizes:
1st Prize: Rs. 2,00,000
2nd Prize: Rs. 85,000

For registration:

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How social|median is developed out of Pune

Jason Goldberg is a serial entrepreneur, who founded and headed Jobster, and who is now on to his next startup, social|median, a social news website. In a long article on his blog, he talks about what lessons he learnt from his first startup, and what he is doing differently in social|median as a result. The whole article is very interesting, and I would say, a must read for budding entrepreneurs (Update: unfortunate, the website seems to be gone, and the original article is no longer available). However, most interesting to me is the fact that, although Jason is based in New York, his entire development team is in Pune, with True Sparrow Systems.

He talks about why he decided that development of social|median:

  • Second […] we decided to build on a tight budget. Now, don’t get me wrong, I’m not talking cheap as in 1 guy in a dorm room. I’m talking low budget as in constraining the company to <$40k/month of burn in the first 4 months and then only taking it beyond that to about $60k/month once we had shown some early initial traction. The notion here was that spending our cash is the same as spending our equity. The more we spend early on, the less the company will be worth in the long run.
  • Maintaining a burn like that forced us to think outside the box when it came to staffing the company. To put a $40k/month burn in perspective, that would get you about 3 employees at most fully loaded with office space in New York (if you’re lucky). I remember interviewing a total rock star CTO-type in January in NYC and walking away thinking there went all my initial funding and that’s just for 1 guy. Instead, we have run the company out of my apartment in New York and from our development center in Pune, India. I’m the only U.S. based socialmedian employee (besides our awesome intern Scott who joined us for the summer from Syracuse and who has been a god-send). The rest of our team is based in Pune, India. We started with 6 fulltime socialmedian employees in Pune and have since grown the socialmedian development team to 11 fulltime employees in Pune.

Finding the right company to outsource to is another interesting story.

Jason first found out about True Sparrow Systems when he saw a facebook application they had developed. He felt that the application had been designed very well, by someone who had not just done a quick and dirty job to jump on the latest bandwagon (social networking! yay!), but instead someone who had spent time thinking about the application and its users. Based on this he decided to go with True Sparrow Systems.

However, this is not your usual outsourcing relationship. Jason has set-up things rather differently from most other companies:

A few notes about working with an offshore team. If you’re gonna do it, do it right. What I mean by that is that I’ve seen it done wrong so many times it’s sickening. Folks in the U.S. all too often have this mistaken belief that there are these inexpensive coders outside the U.S. who are just on call and ready to write code based on specs. That’s a recipe for disaster. In order for software to be developed well, it takes a team that is adept at planning and strategizing and problem solving together. It takes a team that feels like a team and who is passionate about the product they are creating. It takes a team who truly feels like they are building their product not someone else’s.

So, we decided to set up things differently at socialmedian. First, our decision to go offshore was certainly based on costs, but it was equally based on abilities and mutual respect. I had worked with the future socialmedian team in Pune before socialmedian on other projects and only chose to work with them on socialmedian because I was impressed with their thought process as much as their work product. We chose to work with them because they know how to solve problems and how to figure out how to respond to customer/user needs. And, they passed the most important test of all, an earnest early interest in the problem we are trying to solve at socialmedian and fantastic ideas on how to tackle the problem.

Second, I personally committed to travel to Pune, India nearly monthly for the first year of socialmedian (I’ve been there 6 times thus far in 2008 and am headed back in a couple of weeks). The logic here was that if the team was there, I, as the lead product manager, should be there too. As per our hunch, we learned early on that in-person time was critical for planning. As such, we have evolved into this regular cadence wherein for 1 week out of every month we plan together in person, and then for 3 weeks we are more tactical as our interactions are over skype. Sure, all that travel is tough (ask my spouse who hates me for it), but it has proven to be very effective for us at socialmedian.

Third, we have made our Indian team shareholders in socialmedian, so we are one company building one product. It’s an offshore situation, not an outsourcing relationship.

Of course, this model is not for everyone, but it has worked well for us thus far. Mostly because we have an awesome team joined together working on socialmedian and we’ve created an environment where it’s all about our users and the product, and the fact that we are thousands of miles away from each other is just a fact of life, not a problem. If I had to start over today I’d choose the same team 10 out of 10 times to work with.

A lot of this is enabled by the tools:

In case you were wondering, here’s the process and tools/services we use at socialmedian to mange our New York – India operations. As noted, I travel to Pune for at least 1 work-week out of every 5 work -weeks. We ship code 3x per week within 3-4 week development milestones. We use TRAC (open source bug tracking tool) to manage bugs and feature requests. We use basecamp to share files. We talk on Skype when I’m not in Pune pretty much 6x per week from 8am Eastern Time to around 11am.

Read the whole article for a whole lot of other (non-Pune related) advice. It is long, but worth the trouble, especially if you dream of having your own startup.(Sorry, the article is gone, but here is a copy from the Wayback Machine (thanks Pragnesh))

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Why I chose Pune for my startup

This article was written by Anthony Hsiao in an e-mail thread over at Pune OpenCoffee Club‘s mailing list, and is reproduced here with permission. Anthony is a co-founder of Pune-startup Entrip. Anthony, Nick and Adil, who were in London when they decided to start Entrip, moved to Pune to actually make it happen, for the reasons given in this article.

I am putting my money on Pune as India’s startuphub.

When we first decided to just head to India to start work on our startup
(we’re London based), we were only heard of Bangalore as the next IT hub,
and Hyderabad as upcoming. We didn’t want to go to a megacity like Delhi or
Mumbai, but more of a Tech City. Then one of my best friends from
Switzerland, he’s Indian, recommended we should have a look at Pune.

After some research, Pune met exactly the kind of requirements that we were
looking for, or at least, it fared better on a decision analysis than did
Bangalore or Hyderabad: It’s a college city with lots of young, educated and
(as we hoped) creative people, not too large, IT focused, not too expensive
(at the time). Another big factor was the fact that we perceived Bangalore
and Hyderabad as HUGE IT OUTSROURCING CENTERS, cities of modern factories,
where modern labourers were robotting away, while Pune, as educational
center, appeared to offer a different perspective. My friend also told me
that the girls in Pune were very ‘interesting’, but that is just a side note
– but as true geek this didn’t play much of a role *wink*.

When we got to Pune, I think one of the first things that struck me was
actually the apparent lack of creativity, lack of spirit that we are used to
from university towns where students just ‘do things’, the lack of ambition
just for the beauty of it and the seemingly only motivation to do anything –
working for some big company with some name, earning bucks.

It took some time for me to understand where a) people were coming from (not
everybody has parents that would happily support your little startup
adventures if they went wrong) b) the cultural and in large parts traditonal
context that young people had to operate from within, and c) that in fact it
strongly depends on the kind of circles that we moved within to get these
impressions. I was a bit disappointed, and am still, everytime I heard
someone ask for what company I work for rather than for what I actually do,
but my criticism was challenged by a different world that I later
discovered: the startup community in Pune.

Yes, a lot of people in Pune are neither creative nor ambitious or daring.
But that’s ok, every place in the world has a broad layer of such people. In
fact, they are vital for the ecosystem as well. But not every place has a
vibrant, connected and active startup community as Pune.

Instead of ‘cannot’, ‘big salary’ or ‘I don’t know why’, I suddenly heard ‘I
think I can, and I will try’, ‘big opportunity’ and ‘Because it’s cool’. A
180 degree turn from a lot of the students or ‘desparate’ professionals I’ve
met! What is this newly discovered startup community?

Looking at it now as I write this, I would say that Pune has what is
necessary to attract ‘the right kind of people’, young, creative,
adventurous, willing to ‘do things’ – the stuff that startups are about (in
large parts). It certainly worked for us or fellow foreigners trying it out
in Pune as well as the countless NRIs or long term expats that come back
with a more open mind and lots of experience. That, then, is a positive
feedback loop for the composition of the city and the community.

So it’s the people of Pune, or the startup community to be more precise,
which I think send out a strong message. Of course I would like to play an
active part in shaping this still relatively young community, and I think so
does everybody else. There is this community sense, where people communicate
AND understand each other, go through SIMILAR experiences and face SIMILAR
hurdles as entrepreneurs (in IT-outsroucing-India), want to help each OTHER
and want to rise TOGETHER, as a community, so that one day we can all say it
happened in Pune, and we were  there.

So what message does Pune send out? I think it says ‘we are Pune, and we
have what it takes to be India’s silicon valley’.

Best regards ,

Anthony – a foreigner.

Other thoughts: Maybe I am painting a bit of a biased picture, and of course
there is still a lot of work to be done. But the composition of Pune is
there, the community is there (and growing), and the will and shared spirit
seems to be there. Now the change just needs to happen.

I would attribute a great part of this spirit or feeling to the fact that
Pune is relatively small, or at least has been. People are closer, and know
each other. As such, I see the creation of huge IT parks all over the place
OUTSIDE the city/in satellite towns, as a potential dilution to the Pune
startup community, which I hope we can somehow fend off.

Of course, one might be able to craft a similar description about other
cities line Bangalore, but I would say that the unique composition of
colleges and companies are a great edge. Also, at least in the past, the
ratio of ‘large companies’ to ‘small companies’, I’d guess, is smaller in
Pune than in other places – or at least was. If everybody around a young
graduate is going to try to work for the next big company that pays stellar
salaries, of course, startups would lose the war for talent. As such, the
intensifying competition of large companies for good people is another
threat to look out for, but one which, I think, can be addressed by a strong
and visible startup community.

I don’t want to get into politics and policies (at least not in an email

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Inviting articles on Entrepreneurship for CSI Pune’s September Seminar


CSI Pune is planning a half-day seminar on Entrepreneurship in September, and with it they will also publish their Desktalk newsletter, on the same topic. Anjali Gupta of Bookeazy, one of the driving forces behind the Pune OpenCoffee Club, is the guest editor of this issue of Desktalk.

You are invited to submit articles of interest to entrepreneurs, and the entrepreneurial ecosystem in general. The following is a list of suggested topics, but feel free to write on any other subject that goes with the theme. The article needs to be submitted by end of August, to deodhar [dot] swati [at] gmail [dot] com.

The right advisor at the right time made all the difference.

The article must highlight the importance of getting the right advisors for the company early in its lifecycle, recognizing which advisors are necessary and when to listen to them. Or it could highlight a negative experience with bad advice. Also, the necessity to change or add advisors at different phases of the company’s evolution.

An entrepreneur must be very flexible and very stubborn.

Entrepreneurial judgment is the ability to tell the difference between a situation that’s not working but persistence will ultimately prove it out, versus a situation that’s not working and additional effort is a destructive waste of time. An article highlighting either situation or both at different times in the company’s life would be useful to compare and contrast.

Venture capital – the good, the bad, the ugly.

Understanding the mechanics of the VC industry. A profitable business need not always be venture fundable. Only certain businesses need and are suited for venture money. What else besides the money should be evaluated in a good VC?

Five Reasons not to start a company.

Article must highlight and recognize how much pain and effort it involves to start a company and then deliver shareholder value. Being good at something, working on my hobby, having a good idea, wanting flexible timing, or being good at managing people, are not reasons to build companies. What you build must have a path for sustained growth and profitability.

Avoiding the Founders’ bias.

Will your pre-starting work years really count or harm? Every company’s DNA is strongly colored by founders background and prejudices especially in the initial years. Those from a tech background will hire developers first and write code. That need not be the best way to approach the market. Experiences from tech entrepreneurs who’ve had to change themselves to be businessman and not technologists.

Product companies must embrace failure first and cash much later.

Building a successful tech product company i.e. build once, sell many times, is different from building a services company. Very rarely will your first product be successful, most of the times it will just tell you what not to do the second time around. Experiences and learnings from those who have switched from one to the other or built one type of company or both forms in the same company

It’s the stuff that’s not on your business plan that will trouble you the most.

It’s not the assumptions on the business plan but the unknowns that are not even on your sheet that entrepreneurs need to worry about. An experience highlighting how the unknowns unfolded and how to start looking for them early by talking to potential customers, partners or suppliers, competitors, etc.

How will Technology Entrepreneurship benefit India?

What technologies and/or companies will comprise of the next wave of social change in India? Will they still be service-oriented? Or, will they look a lot more like Products from the West with a distinct Indian flavor? The purpose of this is to suggest answers to the conundrum – is India really a potential large market for Technology Entrepreneurs?

India’s Export to the Rest of the World through Entrepreneurship

What is India’s contribution to rest of the World in this day and age? India’s unique problems, social structure, youth, education and culture have resulted in a very different impact on the rest of the world. The aim of this topic is to highlight and analyze startups/companies that have the potential of making a global impact by solving hard problems within an Indian context.

Is there indeed a fortune at the bottom of the Pyramid?

… that requires Entrepreneurs to make a paradigm shift in what is conventional thought? Are we doing enough to encourage failure, experimentation and retrial – all very necessary to encourage entrepreneurship at this level?

The art of the Start for to-be-Entrepreneurs

(and the state of that art in India): Starting a Company is hard, what with an extremely competitive environment and an unforgiving social attitude towards failure. The intention of this broad topic is to highlight the key elements of the startup ecosystem in India – How do I fund my dream (Angel Investors, Friends, Family, Bootstrapping, Venture Capital)? Getting a Business Plan together, what are the key elements of a good business plan? etc.

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Pune to have animation school, gurukul style

AnimationImage via Wikipedia

The Economic Times reports that a new animation school modeled on the gurukul system is coming up in Pune soon.

The unique venture, called Seamless Education Academy or SeamEdu, will be run by Saurabh Gadgil, a jeweller, and aims to cater to the fast growing animation industry’s huge demand for trained personnel.

“There is a huge demand for talented animators in the country – around 200,000 in a couple of years. So we thought this was a very good business idea,” said Gadgil, a major stakeholder in the venture.


To be launched Sep 30, the school has acquired two animation studios in the city, including Toolbox Animation Studio run by Chetan Deshmukh who worked for the Hollywood blockbuster “Chicago”. The academy expects to enrol about 2,000 students by next year.

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Spammers Leverage Interest in Olympics, says Symantec Pune

Official logo of the 2008 Summer Olympic GamesImage via Wikipedia

From PC World – Business Center:

Public interest in the Olympic Games is helping spammers, who are using text related to the games in e-mails to get users to click through to their malware and phishing Web sites, or to go to product sites, according to an executive at Symantec.

Spam messages were 78 percent of all messages in July, up from 66 percent a year ago, according to a monthly report on spam released by Symantec earlier this week.

While spam is increasing overall as a trend, there has been a spike ahead of the Beijing Olympics, said Shantanu Ghosh, vice president of Symantec’s India product operations, on Thursday. Symantec’s center in Pune, India, has one of nine security response labs run by Symantec worldwide.

For more information on Symantec Pune, see the PuneTech profile of Symantec.

Revenue Optimization – Increasing profits for free

Air India Boeing 747-400. The Government of In...Image via Wikipedia

Business intelligence and analytics company SAS announced a few days back that it is acquiring revenue optimization company IDeaS. Both, SAS and IDeaS have major development centers in Pune. This article gives an overview of the software that IDeaS sells.

I always found airfares very confusing and frustrating (more so in the US than in India). A roundtrip sometimes costs less than a one-way ticket. Saturday night stayovers cost less. The same flight can cost $900 or $90 (and those two guys might end up sitting on adjacent seats). The reason we see such bizarre behavior is because of a fascinating field of economics called Revenue Optimization.

IDeaS software (which has a major development center in Pune) provides software and services that help companies (for example hotels) to determine what is the best price to charge customers so as to maximize revenue. The technology called pricing and revenue optimization – also called Revenue Management (RM) – focuses on how an organization should set and update their pricing and product availability across its various sales channels in order to maximize profitability.

First it is necessary to understand some basic economic concepts.

Market Segmentation

If you don’t really know what market segmentation is, then I would highly recommend that you read Joel Spolsky‘s article Camels and Rubber Duckies. It is a must read – especially for engineers who haven’t had the benefit of a commerce/economics education. (And also for commerce grads who did not pay attention in class.)

Here is the very basic idea of market segmentation

  • Poor Programmer want to take a 6am Bombay-Delhi flight to attend a friend’s wedding. He is willing to pay up to Rs. 4000 for the flight. If the price is higher, he will try alternatives like a late-night flight, or going by train.
  • On another occassion, the same Poor Programmer is being sent to Delhi for a conference by his company. In this case, he doesn’t care if the price is Rs. 8000, he will insist on going by the 6am flight.

If the airline company charges Rs. 8000 to all customers, a lot of its seats will go empty, and it is losing out on potential revenue. If it charges Rs. 4000 for all seats, then all seats will fill up quickly, but it is leaving money on the table since there were obviously some customers who were willing to pay much more.

The ideal situation is to charge each customer how much she is willing to pay, but that involves having a salesperson involved in every sale, which has its own share of problems. Better is to partition your customers into two or three segments and charge a different price for each.

Guessing a customer’s market segment

Unfortunately, customers do not come with a label on their forehead indicating the maximum amount they are willing to pay. And, even the guy paying Rs. 8000 feels cheated if he finds out that someone else paid Rs. 4000 for the same thing. This is where the real creativity of the marketers comes in.

The person in the Rs. 4000 market segment (leisure travel) books well in advance and usually stays over the weekend. The person in the Rs. 8000 market segment (business travel) books just a few days before the flight, and wants to be back home to his family for the weekend. This is why the airlines have low prices if you book in advance, and why airlines (at least in the US) have lower prices in case of a weekend stayover.

This also keeps the rich customer from feeling cheated. “Why did I pay more for the same seat?” If you try saying “Because you are rich,” he is going to blow his top. But instead if you say, “Sir, that’s because this seat is not staying over the weekend,” the customer feels less cheated. Seriously. That’s how psychology works.

Exercise for the motivated reader – figure out how supermarket discount coupons work on the same principle.

Forecasting demand

This is the key strength of IDeaS revenue optimization software.

You need to guess how many customers you will get in each market segment and then allocate your reservations accordingly. Here is an excerpt from their excellent white-paper on Revenue Management:

The objective of revenue management is to allocate inventory among price levels/market segments to maximize total expected revenue or profits in the face of uncertain levels of demand for your service.

If we reserve a unit of capacity (an airline seat or a hotel room or 30 seconds of television advertising time) for the exclusive use of a potential customer who has a 70 percent probability of wanting it and is in a market segment with a price of $100 per unit, then the expected revenue for that unit is $70 ($100 x 70%). Faced with this situation 10 times, we would expect that 7 times the customer would appear and pay us $100 and 3 times he would fail to materialize and we would get nothing. We would collect a total of $700 for the 10 units of capacity or an average of $70 per unit.

Suppose another customer appeared and offered us $60 for the unit, in cash, on the spot. Should we accept his offer? No, because as long as we are able to keep a long-term perspective, we know that a 100 percent probability of getting $60 gives us expected revenue of only $60. Over 10 occurrences we would only get $600 following the “bird in the hand” strategy.

Now, what if instead the customer in front of us was offering $80 cash for the unit. Is this offer acceptable to us? Yes; because his expected revenue (100% x $80 = $80) is greater than that of the potential passenger “in the bush”. Over 10 occurrences, we would get $800 in this situation or $80 per unit.

If the person offers exactly $70 cash we would be indifferent about selling him the unit because the expected revenue from him is equal to that of the potential customer (100% x $70 = 70% x $100 = $70). The bottom line is that $70 is the lowest price that we should accept from a customer standing in front of us. If someone offers us more than $70, we sell, otherwise we do not. This is one of the key concepts of Revenue Management:

We should never sell a unit of capacity for less than we expect to receive for it from another customer, but if we can get more for it, the extra revenue goes right to the bottom line.

What would have happened in this case if we had incorrectly assumed that we “knew” certainty that the potential $100 customer would show up (after all, he usually does!). We would have turned away the guy who was willing to pay us $80 per unit and at the end of 10 occurrences, we would have $700 instead of $800.

Thus we can see that by either ignoring uncertainty and assuming that what usually happens will always happen, or by always taking “the bird in the hand” we are afraid to acknowledge and manage everyday risk and uncertainty as a normal part of doing business, we lose money.

The Expected Marginal Revenue

The previous section gave an idea of the basic principle to be used in revenue maximization. In practice, the probability associated with a particular market segment is not fixed, but varies with time and with the number of units available for sale.

One of the key principles of revenue management is that as the level of available capacity increases, the marginal expected revenue from each additional unit of capacity declines. If you offer only one unit of capacity for sale the probability of selling it is very high and it is very unlikely that you will have to offer a discount in order to sell it. Thus, the expected revenue estimate for that first unit will be quite high. However, with each additional unit of capacity that you offer for sale, the probability that it will be sold to a customer goes down a little (and the pressure to discount it goes up) until you reach the point where you are offering so much capacity that the probability of selling the last additional unit is close to zero, even if you practically give it away. At this point the expected revenue estimate for that seat is close to zero ($100 x 0% = $0). Economists call this phenomenon the Expected Marginal Revenue Curve, which looks something like this:

EMR Curve

There is an EMR curve like this for each market segment. Note that it will also vary based on time of the year, day of the week (i.e. whether the flight is on a weekend or not), and a whole bunch of other parameters. By looking at historical data, and correlating it with all the interesting parameters, Revenue Management software can estimate the EMR curve for each of your market segments.

Now, for any given sale, first plot the EMR curves for the different market segments you have created, and find the point at which the rich guys’ curve crosses and goes under the poor guys’ curve. See the number of units (on the x-axis) for this crossover point and sell to the poor guy only if the number of units currently remaining is less than this.

EMR curves crossing over


Revenue Optimization of this type is applicable whenever you are in a business that has the following characteristics:

  • Perishable inventory (seats become useless after the flight takes off)
  • Relatively fixed capacity (can’t add hotel rooms to deal with extra weekend load)
  • High fixed costs, low variable costs (you’ve got to pay the air-hostess whether the flight is full or empty)
  • Advance reservations
  • Time variable demand
  • Appropriate cost and pricing structure
  • Segmentable markets

Due to this, almost all major Hotel, Car Rental Agencies, Cruise Lines and Passenger Railroad firms have, or are developing, revenue management systems. Other industries that appear ripe for the application of revenue management concepts include Golf Courses, Freight Transportation, Health Care, Utilities, Television Broadcast, Spa Resorts, Advertising, Telecommunications, Ticketing, Restaurants and Web Conferencing.

Revenue Management software helps you with handling seasonal demand and peak/off-peak pricing, determining how much to overbook, what rates to charge in each market segment. It is also useful in evaluating corporate contracts and market promotions. And there are a whole bunch of other issues that make the field much more complicated, and much more interesting. So, if you found this article interesting, you must check out IDeaS white-paper on Revenue Management – it is very well written, and has many more fascinating insights into this field.

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PMI meet – “IPR” and “Project Portfolio Management” – 9 August

What: Project Management Institute, Pune Chapter’s monthly meeting, consisting of three sessions – 1. Intellectual Property Rights (IPR) – Copyright, Patent & Software and 2. Linking business strategy with product development by using Project & Portfolio management (PPM) solutions, and 3. OnTarget 2009 National Conference kickoff

When: Saturday, August 9th, 10:00 am to 12:30 pm

Where: Cummins Auditorium, Pune Shramik Patrakar Sangh, 193 Navi Peth, Ganjwe Chowk, Near Alka Talkies, Garware bridge & S. M. Joshi hall, Pune 411030. Reception (Tel) – +91(20) 24534190

Registration: This event is free for all, and no registration is required


Topic 1: Intellectual Property Rights (IPR) – Copyright, Patent & Software

Since last decade IPRs are in limelight. The industrial and service sectors need to handle various aspects related to IPRs and as such the project managers need to know the basic concepts and working of IPRs. Especially due to increasing use of computes in every field, patents and copyright related to software has assumed importance.

This seminar would provide an insight related to national and international legal scenario in these fields.

About the Speaker – Avinash S. Ganu, Advocate

  • Leads a law-firm `Avinash Ganu & Associates’, which deals with Corporate Law, national and international contracts, Intellectual Property issues, Property Law, Litigation etc.
  • Handles legal work in countries including U.S., U. K., Thailand, Singapore, China etc.
  • Has deposed in American Court as an expert witness on Indian Law.
  • Has done LL.M. from the University of Pune specializing in Corporate & Contract Law.
  • Has done LL.M. in `International Economic Law’ from the University of Warwick, U. K., with distinction, specializing in Corporate Laws, International Trade & Contracts, Computer & Internet Law and IPRs.
  • Teaches `Economic Analysis of Law’ to M. A. students at `Gokhale Institute’, Pune
  • Teaches `Intellectual Property Law‘ to fashion technology students at S. O. F. T.
  • Was interviewed on E.T.V. as an expert in IPRs and Computer Law.

Topic 2: Linking business strategy with product development by using Project & Portfolio management (PPM) solutions

To address the challenges in New Product Development, NPD companies started to link their business strategy with product development by using Project & Portfolio management (PPM) solutions. Project & Portfolio Management (PPM) is a term used by project managers and project management (PM) organizations to describe methods for analyzing and collectively managing a group of current or proposed projects based on numerous key characteristics. The fundamental objective of the PPM process is to determine the optimal mix and sequencing of proposed projects to best achieve the organization’s overall goals.

For instance, at any point of time a project manager can identify the gap in demand and supply of resources in relation to the requirements of the project. For the higher management, PPM enables to identify mid and long tem viability of the projects and also helps in calculating ROI regarding investments. This seminar will provide more details about PPM market scenario and how “PPM Studio” product provides the required capabilities.

About the Speaker – SemanticSpace Technologies Limited

Founded in 1997, SemanticSpace is a leading software services company that caters to diverse verticals. Since its inception, SemanticSpace has carved a niche for itself in the space of Project and Portfolio solutions, based on its extensive product development expertise and committed focus. SemanticSpace started working on product development in the late 90’s, since then it has refined and matured its processes and systems in line with the specific requirements of Project and Portfolio Management Solutions market. SemanticSpace’s “PPM Studio” is a collaborative, end-to-end, scalable, enterprise solution that helps organizations in managing projects from inception to delivery. More details &

Topic 3: On-Target (Academic track – 11th Jan 2009) & On-Target (Professional track – 18th Jan 2009)

PMI Pune-Deccan India Chapter is organizing “OnTarget 2009” National Conference on Project Management on 11th & 18th January 2009. Eminent speakers from various industries would present their views in this full day conference with the theme of “Infrastructure development”. The primary objective of this conference is to bring project managers in different industry, academia, NGO and government segments at one platform and share the best practices and lessons learned with each other. Project Management is a critical competency for all organizations, be it Government, Corporate, Academic or NGO – and indeed in all of life’s endeavors. This august gathering provides a unique platform for learning about the craft, knowledge sharing and networking with industry leaders, top executives and practicing project managers from all over the country. PMI Pune chapter’s National Congress Director Ashutosh Gulanikar will present the overall theme and program of the conference and the next plan of action. All the associates who are interested in supporting this mega conference are request to attend this orientation and the kickoff meeting following it.

For more information about PMI Pune, see it’s PuneTech wiki profile