Wednesday, December 23, 2015

Cisco Enhances Network Security & get itself a great deal!

Today, Cisco announced it has completed the acquisition of Lancope, Inc., which provides network behavior analytics, network visibility, and security intelligence to protect enterprises against today's advanced threats.

With this acquisition, Cisco can improve its network security offerings from offering firewalls to a more active data flow analysis based network security which can provide real time security analysis, incident reporting and response.

Given the fact that most enterprises have a global foot print and the network connects them together, having an active network security monitoring solution will help enterprises in a big way.

With Cisco backing Lanscope's security products - these products can grow to about $2-3 Billion dollars in revenue over next 3-5 years.

See more at:

Cisco Acquires Lancope: Great Fit, Great Deal

Cisco goes deep into network security with Lancope acquisition

Leadership communication - 8 Practices that deliver Results!

Often in organizations, people get promoted to leadership roles and I have seen many people struggle with internal communications in their new role. Especially at times when an organization undergoes rapid changes, leaders fail to communicate well within their own organization.

Recently, the topic of leadership communication came up a discussion point and here is what I had to say about it and I decided write it.

Essentially in uncertain times, leaders will have to step up their internal communications. This is more true when the organization is rapidly growing or  when it is being acquired or when there is a major reorganization happening. Over the course of discussion, there were eight points that were captured and is worth sharing.

1. Be the first to communicate!
2. Be visible to all
3. Use modern Media
4. Tell it all - both good and bad news
5. Be empathetic & tough at the same time
6. Talk about reality and immediate next steps
7. Keep everyone focused on the goals
8. Encourage Feedback and answer tough questions

1. Be the first to communicate!

At times of  rapid change, it is best for leaders to step-up  and take a lead in all internal communications. Leaders must be the first to communicate to their whole group. In today’s global world, the group could be spread over multiple locations, so it may be prudent to communicate initially over e-mail first and then follow it up with a group meetings or town hall meetings. 

2. Be Visible to all

Leaders make a great impression by being among the team and people. There is a saying: “Great leaders lead from the front.”  Likewise when it comes to communication, leaders must walk and talk to people personally. If the organization is spread across multiple locations, then leaders must travel around to rally the folks, talk to them in person. For front line folks, it is not enough to see an e-mail or a poster or a picture. Joining them in person make a profound impact. Several military generals - Robert Lee, Napoleon, Patton etc. earned great respect and could command over people due to this simple & yet effective communication technique.

In my past organization at Open-Silicon, I had seen few great leaders  - Dr. Naveed Sharwani and Dr. Satya Gupta (founders) would take extra effort to talk to all departments - be it sales or marketing and R&D labs. 

3. Use Modern Media

Communication technology has changed enormously in the last decade. So use all the latest technology to spread your message. For example, make a video recording and share that over internal social media or Intranets, For meetings use video conference rather than just teleconference,  In addition to emails, use blogs to communicate. Some organizations have even created mobile apps to communicate with employees.

One good example of leadership communication is Narendra Modi, Prime Minister of India. His use of video, radio, social media and even holographic broadcasting of his speeches led to his election victory. If a politician can use modern media, then all leaders in technology companies must be able to do even better.

4. Tell it all - both good and bad news

Too many leaders try to hide company problems from their employees and public and opt to tell only the good news. Another mistake leaders make is to sugar coat bad news or give a positive spin to an obvious bad news. But all this will fail as employees can read through the message and leaders create a bad impression for themselves.

The best strategy is to tell it all. Both good news and bad news upfront. People are smart and will understand. Hiding bad news will only exacerbate the situation. 

5. Be empathetic & tough at the same time

When leaders tell both bad and good news, leaders will have to be empathetic to each individual fates and yet take the tough actions at the same time. One of  the best example in history would be General James Longstreet’s instruction to Major General Pickett in the Battle of Gettysburg. General Lee had ordered Pickett’s men to attack union troops on cemetery ridge. Longstreet knew the futility of this assault, and yet he instructed Pickett and Pettigrew to attack. Longstreet’s commanders knew that the fatalities will be very large in this assault and yet executed the orders.

Unlike military generals, business leaders do not face this type of life and death situations, yet many fail in this aspect.

6. Talk about reality and the immediate next steps

When facing bad times or good, good leaders should  describe the situation and then talk about the steps than need to be taken.  This will help in establishing the basis for taking the necessary steps and leader’s credibility will increase and people will follow them.

During the dotcom bubble burst in 2000, I was at Intel and Greg Barett the CEO of Intel announced a layoff, but first he explained the situation to everyone and then listed out the steps - which included layoffs, and renewed focus on developing new technologies. Intel launched “One Generation Ahead” program in that downturn and since then, AMD has never been able to catch up.

The ability to articulate the current situation in clear terms and then defining the next steps will energize the entire organization and move them in the right direction.

7. Keep everyone focused on the goals

When things are changing rapidly - say for example the company is going through a merger or a split or getting acquired or just being reorganized, employees tend to lose focus on the future goals. The air of uncertainty masks and obscures the main objectives and people often delay execution of plans or delay making decisions. Its natural instinct for people to wait for clarity, and in the mean time the organization flounders.

Leaders must then step up their communication to keep everyone focused on the goals and keep driving the organization towards the goals. This will keep people busy and not get distracted  & waste time.

8. Encourage Feedback and answer tough questions

Its human nature to cringe at tough questions. Leaders are often no different. Many leaders don’t like tough questions. Such leaders insist on people asking questions ahead of time before the major meeting or try to deflect the question on someone else or say “I will answer this later”.

This tactic does not work. Instead walk in the front and answer the tough questions in front of everyone. If the question points towards the leadership mistakes, be open to accept past mistakes and apologize and/or talk about corrective steps.

Closing Thoughts

Leadership is a learned skill, and leadership communication is no different. One needs to just walk out of the comfort zone and walk in the front to lead. This would mean being straightforward and dealing with tough situations. Leaders are first judged on how they deal with tough situations and are measured on the success. If a leader cannot handle tough situation, then there will no success. And the best way to deal with tough situation is to communicate and communicate well with all stake holders. For successful leadership, communication skills is just as important as decision making skills. 

A Three-Step Product Commercialization

Launching a new product is one of the most of the core activities a product manager must do. Launching a product is both costly and risky for any business, and that’s why specialists – called as product managers are brought in.
In order to take a product idea into a successful product, there are several stages of development. Customer requirement, use cases and value to customers has to be identified – and often this is the easy part. Then comes the tougher part – how to commercialize the product. 
Launching a new software product has become very complex. The notion of what denotes a ‘product’ and what denotes a ‘service’ is getting rapidly blurred. In addition, the commercial & monetary aspect of software is incredibly complex. The options run from pay-per-use models or annual license fee or one time license fee or even freeware.
The complexity of pricing and commercialization can make anyone go crazy. 
In this article, I will go over a simplified 3 step plan for product commercialization. Going through this will help you identify and access the business risk & help develop better plans.
Step-1: Create a purchase process map
Step-2: Get a Beta Customer
Step-3: Analyze all sales deals.
Pricing of the software has major impacts on several aspects of productization: Packaging, Distribution, After-sales support, marketing and lifecycle planning. It is therefore very important to incorporate the product commercialization plan right at product design stage. (See: Building World Class Products)

1. Create a purchase process map
As part of product design, one needs to think on how any customer will buy this product. I call it as a purchase-process-map which details every aspect of the buying process. Product Purchase-process-map is a very powerful tool that will help gain deeper insights on what the customer really wants to buy and how you can develop a product around it.
Start with customer research that provides great insight into customers' needs and identifies the factors that motivates customer to buy. Once customer motives are known, you can develop a sales & marketing strategy for the product. 
The first step in developing a purchase-process-map is to get an answer to “WHO” questions:
·        Who orders the product?
·        Who inventories the product?
·        Who will use the product?
·        Who influences the decision to buy?
·        Who controls the budget?
·        Who will dispose of the product?
Learning about all the players who have influence over the purchase is very important. When selling complex enterprise products, companies use dedicated Account managers or Account teams whose main focus is to work out the customer purchase maps and then sell products. So, when developing new products, it will be good to have representatives from sales or account teams who understand customers. 
The purchase-process map must be as accurate as possible and it explains the customer buyer-behavior. Do not make the mistake of assuming that you know the buying patterns of customers based on similar products purchased by customers. Always base your product purchase map on facts and not assumptions.
For example, a software company did a voice of customer research and identified a need for unified data center resource management software. However, the purchase-process map revealed that there were no real users of this product as customer operations were still distributed with servers, network and storage being managed by separate teams and no single team or member was looking at the entire data center infrastructure. Identifying this problem helped to avoid developing a new product. Instead, the company was able to cobble up different software tools and offer it as suite. This learning saved several millions of dollars in development costs and at least one year of development time. 

2. Get a beta customer commitment
Traditionally, beta customers are used for product testing. But Beta customers are also very useful in developing financial aspects of the product. It is best to co-develop a product with a real customer and they can provide valuable feedback on the financial aspects of the purchase process.
In many cases, Beta customers expect a big discount on the purchase price, they can provide inputs on various monetization schemes such as:
1.    Paying for using the unit – one time license fee.
2.    Paying for annual license fee including support
3.    Paying for installation of the product
4.    Software is free, but customer pays for support.
5.    Software is free, but is supported by advertisements
6.    Software is free, but developer can collect & use customer data

Beta customers can also help in product marketing & sales by:
·        Agreeing to give written analysis of the product
·        Agreeing to endorse the product
I have worked on several new product development projects with customer and in most cases, customer was very much interested in developing a monetization model for the product. In one instance, customer helped develop the product and also defined the product cost.   
3. Analyze all sales deals  
Initial sales of the new product must be analyzed against the purchase-process-map. For every item in in the purchase-process-map, there must be a corresponding sales or marketing activity. The review verifies whether each of the sales and marketing strategy actually delivers. This also helps to identify weak links in the marketing program that needs to be corrected. 
Analyzing sales deals is very important for new products. Failing to address key customer needs can impede the product adoption process. Identifying issues early in product launch will help keep up sales momentum.
Remember that if sales efforts stalls, and sales reduce, distributors and sales team will simply turn their attention to other products. Sales team will not analyze why the product is not selling. Once the momentum is lost, it is much harder and more costly to get the new product back on track. To ensure success, review all initial sales deals and periodically review deals to identify any roadblocks that could jeopardize the new product introduction.

Closing Thoughts
The stakes are high with every new product introduction. The company reputation and product manager’s reputation is on the line. The best way to see a product’s success is to follow this three step process and incorporate this into product launch plan and sales strategy.    
Remember addressing product issues early on and eliminating product adaption barriers, you will be setting up the path for success and build products with a healthy revenue stream.
Use this 3 step plan for product commercialization. Going through this will help you identify and access the business risk & help develop better plans.
Step-1: Create a purchase process map
Step-2: Get a Beta Customer
Step-3: Analyze all sales deals.
Remember addressing product issues early on and eliminating product adaption barriers, you will be setting up the path for success and build products with a healthy revenue stream.

Juniper's Software Security Problem and What We can learn from it?

Recently, Juniper was in the news for a wrong reason: FBI is investigating Juniper for a security hole in its Netscreen Firewall products. 

FBI is investigating on a security hole - i.e., someone had put  "unauthorized code" inside Netscreen Firewall - a security equipment sold by Juniper Networks.

While this investigation goes on, there is a major learning for all product companies. Adding some "unauthorized code" into the product is a regular technique used by various government agencies. Few years ago,  NSA had done a similar thing - put code on Cisco network equipment, which prompted John Chambers, then the CEO of Cisco, to write an open letter to President Obama asking Obama to stop the NSA from hacking into Cisco's equipment.

In February 2015, Kaspersky labs found out that NSA had created spyware hidden in the hard drive firmware of more than dozen of the largest manufacturers brands in the industry, including Samsung, Western Digital, Seagate, Maxtor, Toshiba and Hitachi. See: NSA Planted Stuxnet-Type Malware Deep Within Hard Drive Firmware

Given the extent of reach and power NSA and other governmental agencies have, it would be wise to assume that majority of computer equipment could have "unauthorized code"!

How does such "unauthorized code" get into the system?

According to information revealed by Edward Snowden, hacking into hardware is relatively easy for agencies like NSA. NSA has a special department to handle this - called as TAO: Tailored Access Operation Unit. TAO intercept servers, routers, and other network gear being shipped to organizations targeted for surveillance and install covert implant firmware onto them before they're delivered. These devices are then re-packaged and placed back into transit to the original destination. All of this happens with the support of Intelligence Community partners and the technical wizards in TAO.

What can be done about it?

Since the "unauthorized code" is added during the transit, the original manufacturer has no idea that the software inside the device has been compromised. The customer also has no idea of what's inside the box.

As the experts at TAO can do a good job, there will be no physical signs of tampering on the physical boxes.

There are several ways to avoid such hacks. (but there is no perfect plan) This calls for vendor to provide a greater level of transparency to the customer.

1. Ship Hardware only - without any firmware in the device.

All physically shipped products are shipped without any software or data storage drives/memory.
Equipment vendors can then provide another copy of the firmware via secure channel. In an extreme case, customer physically walks into a vendor location and get a copy of the firmware in a disc, which is then installed on the device.

2. Vendor provides CRC checksum details, code size, time stamps and other details to customer 

Equipment vendor also provides loads of meta data about the compiled firmware. Details such as CRC checksum, code size, code time stamps for the golden image is shared with customer. Customers can then check their equipment and embedded code to see if anything has changed.

3. Customer can insist on Open source software only

Several governments are now insisting on using open source software - which engineers from customer side can validate, compile and install on the hardware.

The other option for the customer to insist on vendor to provide the source code. Customer then can validate, compile and install on the hardware.

All this calls for greater transparency by the vendor and a change in product shipment & deployment - which adds to the final cost of the product.

How to detect and catch such "unauthorized code"?

The burden on detecting and catching such "unauthorized code" lies on the end customer. Customers of computer systems have much to lose, hence they must step-up their internal software security practices.

Many customer have instituted a software security assurance program - but this program must also include firmware and hardware.

EMC has a software product called Network Configuration Manager (NCM) to ensure that the network devices are running on authorized code.

Network Configuration & Compliance Management tool, can be used to regularly check all equipment for any changes to the underlying firmware and warn if any irregularities are found. NCM can also be used to remediate infected devices and change the firmware to the known "Golden Image" which is a customer validated version.

Network Configuration & Compliance Management tool can be used to automatically check several thousands of devices simultaneously, do regular compliance audits, report any violations and even do automated remediation steps.

In addition to network device configuration, customer will have to constantly monitor network traffic to detect any "Unauthorized Data Movement". Here again there are tools such as RSA's Envision and Lanscope's StealthWatch System.

Tools can help - but remember that organizations like NSA has a long reach and even RSA's security code has been hacked by NSA. See: Alleged NSA Dual_EC_DRBG backdoor 

Closing Thoughts

Information Security is a major problem. When governments are hacking basic network devices and hardware such as hard drives, the burden of information security lies squarely on customer's shoulders. Customers should be vigilant, demand greater transparency and implement tools and processes to catch any security violations.

Today, there are software tools to help in network security and compliance. Customer have to use tools to the best possible extent, demand greater code level transparency and implement a robust security assurance program. (And then keep your fingers crossed!)

Monday, December 21, 2015

NetApp is on the right track with the possible SolidFire Acquisition

NetApp has had several bad quarters and its core storage business has been in a double digit decline for last 4 quarters.
Today's announcement by NetApp to buy all-flash storage array vendor SolidFire for $1.2 billion could be a step in the right direction. At $1.2 Billion, NetApp has emerged as the front-runner - but there is tough competition from Cisco & EMC.Solidfire makes Scale-out, all-flash storage systems aimed at high performance enterprise needs.
While EMC is market leader in all flash storage array with its ExtremeIO range, NetApp has struggled in recent times. NetApp AFF family of scalable all-flash arrays & E-series have not been able to make it a market leader. This could change with SolidFire acquisition for $1.2 Billion.
All flash storage has been very tricky business for NetApp. Replacing hard drives with SSD is not the best way to build a flash storge array. Software written for a disk based storage system and applying the same on all flash array is just not the right solution. A retrofit solution does not give full benefits of flash and instead it adds tremendous overheards on the faster flash memory.
Netapp's main data storage business is being disrupted by:
  1. Cloud Service Vendors -Azure, Amazon, Google, etc who are offering low price web based solutions.
  2. Server Attached Storage - Nutanix, VSAN, ScaleIO, Hadoop, Open Stack (Cinder/Swift). Server attached storage offers low cost and good performance.
  3. All Flash purpose built array - ExtremeIO, Pure Storage, Violin etc are capturing the high performance mission critical storage systems.
Acquisition of SolidFire is coming at the right time. EMC-Dell merger would mean that other server manufacturers would be more welcoming to NetApp-SolidFire's all fash server storage solutions. NetApp could tie up with server vendors such as Cisco, Lenovo and other ODM vendors and act as a counter weight to EMC-Dell.
Large enterprise customer who need hyperscale soltions for Cloud/mobile apps will find NetApp-SolidFire as a suitable alternative solutions. More importantly, this acquisition of SolidFire will give NetApp an opportunity to rebuild its flash storage strategy and emerge as a strong competition in all flash storage solutions.
The first challenge however is to ensure that NetApp can complete the acquisition of SolidFire and out bid all other suitors. The next challenge is to build upon Solidfire technology & integrate it with NetApp current offerings and position it along side FlashRay arrays.
It is good to see NetApp become active in technology M&A game and develop a strong portfolio of storage solutions.

How Startup can create a fast learning organization

In today's fast paced startup environment in Bangalore, startups such as Flipkart, OnMobile,  OLA etc. are facing a rapidly changing environment. Competition is fierce for these startups as they try to disrupt the market. 

Like with any startup money is tight and these companies have the challenge of hiring the right talent. In many cases, it is tough to attract talented folks - so they are forced to work with what is available. 

In such an environment, working hard is absolutely necessary, but it is not enough. It is also important to create an organization that can learn new things and adapt quickly to take advantage of new opportunities. These companies will have to be creative and innovative. Managers will have be bold enough to try new things, develop new processes and solutions and things don't work, managers must learn to fail fast and turn around quickly. 

Startups cannot afford to create a training department and formalize a training program. Instead, it is best to create a learning culture - where employees have the space to learn new things and have the opportunity to put their learning into practice. All this happens along with day-to-day jobs and without missing a beat.   

In order to create a learning culture, there are few things entrepreneurial leaders can do to create a learning organization.   

1. Top Management Commitment
2. Foresee future business needs and communicate to the team
3. Create space & time for learning
4. Encourage collaboration 
5. Encourage experimentation
6. Fail Fast, unlearn and relearn
7. Setup a reward system
8. Encourage Feedback

These steps will create an informal process for learning in a startup. As the organization grows and matures, it will be good to formalize the learning programs and have a formal training department. In this blog, I am focusing on startups - who need to bootstrap their teams to learn and develop new skills. 

1) Top management's commitment: 

Creating a learning culture has to be top down. A learning culture can be developed in an organization only when the top management is committed and deeply involved. At Open-Silicon, where I worked in the past, One of the founders was a professor and the other had a Ph.D. Both of them led by example when it came learning program. Starting off with such leaders, it was easy to imbibe a learning culture right from the start. 

2) Foresee future business needs and communicate to the team 

Top leadership of often involved in dealing with customers, vendors and partners. As a result, they will know the direction in which business is heading and will have fair idea of their future business needs. It is therefore important to share this insight with the teams on the floor and guide them into learning new things that will be needed in future.

Leaders must set a clear and firm learning objectives which is aligned to the business objective.  The strategic value of learning must be clearly articulated. Employees will be motivated to learn more only when they understand its importance and value.  

For example, when leaders in the IT department of a Bank learnt about the benefits of Big Data analytics, they created a small team - whose main task was to learn about Hadoop and see how Hadoop could change the current Business Intelligence (BI) operations. 

At Open-Silicon, Dr. Satya Gupta initiated a small team to go and learn all about new manufacturing process using 45nm lithography and see how it impacts the current design process. 

Leaders should encourage people on the floor the review new & emerging technologies and understand how it will help & benefit them. Without this guidance, any learning program will flounder aimlessly and lose steam.

3) Create space & time for learning   

Learning does not happen in vacuum. People will need time and space for it. This implies that top management must create the necessary time & space for learning. The best example in recent times was Google when it was still a startup. Google allowed its employees to spend upto 20% of their time on personal initiatives and projects. This created the necessary space for engineers to learn new things, try out new things and Google benefited enormously from it. 

Wipro and several other organizations conduct formal classes on weekends, where employees can sign-up to learn new things. Large organizations have collaborated with universities to create weekend programs that leads to Master's Degrees. Today, universities in Bangalore also encourage industry leaders to come and teach during weekends. I used to teach for Master's students at Manipal Institute of Technology. Teaching is a very good way to learn.

Startups can mimic the same model and help their employees learn - it can be simple certification programs or even university degree program. 

4) Encourage collaboration

Learning is best done in a group. For startups, it is not possible to create a personalized learning program or an Individualized development plan. Instead, it is best to network with other startups in the area and encourage collaboration between startups and have a joint learning programs. Collaboration lowers costs and encourages people to do more. 

Collaboration encourages employees to work in teams, share information, knowledge and learn through a peer group network. People will learn faster when they learn from others in their team.  

5) Encourage experimentation  

Learning without hands-on practical experimentation is useless. It would be akin to reading a novel. To get the benefits of learning and encourage employees, organization must allow for experimentation. Experimentation needs tools and resources. Startups have to provide adequate tools and compute infrastructure for experimentation.

Experimentation needs tools and resources. Startups have to provide adequate tools and compute infrastructure for experimentation. Experimentation can be in form of developing Proof-of-concept or even taking on a open-source projects.

For example, having a weekend hackathon will provide an opportunity for learners to try out their new skills. 

6) Fail Fast, unlearn and relearn

Learning is good for the individual, but for the organization learning a wrong tool or technology will not help. So leaders must watch out for such misalignments and wrong turns. When it is clear that the learning program is not aligned with future needs, the program must be killed fast. 
Leaders in startups have to be flexible and open to fail fast, unlearn things and relearn new things.  

For example, I had a case where a team was learning about MangoDB for bigdata analysis - but after few experimentation it was clear that this tool was not the right one. So the team quickly stopped all learning activities on MangoDB and switched over to Cassandra.

7) Setup a reward system

Employees who are innovative, creative, and experimental must be rewarded.  Rewards are always a great way to motivate people. Rewards is way of acknowledging that the learning program adds value to the core business.  Best part of giving rewards in a learning program is that rewards need not be cash based. It can take several forms - for example a plaque or a certificate or even a preferred parking spot etc.

Like in all organizations, rewards must be given judiciously and must be merit based. Having a regular rewards program will keep people motivated to learn more. However, one must be careful to ensure that the learning program rewards are not linked to performance at work. Regular work and learning should be kept separate. Also avoid giving out too many frivolous rewards. 

8) Encourage Feedback

If leaders in a startup keep a close eye on the learning program, then they will have valuable feedback. Yet there is a need to formally collect feedback on each program so that programs can be improved further. Feedback also helps to identify & remove any barriers to learning. Constant feedback and improvements will create a continually learning organization. 

9) Encourage a Teaching Culture

Learning cannot happen without teachers. So encourage senior employees to reach out and teach. Developing a cadre of coaches and mentors to help employees.  Caches and mentors love to teach - because teaching is a great way to learn several new things. Teaching a course helps people learn new skills such as pubic speaking, presentation skills, interpersonal skills, empathy etc. 

If business leaders act as mentors and coaches, organizations will becomes a learning organization - and will know what it takes in terms of time & resources.

Closing Thoughts

Building a fast learning organization is too important to be left to HR department. While large companies have a formal training department and with dedicated budgets, startups will have to be more creative and flexible.

It is very important to inculcate a learning culture at the startup phase itself so that all employees know the value of continuous learning. As the organization grows, it is important to formalize many aspects of employee learning and have proper organizational controls to oversee learning.

In this article, I have focused on learning in startups. If you have suggestions & feedback - please send it to arun.kottolli(at)gmail(dot)com.  

Friday, December 11, 2015

Can India meet its 100 GW Solar Power Proposal?

Last week, In Paris UN climate conference 2015, India pledged to increase the amount of solar power that can be generated in the country to 100 gigawatts by 2022.

The same week, I got my LEED AP certification, so knowing all about India, I decided to write this article - to tell the reality of India.

100 GW of Solar power!

This is REALLY BIG promise, considering the fact that today, India's current capacity is just around 3 GW! That's more than 20 times India's current solar deployment. It's also more than twice the installed capacity in Germany & China. Germany has about 40 GW. China is little more than 40GW.

To achieve 100 GW, India will have to overcome some of the biggest challenges in terms of Investments and most importantly policy reforms.

To get to 100 GW by 2022, Solar Power installations must grow by 65% year-on-year!

Can India pull it off?

Technically and Financially, getting to 100 GW by 2022 is feasible. The total investment needed in Solar Panels (not including land and investments in Power Grid) is about US$ 75 Billion. (Assuming cost of panels will come down by 5% y-o-y.) Total area required for 100 GW will be around 30,000 acres.

Considering that India has plenty of funds - mainly in form of black money, and according to GFI's 2014 Annual Global Update on Illicit Financial Flows report, US $51 Billion flows out  of India annually and in last 10 years US $ 439 Billion flowed out of India.

We can make a reasonable assumption that given proper channels and opportunities, all that black money can be diverted to create solar power plants. Then we know we have funds to set up 100 GW of solar power!

Between 2012 and 2014, solar capacity increased from 461 megawatts to over three gigawatts in India.

Land needed to set up the panels is not much either. 100 GW will require about 500,000 Acres.  Just by using the large reservoir area of big dams of India - like Nagarjuna Sagar, Tehri dam, Bhakra Dam etc, we can create more than enough space for solar power plans. So even after considering the fact that cost of building solar farms over  lake area is slightly expensive - but it makes up the fact that the Solar plants does not need agricultural land!

Moreover, setting up solar power plans over water reservoirs helps in reducing water losses due to evaporation and also increases the efficiency of Solar PV panels.

In short, we have all the land needed to create 100 GW of Solar power, and we have the funds. But do we have the right policies?

Great Indian Dinosaur Park!

Just take a walk around any Indian cities and look out for power distribution cables. It often looks like this:

The image is also a perfect reflection on the state of Indian power distribution utilities. None of the utilities have performed regular auditing of their power losses and it shows in their balance sheets.

Currently, power supply distribution is a monopoly of several state government owned companies - popularly called as "escoms".  These escoms are badly managed, corruption ridden organizations - which have no business sense. These utilities have racked up $55 billion in losses over the past six years, the cumulative losses in these power utilities has not yet been fully accounted.

Development of Solar Power by private sector will only aggravate losses to state owned power utilities. Currently, farmers in most states do not pay for electrical power. Indian farmers who get free electricity to power irrigation pumps.

The free power to farmers accounts for 20 percent of India's electricity consumption and accounts for roughly $10 billion of the losses on state owned utilities. Consequently, industries in India are charged at very high price for electric power and if these industrial users move to solar power, the losses to state owned electric utilities will only increase. Therefore state owned electric utilities have no motivation to allow "net metering".

The national power grid is also a government owned monopoly of Power Grid Corporation of India - which is yet another dinosaur!

The power grid is already under tremendous stress, and the installed grid capacity is less than generation capacity. As a result power hungry states in the southern parts of the country are not able to draw power from states which has surplus capacities.

Adding 100 GW to this decrepit grid is not possible. Also one must note that peak solar power is available only for a short duration of the day and it completely disappears at night. This massive power fluctuations can disrupt & destabilize the grid adversely.

The intermittent nature of renewable energy sources like solar power presents a range of challenges to utilities, depending on their grid's size and design. If Solar PV cells are providing a substantial share of the grid's power and suddenly cloud covers a large Solar PV plant, the power generation drops by 40-50% in less than a minute. This rapid power loss can cause the frequency of the grid's alternating current to drop well below 50 hertz, damaging customer equipment or even causing a blackout.

In short, Indian utilities' ragged infrastructure and financial woes have deterred investment in both clean and unclean power generation. In many cases, utilities have no money to buy solar power from private plants - even when there is demand for electric power.

The Great Indian Policy Challenge

A. Policy Challenge-1: Power Utilities

The biggest challenge India to developing solar power is its policy framework. The onus of connecting all of the 100 GW of solar power lies with various state power utilities - who have absolutely no incentive to do so.

As a solution, Messrs. Sivaram, Shrimali and Reicher suggest creating a federally administered fund to buy power from solar generators when distribution companies aren't in a position to do so, thereby reducing risks to developers. Such a fund was outlined as part of a 2010 national solar program. Even after 5 years - the policy is not yet implemented.

Today, not all Indian states currently have mechanisms for customers to sell self-generated solar power back to the grid and it is unlikely that the various state governments will change their policies to align with the fedral/central government vision and policy.

B. Policy Challenge-2: Land acquisition

Today, setting up a 1 GW of solar power requires 230 acres of land. For 100 GW, it will require 500,000 acres which investors will have to acquire without government assistance. Given the fragmented land ownership in India, it means negotiating with 30-50 persons per acre of land! Moreover there are innumerable restrictions on acquiring agricultural land.

Further more, land area needed for the solar power plans are under the control of various state governmental agencies: Ministry of agriculture, Ministry of Irrigation etc. In short there are more than 100 agencies that govern the area!

This implies that private developed developers will face difficulties acquiring land and getting permissions to build the necessary transmission lines.

C. Policy Challenge-3: Pricing Challenge

For any business investments, investors must have a clear idea of expected returns. Given the rapid decline in the cost of solar power generation - the cost of solar power has already fallen beneath the cost of power generated from imported coal, and could soon be cheaper than power from domestic coal.

This rapid drop in solar PV panels will create project financing challenges. So apart from a purchase agreement, the solar power plants will need tax benefits and capital grants. A currency-hedging facility would help to attract foreign capital.

In rural areas, Indian government also subsidizes fuel for gas lamps, making solar even more uncompetitive. Reducing fossil fuel subsidies would lift energy prices that this would make rooftop solar plants more attractive for millions of rural households.

D. Policy Challenge-4: Petty Politics  

As a first step in policy reforms, government will have to revive & pass the long-pending Renewable Energy Bill in 2015 or latest by summer of 2016.  This Bill, if ratified by Parliament into an Act, should increase RPOs to 15 percent and provide routes for financing, such as infrastructure funds and green energy bonds.

NDA led central government has so far failed miserably to pass any major bills in parliament. The NDA government has so far shown no political will to pass even minor bills in the parliament. Currently, the government is struggling to pass the GST bill - for which there is a general consensus!

In India, power utilities are owned by local state governments. Given the petty politics that our leaders engage in, there is no chance that all the states will agree with the central/fedral government on solar/green power policies and agree on a national level green policy.

This implies, hitting the target of 100 gigawatts of solar by 2022 will require more fundamental reform in every aspect of power sector and that needs political consensus. This is the biggest challenge India has.

Policy Challenge-5: Roof Top Off Grid solar Power

If there is one good success story in solar power in India, it is in rooftop solar water heaters. India has the largest install base for roof top solar water heaters. Rooftop solar water heaters has been one of the rare successes. Ministry of New and Renewable Energy has been able to provide subsidy to individual buyers and encourage manufactures.

However, when it comes to rooftop solar PV cells, the plan is to generate only 3 GW of power via rooftop solar PV plants. Solar panels and batteries for powering appliances in a single homes or a small group of users, stand to bring enormous benefits to millions of in India who have limited or no access to the electricity grid.

As on today, rooftop solar power can now match or beat the grid rates for commercial and industrial consumers in many states. Unfortunately, very few of these people can afford to setup even the simplest solar technology and there are no easy financing options.

In rural areas, Indian government also subsidizes fuel for gas lamps, making solar even more uncompetitive. Reducing fossil fuel subsidies would lift energy prices that this would make rooftop solar plants more attractive for millions of rural households.

In India there is potential to produce upto 40 GW of power from rooftop installations and having a good policy framework to attract individual house owners to invest in solar PV panels will be a good step - but the current policies are not aligned for this.

Closing Thoughts

Producing 100 GW of solar power requires political commitment and lots of smart interventions. Government needs to increase its spending on power infrastructure which includes national power grids, power exchanges and spot power markets.

To reach 100 GW of Solar power by 2022 requires making solar power a national priority - something akin to Kennedy's race to the moon.

Right now, 100 GW of solar power looks like a pipe dream - an overambitious target that has no detailed plans and allocated budget.  There is a big mismatch between the goal and the road map and there is no clear strategy to achieve it.

Technically, India is capable of setting up more than 500 GW of solar power in next 10 years  - provided there is political will and policies to support it.

With the 100 GW announcement, Narendra Modi's government got the whole world excited and talking about it. If the government can follow it up with policies, investors will follow with their money, set up manufacturing plants and creating thousands of jobs.

India's push towards renewable energy has a lot going for it. It is like a mythological story in many ways. We now need to take a pragmatic view of this story and ensure that the 100 GW plan goes beyond just the talk.

Monday, December 07, 2015

IoT is about to change Human Behavior

Internet of Things (IoT) is no longer a futuristic science fiction stuff. It is here and is slowly but surely changing our lives. As the technology matures and the prevalence of connected devices increases, it will change our lives in several profound ways. IoT would have an impact greater than that of World Wide Web!

I would say IoT will be one of those things that will fundamentally change the way we live on this planet:

 - Just like our ability to harness fire put humans on path to civilization,
 - Just like our ability to read & write helped create complex civilizations,
 - Just like Newspaper and Telegram created a global economy,
 - Just like Internet & WWW created a knowledge economy,

IoT will fundamentally change the way humans live, behave & interact in the society.

Let illustrate this with an example.

Let's say there is a construction on a major highway in the city. One hundred years ago, information of this construction would be published in newspaper - which very few people would read, and the local administration would put up big hoarding all around the construction site - requesting commuters to take alternate routes, and a local policemen would manually redirect traffic.

Percentage of people who knew about the advisory - 5%
Percentage of people who heeded to the advisory - 1%

The rest 99% would still drive on the same path and get redirected by local police.

With the advent of Radio & television the situation did not change much. With better communication technology, more people were now aware of the construction, but did not know

Percentage of people who knew about the advisory: 20-30%
Percentage of people who heeded to the advisory:  1-5%

The rest 95-99% would still drive on the same path and get redirected by local police.

Internet and World Wide Web along with  Social Networking tools improved the level of awareness, but people would still pile up at the construction point and choke traffic, and we still needed police to redirect traffic.

Percentage of people who knew about the advisory: 50-80%
Percentage of people who heeded to the advisory:  5-10%

While we now have all the tools to send out information, we as humans still have limited capability to absorb information and act on it.  So even with instant communications, real time traffic map service and social networks, people behavior hardly changed.
Studies done on the aftermath of Hurricane Sandy and Katrina show that people now have awareness - but still do not act on those information!

But IoT is about to change this.

With the advent of GPS Navigation systems, users can now chart out their driving path so as to avoid the construction area. So with IoT,

Percentage of people who knew about the advisory: 100%
Percentage of people who heeded to the advisory:  50-80%

The next generation IoT does even bettwe, with the advent of self-driving cars, the information about road constructions will be consumed by the car and it will reroute its path to avoid construction site, thus avoiding unnecessary traffic jams and wasted time/fuel. Thus with second generation of IoT,

Percentage of people who knew about the advisory: 100%
Percentage of people who heeded to the advisory:  100%

First Generation of IoT

While IoT is no longer a futuristic pipe dream, the technology is still maturing. The  technology has evolved a lot ever since Simon Hackett and John Romkey operated a toaster via the Internet in 1990. Technology evolved quite a bit since then and today we have Smart thermostats such as Nest, or fridges which can display Tweets!

Today, there is much wider prevalence of connected devices - which collect lots of data from the surrounding environment. But these are essentially the first generation of IoT.

Collecting information and presenting information is just a proof of concept of what role IoT can play in our daily lives. Devices such as smart watches or Fit-bit bands can collect a whole lot of information on a person's daily activity. But it does very little to change the person's behavior.

Very few people can change their actions and behavior based on the information presented to them. I would say less than 1% of people changed their exercise pattern because of Smart Bands/watches.

First generation of IoT was all about collecting data. But data was not an end in itself.  Consumers are already overwhelmed by data. Some systems were able to present data in a meaningful way in form of actionable information for people to act. For example, smart baby monitors can alert parents when the baby's breathing pattern changes. But then all mothers are still very anxious and would not change their sleeping patterns - even after knowing that their baby us being safely and actively monitored.

First generation IoT did not make life better, rather it added tremendous complexity with yet another gadget that consumes attention and feeds our obsessive-compulsive disorders.

Smart products today still have big challenges in making users interact with the products and take actions.

The first generation IoT was still far away from creating meaningful experiences.

Second Generation of IoT

Second generation of IoT is just around the corner. Few systems are already being deployed and tried - but these are just the beginning. Smart systems today react to all the information coming from connected systems in a meaningful, purposeful ways.

For example, Smart insulin pumps can alter the quantities of Insulin being pumped into body based on real time blood sugar levels.

The second generation of IoT goes beyond collecting & presenting data. It has to simplify life through automation. Connected devices have to remove tedious chores from our daily lives, allowing people to concentrate on more important stuff.

Second generation of IoT has to provide the ability to control things automatically - which we otherwise would not. For example changing the building thermostat settings to match with power savings plans or based on real-time power supply data - when grid loads increase beyond a point, smart gird can tell all connect smart buildings to lower their power consumption. Smart buildings will then react to this request by changing the temperature & lighting settings.

The next big innovation in IoT will be to create user experience in ways that it makes lives richer by seamlessly eliminating mundane activities. One must create systems focused on meeting a conscious or an unconscious need. For example self driving cars - which meets the need for transport whenever without the hassle of driving.

Today, Airlines and aircraft's are using data from IoT to change the flight parameters to create better fuel efficiency and better passenger comfort - all without pilots actions.

Closing Thoughts

Developing this second generation IoT systems will certainly require a different ways of thinking. This also presents a tremendous opportunity to enhance human experience and enhance life in ways that were never possible before.

Smart systems must be able to understand our intentions and desires and then act independently to create those experiences. When IoT and Smart systems can take real time, meaningful action - without human interaction, IoT will become mainstream.

Second Generation of IoT will not be centered around the product. Instead, it will be centered around user experiences, while hiding all complexity of technology.  Second generation IoT does away with all the unnecessary interfaces and enable customer to concentrate on more important tasks. When IoT products (sensors, actuators), the network, the apps - will all work seemlessly - it will ehance the customer experience - without "Experience of the product"