New year with SAP HANA..:)

New year comes with new resolutions ....This year Resolution is Get Involved as much as I can in SAP HANA .....:)

At SAP, we set out to change how finance is done. Traditional systems relied on inflexible models, precomputed data, and slow computational systems. With SAP HANA and SAP Simple Finance we changed that, to give you a more agile approach to financial management and planning. By eliminating things such as needleless duplication and precomputation of data which clogs other systems, we have significantly lowered your cost of managing Financials.

SAP HANA Makes Redundant Data Obsolete

Redundant data refers to data that is physically stored in a database but could be derived by calculating it from other data in the database, Redundancy is a frequent source of inconsistency and anomalies. As redundant data needs to be kept in sync on updates, redundancy in a data model leads to slower updates. To reduce redundancy, database normalization techniques such as normal forms have been introduced.

Building on SAP HANA’s in-memory technology, it has now been possible to non-disruptively transform the Financials system into a purely line-item-based Simple Finance that gets rid of all redundant financials data. Thus, SAP Simple Finance overcomes the associated costs such as reduced transactional throughput and increased database footprint. At the same time, SAP Simple Finance is a non-disruptive innovation of the classical ERP Financials because it replaces the materialized views with non-materialized compatibility views. All applications that have read from the materialized views, be it SAP standard reports or customer modifications, continue to access the views as before without requiring any changes.

A New, Non-disruptive Data Model with Zero Redundancy

The fundamental and essential data tuples of every financial accounting system are the accounting documents and line items, in this case stored in the tables BKPF and BSEG, respectively. The traditional data model of SAP ERP Financials – which is running on SAP HANA as part of SAP Business Suite powered by SAP HANA (in the following: Suite on HANA) – additionally contained materialized views that allowed fast access on disk-based database systems to open and cleared line items, separated by accounts receivable, accounts payable, and general ledger accounts. As calculations and observations in future installments of this deep dive series will show, SAP HANA’s in-memory database makes materialization obsolete thanks to the improved performance. Hence, the decision for SAP Simple Finance was clear: the previously existing materialized views have been removed and replaced by compatibility views. These compatibility views transparently provide access to the same information calculated on the fly to ensure that the changes are non-disruptive.

Benefits of SAP Simple Finance in Summary

The data model of SAP Simple Finance is now exclusively consisting of line items. It is “simply” recording all business transactions as they happen. Everything else is being calculated on-the-fly by algorithms on the data. This implies that the previously needed modifying operations to maintain the materialized views are no longer necessary, thereby simplifying the program code and increasing the transactional throughput.

The fact that it is feasible to remove the redundancy from the Financials data model demonstrates that in-memory database systems enable new levels of flexibility. Instead of pre-defining materialized views and materialized aggregates, it is possible to aggregate flexibly directly on the line items. Instead of being restricted to specific analysis questions supported by the underlying model of materialization, all questions are feasible that can be answered based on the actual items themselves via any aggregation on top of them. An improved and user-friendly user experience adds to that and allows unprecedented user productivity and novel insights .

Still have to come more on Finance ...no limits and sky is wide . 

Crony Capitalism

1. Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.

Crony capitalism a big threat to countries like India, RBI chief 

Raghuram Rajan says

MUMBAI: Reserve Bank of India governor Raghuram Rajanhas warned against crony capitalism which he said creates oligarchies and slows down growth. 

"One of the greatest dangers to the growth of developing countries is the middle income trap, where crony capitalism creates oligarchies that slow down growth. If the debate during the elections is any pointer, this is a very real concern of the public in India today," said Rajan while delivering the Lalit Doshi memorial lecture in Mumbai on Monday. 

The last general election was fraught with allegations of the nexus between politicians and business groups.

Rajan extolled the virtues of India's democracy before turning to its darker aspects. "An important issue in the recent election was whether we had substituted the crony socialism of the past with crony capitalism, where the rich and the influential are alleged to have received land, natural resources and spectrum in return for payoffs to venal politicians. By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth. And by substituting special interests for the public interest, it is harmful to democratic expression. If there is some truth to these perceptions of crony capitalism, a natural question is why people tolerate it. Why do they vote for the venal politician who perpetuates it?" 

Rajan continued by saying, "One widely held hypothesis is that our country suffers from want of a 'few good men' in politics. This view is unfair to the many upstanding people in politics. But even assuming it is true, every so often we see the emergence of a group, usually upper middle class professionals, who want to clean up politics. But when these 'good' people stand for election, they tend to lose their deposits. Does the electorate really not want squeaky clean government?

"Apart from the conceit that high morals lie only with the upper middle class, the error in this hypothesis may be in believing that problems stem from individual ethics rather than the system we have. In a speech I made before the Bombay Chamber of Commerce in 2008, I argued that the tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access. This may be why he survives." 

The governor's warning against crony capitalism and oligarchies is a reiteration of his statements four days before the Lehman Brothers collapse in 2008. In a speech at the Bombay Chamber, Rajan had highlighted that India had the highest number of billionaires per trillion dollars of GDP after Russia. While excluding NR Narayana Murthy, Azim Premji, and Ratan Tata as 'deservedly respected', Rajan had said "three factors — land, natural resources, and government contracts or licenses — are the predominant sources of the wealth of our billionaires. And all of these factors come from the government."

On Wall Street, So Much Cash, So Little Time

Private Equity firms, where corporate takeovers are planned and plotted, today sit atop an estimated $500 billion. But the deal makers are desperate to find deals worth doing, and the clock is ticking.

The stores of money inside the private equity industry have ramifications far beyond the bid-’em-up crowd on Wall Street. Millions of Americans — investors, employees, retirees — have a stake in the game too.

Corporate buyout specialists generally raise money from big investors and then buy undervalued or underappreciated companies. To maximize investment returns, they typically leverage their cash with loans from banks or bond investors.

Critics contend that leveraged buyouts can saddle takeover targets with dangerous levels of debt. But unlike indebted homeowners, highly leveraged companies under the care of private equity have so far dodged the big bust many have predicted. After an unprecedented burst of buyouts during the boom leading up to 2008, a vast majority of these companies are hanging on. Whether they will avoid a reckoning is uncertain.

So for now buyout artists are searching for their next act. Public pension funds, university endowments, insurance companies and other institutions have pledged to invest many billions with them — provided the deal makers can find companies to buy. If they fail, investors can walk away, taking lucrative business with them.

Private equity funds generally tie up investors’ money for 10 years. But they typically must invest all the money within the first three to five years of the funds’ life. For giant buyout funds raised in 2006 and 2007, at the height of the bubble, time is short while investing in private equity will probably be more lucrative than investing in public markets, “those are far from the gross returns of the mid- to high teens that we saw a few years ago,” Mr. MacArthur said.

One factor in the modest forecast is rising prices for buyouts. Kelly DePonte, a partner at Probitas Partners in San Francisco, which helps private equity firms raise money, said “tough competition for deals” had driven up valuations recently.

One of the biggest and costliest deals so far this year was the acquisition of a stake in the Interactive Data Corporation, a financial market data company, by two private equity firms, Silver Lake and Warburg Pincus, according to Capital IQ, which tracks the industry. A third, unidentified private equity partner dropped out because the price was too high.

The two buyout shops paid $3.4 billion, or $33.86 in cash for each share of I.D.C. — a premium of nearly 33 percent to the going price in the stock market. Technology companies often command high valuations. Silver Lake and Warburg Pincus declined to comment for this article.

Last year, when banks balked at financing deals and private equity firms worried the economic crisis would drag on, the number of deals — and prices paid — fell sharply.

In July 2009, for instance, Apax Partners paid $28.50 a share, or $571 million, for Bankrate, which owned a number of consumer finance Web sites. The price represented a 15.8 percent premium. Apax had to pay the entire bill itself, with no money from banks.

But these days, even small and midsize companies are in a bidding frenzy. More than a dozen buyout firms made initial bids for the Virtual Radiologic Corporation, a company that interprets medical images remotely. Providence Equity Partners eventually paid a 41 percent premium for the company. When a small online education company called Plato Learning hung up a “for sale” sign, several suitors showed interest. When Plato last tried to sell itself, in the fall of 2007, it found no takers.

Private equity players concede that competition has heated up and prices are rising. But they argue that prices, from a historical standpoint, remain attractive. Prices are well below the stratospheric levels of 2007 and 2008, according to Capital IQ. Buyout executives also say it is too soon to determine what profits will come from these deals. And, they say, losers in bidding wars always claim the winners overpaid.

Still, those with dry powder are bidding aggressively, in the United States, Europe and Asia.

Long periods of low interest rates make banks take more risks

Using a comprehensive database of listed banks from the EU and the US, Gambacorta finds strong evidence of a link between the two in the run up to the crisis. Banks’ risk of default implied by asset prices shot up by a larger amount in countries where interest rates had remained low for an extended period prior to the crisis, implying that monetary policy is not fully neutral from a financial stability perspective. Monetary policy may influence banks’ perceptions of, and attitude towards, risk in at least two ways: (i) through a search-for-yield process, especially in the case of nominal return targets, and (ii) by means of the impact of interest rates on valuations, incomes and cash flows, which, in turn, can modify how banks measure risk.Easy monetary conditions are a classic ingredient of financial crises: low interest rates contribute to an excessive expansion of credit and, hence, to boom-bust-type business fluctuations. In addition, some recent papers have found a significant link between low interest rates and banks’ risk-taking , pointing to a different dimension of the monetary transmission mechanism, the so-called risk-taking channel. This channel may operate in two ways. First, low returns on investments, such as government securities, may increase incentives for banks, asset managers and insurance firms to take on more risk for contractual or institutional reasons (for example, to meet a target nominal return). Second, low interest rates affect valuations, incomes and cash flows, which can modify how banks measure risk.
The inertia in nominal targets at a time of lower interest rates could be for a number of reasons, some psychological, such as money illusion. Investors may ignore the fact that nominal interest rates may decline to compensate for lower inflation. Others may reflect institutional or regulatory constraints. For example , life insurance companies and pension funds typically manage their assets with reference to their liabilities. In a period of declining interest rates, the interest rates on their liabilities may exceed the yields available on highly-rated government bonds. The resulting gap can lead institutions to invest in higher-yielding , higher-risk instruments. More generally, financial institutions regularly enter into long-term contracts committing them to produce relatively high nominal rates of return.The second way low interest rates can make banks take on more risk is through their impact on valuations, incomes and cash flows. A reduction in the policy rate boosts asset and collateral values, which, in turn, can modify bank estimates of probabilities of default, loss-given-default and volatilities.In the aftermath of the bursting of the dotcom bubble, many central banks lowered interest rates to combat recession. With inflation remaining remarkably stable, central banks in a number of developed countries kept interest rates below previous historical norms for some time. The implication of these strategies for risk-taking did not loom large in policy decisions. First, most central banks had progressively shifted to tight inflation objectives. Second, financial innovation was seen as a factor that would strengthen the resilience of the financial system, by resulting in a more efficient allocation of risk.
Nonetheless, the paper finds that when interest rates are low, banks not only increase the number of new risky loans but also reduce the rates they charge risky borrowers relative to those they charge less risky ones. Interestingly, the reduction in the corresponding spread — and the extra risk — is higher for banks with lower capital ratios and more bad loans.

Stock values point to recovery

Strong gains on Wall Street and in Asia have seen the top shares open 0.7 percent higher today, which along with a 21 percent rally in the FTSE index this quarter has given signs that the global recession could be making a stronger-than-anticipated recovery.

Domestic forecasts also point to economic recovery. Philip Shaw, chief economist at Investec, said “we expect growth to return in Q3”. This comes as retailers reported a picking up of spending in the month of July. As ever, this comes with a note of caution; the Bank of England warned that it was no quick fix, and the long-term may still require pro-active intervention to bolster recovery.

In news even closer to home, Gordon Brown has been talking about cuts. It seems a point of break-even is a while away, as the government needs to borrow £2 for every seven it spends. But where to make cuts? The UK’s swollen public sector needs to retreat, but a hatchet-job certainly won’t do the trick. Though whether allowing state borrowing to rise further is a viable course of action remains to be seen. Feeding into this comes the revelation that the UK’s jobless rate now stands at 7.9 percent, or a total of 1.61 million people. There is no quick silver lining to this multi-part problem.

Escaping may be the best option, at least for now-former Barclays bankers Stephen King and Michael Keeley, who are leaving to set up C12 Capital Management in the Cayman Islands. The firm are buying $12.3bn of Barclays’ debt, which will not be removed from the bank’s balance sheet but will be treated differently – Barclays will no longer need to price its assets at current market values. It’s an obtuse set up in a climate where transparency and clarity are being promoted as the values to pursue, a move that has astonished many.

In a parallel world, traders have been using StockTwits, a Twitter-based service, to track relevant discussions on stock trends. Traders tweet their opinions which are picked up and displayed on StockTwits’ own website, making the formerly mantled compartment of finance as transparent and public as can be. There are currently 90,000 people signed up to the site, of which about 15,000 tweet. It’s easy to watch how amateur day traders operate and notice trends from the outside, and may be a valuable template to follow in this pro freedom-of-information world we’re moving rapidly into.