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PRESENTATION ONPRESENTATION ONPRESENTATION ONPRESENTATION ON

BUSINESS ENVIRONMENT BUSINESS ENVIRONMENT BUSINESS ENVIRONMENT BUSINESS ENVIRONMENT

Subject:-

Impact of Technology on Organization

Presented By:

(B-09) Divyesh Sharma

(B-20) Mitul Kamdar

(B-34) Bankim Parmar

(B-42) Pradeep Prajapati

(B-47) Sandeep Todarmal

DATE: 16TH

APRIL, 2010



CONTENT

Impact of Technology on Organization structure

Example of modern day technologies.

Impact on banking industry.

Status of technology in India.

Status of technology in Gujarat.



Impact of Technology on Organization

Introduction:

Technology is one of the important determinants of success of a firm as well as the economic and social

development of a nation.

“Technology includes the tools – both machines (hard technology) and ways of thinking (soft technology) -

available to solve the problems and promote progress between, among and between societies”

According to the United Nations Conference on Trade and Development (UNCTAD’s) draft TOT code,

technology should be described as “systematic knowledge for the manufacture of the product, for the

application of a process or for the rendering of a service and does not extend transactions involving mere sale

or lease of goods”

“Technology includes not only the knowledge or methods that are necessary to carry on or to improve the

existing production and distribution of goods and services, but also entrepreneurial expertise and professionalknow-how “The latter two elements may often prove to be the essential competitive advantages possessed by

the technology owners.

Technology has a very great impact on the organisation and it can entirely change the working of the

organisation and the way of doing business.

Technology and Organisation Structure:

Technology has considerable influence on organisation structure, length of the line of command, and

span of control of the chief executive. Where companies use technology which is fast changing, matrix

structures are more common. Some companies use a matrix even though the rate of technological change is no

fast besides technology, other factors which have their influence on organization structure are history and

background of a company and the personalities of the people who founded the firm and managed it

subsequently but the impact of technology is considerable.

In this context, three types of technology may be distinguished: small batch technology, mass production

technology, and continuous-process technology. Each of these types has its impact on levels of hierarchy, span

of control, ratio of managers to non-managers, shape of organization, type of structure and cost of operation.

Small Batch Technology:

Organizations that employ small batch technology make one-of-a kind, customized products or small

quantities of products. Furniture maker is an example for this type of technology. An organization that uses

small-batch technology needs to give people the freedom to make their own decisions quickly so that they can

respond to customer’s needs fast and produce what they want. For this reason, such an organization has

relatively flat structure (three levels), and decision making is decentralized to small teams where managers hav

a relatively small span of control (23 employees). The most appropriate structure for small-batch technology is

an organic structure in which managers and employees work closely to coordinate their activities to meet



changing work demands. Small-batch technology is relatively expensive to operate because the work process i

unpredictable and the production of made-to-order products makes production planning difficult.

Mass Production technology:

Organisations with mass production technology produce large volumes of standardized products such as

cars, razor blades, and soft drinks. Here machines control the work process. The use of machines allows tasks

be specified and programmed in advance. Organizations with mass production technology have four levels of hierarchy, have span of control of seven each, have mechanistic structures and costs of operation are moderate

Continuous Process Technology:

Organizations with continuous-process technology produce continuously with little variation in output.

In an oil refinery, for example, (an industry where continuous-process technology is employed) crude oil

brought continuously to the refinery by tankers flows through pipes to cracking towers where its individual

component chemicals are extracted and sent to other parts of the refinery for further refinement. Final products

such as gasoline, fuel oil, benzene and tar leave the plant in tankers to be shipped to customers. Workers in a

refinery or in a chemical plant rarely see what they are producing.

Organizations that employ continuous-process technology have six levels of hierarchy; have organic

structures and costs of operation tend to be low.

Technology has its impact on other areas of an organization. Any technological advancement will result

in

(a) The expanded availability of a range of products and services;

(b) Substitution of capital for labour, leading to higher productivity and lower costs;

(d) Initiation of changes in behavior among customers, suppliers, employees, or society; and

(e) Side effects on the quality of physical environment.

Fear of Risk

There is always the fear of risk. Take the case of DuPont’s Corfam, an intended substitute for the

forecasted shortage of shoe leather. After an investment of $ 300 million, the company abandoned the project i

1971 because of quality and cost problems. Even a research-oriented company like DuPont, which was

responsible for adding totally new dimensions to the textile industry with its introduction of synthetic fibres

beginning in 1939, was unable to manage technology without great risk and some subsequent failures.

Resistance to change

The manager of a given business unit shall face resistance to change. New technology poses new

problems which may not be to the liking of the organizational men. The resistance to change is purely

psychological.

A typical businessman himself is opposed to new technology. He does not encourage new technology.

Reasons are not purely psychological. Adopting new technology is expensive and risky. When he is making

enough money with obsolete technology why must he worry about new technology? Take the case of erstwhile



Telco for example. Telco’s trucks were still antiquated models only found in developing countries. But the

turnover of Telco was Rs. 1,969 crores during 1989-90. Another example is Bajaj Auto, Ltd. The company

claims to be number two in the world in the manufacture of two wheelers. But during the last two decades the

company could not develop a self-starting scooter. Or take the case of Indian Telephone Industries (ITI) which

was till recently manufacturing strowger crossed switching equipment that became outdated 10 years ago with

the development of electronic switching system.

Specifically, resistance change stems from the following reasons:

a) Psychological and social commitments to exiting products, processes and organization,

b) Sizable capital investments in long-life single-use-facilities,

c) Low profit and reduced rate of growth,

d) Small size or fragmented activities,

e) Complacent top management,

f) Industry norms and associations or cartels which perpetuate industry-bound thinking,

g) Lack of successful entrepreneurial models to emulate, and

h) Powerful labour resistance to changes in methods.

Total Quality management (TQM):

Total Quality Management refers to deep commitment of an organization to quality. Quality of produc

and service is an obsession and every step in the company’s processes is subjected to intense and regular

scrutiny for ways to improve it. Almost every issue is subject to exploration, and the process is a continuing on

of long duration. Employers are provided with extensive training in problem solving, group decision making

and statistical methods.

TQM replaces traditional beliefs about quality with a new set of principles. Traditional beliefs which ar

discarded include-

• High quality cost more.

• Quality can be improved by inspection.

• Defects cannot be eliminated completely.

• Quality is the job of the quality control personnel.

The new principles of TQM are-

• Meet the customer’s requirement on time, the first time, and 100% of the time.

• Strive to do error-free work.• Manage by prevention, not by correction.

• Measure the cost of quality.

TQM has been introduced by almost all organizations. It has several implications for employees and

organizations. Managers are required continuously to search for improved policies and activities.

Employees can no longer rest on their past achievements. They too are required to search for newer and

better ways of doing things. Some of them may experience stress from a work climate that no longer accepts



complacency with the status quo. Employees will be more and more involved in process improvement.

Management will look at them as a source of improvement of ideas.

Some of our companies have excelled in quality and have won the prestigious prize for excellence in

quality.

Flexible Manufacturing System (FMS):

Flexible Manufacturing System (FMS) is another by-product of technology. Under FMS machines are

designed to produce batches of different products. Gone are the days of one machine producing multiple units

of one component? It can now make dozens or even hundreds of different parts in any order management

desires.

The unique characteristic of FMS is that by integrating computer aided design, engineering and

manufacturing, they can produce low-volume products for customers at a cost comparable to what had been

previously possible through mass production. In effect, FMS is rewriting the laws of economies of scale. With

flexible manufacturing, when management wants to produce a new part, it does not change machines- it needs

to change the computer programming.

Under FMS, workers need more training and higher skills. Besides, employees in flexible plants are

typically organized into teams and given considerable decision making discretion. Organizational structure

needs to be so designed so as to facilitate decentralization of authority into the hands of operating teams.

Technological advances are continuously been made and new ways are been developed to achieve the

same purpose. This also forces the organisations to change there processes and business model. Let us conside

the example of motive power.

• Initially the work was done with simple machines using human or animal power like bullock carts were

used for transport, clothes were manmade and no industrialisation was there.

• With the invention of steam engine locomotives were used for transportation, textile mills using steam

power came up and steam engines were been used for many purposes.

• Then came the internal combustion engine (diesel and petrol engines) and many industries using steam

engines now started using the internal combustion engines like steam engine for train were replaced

with diesel engines.

• With the inventions of electricity and electric motor the steam engines were replaced with electric

power like in textile industries which used heavy steam engine to run its machinery started using

electric power and because of its advantages all the companies had to shift to electric power to stay

competitive.

• Now with the new development of instrumentation and control a lot of automation has happened and

most of the machinery is now computer controlled. This has increased the productivity and efficiency o

the companies.



Recent advances in technology and its impact:

In the later half of the 21st century there has been a major change in technology. The development of the work

flow software, the internet and telecommunication and the advances in the supply chaining technology has

changed the businesses drastically and has lead to development of new business models.

For example Wal-Mart:

Wal-Mart is the world’s biggest retailer. It has introduced technologies which has now become industrystandards like the bar codes and RFID tags. It could have never become the world’s biggest retailer without thuse of technology. Its success is based on its supply chain management.

Wal-Mart has over 1.2-million-square-foot distribution centre. On one side of the building, scores of white

Wal-Mart trailer trucks drop off boxes of merchandise from thousands of different suppliers. Boxes large and

small are fed up a conveyor belt at each loading dock. These little conveyor belts feed into a bigger belt, like

streams feeding into a powerful river. Twenty-four hours a day, seven days a week, the suppliers' trucks feed

the twelve miles of conveyor streams, and the conveyor streams feed into a huge Wal-Mart river of boxed

products.

As the Wal-Mart River flows along, an electric eye reads the bar codes on each box on its way to the other

side of the building. There, the river parts again into a hundred streams. Electric arms from each stream reach

out and guide the boxes-ordered by particular Wal-Mart stores- off the main river and down its stream, where

another conveyor belt sweeps them into a waiting Wal-Mart truck, which will rush these particular products

onto the shelves of a particular Wal-Mart store somewhere in the country.

There, a consumer will lift one of these products off the shelf, and the cashier will scan it in, and the

moment that happens, a signal will be generated. That signal will go out across the Wal-Mart network to the

supplier of that product-whether that supplier's factory is in coastal China or coastal Maine. That signal will po

up on the supplier's computer screen and prompt him to make another of that item and ship it via the Wal-Marsupply chain, and the whole cycle will start anew. So no sooner does your arm lift a product off the local Wal-

Mart's shelf and onto the checkout counter than another mechanical arm starts making another one somewhere

in the world.

This has been achieved by SCM software, internet and technology like RFID tags. Because Wal-Mart wan

to use RFID tags for its supply chain its supplier will have to incorporate the change in their product packaging

to remain a supplier to Wal-Mart. Other retailers will also have to use these technologies to keep their prices

low.

Wal-Mart has a history of using information technology to be the leader. In 1975 it was the first to use an

IBM computer system to track inventory in its distribution centres. The computers have come a long way now

and are used in almost everything but in 1975 it was a cutting edge technology which gave it an advantage ove

other retailer. In 1983 Wal-Mart came up with another revolutionary technology the “barcodes” which has now

become an industry standard for inventory and products. In 1987 when information technology became very

important Wal-Mart completed its own information network which at that time was the largest private network

in the world. RFID is the recent technology introduced by Wal-Mart and has now become the industry standar

All its suppliers need to integrate the RFID tags in there packaging to supply to Wal-Mart.



E-Commerce and E-Business:

Technology has given birth to the Internet and the association world wide web which have made e-

commerce possible. E-commerce is contributing to a growing number of transactions within a country and

across nations. Viewed globally, the web is emerging as the great equaliser. It rolls back some of the constrain

of location, distance, scale and time zones. The web allows both small and large enterprises to expand their

presence globally at a lower cost than ever before. The web makes it much easier for buyers and sellers to find

each other, wherever they may be located, and whatever their size of operations.

While e-commerce focuses on marketing and sales process, e-business emphasizes integration of

system, processes, organizations, value chains and markets. The integration operates through internet and help

build new relationships between business and customers.

The internet and e-business worldwide; facilitating communication across borders following:

• Convenience in conducting business worldwide; facilitating communication across borders which bring

globe closer.

• An electronic meeting and trading place, which adds efficiency in conducting business.

• Power to consumers as they gain access to limitless options and price differentials.

• Efficiency in distribution.

The following table shows some of the most important business models that have emerged. All in one way

the, use the internet to add extra value to existing products and services or to provide the foundation for new

product and service.

Category Description Examples

Virtual Storefront Sells physical products directly to consumers or to individual

businesses

Amazon.com

RedEnvelope.com

Information broker Provides product, pricing, and availability information to individuals

and businesses. Generates revenue from advertising or from direct

buyer to seller.

Edmunds.com

Insweb.com,

Realto.com

Transaction broker Saves users money and time by processing online sales transaction

and generating a fee each time a transaction occurs. Also provides

information on rates and terms

E*trade.com

Expedia.com

Online

marketplace

Provides a digital environment where buyers and sellers can meet,

search for products, display products, and establish prices for thatproduct. Can provide online auction of reserve auctions in which

buyers submit bids to multiple sellers to purchase at a buyer specified

price as well as negotiated or fixed pricing. Can serve consumers or

B2B e-commerce, generating revenue from transaction fees.

eBay.com

Priceline.comChemconnect.com



Category Description Examples

Content provider Creates revenue by providing digital content, such as digital news,

music, photos, or videos, over web. The customer may pay to access

the content, or revenue may be generated by selling advertising space

WSJ.com

GettyImages.com

iTunes.com

Online service

provider

Provides online service for individuals and businesses. Generates

revenue from subscription or transaction fees, from advertising. Orfrom collecting marketing information from users.

Streamload.com

Xdrive.comSalesforce.com

Virtual community Provides an online meeting place where people with similar interest

can communicate and find useful information.

YouTube.com

MySpace.com

Portal Provides an online point of entry to the web along with specialized

content and other services.

Yahoo.com

MSN.com

This shows that how technology has impacted and changed the entire way of doing business. Many of

the changes are such that no one could have imagined a few years before.

Technological advancements in internet, software and electronic hardware have also led to open

sourcing, outsourcing and in sourcing, let’s have an idea of what these terms mean:

Open sourcing:

Open-sourcing means that companies or ad hoc groups would make available online the source code-the

underlying programming instructions that make a piece of software work-and then let anyone who has

something to contribute improve it and let millions of others just download it for their own use for free. While

commercial software is copyrighted and sold, and companies guard the source code as they would their crownjewels so they can charge money to anyone who wants to use it and thereby generate income to develop new

versions, open-source software is shared, constantly improved by its users, and made available for free to

anyone. In return, every user who comes up with an improvement-a patch that makes this software sing or danc

better-is encouraged to make that patch available to every other user for free.

Outsourcing:

Outsourcing means getting a part of your work done by some other company in a cheaper and more

efficient way. Every company has its core competency and it’s always advisable to concentrate on one’s core

competency. This can be done by getting the other work or the back office jobs done by someone else at some

other place. This has become possible with the help of high speed internet and telecommunication facilities.

Many of the US companies have outsourced their work to Indian IT firms like Wipro, Infosys, and TCS etc.



In sourcing:

In sourcing means getting some part of your work or some business process done by some other company whic

has its core competency in that process. For example Toshiba has in sourced its repairing of laptops to UPS.

Toshiba had developed an image problem several years ago, with some customers concluding that its repair

process for broken machines took too long. So they in sourced that work to UPS. When any Toshiba’s laptop

breaks down and the customer calls for repair then the UPS employee would pick that laptop from the customer

takes it to the UPS hub repairs it and gives it and gives it back to the customer, this saves the for transporting th

laptop from UPS hub to Toshiba repairing facility and then back to UPS hub and then to the customer. This

brought down the repair time of Toshiba to three days and helped them improve there image.

The banking sector has been the subjected to tremendous change because of new technology so let us

discuss the technological environment in banking sector.

Section 1:

ROLE OF INFORMATION TECHNOLOGY

The financial sector, comprising banks, stock exchanges and insurance organizations, have been the backboneof every country. They are agents to implement and bring about economic reforms. The development in

information collection, storage, processing, transmission technologies have influenced all aspects of the

banking activity. The objectives of this are to describe the extent to which these developments have been takin

place in the banking industry with special reference to India and analyse adaptation and risks related to

technologies progress as well as relevant issues.

Information technology development affects banking in two ways.

1. First, they contribute in the reduction of costs associated with management of information by replacing paper

based and labour intensive methods with automated processes.

2. Secondly, they modify the ways in which customers have accesses to a bank’s services and products, mainly

through the use to automated processes such as remote banking. The phenomenon of remote banking is very

recent.

Remote banking is currently offered by all the major banks in India. Most of the standards retail bankin

services is offered through the use of Automatic Teller Machine, tale banking and online banking. Online

banking is generally not widespread, yet all major banks have their online banking portals. Internet banking is

expected to have the highest growth potential incorporating increasingly sophisticated products. The use of

electronic money is one such innovation. The main reasons for slow acceptance of internet banking are cost as

well as security concerns, low reach of internet and weak legal system.

Section 2

REMOTE BANKING

Remote banking refers to the provision of extending banking services without face to face

communication between the bank employees and customers. The following types of services fall within the

range of remote banking defined above.



1. Kiosk Banking (ATM Channel)

Here, the customer uses multipurpose ATMs installed by the bank which may also be use as an

interactive link between the customer and the bank.

2. Telephone Banking of business

In this channel telephone is used as a message carrier to enable person to person or voice activated

automated communication between the bank and the customer.

3. Online Banking (Internet Channel)

In such cases, internet is used as a message carrier where the customer uses a PC and modem to connect

to the bank using its online website or software provided by the bank.

Today, the upwardly mobile customer expects remote banking as a basic service to be provided

by bank. A large branch network which spans through the whole of rural and urban areas, is sometimes not a

priority for some banks.

In principle, the banks can be categorized by their involvement in remote banking.

1. Banks that provide traditional services, but struggling with the new technology. E.g. PSUs

2. Old banking institutions that offer traditional banking services and are moving on to offer remote services in

a big way. E.g. SBI.

3. New age banks that operate with minimal number of physical branches and use remote banking for the bulk

of their operations. E.g. ICICI, HDFC.

Penetration of Remote Banking Services and ChannelsMost of the traditional banking services can be effectively implemented by the banks using remote

channel too. In many cases, the remote channels are better placed than the conventional ones to serve a

customer. Until now, major emphasis has been given on ATM and telephone based services by the banks that

have used the remote banking channels but they have been slow to catch up with net based banking.

Uses of ATMs:

Use of ATMs has seen an exponential growth in India ICICI bank is most aggressive deployer of ATM

and has seen its base surge from 125 ATMs in January 2000 to more than 3000 ATMs today. Such has been th

impact of ATMs that ICICI Bank’s customer base has grown from two million to ten million. Now they aretargeting 8 ATMs per branch.

Online Banking

The total number of registered users for internet banking in India is over five million. India has a little

less than three million active internet banking users. And though this in just 0.3 per cent of the total population

it represents a high percent of the India‘s Internet user population, thus indicating that the concept of internet

banking is surely catching on.



Telephone Banking

Telephone banking is also catching up across the countries. Transaction such as request for loan, credit

cards and account balance enquiries, are increasingly being carried out through a phone or mobile.

Future trends in remote banking

With ATM networks already in place in most of the urban areas, the drive is now focused towards the

rural areas where the use of ATMs is still uncommon. The banks are also seeking IT solutions to ensure that

transaction on the net are more secure and efficient. The spreads of such e-banking is also more superior to

those services offered through the conventional channel.

So, following are some of the future trends in the new age banking.

• Spectacular growth in the use of online banking facilities to manage money rather just for account

reportingin both retail and corporate sectors.

• New digital signature legally binding in many countries leading to entirely new patterns of consumer

activity.

• Huge growth in wireless banking and payment services using mobile phones.

They are facing problems like security, identification, increasingly costs and legal frame works also pose a

challenge.

PAYMENT SYSTEM- Current Status:

There are diverse payment systems functioning in the banking sector, ranging from the paper based

systems to the most sophisticated electronic fund transfer system which settles transactions on a gross, real tim

basis.

The retail payment system comprise of both paper-based as well as electronic-based system. Thesesystems typically handle transactions, which are low in value, but very large in number, relating to individuals

and Corporate. These transactions relate mainly to settlement of obligations arising from purchase of goods an

services. In India, there are about 1,050 cheque clearing houses. These houses clear and settle transactions

relating to various types of paper-based instruments like cheques, drafts, payment orders and interest/dividend

warrants. The clearing houses are voluntary bodies set up by the participating banks and post offices and they

functions in an autonomous manner.

There are various types of electronic clearing systems functioning in the retail payments area in the

country. Electronic Clearing System (ECS), both for credit and debit operations, functions from 45 places (15

managed by Reserve Bank and the rest by the State Bank of India). The ECS is the Indian version of theAutomated Clearing Houses (ACH) for catering to bulk payments. This is typically for individual/single

payments and is governed by their own respective rules. A variant of the EFT, called the Special Electronic

Funds Transfer (SEFT) System, is also operated by the Reserve Bank to provide nationwide coverage for EFT

All these electronic fund transfer systems settle on deferred net settlement basis.

All these systems, except the High Value clearing and the Forex Clearing are managed by the Clearing

Corporation of India Limited (CCIL).



The TRGS system is operated by the Reserve Bank has, in line with the international trend moved them

(except the Inter-bank Clearings at other than Mumbai and the High Value Clearings) to either secure and

guaranteed systems or the Real Time Gross Settlement System (RTGS).

Future of payment systems

The payment systems are envisaged to have the following four features, which relate to Safety, security

Soundness and Efficiency.

• Safety addresses risk. Payment Systems, by their nature, are risk prone and so, the need for addressingthese risks assumes significance, Sound designs, rules, and practices promote the safety of payment forusers and their financial institutions.

• Security addresses the issues relating to confidence with specific reference to the users of these systemsPublic confidence in the integrity of basic paper payment instruments was built up over very long periodof time. Prudent users will require strong evidence that these new systems will meet their needs in bothnormal and exceptional circumstances. The payment service providers realize that confidence is an asseto be guarded.

• Soundness aims at ensuring that the systems are built on strong edifices and that they perform over a

long period of time. All the systems are envisaged to be on sound footing, with adequate legal backing,firm operational procedures, and transparency norms.

• Efficiency represents the measures aimed at efficiencies in terms of costs so as to provide optimal andcost effective solutions.

The financial institutions try to focus on the following major themes:

• A new organizational structure for retail payment systems

• Sound legal base

• Efficiency enhancements

•

Rural Sector facilitation

• Customer facilitation and protection.

Section 3: TECHNOLOGY AND BANKS’ STRATEGIES

As an all-encompassing development, new technology has important implications for all aspects of strateg

and offers major opportunities through investment in the following areas:

• Application of IT into banks’ internal operations, products and distribution methods in order to gaincompetitive advantages and increase the markets share as well as to improve efficiency and risk management.

• The formation of alliances with technology partners, telecommunication providers and IT vendors inorder to create common platforms which allow further developments in the effective application of themost up-to-date IT and to optimize R&D implementation costs; and

• Diversification into other business such as electronic commerce and non-financial services. Technologyis an important strategic tool for banks to safeguard long-term competitiveness, cost efficiency andprofitability. Technology enables banks to obtain additional marketing instruments and reductions. Inany case, bank also needs to evaluate the risks involved in adopting any technology.



COST ASPECTS

The most important driver of quick adoption of technology in any sector is the possibility of achieving

significant cost reductions in the long term. Banking sector is no different. The use of technology in bankin

sector might reduce the per transaction cost and hence the overall operating expenses in the long run. The

cost reduction may be attributed to the following factors:

• The reduced cost of automated processes as compared to labour intensive ways to process the variousbank transactions. This is a long term phenomenon.

• The lower Turn around Time (TAT) and the response time for the response time for the transactions.

• Existence of greater economies of scale in the case of automated processes as compared to manualprocesses.

• Centralization of information and processing functions lead to reduction in costs in the long run.

• Typically, it might cost a bank close to Rs50 per transaction if conduced in a branch. The same, if done

through an ATM, cost about Rs 15. A look at the volume of ATM transactions conducted reflects the

level of success of this delivery channel. The adoption of Internet banking by the bank’s customers is

important since the costs per transaction in this case are even lower than those of an ATM. A net-based

transaction costs the bank only about Rs 4

There might be certain catches while implementing technology in banking. These are:

• A relatively large number of transactions might have to be built up before economies of scale areachieved.

• Some redundancies might build up. For example, a remote banking channel and conventional channelcatering to the same segment of customers will involve redundancy since multiple channels are presentfor the same use.

• Higher use of technology requires highly trained manpower. This involves significant training costs forthe existing employees and a general rise in salaries.

• The technology keeps changing very rapidly and hence, banks must keep pace with the latest IT tool,which will further push up the cost.

In the banks, significant cost advantages will accrue only in long term, however, these reductions might not

be dramatic. The variable costs will decrease while the fixed costs might increase. At present, it is difficult to

assess how much cost advantage has been achieved by banks; however, the labour costs have seen a decline

with the gradual implementation of technology.

Revenue AspectsThe investments in IT are not just on the basis of cost considerations but also with a view to attract more

customers and thereby to increase the revenues. This is done offering new services using technology and

attracting more number of tech-savvy customers. Many banks have seen a surge in customer base and revenue

since the time they implemented technology.

Technology has a major impact on a bank’s relationship with its customer since the implementation of CRM

(Customer Relationship Management) tools in banking.



Personal information and banking behaviour of each customer is re-tracked and stored which helps in

coming up with customized solutions for the person. This improves the customer loyalty and also helps in

targeted marketing for the bank.

Another aspect is the emergence of competition with the websites of banks just a mouse click away. This

helps the customer look out for the best deal in the market. The market has today seen that much customer dea

with multiple banks trying to locate the best player for their specific needs. One might have an account in ICIC

but avail of a loan from SBI and carry a Citibank credit card. Increased competition might create a pressure tochange a system to cost-based pricing. The new entrants, which avoid the cost related to a branch network, wil

have a certain cost advantage compared to established banks. Customers demand the best service and

implementation of technology can help retain the customers in long run.

Impact on the Banking Sector:

The technology recourses are use in number of ways by the banks. Certain effect on banking structure is visibl

in the form of:

Numbers of Customers

The branch networks are witnessing an impact as a result of technology. This is being done by deciding

the number of customers to be serviced through both remote banking and conventional banking.

Bank Branches

In the short term, the branch network will remain as it is, since the physical presence is still considered

necessary because the remote channel would not become complete substitutes.

Bank Personnel

The redundancy among bank employees will rise due to the automation of previously manual functions

The technical competency among the employees will rise and bulk of employee work will shift to marketing,

telephone operations and maintenance of the system. Thus, the employee strength might not exactly change.

Outsourcing

Bank outsourcing activities, such as IT support, printing, security, transportation and document

processing. Outsourcing is slated to increase drastically in future as organizations identify their correct positio

in the value chain. Outsourcing is being considered due to various reasons which include absence of in-house

competence, improvement in efficiency and economies of scale or flexibility.

SECTION 4: EFFECTS OF TECHNOLOGY ON RISKS IN BANKING

The technological innovations and subsequent adaptation of technology by the bank have an impact on

the overall risk profile of bank. Possible effects of IT on various types of risks for banks are classified below.



Strategic Risks

The strategic risk includes:

• Increased competition

• Excessive investments in technology

• Long time lag for break even

Legal Risks:

The legal risks are attributable to laws and regulations in the wake of the ever changing technology.

These laws relate to validity of proof of electronic signatures, customers ’privacy, technical failure

responsibilities and data protection. The legal disputes may arise due to disputed cash withdrawals, sharing

responsibility between banks vulnerability of transaction on internet, hacking and breakdown of computers.

Operational Risks

For banks, there is always an operational risk of technological failures. Open internet architecture pose

a risk of external intrusion while employees pose a risk of data leakage. Some operational risks are themishandling of IT products, inadequate safety of IT infrastructure, leakage of password, dependence on the

third parties, obsolescence of technology or ill designed IT package. Operational risks also pose a major

reputation risk which can lead to loss of customers.

Credit Risks

An increased use technology of technology leads to easing of mechanisms to disburse loans. The use of IT has

enabled better quantification and management of credit risks.

SECTION 5: DELIVERY CHANNELS AND CHANNEL MIGRATION

The evolution of high-tech banking can be divided into three stages:

Business ComplexityPast Present Future

• Simple products • Retail push • Continued retail focus

• Low volumes • Complex products • Transaction intensive

• Focus on high value

Corporate business

• Multiple channels

• Challenge of increasingvolume

• Need to push down per

transaction costs

Changing business needs paved the way for new technology and channel migration. The key areas of

application of technology can be classified into two as mentioned below:



I. Transaction processing

• Makes the routing but necessary work

Easier

Faster

Accurate

Cheaper• Focused factory concept for processes link account opening and cheque clearing

• Economies of scale

• Reduced load on branches

• Improved turnaround times

• Automated check processing

II. Cost cutting

• Normal transaction re-routing

• Automation integral administrative tasks• Rapid increase in customer base led to proportionate growth in number of tractions, creating a need

to use technology to improve productivity and efficiency of the processes

• Centralized operations

(Technology-led Delivery of Products)

Migrating the customer to alternate channels improves the quality and lowers the cost of service deliver

The banks are getting consumers to use the right channels for the right transactions and interactions. The

alternate delivery channels are the biggest growth for the banks.

Private

Banking

Credit/Debit

cards

Loans-Home

Car, etc

Deposits

Young

Stars/Student

Banking Services

Investments-

Mutual Funds, Gol

Bonds

Saving Account

(Quantum

Optima)



Mobile

Banking

Internet

Banking

ATM Branch

Banking

Phone

Banking

(Extended Reach by Multi-channel Offerings)

Table 1. Channels

Internet BankingServices

• Electronic bill presentment and payment

• Online bill payment for shopping, travel etc. transactions

• Funds transfers 24X7 facility• Money to India for NRI facility

• All routine transactions regarding banking, cards, loans and investment services

Automatic TellerMachine

• Routine Banking transactions like balance enquiry, cash withdrawal, funds transfer acheque book request

• Features like airtime recharge for pre-paid mobile phone, donations to temples/trusts

• ATMs for visually challenged customers

Mobile Banking • SMS alert for salary credit, account getting credited, cheque bounce

• SMS alert for credit card due date reminders, approaching credit limit reminders

Call Centre • Customer contact through voice, IVR, e-mail, correspondence, video conferencing• Wide range o f solution offerings to customer rights from balance enquiry to execut

of banking transactions like founds transfer, bill payment over phone



Table 2. Channel Migration-Data on use of Channels by Customers (Approximate Figures)

2000 2004

ATM Call Centre Internet Branch ATM Call

Centre

Internet Branch

15% 5% 2% 78% 46% 12% 12% 30%

Functions of channels

Functions that channels must perform can be as:

• Sales

• Transaction

Activities under Sales are:

i. Pre sale

• Account opening

ii. Post sale

• Cross sell

• Relationship depending

Activities under Transactions:

• Case payment/withdrawal

• Request for Demand Drafts/Pay Order

• Account opening/closure/transfer

• Investment Consultancy

• Balance Enquiry/last few transactions

• Statement of account

• Cheque Book Request

• Cheque Status Enquiry

• D-MAT Queries

• Standing Instructions

• Fixed deposit renewal/closure/opening

• Address Change

• Stop payment

• Cheque deposit

• Funds transfer

• Balance/internet Certificates

• others



Types of Channels

Predominantly Human Predominant Technology

(Branch channel) (ATM channel, Internet Channel, Phone

channel)

Let as do a SWOT of each channel to understand the mentioned points clearly.

Branch Channel

Strengths Weaknesses

Personal touch Requires high manpower

Personalized information High infrastructure cost

Facilitates complex banking activities Restricted accessibility

Customers retention Limited accessibility

Deepens relationships Time consumingBrand visibility

Inculcates customer loyalty

Perceived as a trusted advisor

Opportunities ThreatsFinancial advisor Increasing cost of transactions in the branch

Facilitates channel migration High footfall vis-à-vis employee ratio

Effective cross selling

ATM Channel

Strengths WeaknessCost effective Cost of set-upBetter reach Limited cash dispensing ability

Brand visibility Lack of human interface

Round-the clock availability Waiting time is not eliminated completely

Quicker transactions

Networked to centralized database enabling

Adds a fillip to bank’s customer base

Opportunities Threats

Platform for cross selling Security concerns

Value-added services like donations and

mobile

Lower brand loyalty

phone prepaid recharging Communication gapShared ATMs to reduce cost and maximizereachMobile ATMs to reach remotely locatedcustomers



Internet Channel

Strengths WeaknessLowest cost per transaction All transactions not possible

Reach Slow adopter of internet banking

Minimum physical infrastructure Lack of human interface

Round the clock availability Poor presentation of Internet of India

Convenience banking

Account integration for single relationshipView

Waiting time eliminated

Information gateway

Opportunities ThreatsPlatform for cross selling Security concerns

Value-added services like ticket reservations Lack of strong trust environment

Virtual Banking Perceived notion that internet is not a safeplace to conduct financial transactions

Not accessible to masses

Phone Channel

Strengths WeaknessesCost effective and accessible Cost of set up

Most of the banks offer 24 x 7 x 365 days service Limited transactions

Convenience banking Communication barrier

Economies of scale High AHT ( Actual Handling Time)

Single point of contact for multiple products

Supports complaint resolution

Opportunities Threats

Campaign & cross selling opportunities Customer perception of incurring cost whiletransacting

Accessibility across locations

Deepening of relationships

Acquisition of new customers



Status of Technology in India

India, like any other third world country, attained political independence after prolonged colonial rule

and exploitation. The country entered the modern world in a state of economic backwardness and poverty of a

large section of its people. It is obvious that technology must attend to the basic problems of food, clothing,

health and housing of people. At the same time, rapid industrial development through latest technology is

necessary to catch up with the advanced countries.

With these objectives in mind, Government of India set-up Research and Development establishments,

space research centres, agricultural research establishments, oil exploration centres, power development

projects and the Council of Scientific and Industrial Research. Besides, several universities and institutes have

been set up to provide higher education in science, technology and management. As of today, there are 4700

intermediate/junior colleges, 144 universities, and 44 deemed universities in the country. Also there are more

than 500 science and technological institutions, and 1220 in-house research and development laboratories.

There is also the Department of Science and Technology, an administrative wing of the government, to

coordinate the activities of all research and technical activities in the country.

With all these, our country ranks eight among Asian Countries in the technology front

THE ASIAN TECHNOLOGY LEADERS

Rank NationalOrientation

Socio-economicInfrastructure

TechnologicalInfrastructure

ProductiveCapacity

1 Singapore Taiwan Japan Japan2 Japan Singapore South Korea Singapore

3 South Korea Japan Singapore Malaysia

4 Malaysia and Taiwan South Korea China South Korea5 Hongkong Hongkong Taiwan Taiwan

6 Indonesia Malaysia Malaysia Hongkong7 China Indonesia India India

8 India China Indonesia China &Indonesia

Note: In socio-economic infrastructure, India’s position is No.9

(Source: Business World, 16-31 March, 1997)

The Government also came out with a policy on science and technology spelling out its aim and thrust

areas. The salient features of the 2003 policy are mentioned below:

Science And Technology And Development of India`s Rural Economy

The Technology-led developments in agriculture have made India self-sufficient in food-grain and a

leading producer of several commodities in the world .The Green Revolution in crops, yellow revolution in

oilseeds, white revolution in milk production, blue revolution in fish production and a golden revolution in

horticulture bear testimony to the contributions of agricultural research and development efforts undertaken in

the country.



For instance, with reference to 1950, the gains in productivity are nearly 3.3 times in food grains, 1.

times in fruits, 2.1 times in vegetables, 5.6 times in fish, 1.8 times in milk 6.4 times in eggs.

It is also revealing to note that modern technologies have contributed to saving of the area, other

resources and in increasing revenues and exports. For instance, modern varieties of rice saved nearly 39 millio

hectares and the varieties saved about 37 million hectares of area.

ITC uses information technology for:

• Delivering real –time information and customize knowledge to improve farmers decision-making

ability to align farm output to market demands and secure quality ,productivity and improved price

discovery.

• Aggregating demand in the nature of a virtual producers’ cooperative to access high quality farm inputs

and knowledge at the lowest cost.

• Setting a direct marketing channel virtually linked to the mandi system for the system of price

discovery, yet eliminating wasteful intermediation, multiple handling and thus reducing transaction

costs and making logistic efficient and cost effective.

Thus modern technology is not only bringing wealth to India and its rural parts

but is also generating various business opportunities for the Indian corporate sector.

Science and Technology Policy 2003

Objectives of the Policy:

• To ensure that the message of science (and technology) reaches every citizen of India.

• To ensure food, agriculture, nutritional, environmental, waste, health and energy security of the people

on a sustainable basis.

• To mount a direct and sustained effort on the alleviation of poverty, enhancing livelihood security,removal of hunger and malnutrition, reduction of drudgery and regional imbalances and generation of

employment.

• To vigorously faster scientific research in universities and other institutions.

• To promote the empowerment of women in all science and technology activities and ensure their full an

equal participation.

• To provide necessary autonomy and freedom of functioning for all academic and R&D institutions.

• To use the full potential of modern science and technology to protect, preserve, evaluate, update, add

value to, and utilize the extensive knowledge over the long civilization experience of India.

• To accomplish national strategic and security-related objectives, by using the latest advances in scienceand technology.

• To encourage research and innovation in areas of relevance for the economy and society, particularly by

promoting close and productive interaction between private and public institutions in science and

technology.

• To substantially strengthen enabling mechanisms that relate to technology development, evaluation,

absorption and upgradation from concept to utilization.



• To establish an Intellectual Property Rights (IPR) regime this maximizes the incentives for the

generation and protection of intellectual property by all types of inventors.

• To ensure that all efforts are made to have high speed access to information at affordable cost.

• To encourage research and application for forecasting, prevention and mitigation of natural hazards,

particularly, foods, cyclones, earthquakes, drought and landslides.

• To promote international science and technology cooperation towards achieving the goals of national

development and security, and make it a key element of India’s international relations.

• To integrate scientific knowledge with insights from other disciplines.

Strategies to Realize Objectives:

In order to realize the above objectives, the policy spelt out several strategies. The strategies include:

1. To ensure science and technology governance and investments.

2. Optimal utilization of existing infrastructure and competence.

3. Strengthening of the infrastructure for science and technology in academic institutions.

4.

New funding mechanisms for basic research.

5. Human resource development.6. Technology development, transfer and diffusion.

7. Promotion of innovation.

8. Interaction between industry and scientific laboratories.

9. Utilization of indigenous resources and traditional knowledge.

10. Development of technologies for mitigation and management of natural hazards.

11. Generation and management of intellectual property.

12. Creation of awareness among public about science and technology.

13. Achieving international science and technology cooperation.

14. Build a new and resurgent India that continues to maintain its strong democratic institutions and

traditions.

Institutional and Other Facilities to Promote Science and Technology

Government has established series of research establishments and granted recognition to in-house R&D

centres run by private industries and educational institutions. The Government has been offering man monetar

and fiscal sops for the purpose. The facilities available are as follows:

Institutional Arrangement:

1. Apex Level OrganizationsDepartment of Scientific and Industrial Research (DSIR)

National Research Development Corporation (NRDC)

Council of Scientific and Industrial Research (CSIR)

Department of Science and Technology (DTS)

Department of Biotechnology (DBT)

Department of Space (DOS)

Department of Atomic Energy (DAE)



Department of Electronics (DOE)

Department of Defense R&D

Ministry of Non-Conventional Energy Sources

Ministry of Industry

Department of Mines

Department of Ocean Development

Venture Capital Companies for Technology Development

2. Research and Development by Industry

In-house R&D units recognized by the government. There are 1220 R&D units and the break-up

is as follows:

Chemical and allied industries 425

Electrical and electronic industries 325

Mechanical engineering 240

Processing industries 180

Agro industries 50

Total 1220

Major Industry Association such as FICCI, ASSOCHAM, CII, Indian Chemical ManufacturersAssociation and the like have also been active in promoting research.

3. Incentives

Income Tax relief on R&D expenditure

Weighted tax deduction for sponsored research

Accelerated depreciation allowance

Five year tax holiday to commercial R&D companies

Customs duty exemption on good imported for R&D project

Excise duty waiver on patented products

Excise duty waiver on non-commercial research institutions

Price control exemption on domestic R&D based bulk drugs

4. New Technological Initiatives

Technology parks

Joint R&D companies

Joint Industry-National Laboratory Programme

Joint Test/Evaluation Centers

Technology-business Incubation Centers

Co-operative Research Associations for SSIsCommercial R&D companies



Some of the remarkable achievements in the field of science and technology over the last

62 years of independence:

• India’s own satellites have soared into space on rockets developed by Indian scientist

indigenously.

• India’s super computer confronts the most complex strategic and civilian challenges. Biotechnologists

have produced the first leprosy vaccine.

• Alternative energy technologies are transforming life in isolated villages.• When India initiated a space research program, the world scoffed, and critics declared that such a

research had no relevance in a poor and underdeveloped country.

India today is, is one of the only seven nations in the world with its own satellite launch capabilities.

• Development of remote sensing and communication satellites that encompasses

1. Mastery of solid propulsion fuels

2. Development of cryogenic engines

3. Development of closed loop control and guidance system.

4. Development of step on staging satellite launches technologies.

• Satellite monitoring of earth- atmosphere-ocean systems has revolutionized the forecasting and

management of natural disasters. High speed computers run sophisticated mathematical models to

forecast extreme weather, saving thousands of lives every year.

• India has installed capacity of 1840 MW of atomic power, and possess the potential for setting up a

thorium based generating capacity of 200,0000 GW of electric energy.

• Indian atomic scientists have successfully mastered the entire atomic fuel cycle and production of atom

materials.

• India has developed three indigenous diagnostic kits for detection of AIDS.

• A sophisticated leposome delivery system for drugs to cure fungal infections.

•

Diagnostic kit for tuberculosis, Hepatitis-B, A&C, kalabazar, and Japanese Encephalitis in advanced

state of development.• A wide range for bio-fertilizers and biological control agents to supplement and reduce the use of

harmful chemical pesticides and fertilizers. Development in drugs, therapeutics, medicine and the wide

field of health services have resulted in the doubling of life expectancy since independence.

• Dreaded diseases such as smallpox have been eradicated completely.

• Defense research organization has excelled in the development of missiles, and India is more secure

because of the wide range of tactical missiles now available to the defense forces.

1. Prithvi: surface-to-air tactical battle field missile.

2. Akash: medium range surface-to-air missile.

3. Trishul: short range quick reaction surface-to-air missile.

4. Nag: a third generation anti-tank missile, rated among the best in the world.

5. Agni: re-entry missile with capabilities to perform as an intermediate range ballistic system.

• A sophisticated low-level warning radar, Indra, has been developed.

• Multi-barrel rocket system Pinaka has been developed.

• India has its own battle tanks: Arjun and Ajeya.

• India has, to its credit, the development of fourteen new drugs, many of which are now being exported.



• Compound rate of growth of IT

16% of world market for custo

State o

Awarded for Best e-Governanc

policies & projects and setting up of k Gujarat Government focuses o

been increasingly using the ICT (Infor

as per convenient location with an init

response time with reducing costs. Th

country to have made e-Governance f

Gujarat Government promotes

information of large number of functi

respective websites which act as ‘Info

State Govt. has adopted Innov

promotion of e-governance in the StatDepartment positions Gujarat, as a Ke

Government-Citizen Interface more ef

Gujarat is an aspiring leader wi

position at L2 Stage in Information C

Environment, Readiness and Usage A

the World and minimizing to reach th

Through the Bisag Satellite, th

Elementary school teachers through S

participated in the Interactive Training

academicians as well as interact with t

The following are projects undertaken

GSWAN Performance:

Connecting 7 Districts on 8 MbpGandhinagar using leased circuit

Connecting 225 Talukas to 26 Di

Interconnecting more than 3600

Average 70 departmental offices

connected to GSWANFacilitates uninterrupted and easy

Over 20015 E-mail IDs created f

Over 255 Websites are hosted for

14 Mbps Internet Bandwidth ter

Facilitates uninterrupted and easy

industry has been: 55% over the last five years.

ized software services.

Technology in Gujar

e, Gujarat is a frontline State in the implementa

y infrastructure for E Governance.growth and development of new & emerging t

mation and Communication Technologies) to o

iative to improve the reach, make services more

Government is also pro active in its Initiatives

nctional in all its Municipalities and Municipal

information sharing with the citizen by way of

nal departments and their subordinate organiza

mation tools’ in the State.

tive, constructive and result oriented progressi

. Through the Nodal Agency, the Government’y State in the Knowledge Economy sector and a

fective, transparent and efficient.

th e-readiness Initiatives with the IT Policy 20

mmunication Technologies (ICTs) which is cat

plications. It stands as an aspiring leader ranki

goal

CM addresses the Distance Teachers' Trainin

tellite Technology. Over 1, 94,000 Teachers ov

Program. Teachers get to watch and listen to e

hem in Gujarat:

, 18 Districts on 4 Mbps and 1 District with 2provided by BSNL, Reliance and Tata Tele Se

strict HQ on 2 Mbps leased circuits.

istrict and Taluka level GoG offices

at District locations and 5 offices at Taluka Loc

IP based Video-conferencing between various

r Government officers all over the state.

various departments.

inated at GSWAN State Centre among 5000 In

IP based video-conferencing between various

India commands over

t

tion of e-governance

echnology areas. It has

fer citizen based service

transparent and reduce

and ranks first state in th

Corporations.

display and disclosure o

ions through their

e policies for the

s Science and Technologcts as a medium to make

6-2011. Gujarat has bee

gorized based on

g to 31st Top Hotspots

Programme for the

er 4000 receiving Centr

inent scholars as well a

bps to State Centre atrvices.

ations have been

GoG offices.

ternet Users.

oG offices.



VAT(Value Added Tax)

The Project implemented by Commissionerate of Commercial TAX, GoG, was initiated to ensure promptcapturing of data at its origination in digitized form so that the VAT administration could be more informedand controlled with a view to simplify Administrative procedures. It provides Efficient, Effective, Economicaland Transparent Tax Administration. The project was initiated to ensure prompt capturing of data at itsorigination in digitized form so that the VAT administration could be more informed and controlled. As theVAT implementation process involving VAT returns, scrutiny, assessment and refunds get streamlined, it wasenvisaged that the data also gets digitized to help the administration have an in-depth analysis of informationfor better decision support with respect to strategizing the tax administration processes. Gujarat VATInformation System (VATIS) project is logically divided into various business services, shared services, MISand House keeping.

E Procurement

SICN is a network owned by Government of Gujarat for their Voice, Data & Video Communication needs.This is Asia’s biggest network of Govt. of its kind. This Network is spread in the periphery of 12 kms.Connecting almost all the Govt. Boards and Corporations offices in capital of Gujarat Gandhinagar.

SICN(Sachivalya Integrated Communication Network)

SICN is a network owned by Government of Gujarat for their Voice, Data & Video Communication needs.This is Asia’s biggest network of Govt. of its kind. This Network is spread in the periphery of 12 kms.

Connecting almost all the Govt. Boards and Corporations offices in capital of Gujarat Gandhinagar.

ICT and e readiness Initiatives

Gujarat is an aspiring leader with e readiness Initiatives with the IT Policy 2006-2011. All departments haveprepared their IT Action Plan, which has a one-year focus and a five-year perspective. A fix part of the budgetis committed to IT related activities. Each department has Chief Information Officer (CIO) who reports directlto Secretary of the department.

The IT Policy also showcase other features. IT enhances man power skills, collaborations and Businesspromotions. Mega Projects, IT Parks, SEZ and spaces for IT/ITES promotions. Power exemptions for largeunits, financial assistance are other areas focused upon. Distance Learning and Education is yet anotherInitiative that takes a major uplift. Optimum use of existing educational infrastructure, including distancelearning through satellite communication facilities is available at Bhaskaracharaya Institute for SpaceApplication and Geo-informatics (BISAG).



Gujarat State Data Centre

State Data Centre (SDC) has been set up at Gandhinagar. The Project under the National e-Governance Plan(NeGP) of GOI, is identified as one of the core and critical infrastructure components needed for consolidationand hosting of applications essential for the eGovernance services. It is integrated with other two componentsi.e. SWAN and CSC/E-Gram. The GSDC (Gujarat State Data Centre) includes 2600 sq.ft. Of server andstorage area, 600 sq. ft. of connectivity zone and 1300 sq.ft of control room and utility area.

GSDC has been connected to all the Government offices through GSWAN infrastructure. The GSDC acts as amediator ad convergence point between open unsecured public domain and sensitive government environmentThe GSDC has been equipped to host/co-locate systems such as Web Servers, Application Servers, DatabaseServers, SAN, and NAS etc.

GSDC will provide much functionality such as Central Repository of the State, Secure Data Storage, OnlineDelivery of Citizen Information/Services Portal, State Intranet Portal, Disaster Recovery, Remote Managemenand Service Integration etc. GSDC would also provide better operation & management control and minimizeoverall cost of Data Management, IT Resource Management, Deployment and other costs.

To provide decentralized delivery of services to the citizens in the state, Government of Gujarat has also set upthree Mini Data Centres at Mehsana, Rajkot and Vadodara.

Home Department

The portal of Home Department – www.home.gujarat.gov.in – covers total 70 individual websites, includingthat of the Home Department, all its HODs like Anti Corruption Bureau, Prohibition & Excise, IG Prisons etcand Gujarat Police (DGP, Commissionerate, DSPs, Armed Unit, Training, and Human Rights etc.), Port &Transport Department, Commissioner Transport and all RTOs & ARTOs. It is completely Dynamic (Unicodebased) Web-Portal & Websites based on CMS (Content Management System) and having Online UpdatingFacility, User Interaction to the various Applications and Database, Search Engine enabled features, OnlineComplain and User Feedback facility.

The Portal is set with Objectives to bring the government department closer to the citizens and make the workand procedures of the Department speedy and transparent. It makes all the HoDs far more approachable and

accessible; provide in-depth information about each office, going much beyond the requirements under theRight to Information Act. It also provides public interface to the applications like whom to contact (contactmatrix), online complain, report & find missing/ stolen persons/ vehicle/ things, Track FIR status, find policestation, Getting Tenant / Servant Registration etc.



TRANSFER OF TECHNOLOGY

Technology transfer is the process by which commercial technology is disseminated. This will take the for

of a technology transfer transaction, which may or may not be a legally binding contract, but which will involv

the communication, by the transferor, of the relevant knowledge to the recipient. Among the types of transfer

transactions that may be used, the draft TOT Code by the United Nations Conference on Trade and

Development (UNCTAD) has listed the following:

a) The assignment, sale and licensing of all forms of industrial property, except for trademarks, service

marks and trade names when they are not part of transfer of technology transactions;

b) The provision of know-how and technical expertise in the form of feasibility studies, plans, diagrams,models, instructions, guides, formulae, basic or detailed engineering designs, specifications and

equipment for training, services involving technical advisory and managerial personnel, and personnel

training;

c) The provision for technological knowledge necessary for the installation, operation and functioning of

plant and equipment, and turnkey projects;

d) The provision for technological knowledge necessary to acquire, install and use machinery, equipment,

intermediate goods and/or raw material which have been acquired by purchase, lease or other means;

e) The provision of technological content of industrial and technical cooperation arrangements.

METHODS OF TECHNOLOGY TRANSFER

Transfer of technology takes a variety of forms depending on the type, nature and extends of technological

assistant required. The following are the important methods of technology transfer:

1. Training or Employment of Technical Expert:

Fairly simple and unpatented manufacturing techniques/processes can be transferred by impartin

the requisite training to suitable personnel. Alternatively, such technology can be acquired by employin

foreign technical experts.

2. Contracts for Supply of Machinery and Equipment: Contract for supply of machinery and equipment, which normally provide for the transfer of

operational technology pertaining to such equipment, is often quite adequate for manufacturing purpose



not only small scale project but also in number of large scale industries where the nature of technology

not particularly complex.

3. Licensing Agreements: Licensing agreements, under which the licensor enters into an agreement with a licensee in

another country to use the technical expertise of the former, is an important means for the transfer of technology. Licensing agreements are usually enter into when foreign direct investment is not possible o

desirable.

4. Turnkey Contract: Transfer of complex technology often takes place through turnkey project contracts, which

include the supply of such service as design, creation, commissioning or supervision of a system or a

facility to the client, apart from the supply of goods.

Many times, a combination of two or more of the above mentioned method is used. Turnkey contracts,

obviously, are the most comprehensive of such combinations.

Guidelines/ Instructions for Technology Transfer and IntellectualProperty Rights (Annexure-XV)

With a view to encourage the institutions to file patent applications on their innovations, motivate themto transfer their technologies for commercialization, and to facilitate them to reward their inventors, thefollowing instructions are issued.

1. In these instructions:

a) “Institution” means any technical, scientific or academic establishment where research work is carried outthrough funding by the Central/ State Government.

b) “Intellectual Property Rights” include patents, registered designs, copyrights and layout design of integratedcircuits.c) “Inventor” means an employee of the Institution whose duties involve carrying out scientific or technicalresearch.

1.

Scope: These instructions apply to those institutions receiving funds for research projects from the

Ministry of Science & Technology and Department of Ocean Development.

2. Inventions by Institutions: Institutions shall be encouraged to seek protection of Intellectual PropertyRights (IPR) to the results of research through R&D projects. While the patent may be taken in thename(s) of inventor(s), the institution shall ensure that the patent is assigned to it. The institution shallget its name entered in the Register of Patents as the proprietor of the patent. The Institution shall takenecessary steps for commercial exploitation of the patent on exclusive/ non-exclusive basis. Theinstitution is permitted to retain the benefits and earnings arising out of the IPR. However, the institutio



may determine the share of the inventor(s) and other persons from such actual earnings. Such share(s)shall be limited to 1/3

rdof the actual earnings.

3. Inventions by Institutions and Industrial concerns: IPR generated through joint research byinstitution(s) and industrial concern(s) through joint effort scan be owned jointly by them as may bemutually agreed to by them through a written agreement. The Institution and Industrial concern maytransfer the technology to a third party for commercialisation on exclusive/ non-exclusive basis. The

third party, exclusively licensed to market the innovation in India, must manufacture the product inIndia. The joint owners may share the benefits and earnings arising out of commercial exploitation of the IPR. The institution may determine the share of the inventor(s) and other persons from such actualearnings. Such share(s) shall not exceed 1/3rd of the actual earnings

4. Patent Facilitating Fund: The Institution shall set apart not less than 25% of such earnings forcrediting into a fund called “Patent Facilitating Fund”. This Fund shall be utilised by the institution forupdating the innovation, for filing new patent applications, protecting their rights against infringementsfor creating awareness and building competency on IPR and related issues.

5. Information: The institutions shall submit information relating to the details of the patent obtained thebenefits and earnings arising out of IPR and the turnover of the products periodically to the DepartmenMinistry which has provided funds.

6. Royalty-free licence: The Government shall have a royalty-free licence for the use of the IntellectualProperty for the purposes of the Government of India.

7. Review: These instructions shall be reviewed by the Central Government after a period of five years.

8. The instructions are issued with the concurrence of the Ministry of Finance, Department of Expenditurvide heir OM No 33(5) PF-II 99, dated 22

ndFebruary, 2000.

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impact of technology on organusationx

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