What makes a good and sustainable procurement system

One of the most important phases in the implementation of public works and development programs is procurement — or the acquisition of good and services to deliver project objectives and results.

International development institutions, private organizations, national governments and corporations need a reliable procurement process to ensure timely delivery of services to their stakeholders. Disaster victims, for instance, could starve or die from diseases if the procurement of food and medicine is delayed or not done right. The quality of education, meanwhile, may not improve if school supplies, books and teaching materials are not delivered in rural areas.

But how can you make procurement better and more sustainable?

While there isn’t one strategy that can apply to all contexts, Steve Schooner, co-director of George Washington University’s government procurement law program, explained that a sustainable procurement system will only be possible if the legal and institutional environment allows for it.

“Anybody can come up with a very good procurement legislation, but it’s another if we can apply it and implement it well with transparency, integrity, accountability, efficiency and effectiveness,” the professor said in a procurement conference attended by Devex, adding that governments — as the main proponents of public procurement — should always engage the private sector and other stakeholders in the process.

Eveline Venanzoni, head of the ecological procurement service of the Swiss Federal Office for the Environment, agreed, saying that sustainable procurement systems take into account the environmental, social and economic effects of the process.

She explained that modern procurement systems should integrate objectives into larger development goals and aspirations — a move away from the detached view that procurement had been put under over the past couple of decades, as an industry of winning contracts and delivering them.

Some governments, such as that of the Philippines, and even multilateral institutions like theWorld Bank and the Asian Development Bank have recognized the benefits of aligning procurement processes with national and international interests. Doing so, according to Venanzoni, is “good for the whole procurement process” as it cuts costs and improves efficiencies.

Process should be clear and stable

The whole procurement process should also be clear and stable, with each stakeholder fully aware of their specific roles and the general objectives of the project — everyone is a vital piece of a huge puzzle.

Felipe Estefan, an open government strategist at the World Bank, shared that in the whole procurement process, “everyone should be aware of the goals, objectives and their responsibilities so people and other stakeholders are aware of what’s happening and what is expected. This helps in managing expectations.”

The World Bank official added that being engaged and fully aware of the process, objectives and expected outcomes of the whole project also empowers stakeholders and beneficiaries to hold contractors and funders accountable if a certain key result is not achieved or a certain good or service is not delivered — making the whole process sustainable and more effective.

Procurement should also be more outcome-oriented with a view of delivering quality results, instead of just being process-oriented. Schooner shared that “having goals is better in making procurement outcome-oriented” because it is a “double-edged sword” that always targets policy goals and value for money.

By focusing just on the process, Jose Tomas Syquia, executive director for procurement at the Philippine budget department, shared that the whole system runs the risk of becoming a checklist where stakeholders just do what is written without any “discretion.”

“Procurement is not just about having a checklist and crossing them out. There should be discretion to be able to exercise judgment,” the Philippine official said. “If there’s nothing like that, there’s no growth or no room for improvement. Crossing out everything in the checklist does not necessarily suggest and ensure success, effectiveness and efficiency.”

Having a standard is important

The implementation of standards as a way to make procurement sustainable is also key. Schooner shared that the maturity of a procurement process is the presence of standards or benchmarks where all stakeholders are required to follow.

“Think about your procurement regime and think inwardly and ask if there are things that need to be improved,” he said.

The GWU professor added that stakeholders should also be aware that awarding of the contract is not the end of the procurement process. It is rather the “first contact of business” because it is “not an assurance that you will get results every single time.”

Monitoring and evaluation of goods and services delivered from the start of the contract to the delivery of the last ones should be done to ensure that beneficiaries are getting what they deserve and expect.

These standards should be streamlined — or even centralized — in all procurement services and programs as it allows for “buying in volume, competitive pricing and coherent implementation,” among others, Venanzoni shared. “Make things measurable and set up a standard so you can assess progress and improvement easily.”

“Countries tend to measure what’s easy to measure and not what’s important,” Schooner concluded. “We shouldn’t just train [stakeholders], but we should empower them.”

Source: Devex, April 22, 2015

Anjuli Bhargava: Forget smart, make cities livable

Here's what the government should do to make our cities better - work out a plan to manage the traffic situation and make public transport more attractive

All of last month, newspapers have been full of news aboutpollution levels in Delhi and how we are losing years of our lives due to the air we breathe. The expats in India have been warned, sales of air purifiers are on the rise and I'm sure hardship allowances of diplomats in India will go up. Even the early morning walks at Lodi Garden - as one of our columnists has informed us - are no longer as fresh as they felt before.

If the Cabinet looked beyond its noses and Lutyens' Delhi, it would quickly see what a menace the traffic in the city has become - this despite the Metro taking a huge load off the roads. Start at 9 a m from Gurgaon and try and reach Noida or Greater Noida. It is easier and faster to reach Mumbai, which is 1,433 km away - aerially, of course. Senior government officials need to take a ride crossing south Delhi during peak hours for a reality check on what can happen and how long and frustrating it can be.

Driving within Gurgaon - the Millennium City - has become a challenge. As the city tries to regulate its ever-increasing traffic, roads are made one way and back the other way without any warning. Cybercity - the hub of corporate Gurgaon - resembles a large construction site, with uneven large craters (akin to the moon, I suspect) on the road. There are forks and U-turns that everyone regularly misses. Cars are often backing up into a steady stream of traffic as they realise they have missed some turn or the other - they are so poorly sign-posted, if at all.

The traffic situation in several other cities - be it Bengaluru, Pune, Hyderabad or Kolkata - is steadily deteriorating as well. Traffic peak hours in all these cities are dreaded and cases of road rage are no longer unheard of even in these relatively less aggressive cities.

I have a few suggestions that focus on Delhi but can easily be extended to other cities. First; make it more attractive for people like us - who own the majority of the cars - to minimise the use of personal vehicles and increase the use of public transport. As things stand, road space is hogged by car owners, leaving little room for cyclists and pedestrians.

I know public buses and taxis are not an option for the relatively better off but the metro is a very viable option if one plans and sticks to non-peak hours. Of course, it won't take all the cars off the roads right away (since most of the work and meetings will happen during peak times) but it will be a start.

For this to work, two things need to happen. One, you need a Metro station within one km of most locations. The Metro network - which is currently around 200 km - needs to go up at least threefold.

Second - and this is key - car owners have to change the way they think. The Metro is not only for people like "them". As someone wisely said, a society is wealthy not when rich people travel in cars but when they use public transport. If Cherie Blair - former British prime minister Tony Blair's wife - could use the London Underground to commute in the city, there is no reason affluent Indians - and indeed Indian politicians' wives to begin with - cannot do the same and lead by example.

Once the metro coverage expands, the authorities can limit access to certain areas by making it prohibitively expensive, like cities such as London do. This works like a congestion tax for cars that move into the city at peak hours.

There are other methods that cities have adopted - enforcement will remain the challenge - like designated days for even and odd number-plates. This forces citizens into some kind of car-pooling even if they have cars with both even- and odd-numbered plates.

While what I mention is just common sense, there is no dearth of expert advice on better management if someone has the will to implement it. So, even as the Cabinet and our ministers sit down to put the final touches to their plan for smart cities, I have a request. Forget smart, just make them livable.

Source: Anjuli Bhargava: Business Standard (April 23rd)

Bangalore - India's leading realty market

Wide range, stable prices give the city an edge over its peers

With a good range of properties, stable prices and a vibrant workforce, the city’s real estate sector has performed far better than peers like Mumbai and Delhi. Real estate markets around India have been getting a hammering since last year and home sales across the board have suffered.

In the last quarter of the financial year 2012, the Mumbai Metropolitan Region (MMR) saw a drop of 58 per cent in unit home sales, while the National Capital Region (NCR) experienced a similar 57 per cent plunge, compared to the same quarter a year ago, according to realty research firm PropEquity.

However, the one star performer amid this gloom was Bangalore, which saw a drop of just 18 per cent in the quarter, when the numbers were down significantly elsewhere. Moreover, the city has already beaten other property markets in home sales last calendar year, when it absorbed 49 million square feet (sq ft) of residential properties — more than any Indian city — according to Kotak Institutional Equities. Bangalore was followed by NCR, with 46.88 million sq ft of offtake, and MMR, with 35 million sq ft.

"Home sales have been much, much stronger in Bangalore than other cities," says Anuj Puri, chairman and country head, Jones Lang LaSalle, a global property consultant.

So, it's not surprising that Bangalore ranks tenth this year in the list of top global investment destinations, brought out by Urban Land Institute and PricewaterhouseCoopers. Meanwhile, Mumbai and New Delhi fell from third and fifth place in 2011 to 15th and 12th in 2012.

It's not just in the residential market that Bangalore is on top. The city has also experienced the highest absorption in office space among major cities. In the fourth quarter of financial year 2012, Bangalore sold 3.4 million sq ft of office space, which is 89 per cent higher than in the corresponding quarter of the previous year. By comparison, NCR's office absorption has come down from 1.3 million sq ft in Q4 of 2011 to 0.9 million sq ft in Q4 of 2012, according to data culled by Knight Frank, a global realty consultant. In Mumbai, it has risen from 0.9 million sq ft in Q4 of 2011 to just 1.3 million sq ft in Q4 of 2012.

Why is Bangalore performing better than other Indian markets?

 

A good range of products, seems to be one reason. "There are good products available at various price points," says S Bhaskaran, chief financial officer at Sobha Developers, one of the largest property developers based in Bangalore. "You can buy a house at any price between Rs 20 lakh and Rs 1 crore or more," he adds.

The absence of big price spikes seems to be another reason. "Prices increase in Bangalore by 10-15 per cent in a year, unlike Mumbai or NCR, where prices go up like crazy. Besides, execution of properties is also much better here," says Sameer Jasuja, chief executive of realty research firm PropEquity.

According to data culled by PropEquity, Bangalore has seen a rise of 18 per cent in home prices since the first quarter of 2009. In comparison, other markets such as Chennai, NCR and Mumbai have seen increase of 22 per cent, 48 per cent and 26 per cent, respectively.

Even the recent data released by National Housing Bank Residex, an index that signals property prices across key cities in India, indicate this. Bangalore saw a rise of 4.5 per cent in residential properties in January to March 2012, compared to the same period last year. Mumbai saw a nine per cent and Delhi a 33 per cent increase during the last quarter of financial year 2012.

Many argue that robust hiring by IT companies and stable tech incomes have also fuelled home sales in Bangalore. "Many IT companies such as HP, IBM and Texas Instruments have large bases in Bangalore. Whenever they win global contracts, the local markets in which they are located benefit, as the firms shift work here," says Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield, an international property consultant.

 

Adds K Madhusudan, co-chief investment officer, Azure Capital, a Bangalore-based realty fund manager : "Both global IT majors such as IBM, Oracle and Cisco and domestic companies are hiring aggressively. That is driving the growth of residential and office markets in the city,"

For instance, TCS, the country's largest software exporter, has a hiring target of 50,000 for 2012-13. It has already made job offers to 37,800 students. Another IT major, Infosys, recently announced that it would hire 35,000 in 2012-13. It had made 26,000 campus offers the previous year.

Akshit Shah of SBICAP Securities, however, reminds people that the numbers are looking good, possibly because of low absorption in 2009-10, when both supply and demand were low in Bangalore.

How long will the garden city be able to sustain its good run?

"I believe Bangalore will be able to maintain a good sales momentum. I expect land costs to remain stable and we will be able to offer good products at reasonable rates," says Irfan Razack, chairman and managing director of Prestige Estates, a Bangalore-based developer that has done a sales of Rs 2,200 crore in 2011-12 and is expecting similar numbers in 2012-13.

Adds Jasuja of PropEquity: "I think the trend (Bangalore leading the markets) is likely to continue for the next three-six months. Beyond that, we have to see how the markets pan out."

If the economy improves, rates climb down and developers come out with aggressive prices, things could look up for Mumbai and NCR, adds Jasuja.

SBICAP’s Shah says, given the high inventories, absorption in Bangalore may not continue to keep pace with supply going ahead. He believes Mumbai will overtake Bangalore in absorption of properties in the coming quarters. "At 3.5 million sq ft to four million sq ft a month, the absorption is stable. I do not see further growth from here," he adds.

One big factor distorting the picture so far is that there have been no major approvals given out by Brihanmumbai Muncipal Corporation (BMC). That has changed now, with BMC’s green light to as many as 78 skyscrapers, positioning Mumbai for a construction boom. If that happens, Bangalore's reign on top of the real estate charts may end.

Business Standard, June 21, 2012

Real estate recovering from the bottom

India’s real estate sector, which has been seeing a prolonged slowing in sales and huge pile-up in property companies’ debts over the last few years, seems to have started recovering from the bottom, says a new report.

Robust demand across micro markets, stabilising debt of realty companies, continued strength in underlying demand in Mumbai and a sharp reduction in exposure of the banking sector to retail home loans are auguring well for the sector, says Aashiesh Agarwal, real estate analyst at Edelweiss Securities, in a report released today. Edelweiss has maintained an ‘overweight’ stance on the sector. 

Quoting realty research firm Liases Foras, Agarwal said sales volumes remained robust, except in Hyderabad. The National Capital Region (NCR) and Chennai led the pack among major cities, driven by resolution of the land row in Noida and a pick-up in approval process, respectively. Pune saw an increase in volumes, while Mumbai remained sluggish, he said.

For instance, NCR saw a 14.8 per cent jump in volumes on a year-on-year (y-o-y) basis in the March quarter, while Chennai saw a jump of 29 per cent. Pune saw 34 per cent increase in volume offtake.

Led by strong revival in sales reported by real estate developer DLF, sales volume across the 11 major real estate companies increased 28 per cent quarter-on-quarter and 29 per cent y-o-y in the three months ended on March 31. DLF accounted for 42 per cent of the sector volumes.

The report further said aggregate net debt of top the 11 companies declined marginally to Rs 41,400 crore in the March quarter against Rs 41,700 crore at the end of the previous quarter, driven by a reduction in debt by Sobha Developers Ltd and Godrej Properties Ltd which went in for an institutional placement programme to bring down the promoter stake and reduce its leverage.

Pointing out that “bright spots are emerging” in Mumbai, the report said the pace of percentage decline in property registrations has been losing momentum, indicating signs of bottoming out.

“Property registrations for March and April were 5,830 and 5,150, respectively, well above the January-February numbers of 4,100-4,300, indicating an uptrend in registrations,” it said.

The Maharashtra government’s recent move to introduce amended development control rules for Mumbai is a positive and will spur new launches in city, the report said. Further, exposure of the banking sector to retail home loans has reached an eight-year low, which lessens potential concerns of a credit-led bubble in real estate, while also providing headroom for future growth.

Business Standard, June 14, 2012

IIP dip may prompt rate cuts

But will not revive growth as demand conditions are not very supportive

India’s industrial sector has nearly come to a halt, going by the 0.1 per cent factory output growth data for April. Exasperated economists with large conglomerates say since the government has not been able to resolve the structural supply-side issues, the central bank had to curtail demand through rate rises. Demand is weak and there are few triggers which can revive sentiment adequately to improve growth. Moody’s Analytics says, “Soft business investment is now both a cause and an effect of India’s weak economic environment. The reasons for the weak economic environment have been detailed many times before — centred on a weak national government and declining investor confidence — and this is now the new status quo in India.”

While most believe the high cost of capital is a big reason for the weakness in industrial output, Richard Iley, chief Asia economist at BNP Paribas, believes sluggish export markets, lagged impact of the previous rupee real overvaluation, policy (and demand) uncertainty and high cost of capital, exacerbated by excessively loose fiscal policy settings, have contributed to the weak index of industrial production (IIP) print.

At this point in time, it doesn’t really matter which of these factors is more debilitating. But such a slowdown in industrial production means economic growth in the first quarter of FY13 will mimic the 5.3 per cent seen in Q4 of FY12. Siddhartha Roy, chief economist at Tata Sons, is expecting a 50 basis points rate cut, without which nothing will move. Both, availability and cost of money are problems, he explains.

Weak IIP data, cheaper crude oil and a precarious global situation may push the Reserve Bank of India to cut rates by 25-50 basis points. But it is no magic pill, which will reverse sluggish economic growth and even slower investments. Given the slowdown in global growth and Europe’s unending woes, any pullback will not be easy. Also, transmission of a rate cut will take time, as deposit growth has been slowing in the past few months and banks will not want to cut rates aggressively.

Leif Eskesen, chief economist for India and Asean, HSBC, says this is the wrong medicine to boost growth. “Instead, the right prescription is a heavy dose of supply-side reform. Moreover, the room for aggressive policy rate cuts is limited by the persistent inflation pressures, which are partly the residue of the supply-led slowdown in growth and the sizable twin deficits. The continued struggles of the exchange rate also limit the room for rate cuts

Business Standard, Wednesday, June 13, 2012

Rajeev Malik: Monetary policy isn't a popularity contest

If the RBI cuts interest rates now, it will prolong the much-needed macro adjustment

A lot has changed since the last monetary policy announcement from the Reserve Bank of India in April, in which it unexpectedly cut the repo rate by a bigger-than-expected 50 basis points, to eight per cent. However, it tactically balanced that aggressive signal – the actual transmission was much weaker – with an equally unexpected guidance of limited room for further easing. Since then, however, a sense of urgency in government actions remains missing (forget words, as they are cheap); global uncertainties have increased; and international commodity prices have declined, but India’s headline inflation has risen — and is poised to rise further. The rupee collapsed as the overall balance of payments will likely be in deficit for the third straight quarter, and GDP growth plunged to a pathetic 5.3 per cent in the January-March quarter. The RBI’s approach of not being wedded to a particular rupee level and sensibly avoiding its senseless defence by running down foreign exchange reserves has saved us so far from a bigger disaster. I know it is difficult for people, including some economists, to think of massive exchange rate depreciation as being positive, but in the kind of the macro cross-currents India finds itself, currency weakness is part of the solution, not part of the problem.

The poor GDP data (which will probably be revised up, but with a long lag) have raised the decibel level of cries for rate cuts by the RBI. Amazingly, India is the only country in Asia where consumer price inflation is almost double the pace of real GDP growth. And there are calls for interest rate cuts, despite government inaction being a much more important factor than interest rates for the precipitous drop in economic growth.

As with faulty currency analysis – as a result of which almost all analysts missed the warning signals about the rupee debacle and the slump in growth – the clamour for rate cuts to boost growth mistakenly assumes a normal economic cycle response function. It is time to wake up: India is experiencing an abnormal economic cycle in which inflation, thanks to the government, has become more entrenched. Consequently, it is less sensitive to slower growth.

India’s economic cycle continues to have a lopsided fiscal-monetary mix that has resulted in consumption being boosted at the expense of investment, and inflation becoming more entrenched because of the government’s populist policies. Essentially, the government in recent years boosted aggregate demand via consumption without facilitating higher aggregate supply.

The fact is conveniently overlooked that inflation has been higher than real GDP growth for several quarters. Boosting aggregate demand via interest rate cuts rather than enhancing aggregate supply will only worsen the inflationary pressures in the near term. Even if an investment upturn adds to aggregate supply, it does so with a lag. In any case, boosting aggregate demand from, say, higher investment should be matched by shrinking the fiscal overhang and moderating consumption growth. In the absence of such finely balanced recalibration – itself a challenge – India will suffer a more protracted macro adjustment.

Trend GDP growth has been decelerating because of government policy inaction and the fallout of the corruption scandals. Trend growth is probably around 6.5 per cent, well below the RBI’s guidance of 7.6 per cent. Higher trend growth needs government action to create a more enabling environment for investment recovery, and undertake supply-side measures and reforms that will result in a lasting decline in inflation. That will then facilitate a significant and sustained decline in interest rates. Until then, India will have to live with a combination of below-trend growth and still-high inflation.

A critical issue is whether the current level of the repo rate is too high. Now, just because GDP growth has decelerated and investment is on hold doesn’t necessarily mean that interest rates are too high, especially if the government’s policy paralysis has worsened the downturn. Also, the appropriate policy rate should balance the returns to depositors with the cost of borrowers. Given the uncertain global capital inflows, it is critical to encourage domestic resource mobilisation.

However, even the current repo rate is well below CPI-new inflation. The RBI is questionably married to WPI-core, but consumer price inflation matters more for depositors. Perversely, the RBI focuses on WPI-core (April: 4.9 per cent year-on-year) while depositors deal with consumer price inflation (April: 10.4 per cent with core at a mindboggling 10.3 per cent). With still-high inflation, further interest rate cuts will increase the tightness in domestic liquidity as depositors will not find interest rates attractive especially at a time when foreign capital inflows are weak and remain uncertain. Indeed, it is striking that the deceleration in GDP growth in recent quarters has been accompanied by rising loan-deposit ratio.

Perhaps the most convincing evidence of firmly entrenched inflation and inflation expectations is the talk of rate cuts despite double-digit consumer price inflation. The decline in the prices of global commodities, especially crude oil, eases multiple pressure points, such as the twin deficits and inflation, without the government undertaking any meaningful corrective action. However, the government’s myopic approach is not ensuring greater macro stability, especially since it does not provide a long-term fix for supply-side drivers of inflation and for a backlog of overdue price adjustments.

Interest rate cuts are not the near-term panacea for India’s growth problem. It is surprisingly overlooked that rupee depreciation has already significantly eased monetary conditions. Further, rate cuts may not necessarily boost growth: Brazil has slashed the policy rate by 400 basis points since mid-2011, but its GDP growth continues to slide, hitting 0.8 per cent year-on-year in the March quarter.

Finance ministry mandarins don’t seem to realise that it is high inflation that has become inimical to growth. We need to ensure greater confidence towards sustained low inflation rather than a quick fix. It is helpful that central banks have a longer time horizon than governments and self-serving financial markets. Also, the RBI should seriously benchmark India’s inflation relative to that of its trading partners. That is important as India’s higher relative inflation threatens to return us to the almost forgotten days of annual rupee depreciation. Everyone thinks of currency movements impacting inflation but few realise that inflation also affects the currency, as has been the case with the rupee.

Politicians, bureaucrats, pop macroeconomists, columnists lobbying for businesses and some market participants talking their own book conveniently – and myopically – argue for a quick fix of cutting interest rates. India definitely needs a policy response but it has to come from the government, not the RBI right away, especially after the bigger-than-expected rate cut in April.

Frankly, the RBI should not be in the business of doctoring financial markets’ mood to make up for the government’s inaction and incompetence by ignoring the over 10 per cent consumer inflation just before an uncertain monsoon. If it attempts to do that by responding under political pressure, or as if in a popularity contest, or as a prisoner of market expectations, it’ll only be contributing to the very macro instability due to entrenched inflation it is trying to address.

Business Standard - Wednesday, June 13, 2012

For businesses, it's ad-vantage point on social platform

For companies trying to reach out to more of their audience, creating a page on social networking sites has become vital to connecting and communicating with fans

Pranshu Diwan, who runs Travel Another India, a tourism outfit, found that his company could tap a wider set of travellers looking for offbeat destinations on the largest social networking platform Facebook. By creating a page on Facebook, the business now interacts with an audience of about 50,000 followers who share their experience on the social platform. With over 50 million users from India, networking, sharing and recommending restaurants to holiday destinations to their friends, Diwan and many other small business owners have found Facebook as the new-age means to promote their businesses.

In turn, Facebook, too, has upped its offering. The social networking major has launched a series of webinars designed to help small and mid-sized businesses understand and use the new Facebook product offerings, such as Timeline, Offers, Sponsored Stories and real-time Page Insights. Kirthiga Reddy, director (online operations and head of office), Facebook India, says, “Timeline has been rolled out to all brands and in India most of the companies have done a great job of moving to Timeline. The success of SMBs on Facebook can be judged on the basis of the popularity of the page and how much business/inquiries does the brand generate through its Facebook page. As of end-March 2012, there are more than 42 million pages with ten or more Likes.” Diwan of Travel Another India reflects on the changes, “While it is too soon to determine the effects of the new marketing features on FB platform, nevertheless we have seen an increase in interest on our page. The new timeline view allows people to better scroll through posts and enables better highlighting and tagging of key stories. Facebook platform and metrics help us quantify which stories, photographs, posts are more effective.”

Earlier this year, Facebook also announced a partnership with Federation of Indian Chambers of Commerce & Industry (FICCI) to enable micro, small and medium enterprises to learn how to use social media. The partnership is aimed to expand Facebook’s global SMB Boost programme in India and provide Indian SMEs with educational resources and free advertising to help them get started and grow their businesses online.

For companies trying to reach more of their audience, creating a Facebook page has become central hub for connecting and communicating with fans. It makes sense for home business owner, Bhadra Shah, an Iyengar yoga teacher in Mumbai, who chose voluntary retirement from a leading insurance company to pursue yoga. While he started with friends on Facebook and how Yoga could help them. Shah then got requests for private classes and small-group yoga sessions from friends on the social networking site. Today after 15 months, Shah runs seven private yoga sessions for high flying executives and has regular yoga training camps.

It was a similar experience for Ashwin Menda, a mumbai based caterer, who today spends 6-8 hours on his Facebook Page to connect with prospective clients every day. Word of mouth publicity on Facebook worked for Menda, especially when it came from clients. Better still, when people post pictures of food items cooked and served by the caterer, it further helped Menda’s business. On average, Facebook enquiries generate close to half of his business and the repeat customer base comprises mostly of clients who came to Menda via Facebook.

“Marketing is much flatter now," notes social media expert Guy Kawasaki in a webinar. "Word of mouth is now what makes products tip.” Social media websites, he argues, present personalized customer service and thus are the quickest way to communicate with your consumers.

While Facebook is the de la creme of social networking sites, there’s no denying that Google+ is close on its heels. With over 100 million users on Google+, it is time small businesses start channelising the social platform as part of their marketing game plan, list experts. A big reason, they claim, to be active on Google+ is the boost it gives small businesses’ online presence through Google search popularity and page ranking. Jason Hennessey, CEO of EverSpark Interactive, a search engine optimisation company explains in a blog post why Google+ is not to be ignored. “The more frequently you add content to your page, the more frequently Google will ‘crawl’ your site, and the higher you will rank in searches. Adding more contacts to your Google+ circle will also help to push your content higher and connect their blogs and sites with yours,” he noted. In other words, the more you become engaged with Google+ and the more people you havefollowing you on Google+, the more promotion your content will get acrossthe Web.

Prabhu Ram, general manager (research and consulting), Cybermedia Research, reasons, “A majority of the established social networking platforms have developed a unique positioning for themselves among users. For instance, while Linkedin is used for professional networking and lead generation, Facebook is preferred for social networking. As per our survey results, a ‘new generation’ tool like Google+ is being used in both professional and personal settings within a short span of its launch.”

Meanwhile, Facebook is already out with engaging marketing tools that can be deployed by business owners easily. For example, the new Pages for businesses have features that allow business users to express what their brand stands for. Another new feature, Real-time Page Insights presents data that is now more actionable, so businesses now have a better window into what’s working and what’s not on their Page, and how to optimise quickly. The effectiveness of Timeline and the marketing tools can be measured by increased engagement and the number of likes on the brand pages. Additionally the new ‘insights’ feature also helps brands to understand and connect with their fans better.

 
For now small business owners and social media experts conclude that while Google+ has its benefits, it just 
doesn't match up to Facebook today. Unless you have the time to spare to run a Google+ page, it's likely not worth the effort because the ability to engage consumers is so limited, and the breadth of audience is too. But they also don’t deny the fact that Google+ could close that gap over time.

Business Standard - Monday, June 11, 2012