Internet service provider busines models in Africa


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This lecture identifies business models adopted by Internets service providers in Africa

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Internet service provider busines models in Africa

  1. 1. 08-10-2012Internet Café Provider Business Modelin AfricaIdongesit Williams (PhD Fellow)CMI, Aalborg
  2. 2. 2Outline• Business Model Overview• Value Proposition Builder• Building Value Propositions for Internet cafés• Value Creation Model• Internet Cafe value creation• Business model for simple internet café in Africa• Generic Business models for Internet cafés in Africa• Summary
  3. 3. 3Business Model Overview• The process of business modelling is the part of developing abusiness strategy.• The interest for developing business models is on howorganizations or businesses can create, deliver and capturevalue. Eg. of value is Economic value of good and service, orSocial value (ability of the customer to participate in decisionmaking maybe through surveys etc.) etc.• Value proposition is used to promise value to the customer• Value proposition could be Product, Service or the brand ofthe organization
  4. 4. Value Proposition Builder• Market: for which market is the value proposition being created?• Value experience or customer experience: what does the market valuemost? The effectiveness of the value proposition depends on gathering realcustomer, prospect or employee feedback.• Offering: which products or services are being offered?• Benefits: what are the benefits the market will derive from the product orservice?• Alternatives and differentiation: what alternative options does the markethave to the product or service and how is my product better?• Proof: what evidence is there to substantiate your value proposition?Barnes 2009
  5. 5. • Market: Mass market• Value experience: They can communicate remotely at a cheap cost• Offering: Internet service accessibility at a low cost, price differentiation for themeasured access to the internet.• Product: Internet Service, Gaming services, Canteen Service, Internet ServiceProvision to remote users, Sale of Customer Premise Equipment, telecenterservices, photocopy services. (the highlighted Green text are the most commonofferings).• Benefits: Development of e economy, social networking and other cheapcommunication possibilities.• Alternatives: Personal travel or visitation, fixed/mobile telephone call, postalservice etc.• Proof: All over Africa people prefer to access the internet at internet cafes.Building Value Propositions for Internet Cafés
  6. 6. 6Value Creation ModelSource: US Department of LaborN/B: There are many ways of creating a Value Creation Model. It depends on what product or service you have to offer
  7. 7. Periphery ServiceCore Service7Internet Café Value CreationNeed to communicate,stay in touch at anaffordable cost than usecostly telephony• Internet ServiceProviders,• Telecom NetworkOperators,• Hardware/Softwareproviders,• Utility ServiceProvider,• LandlordTelecom Operatorprovides connectivity(Fixed/mobile)Internet ServiceProvider providessegmented Internetservice offeringsHardware/softwareprovider providesHardware andSoftware solutionsUtility serviceproviders provideelectricity andwater supplyInternetServiceLandlord providesland and officeaccommodationneedEstablish aninternet café• Customerscan accessthe internetwithoutowning acustomerPremiseequipment• They canaccess at anaffordablepriceInternetAccess perhour at cafeInternetaccess perhalf hour24 houraccessOnline GameaccessCanteenRetail ofinternetservice to thehome(secondaryISP services)Internet CafeProduct/Service Value Creation
  8. 8. Service Design TechnologyDesignOrganizationaldesignFinancial designInternet services(VOIP, internetsurfing etc.)Broadband Internet CaféOperatorIncome from theservices andproductsTelecenter Service Dial-up analogue Internet ServiceProvideExpenditure to ISPISDN Landlord Expenditure toUtility ServiceProviderUtility ServiceProviderExpenditure to taxofficeTax office Expenditure toEquipment/Software provider8Business Model for a Simple Internet CaféUsing the Faber et al (2003) Business Model Ontology
  9. 9. 9Generic Business Model for Internet Cafés in AfricaUsing the Osterwalder et al (2010) Business model canvasKey PartnersInternet ServiceProviderHardware/SoftwareprovidersUtility ServiceProvidersOffice landlordValue PropositionRequireTelecoms / ITNetworkValuePropositionsInternetaccessibilityInternetservice at lowpriceInternetservice either16 or 24 hoursa dayInternetservice withhigh/low speedCustomerRelationshipsPersonalassistanceCustomerSegmentsMassMarketKey Resources forValue PropositionFinancialPhysical(components forthe cybercafé)HumanChannelsHand billsBannersRadio AdvertsCost StructureFixed cost: Rent, Utility bills, ISP bills, tax,Salaries, amortization, cost of equipmentRevenue StreamUsage fee, Subscription fee,Price is volume dependent (charged perhour)
  10. 10. 10SummaryBusiness models gives the organization a road map to efficientservice deliveryThe business model in Africa for Internet cafes are similar but differ on theService Value propositionsUnfortunately this business models thrive in cities not in rural areas.
  11. 11. ReferencesCindy Barnes; Helen Blake; David Pinder (2009). Creating & delivering your valueproposition: managing customer experience for profit. Kogan Page Publishers.Faber, B., Ballon, P., Bouwman, H., Haaker, T., Rietkerk, O., & Steen, M. (2003).Designing business models for mobile ICT services. 16th Bled Electronic CommerceConference eTransformation. Slovenia: Bled.Osterwalder, A., Pigneur, Y., & Smith, A. (2010). Business Model Generation. self-published.US Department of Labor Value Creation. Available online at
  12. 12. Thank you for paying attention.Time for Questions