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

1. 08-10-2012
Internet Café Provider Business Model
in Africa
Idongesit Williams (PhD Fellow)
CMI, Aalborg University
Idong@cmi.aau.dk

2. 2
Outline
• 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
Business Model Overview
• The process of business modelling is the part of developing a
business strategy.
• The interest for developing business models is on how
organizations or businesses can create, deliver and capture
value. Eg. of value is Economic value of good and service, or
Social value (ability of the customer to participate in decision
making maybe through surveys etc.) etc.
• Value proposition is used to promise value to the customer
• Value proposition could be Product, Service or the brand of
the organization

4. Value Proposition Builder
• Market: for which market is the value proposition being created?
• Value experience or customer experience: what does the market value
most? The effectiveness of the value proposition depends on gathering real
customer, prospect or employee feedback.
• Offering: which products or services are being offered?
• Benefits: what are the benefits the market will derive from the product or
service?
• Alternatives and differentiation: what alternative options does the market
have to the product or service and how is my product better?
• Proof: what evidence is there to substantiate your value proposition?
Barnes 2009

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 the
measured access to the internet.
• Product: Internet Service, Gaming services, Canteen Service, Internet Service
Provision to remote users, Sale of Customer Premise Equipment, telecenter
services, photocopy services. (the highlighted Green text are the most common
offerings).
• Benefits: Development of e economy, social networking and other cheap
communication possibilities.
• Alternatives: Personal travel or visitation, fixed/mobile telephone call, postal
service etc.
• Proof: All over Africa people prefer to access the internet at internet cafes.
Building Value Propositions for Internet Cafés

6. 6
Value Creation Model
Source: US Department of Labor
N/B: There are many ways of creating a Value Creation Model. It depends on what product or service you have to offer

7. Periphery Service
Core Service
7
Internet Café Value Creation
Need to communicate,
stay in touch at an
affordable cost than use
costly telephony
• Internet Service
Providers,
• Telecom Network
Operators,
• Hardware/Software
providers,
• Utility Service
Provider,
• Landlord
Telecom Operator
provides connectivity
(Fixed/mobile)
Internet Service
Provider provides
segmented Internet
service offerings
Hardware/software
provider provides
Hardware and
Software solutions
Utility service
providers provide
electricity and
water supply
Internet
Service
Landlord provides
land and office
accommodation
need
Establish an
internet café
• Customers
can access
the internet
without
owning a
customer
Premise
equipment
• They can
access at an
affordable
price
Internet
Access per
hour at cafe
Internet
access per
half hour
24 hour
access
Online Game
access
Canteen
Retail of
internet
service to the
home
(secondary
ISP services)
Internet Cafe
Product/Service Value Creation

8. Service Design Technology
Design
Organizational
design
Financial design
Internet services
(VOIP, internet
surfing etc.)
Broadband Internet Café
Operator
Income from the
services and
products
Telecenter Service Dial-up analogue Internet Service
Provide
Expenditure to ISP
ISDN Landlord Expenditure to
Utility Service
Provider
Utility Service
Provider
Expenditure to tax
office
Tax office Expenditure to
Equipment
/Software provider
8
Business Model for a Simple Internet Café
Using the Faber et al (2003) Business Model Ontology

9. 9
Generic Business Model for Internet Cafés in Africa
Using the Osterwalder et al (2010) Business model canvas
Key Partners
Internet Service
Provider
Hardware/Software
providers
Utility Service
Providers
Office landlord
Value Proposition
Require
Telecoms / IT
Network
Value
Propositions
Internet
accessibility
Internet
service at low
price
Internet
service either
16 or 24 hours
a day
Internet
service with
high/low speed
Customer
Relationships
Personal
assistance
Customer
Segments
Mass
Market
Key Resources for
Value Proposition
Financial
Physical
(components for
the cybercafé)
Human
Channels
Hand bills
Banners
Radio Adverts
Cost Structure
Fixed cost: Rent, Utility bills, ISP bills, tax,
Salaries, amortization, cost of equipment
Revenue Stream
Usage fee, Subscription fee,
Price is volume dependent (charged per
hour)

10. 10
Summary
Business models gives the organization a road map to efficient
service delivery
The business model in Africa for Internet cafes are similar but differ on the
Service Value propositions
Unfortunately this business models thrive in cities not in rural areas.

11. References
Cindy Barnes; Helen Blake; David Pinder (2009). Creating & delivering your value
proposition: 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 Commerce
Conference eTransformation. Slovenia: Bled.
Osterwalder, A., Pigneur, Y., & Smith, A. (2010). Business Model Generation. self-
published.
US Department of Labor Value Creation. Available online at
http://www.dol.gov/_sec/e_government_plan/p11_relationship_management.htm

12. Thank you for paying attention.
Time for Questions