Monday, 31 March 2008

Agony of transformation from Donor funding to Social Enterprising


SITU (Sarvodaya IT Unit) is the pioneering telecentre program of Sarvodaya, Sri Lanka. Though it had multiple sustainability elements inbuilt from early stages, the organizational priorities (of Sarvodaya) were on social-welfare delivery than revenue generation. Thus, SITU lacked the conducive organizational environment to materialize a cohesive economic program. As a result, the program was struggling to maintain its own telecentre network by early 2006. Since then, the management had taken a serious challenge to convert the unit into a self-sustainable (non-profit) operation.

What were their strategic steps?
• Institutionally, SITU has been re-organized under new program (Fusion) and given its freedom to concentrate on Social Enterprising.
• Management of SITU accepted the challenge, had re-defined their strategic mission, and set up a very systematic revenue generation plan.
• After assessing the overall operation, they have hand picked 10 telecentres (out of 34) as economically feasible ones, and initiated participatory discussions with their telecentre operators on revenue targets.
• Among diverse services they have offered, ICT Courses and IT Services had been selected as main services & products.
• Developed a detail business plan with monthly targets.
At the end, they set up an ambitious revenue target of 10.5mil Rs (10,500$US) by the end of March, 2008.

What was the progress?
After 9 months of performances (from April – Dec, 2007), SITU has reported 4.1mil Rs (4,100$US) overall revenue. That was just about 40% of their target.

Why only 40%?
Though in conventional terms this could be an acceptable progress as an entrepreneurial start up, Program Managers continues to refine their strategy and approach.
Following were the list they identified as the problem list contributed to lesser progress;
• Overall targets were not realistic (though they used their decade long telecentre experiences to set the financial targets, they did not have experience of running the program as an enterprise. Thus did not have past records to figure out their forecasts).
• Could not assess the staff capacity and operational obstacles during planning stage
* Optimal number of staff required at telecentres to carry out set targets
* Entrepreneurial skills of the staff
* Running conditions of the ICT equipment
• Capital shortages (Absence of sufficient cash flow)
* To carry out appropriate equipment replacements
* To carry out promotional campaigns
Internal coordination problems
* The administration system was designed (over the years)
for welfare delivery. Thus priorities of different departments were not aligned with the time-driven demands of business operation.

Shilpa Sayura - Digital learning at Telecentres

Shilpa Sayura (Sea of Knowledge), is a local language digital learning system based on National Curriculum of Sri Lanka. Targeting remote, rural students to improve self learning capacity to prepare for national examinations, utilizing rural telecenters, project was initiated by e-fusion pvt ltd with a grant of Rs 5 mil (50,000$US) received from ICTA under e Sri Lanka Project.

Absence of competent teachers and adequate facilities handicap rural students in 80% of the Sri Lankas population. Now over 500 telecentres at rural outskirts provide a new window of opportunity. Shilpa Sayura enables students to interact with ICT to study 8 subjects digitally at tele centers and develop their knowledge to prepare for national examinations.
The project initiated in 2006 and pilot tested in 26 telecentres (branded as Nanasala).

The problem:
Having a success story of a very compelling pilot, the project struggles at scaling up. Every telecentre operator of over 500 telecentres in Sri Lanka needs to have Shilpa Sayura installed in their telecentre. But, e-Fusion acknowledges it is not feasible at this present state.
• It needs technological improvements to ensure trouble free smooth run.
• Also needs technical capacity building at the telecentre operators to assist the users.
• Need to improve help-desk capacity to accept escalating demands
All these needs significant capital investments. They recognize it is not reasonable to tax the government to support further. Thus eyes at the CSR goodwill of the corporate partners.
In the mean time they plot the plans for an appropriate business model.

Shilpa Sayura had been the Winner of i4D award at e India 2007 and Stockholm Challange GKP Award at Gk3, Malysia, 2007.

Listen to the UNESCO interview with founder>
http://www.unesco-ci.org/cgi-bin/media/page.cgi?g=Detailed/102.hctml;d=1

Friday, 28 March 2008

EasySeva - ‘Franchise in a box’


Emergence of corporate sector models in the donor dominated telecentre eco-system is becoming a trend. They begin telecentres with economic sustainability as the primary goal, thus demand for essential entrepreneurial elements from the inception. They aim to penetrate to the bottom of the pyramid communities, thus create services recognizing double bottom lines of Social Goals and Economic Goals.
Easy-seva is an interesting corporate entry into Sri Lanka’s fast expanding telecentre landscape. Synergy Strategies Group (SSG), US based small company, won the bid of USAID’s Last Mile Initiative to set up EasySeva. Each EasySeva centre is owned by an entrepreneur who is part of a franchise. In return for franchise fees, the franchise provides bulk purchasing, training, technical and marketing support. The franchise also provides entrepreneurs access to micro-finance and leasing services through Sri Lankan financial institutions.
In order to offer a compelling business opportunity to entrepreneurs, SSG has partnered with a rich set of Sri Lankan companies, including Dialog Telekom, Qualcomm, National Development Bank, Lanka Orix (LOLC) and Microsoft. Together, these alliance partners have contributed funding, technology and know-how to the project. The project team has designed the 25 EasySeva centres as a test case to prove that it is possible to provide high quality ICT-enabled services to rural communities on a profitable basis. The company launched the first three centres in May 2007, and is on track to open all 25 centres. Early indications suggest that demand for EasySeva services is high.
Uniqueness in the package (franchise-in-a-box):
The EasySeva franchise-in-a-box includes a standard equipment package that each franchisee is required to acquire as part of the franchise agreement. The package consists of four reconditioned PCs with a licensed suite of MS Office, a printer-copier-fax, broadband connection, and 1-2 VoIP phones. The PCs and printers are supported by a reliable Sri Lankan vendor under a one-year service agreement. The PCs are configured with WiFi cards, thus eliminating the need for cabling. EasySeva also installs a local content package, which includes a variety of training and informational materials in Singhalese and Tamil.
The equipment and content package is supported by a micro-loan and leasing arrangement through LOLC (leasing company). Each EasySeva franchisee finances the equipment purchased through a 30 month lease with LOLC. In addition, most franchisees also take out a small working capital loan to cover start-up and initial costs. Because SSG negotiated bulk rates, franchisees are able to obtain better financing terms and credit approval much more quickly than if they had to apply for financing independently.
The business philosophy:
Though this initiative was funded by the USAID LMI (Last Mile Initiative), from the outset, SSG sought to use a radically different strategy. Rather than working as a traditional development project, the company saw the fund as an opportunity to demonstrate the efficacy of a BoP (Bottom of the pyramid) ICT business model. Accordingly, SSG proposed to use the build-out of the centres as a proof-of-concept for a ‘bankable’ business model that could be rolled out across the island. To be bankable, the project had to demonstrate a significant economic opportunity for private investors
The vision of the company is to attract private investment to finance the opening of 400-500 centres in Sri Lanka over the next 3-4 years, and an additional 1,000 centres in other markets in South Asia. In doing so, the company believes it can offer a significant ‘double-bottom line’ return on investment. On the economic side, the company’s financial models suggest that the franchise will achieve strong financial returns by offering a mixture of services: voice, internet, training, financial and health, all of which offer revenue opportunities for both the franchise and the individual entrepreneur. In turn, the centres should have substantial positive impacts in rural communities by giving BoP customers access to quality services for the very first time.