Business Models Based On Open Source Networking in Malawi

CSD Course, Fall 2008. Open Case Team Presents. KTH, Stockholm

Entrepreneurs of Future, Keep Your Dream Alive, Never Give up. Be Humble and Stay Calm, Tomorrow Will Always Be Better

Beginning of the story
After a tiring week at his office in Kista, Jonas was so tired. It was end of the summer in
Stockholm and the trees started to turn in to yellow. Being an entrepreneur, Jonas spent
whole summer in Stockholm by writing business plan and opportunity assessment
reports based on the idea that he has in his mind. He believed that Africa is a very
unsaturated market and his idea is a very cool idea which will enable his start up to gain
some market share in the continent starting from Malawi. He previously knew that; in
the 1990s the computing industry shifted from expensive proprietary systems to open
systems based on standard, low-cost hardware. This dynamic changed a 20-year pattern
of IT buying and deployment models. This was a good chance for him to implement his
idea. He believed that this idea is practical and things will happen if he continues to
work and has some local connections in Malawi. He was also aware that each country
has a unique value proposition.
One of his believes was that; ever increasing IT needs and innovations force IT
companies to have high performance and low cost products and services. To be able to
reach this goal open-source is one of the options to accelerate this movement. By all
these believes and hopes in his mind finally he caught up the metro towards T-Centralen
and it was time for him to get ready for the big family dinner…

1. Description of the proposed task
Sustainable development through the right decisions and the best practices is one of the
biggest goals of African countries. To achieve this, universities are the key point, where
innovation and science comes from. Sharing knowledge and experience is one of the
crucial parts to accelerate this development. In order to gain a competitive position
globally and expedite economic growth the governments have to implement policies,
which focuses on achieving this goal. We need to make believe the policy makers that
ICT is an enabler for every industry sector in order to be competitive globally.
To create a bridge between universities and research centers, we are building an
infrastructure to be connected with each other under a national research educational
networks called NRENs. In this internet infrastructure we are using a PC-Based opensource
networking model, which is much more cheaper and flexible than any other
commodity networking hardware or software. But one of our biggest problems here is
that, to define the business model behind this philosophy, which will enable us to sell
this product in the future or make this solution acceptable for the possible customers.

1.1 NRENs
Most of the African countries do not have fast internet connection and the IT
infrastructure has also some problems. Internet access is provided by private companies
and they are charging very high prices. If we can connect National Research and
Education Networks (NRENs) with other academic institutions in nationwide networks,
this will encourage NRENs to share knowledge, increase research and development
capacity and finally create value for their countries and Africa. This also means that the
collaboration and knowledge sharing is a crucial goal for the NRENs network.
From a start up points of view and the decision makers’ point of view, price is a very
important factor when deciding which solution to be used. Today in the market we have
proprietary ones, which are safe but expensive, rather than using only those, it would be
meaningful to use open source solutions to provide better internet connection to NRENs
and to possible customers. In addition to these, decision makers should be very sure
about the quality and ability of an open source solution, which will perfectly fit to the
NRENs needs.

1.2 Open Source Networking
The most commonly used network and routing equipment for major networks is today
proprietary, made by large companies like Cisco and Juniper. This dedicated hardware is
highly sophisticated and is in most cases serving its purposes very well. Nevertheless the
open source alternative to proprietary routing solutions is getting more and more
attention because of two important factors: the much lower purchasing cost, and the
open source characteristic that lets any system designer or programmer develop and
improve the software. An open source based network is built using ordinary PCs,
equipped with increasingly affordable network cards, and switches available on the
consumer market. The software used is Linux based [1].
Open source solutions do not yet include all the advanced features as proprietary
solutions do. But all the basic features for normal networking are supported and due to
the fact that the hardware components are easily interchangeable and the software is
free and under constant development, an open source network is easy and cheap to
upgrade [1].
2. Goals and Objectives
One of the most important objectives is to define a sustainable business model based on
open source networking idea, which will enable us to persuade the regulators? In Africa
there are 53 countries and each has priorities, so it is a challenge to define a business
model which will fit most of the African countries. By keeping this in mind that decision
makers are difficult to convince and there is also lack of political support.
Another undefined topic is commercialism. How can we show the importance of the
open source networking for NRENs to the decision makers and end-users? We believe
that the network between NRENs is important and will create value for public if we
provide them fast internet connection, but how should we persuade the politicians and
other decision makers.
In addition to these partnership and alliances are key to success while you are working
in another country. Should we have local partners? If yes, who are they? While thinking
all of these things, keep in mind that a start up’s most important 4 characteristics are
“People, Problem, Product, and Potential”. By keeping in mind the 4Ps, what will be the
best solution to start from?
Finally, how are we going to sponsor the project? How much we need as a start up
expenditures and what is the break even point? Thinking about the long term relationship how are we going to generate revenue to pay back the investors or partners?

2.1 Final Clues from a Start-Up Point of View
• Don’t forget the basic
– People, Product, Potential & Problem
• Start-ups’ ABCDE
– Alert, Believe, Consistency, Determination & Effectiveness
• Yet another 4 P’s
– Principle, Perfectness, Persistency & Pray

3. Deliverables
We want to divide the deliverables in to two parts. Part one is the deliverables that we
expect at the end of each week and the other that we expect to have at the end of your
final work.

3.1 First Week Deliverables
- Calculation of the approximate start up expenditures for Malawi and break even
point. (they do not have to be the exact numbers but a close approximation)
- Prepare a policy document for Malawi, which will inspire us about how to
convince policy makers to use open source solution rather than a proprietary
one.
- Prepare a 10 minute presentation about the proposed solution.

3.2 Second Week Deliverables
- A report which will inspire us to define the best business model based on open
source networking idea. This report must clearly shows the reasons and must
have a reality check part.
- Prepare a 5 minute presentation about the suggested business model for
Malawi.

3.3 Final Deliverables
- Prepare a 10 minute presentation about the whole idea and suggested business
model which will show us how this plan will work and how we will generate
revenue on long term? (If possible, please use the DDART model)

4. Competence profile required
To be able to successfully deliver the assigned tasks we need a group of students which
has 3 members who has basic knowledge of
- Basic Knowledge of Computer networks
- Business Opportunity Analysis
- Entrepreneurship

5. End of the story
After a long and tiring night with all the family members, Jonas was so tired at morning.
He was planning to review the documents and watch news about Africa. He knew that,
not the plan it self but the planning is the most important thing. That’s why;
continuously he was reviewing the documents and improving them. He decided to read
the business model of Vyatta, Ubuntu, MySQL and Redhat to see if he can adopt
something from their business model to his own. While drinking his coffee he had some
questions marks in his mind, “how can I make believing the decision makers to my idea
and what is the best way of implementing this plan in Malawi?” It was a balmy Saturday
morning and he was so tired of thinking the business models to help Africans and make
meaning for their lives…