report on the information system of village phone

8/8/2019 Report on the Information System of Village Phone

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EXECUTIVE SUMMARY

Managed by Grameen Telecom in cooperation with Grameen Bank and GrameenPhone,

the Village Phone further expanded to add nearly another 100,000 new VP subscribers,

with the total year-end figure standing at around 191,000 in 2005.

As of today, there are more than 260,000 VP operators in over 50,000 villages in 439

Upazilas (sub-districts) of the country. Amongst GP subscribers, VP operators yielded

the highest average revenue per month.

Commencing its operation in March 1997, the VPP is a unique initiative to provide

telecommunications facilities in remote, rural areas where no such service was available

before. It has brought about a quiet revolution in mobile telephony in Bangladesh, by

putting cell phones in the hands of the rural poor, many of them women, who had never

seen a telephone before.

The Village Phones work as an owner-operated pay phone. It has created a good income-

earning opportunity for the VP operators, mostly poor women who are borrower

members of Grameen Bank. Typically, a member of Grameen Bank takes a loan to buy a

handset and a GP subscription and she is trained by Grameen Telecom on how to operate

it.

Information System is to be regarded as a tool for attaining development goals. It is to be

integrated wherever it is expedient and feasible. GrameenPhone Bangladesh Limited is a

leading telecommunication operator in Bangladesh. It provides GSM services to the fastgrowing rural customers. Its objectives are to provide easy access to GSM cellular

services in the country and creating new opportunities for income generation to modern

Information System.


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1. INTRODUCTION

1.1 Origin of the Report:

This report has been prepared to fulfill the requirement of MIS-205 as a part of its course

schedule. This report titled Information System of Grameen Phone & its Impact on

Village Phone aims to track the changes in the communication technology and

managing the information system at GrameenPhone responding to the changing

environment and the need of time.

1.2 Purposes:

The report has the following concrete purposes:

1. To fulfill the requirement of the BBA Program.2. To maintain the schedule of Management Information course.

3. To do a project on a topic that helps to apply and utilize the academic knowledge.

1.3 Scope:

The intent of the study is to understand how GrameenPhone use the information system

with helps them to have a good control on Village Phone. The report, however, has

covered only the IS implementation by GrameenPhone.

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1.4 Limitations:

No actual written documents are available regarding the changes in the information

system of GrameenPhone or the Village Phone and about the current model. Therefore,

there might be lack of consistency with the real scenario to certain extent. The operation

and execution of information system are a complex composition of different factors.

Therefore, depicting a clear picture was not possible within the boundary of the report.

Confidentiality of information has limited the extent of presentation in the report.

1.5 Methodology:

Study Design

The study is descriptive in nature. It was conducted using the qualitative instrument.

Depth interviews as well as assessment of different historical data were used to analyze

the present scenario.

Source of Data

All the datas are collected from Secondary source. There is no primary source of the

collection of the datas.

o Information is collected from GrameenPhone official website.

o Information about GrameenPhone Ltd. is taken from news paper journals.

o Information collected from different IS reports which are available on Internet.

o Informations were also collected from Wikipedia.

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2. COMPANY PROFILE

2.1 Historical Background:

Founded by Muhammad Yunus, the 2006 Nobel Peace Prize Winner, Grameen Bank has

created a new category of banking by granting millions of small loans to poor people

with no collateral. While originally established as a village bank (Grameen in the local

language means Village), Grameen Bank has since lent more than $5.1 billion to 5.3

million people.

It is from this background that Grameen Bank teamed with Norways Telenorcommunications company to provide phone services to rural areas. The organization born

of the joint venture, GrameenPhone Ltd., developed a program through which poor

women in rural villages could buy cell phones with a loan from the bank and then sell the

use of them on a per-call basis. Through the program, GrameenPhone has become one of

Telenors fastest-growing markets. This truly reflected a social business enterprise and

the only one of its kind in the world.

2.2 About GrameenPhone:

GrameenPhone is a for-profit telecommunications company in Bangladesh. They are

responsible for establishing and maintaining the physical communications infrastructure

used in the Village Phone program. GrameenPhone liaisons with Grameen Telecom to

provide services to the Village Phone Operators at discounted rates. GrameenPhone is

also responsible for complying with government regulations.

Grameen Telecoms objectives are to provide easy access to GSM cellular services in

rural Bangladesh and creating new opportunities for income generation through self-

employment by providing villagers with access to modern information and

communication technologies.

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From the very beginning, GrameenPhone placed emphasis on providing good after-sales

services. In recent years, the focus has been to provide after-sales within a short distance

from where the customers live. There are now more than 600 GP Service Desks across

the country covering nearly all Upazilas of 61 districts. In addition, there are 72

GrameenPhone Centers in all the divisional cities and they remain open from 8am-7pm

every day including all holidays.

In addition, the Village Phone Program, also started in 1997, provides a good income-

earning opportunity to more than 210,000 mostly women Village Phone operators living

in rural areas. The Village Phone Program is a unique initiative to provide universal

access to telecommunications service in remote, rural areas. Administered by Grameen

Telecom Corporation, it enables rural people who normally cannot afford to own a

telephone to avail the service while providing the VP operators an opportunity to earn a

living.

The Village Phone initiative was given the "GSM in the Community" award at the global

GSM Congress held in Cannes, France in February 2000. GrameenPhone was also

adjudged the Best Joint Venture Enterprise of the Year at the Bangladesh Business

Awards in 2002. GrameenPhone was presented with the GSM Association's Global

Mobile Award for Best use of Mobile for Social and Economic Development' at the

3GSM World Congress held in Singapore, in October 2006, for its Community

Information Center (CIC) project, and for its Health Line Service project at the 3GSM

World Congress held in Barcelona, Spain, in February 2007.

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3. INTRODUCTION TO INFORMATION SYSTEM

3.1 Definition of Information System:

An Information System (IS) is the system of persons, data records and activities that

process the data and information in a given organization, including manual processes or

automated processes. Usually the term is used erroneously as a synonym for computer-

based information systems, which is only the Information technologies component of an

Information System. The computer-based information systems are the field of study for

Information technologies (IT); however these should hardly be treated apart from the

bigger Information System that they are always involved in.

In the following the term IS refers to:

o Information channels such as the World Wide Web, online databases, electronic

documents, management and accounting systems, intranet, etc.

o Communication channels such as e-mail, electronic discussion groups, electronic

conferences, the use of cell phones, etc.

o Hardware and software used to generate, prepare, transmit and store data, such as

computers, radio, TV, computer programs/tools, etc.

o Overall information technology used in every sector of the company.

Information system on a global scale presents a number of opportunities and challenges.

IS can drive the change in global business strategies and improve international

coordination. At the same time, IS can be an impediment to achieving globalization. IS

raises interesting questions as an enabler of globalization and inhibitor to globalization.

Global Perspective of Information System provides a collection of research works thataddress relevant IS issues from a global perspective. As the world economy becomes

more interdependent and competition for business continues to be more globally oriented,

it has; likewise, become necessary to address the issues of IS from a broader global focus.

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History of information systems:

The study of information systems, originated as a sub-discipline of computer science, in

an attempt to understand and rationalize the management of technology within

organizations. It has matured into a major field of management that is increasingly being

emphasized as an important area of research in management studies, and is taught at all

major universities and business schools in the world.

Information technology is a very important malleable resource available to executives.

Many companies have created a position of Chief Information Officer (CIO) that sits on

the executive board with the Chief Executive Officer (CEO), Chief Financial Officer

(CFO), Chief Operating Officer (COO) and Chief Technical Officer (CTO).The CTOmay also serve as CIO, and vice versa.

3.3 Why Information System is used?

The information revolution is changing everything about the world we live in, including

the practice of development. IS has the potential to create jobs, improve access to basic

services, and increase the sharing of information between people living in different parts

of developing countries. The network age is creating a new paradigm of development that

can empower the South and enable it to develop itself.

o Information Systems has a number of different areas of work:

o Information Systems Strategy

o Information Systems Management

o Information Systems Development

Each of which branches out into a number of sub disciplines, that overlap with other

science and managerial disciplines such as computer science, pure and engineering

sciences, social and behavioral sciences, and business management.

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3.4 The Unique Characteristics of Information System:

IS can be a powerful enabler of development goals because its unique characteristics

dramatically improve communication and the exchange of information to strengthen and

create new economic and social networks:

IS is pervasive and cross-cutting. IS can be applied to the full range of

human activity from personal use to business and government. It is

multifunctional and flexible, allowing for tailored solutionsbased on

personalization and localizationto meet diverse needs.

IS is a key enabler in the creation of networks and thus allows those

with access to benefit from exponentially increasing returns as usage increases

(i.e. network externalities).

IS fosters the dissemination of information and knowledgeby separating

content from its physical location. This flow of information is largely

impervious to geographic boundariesallowing remote communities to

become integrated into global networks andmaking information, knowledge

and culture accessible,in theory, to anyone.

The "digital" and "virtual" nature of many IS products and services allows

forzero or declining marginal costs. Replication of content is virtually freeregardless of its volume, and marginal costs for distribution and

communication are near zero. As a result, IS can radically reduce transaction

costs.

IS's power to store, retrieve, sort, filter, distribute and share information

seamlessly can lead to substantial efficiency gainsin production, distribution

and markets. IS streamlines supply and production chains and makes many

business processes and transactions leaner and more effective.

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The increase in efficiency and subsequent reduction of costs brought about by

IS is leading to the creation of new products, services and distribution

channels within traditional industries, as well as innovativebusiness models

and whole new industries. Intangible assets like intellectual capital are

increasingly becoming the key source of value. With the required initial

investment being just a fraction of what was required in the more physical-

asset intensive industrial economy, barriers to entry are significantly lowered,

and competition increased.

IS facilitates disintermediation, as it makes it possible for users to acquire

products and services directly from the original provider, reducing the need

for intermediaries. This cannot only be a considerable source of efficiency,

but has in fact been one of the factors leading to the creation of so-called

"markets of one," leveraging IS's potential to cater to the needs or preferences

of users and consumers on an individual basis.

Accelerating global change is generating a volatile, shifting and potent array

of risks and threats for business and corporate management. If business is to

survive and recover, a major shift is needed that embraces corporate culture,

operational planning and the key role of communication in the IS revolution.

It includes informed insights into the implications for strategic planning,management and communications handling for companies facing serious

issues and crisis situations in tomorrow's corporate world.

These characteristics suggest that IS has the potential, if conceived as a means and not an

end in itself, to be a powerful enabler of development. However, the fact that IS can, in

theory, assist development efforts does not mean that it will necessarily do so. In order

for IS to positively foster development goals, it must be employed effectively.

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4. VILLAGE PHONE

4.1 What is Village Phone?

An individual poor person is an isolated island by himself or herself. IT can end that

isolation overnight.-- Professor Muhammad Yunus

Village Phone uses microfinance to bring much-needed telecommunications to

the world's rural poor.

Village Phone Direct is a micro franchise approach to Village Phone that allows

microfinance institutions to directly and independently develop a Village PhoneProduct for their clients.

This relatively inexpensive technology can solve many of the problems the poor in rural

villages have faced for decades. Grameen Foundation serves as a catalyst and creates the

linkage between the telecommunications sector and the microfinance sector to enable

microfinance clients to borrow the money needed to purchase a Village Phone business

literally, a business in a box. These grassroots entrepreneurs, or Village Phone

Operators (VPOs), operate their businesses in rural villages where no

telecommunications services previously existed; they rent the use of the phone to their

community on a per-call basis. The VPOs provide affordable rates to their patrons while

earning enough to repay their loans and earn profits that allow them to make investments

in their childrens health, nutrition and education, and in other business ventures.

Village Phone allows everyone to benefit. VPOs have strong, thriving businesses.

Microfinance institutions provide financial services and earn income on the loan interest,

as well as commissions from the sale of prepaid airtime cards to their clients. They alsoattract new clients who are drawn by the opportunity to start a technology-oriented

business. Telecommunications companies we partner with benefit by tapping a new

market while at the same time furthering their social responsibility objectives. More

importantly, individuals living in rural communities gain access to affordable

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telecommunication services linking them to their friends, family, business contacts and

the world.

Village Phone has become recognized as a solid business model for reaching rural

populations. Village Phone has become recognized as a solid business model for reaching

rural populations.

Village Phone is a methodology that creates a profitable partnership and a channel to

market to bring telecommunications services to the rural areas of a developing nation. It

offers a framework to extend telecommunication service to the rural poor in countries

where an investment has already been made in mobile phone infrastructure.

Village Phone is based on a business model that is sustainable for all of the participants

and enables the poorest of the poor to have access to valuable communication services.

Additionally, through this telecommunications service, rural individuals can gain access

to information that increases their productivity, earns better prices for the goods they

produce, and saves on the direct and opportunity costs of traveling away from home.

By leapfrogging fixed infrastructure and leveraging existing wireless infrastructure,

Village Phones offer a viable strategy for increasing teledensity in developing countries

and helping the poor lift themselves out of poverty.

4.2 The Need for Village Phones

Most people in developed countries take for granted their ability to contact others by

telephone. However, in developing countries, access to communication services can be

extremely challenging, especially for the rural poor. Given the high cost of deploying

telecommunications infrastructure, governments and industry have little financial

incentive to extend communications networks to rural areas in developing countries. As a

result, millions live without the ability to contact people beyond their

Local village.

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In rural areas there are often no affordable and accessible telecommunications services.

Telecommunications providers are reticent to place public access telephone booths in

these locations as the initial investment and ongoing maintenance costs do not make for a

viable business proposition. Governments, through their regulators, often place

Universal Access requirements on telecommunications providers. These requirements

result in an infrastructure investment that can make access available to some degree.

These services typically operate at a loss and the telecommunications provider maintains

them as a duty to their licensing obligation.

Why is it such a challenge to provide telecommunications to rural areas? High initial

infrastructure investment, relative low call volumes, high maintenance costs due to harsh

environments, cash box collection needs, cash security costs (for coin operated phones),

card availability (for prepaid airtime systems), technical illiteracy, remote locations, and

high transportation costs are just some of the impediments to providing rural

telecommunications access.

Village Phone addresses these issues. It provides a profitable new market niche for

Telecommunications companies, new and profitable micro-enterprises for rural poor

Village Phone Operators, and affordable and accessible access for communities.

4.3 How Village Phone Works

In many rural villages there are no telecommunications services, no public phone booths,

no private subscriber fixed lines, and no individual who owns a mobile handset. People

have no option but to physically travel to communicate. Studies have shown that there

can be a cost to not making a phone call up to eight times more expensive than the cost

of the actual phone call. The rural poor cannot make telephone calls simply because there

is no access, not because they cannot afford to or dont wish to.

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The cost of developing and maintaining an infrastructure to place telephones in these

rural areas often prohibits telecommunications operators from entering this market.

Another barrier is the lack of a mechanism that allows them to interact with their

customers, selling airtime and making financial transactions. What is missing is

essentially a channel that would allow Telecom Operators to connect with their

potential market.

By their very nature, microfinance institutions have deep roots into rural communities.

They are trusted institutions with detailed knowledge of the local communities and an

existing infrastructure for regularly visiting these communities to transact financial

services with their rural clients. These deep links into the community are essential for

introducing new services and the potential contribution of microfinance institutions to

new business initiatives targeting rural communities is often undervalued. Here is a

Channel to market to bring telecommunications services to the rural poor.

The microfinance sector is historically missing from telecommunication operators

normal distribution chain. By utilizing microfinance institutions as a channel to market,

the telecommunications industries in Bangladesh and Uganda were able to tap a market

that was previously inaccessible because of the prohibitively high cost of developing and

maintaining a channel to this enormous market.

As a member of a microfinance institution (MFI), a potential Village Phone Operator

uses a loan to purchase everything needed to start their business. The Village Phone

starter kit costs approximately US$200-US$250 and includes a mobile phone, prepaid

airtime card, external Yagi antenna, charging Village Phone is a methodology that creates

a profitable partnership and a channel to market to bring telecommunications services to

the rural areas of a developing nation. The rural poor cannot make telephone calls simply

because there is no access - not because they cannot afford to or dont wish to!

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Grameen Foundation USA Village Phone Replication Manual Page 6 October 2005

solution, signage, marketing collateral, and other materials necessary to get started. The

Starter Kit is created by the Village Phone Company, which establishes relationships

with microfinance institutions to bring this product to their customers. The Village Phone

Company negotiates wholesale airtime rates from the Telecommunications Provider who

provides access to existing telecommunications infrastructure for the Village Phone

Operators. Individual villagers in rural areas can then visit their

local Village Phone Operator and make an affordable phone call.

With proceeds from the business, the Village Phone Operator contributes to their loan

repayment and also purchases additional prepaid airtime cards. The microfinance

institution earns money from the loan and also a percentage of the revenue from airtime

sales. The Telecommunications Provider earns money through volume sales of airtime,

and the Village Phone Company earns enough money to continue to promote and expand

the program. There are no subsidies in this model. It works because it is designed so that

all parties in the partnership win.

4.4 Success of Village Phone in Bangladesh

One of the greatest success stories in international development has been Grameen's

Village Phone program in Bangladesh. In rural villages where no telecommunications

service has previously existed, mobile phones are provided to very poor women who use

the phone to operate as a business. These micro-entrepreneurs purchase the phone with a

loan from Grameen Bank and then sell the use of it on a per call basis. The benefits to

both the operator and the community have been tremendous. The typical "village

phone lady" has an average income three times the national average.

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The most obvious benefit of the Village Phone program is the economic impact

that this communications tool brings to the entire village. There is clear evidence of this

impact in Bangladesh, including higher prices paid to Village Phone users for their goods

and better exchange rates when repatriating funds. For the cost of a phone call, a family is

able to save the expense of sending a productive member to deliver or retrieve

information by traveling great distances in person. Some creative and entrepreneurial

users of the technology identify new business opportunities, including the resale of

information to others in their communities. The technology also serves to link regional

entrepreneurs with each other and their clients, bringing more business to small

enterprises. Phones have even been used in emergency situations, such as accessing

medical assistance during natural disasters.

Farmers from the villages use the phones to call the city markets to find out prices for

their produce. Previously they were a little bit short-changed by their middlemen. The

middlemen would say a lower price than what the actual market price was. So now they

can call the market themselves to find out what the actual price of eggs or whatever their

produce is. An independent study found that half the people who use the phones

regularly, traders in rice or bananas for example, make more money from their business

and they save 10 hours in travel time.

If the Grameen Telecom experience is a reliable guide, then providing phone service

yields powerful social and economic benefits in rural communities.Empowering poor

communities by providing a wide range of digitally enabled self-help tools via the

private sector could become a crucial part of an effective rural development strategy.

Business is a proven method of solving their [poor individuals] problems in a sustainable

way.

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5. CONCLUSION

After analyzing the whole report, the impact of IS is somehow positive on

GrameenPhone which is one of the main reason for the success of Village Phone. They

understand the concept of IS and been one of the effective practitioners of IS. They have

the up to date components to implement the IS. Highly professional workforce IS

involved in this work.

Though they have the IS components, however, they use more human power which is

affecting their cost. GrameenPhone organizational structure is very wide. As a result, it

takes more time to take a decision. GP strategically viewpoint is getting weaker and its

customer loyalty is increasing at a decreasing rate.

Bangladesh now has more than 125,000 new Village Phone Operators in place mostly

poor village women. They have seen their incomes and status in the community increase

dramatically by selling pooled cell phone time to their peers, using equipment that costs

no more than US$250 at start-up. Pioneered by one of the worlds best known

microfinance organizations, Grameen Bank, it is a highly successful program.

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BIBLIOGRAPHY

Lesiker, Raymaond V. and Marie E. Flattley, Basic Business Communication-

Skills for Empowering the Internet Generation, 10 th ed, New Delhi, Tata Mc.

Graw Hill Publishing Inc, 2005

Grameen Foundation USA, Village Phone Replication Manual

Wikipedia, The Free Encyclopedia

http://en.wikipedia.org/wiki/Village_Phone

GrameenPhone Bangladesh Limited, Annual Report 2005. July 2006.

http://www.grameenphone.com/index.php?id=71

Kohen, Nevin, What Works: Grameen Telecoms Village Phones, World

Resources Institute. June 2001.

http://web.mit.edu/d-lab/Readings/GrameenPhone.pdf

Bowes, Pitney, GrameenPhone Integrates Key Technology, Group 1 Software.

2007

http://www.g1.com/PDF/CaseStudy/GrameenphoneCaseStudy.pdf

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