ICT4Ag Trends: To Bundle or Not to Bundle
This post was written by Elaine Chang, Director, Market Development and Customer Success at TaroWorks and was originally published on Grameen Foundation's TaroWorks blog.
“Eierlegende Wollmilchsau.” Part pig, sheep, chicken and cow, this “marvel of German (bio)engineering” can do just about anything. But as Gabriel Krieshok, a startup founder, consultant and former Peace Corps ICT4D Program Manager notes, “The tragedy of the egg-laying-wool-milk-sow is that it’s a single animal that contains all the positive attributes of a variety of animals and can perform many functions. Except, of course, it’s a fantasy.” (Read More)
Full-Stack Vertical Solutions vs. Bundled Horizontal Platforms
This German colloquialism is the perfect metaphor for the one-size-fits-all, Swiss Army knife theory of ICT4D or, in this case, ICT4Ag. It’s the notion that a good way to use technology to help farmers in developing countries is by building products from scratch that incorporate the full technology stack and a range of services or functionality in a custom vertical configuration. The alternative is “bundling,” or connecting existing software, database and service products from multiple providers in a horizontal system.
“To be fair, particularly in Kenya, I see a lot of farmer-centric AgTech innovation going on. iProcure, Esoko and FarmDrive come to mind as organizations that are laser focused on building full-stack ICT4Ag startups with a clear value proposition for the end-user farmers,” writes TaroWorks CEO Brent Chism. “But you don’t need to be a full-stack, vertically integrated startup to provide farmer-relevant AgTech features, especially if those features result from needs expressed by your end users.” (Read More)
Companies like TaroWorks, which offers a mobile data collection and analysis app and offline field service management system powered by Salesforce, have created horizontal platforms that some agricultural organizations use in conjunction with other apps and partners (as an alternative to vertically integrated solutions) to manage networks of extension workers or sales and distribution field agents.
Lots of Agtech Options, But Which Ones Will Scale?
There’s no shortage of agtech solutions that NGOs, social enterprises and commercial vendors are deploying with the goals of increasing farmer productivity, reducing cost and opening access to larger markets.
“There is a dizzying number of ICT4Ag innovations — from remote and in-situ sensing tools to big data platforms — that can improve decision-making among farmers, suppliers and governments. Rising smartphone penetration and improving connectivity, along with improved data processing and analytics capabilities, offer us the opportunity to adapt and bring these improved solutions to smallholder farmers at a fraction of the cost of traditional methods,” writes Christian Merz, Senior Program Officer Digital Solutions at the Bill & Melinda Gates Foundation.
“Yet most players are not yet translating momentum into impact at scale. Lack of evidence, challenging economics and poor understanding of the consumer, among others, continue to hamper the success of digital solutions … The most successful ICT4Ag grants of the Bill & Melinda Gates Foundation built upon the ability to convene and coordinate disparate actors towards a common goal.” (Read More)
Merz sees six areas that could support funding and a technology focus: “rural advisory services, financial access, farm management, supply chain management, market access and agricultural intelligence and knowledge.” Can bundling software and services help reach scale in these or other areas? Alice Van der Elstraeten, an Information Management Specialist at The Food and Agriculture Organization of the United Nations, believes so:
“We can work much much better on bundling ICT functionality such as digital finance, marketing, surveillance, supply management, extension. They could all be bundled on the same platform. This is essential to be able to achieve economies of scale and to enhance the benefits these platforms can bring to farmers. If we find bundled and cross sectional ICT technologies that can work for a community, we would really make a good step forward.“ (Read More)TaroWorks Mobile App. Source TaroWorks
Horizontal or Vertical, ICT4Ag Needs to be Sustainable
While developing a customized, full-stack ICT4Ag platform makes perfect sense in a range of cases (including when an organization has strong internal tech resources, the project has complicated business requirements or there exists a well-functioning legacy system), both full-stack (vertical) and bundled software (horizontal) ICT4Ag projects face similar challenges in developing business models to make either technology platform sustainable.
In a study of 15 ICT4Ag solution providers in Kenya, Tanzania and Ghana, AGRA identified strengths, weaknesses and areas of possible improvement in the development of business models to sustain ICT4Ag solutions. To paraphrase a number of the findings and recommendations, while not necessarily endorsing them all:
Business Model Flaws
- Smallholder farmers who can’t afford to or aren’t willing to pay for services, including automated payments and messaging they fear will eat up their airtime
- Unfavorable revenue share from mobile network operators
- Shortage of patient capital
- Solutions with no clear revenue model
- Insufficient customer segmentation, relationship management and user feedback, which stifle product uptake and farmer retention
- Extension workers reluctant to promote technology solutions for fear of job or income loss
- Little attention to key performance indicators or view of cost drivers (Read More)
Business Model Strengths
- Agribusinesses or institutions who pay smallholder farmers to access the service
- Low-cost digital delivery plus expensive face-to-face marketing to elicit farmer feedback and trust
- Respected organizations providing content, users or infrastructure
- Close attention to key performance indicators and customer feedback
- Diversified revenue sources like subscription and usage fees, advertisements and commissions (Read More)
Business Model Recommendations
- Use “freemium” revenue model to demonstrate value before charging for additional features
- Employ user-centered design to make product farmer-centric and user-friendly
- Bundle solution with services for which farmers are willing to pay (like credit) to improve uptake
- Offer change management support
- Share cost of field agents, user acquisition, customer service and content creation among partners
- Lobby mobile network operators for equitable revenue share
- Develop exit strategy for donor support (Read More)
Final Thoughts on Bundling
In June 2017, TaroWorks assembled a panel of experts to share their thoughts on the future of ICT4Ag, especially as it applies to mobile agriculture. You can listen to their thoughts in this webinar. They identified two channels as among the most promising for bundling ICT4Ag software, services and functionality: (1) Marketing — information connecting farmers to markets, agriculture extension, supply chain management and surveillance; (2) Money — local and regional agribusinesses are increasingly getting interested in moving to digital payments for their farmers, especially with the proliferation of mobile money.Credit: TaroWorks.
The consensus of the panel — admittedly a group already focused on bundling applications — was that this development approach maximizes the value proposition for farmers by directly connecting them to the supply chain. At the same time, the strategy maximizes the value proposition for anchor agribusinesses, the mobile money channel and anybody else who’s part of the strategic alliance.
What is also helping spark momentum for bundling are products like Zapier and OpenFN, which automate the flow of information between multiple technologies, making it possible to connect APIs without significant development time and expertise.
The challenge is to get all of the data to work together. TaroWorks believes that the single source of connections is the farmer’s identity. By tying it at that level, we’re essentially creating a farmer relationship management system. Whatever form the system takes, that core identity should be the farmer.