ONITOR 46001 Measuring development results in IFC ISSUE NO. 1, JANUARY 2006 The Small and Medium Enterprise Toolkit The Small and Medium Enterprise (SME) Toolkit was created in 2001 as part of an effort by the SME Department to find ways to reach a larger number of companies than were being reached through the traditional International Finance Corporation (IFC) strategy of working with companies on an individual basis. The theory was simple: the IFC and local partners would amass information relevant to SMEs and present it on the Internet, where business people could find and use it themselves. The IFC retained Nexus Associates to provide an interim review of the Toolkit, and in 2005 the company reported that the project had accomplished its original objective and many more as well. The IFC retained Nexus Associates to provide an in- under terms and conditions agreed with the IFC; and terim review of the Toolkit, and in 2005 the company four sites where local partners license content from the reported that the project had accomplished its original IFC that is posted--along with a broad range of other objective and many more as well. materials--on Web sites that partners have developed on their own. THE TOOLKIT AT A GLANCE Launched in 2001, the Toolkit was conceived as a Partners include: means of providing information to SMEs in a more · IFC Facilities. The Sustainable Financial Market Fa- cost-effective manner than could be achieved through cility, Latin America and Caribbean SME Facility, working with companies one by one. But its objectives South Asia Enterprise Development Facility, Mada- expanded over time to include: gascar SME Solution Center, and the Mekong Proj- · Building the capacity of local partners to deliver new ect Development Facility view the SME Toolkit as a training and consulting services. complement to their existing services and a means of · Supporting the marketing efforts of partners. promoting their organizations in specific markets. · Enabling organizations to establish a Web presence · Three private companies (two small information and attract visitors to their Web sites. technology firms and a commercial bank) use the · Establishing and reinforcing relationships between Toolkit to attract traffic to their sites. One informa- the IFC and companies in its investment portfolio. tion technology firm was spun off from the IFC's · Promoting the IFC brand. South and Eastern Europe Facility. · Offering some assistance in countries where invest- · Nongovernmental organizations have used theTool- ment opportunities are limited. kit to develop and enhance their presence with their clients. Examples include the Business Technologies As of March 2005, at the time of this review, 16 Web Development Center, a spin-off from PEP-Ukraine, sites incorporated one or more components of the SME which offers information technology consulting and Toolkit (other sites have been established since then). services to SMEs; FUNDES, a business solutions These include seven sites where the SME Toolkit team network of specialized organizations dedicated to is fully responsible for development and maintenance promoting SME development in Latin America; En- of the site; five sites that are managed by local partners terprise Development Services, a private sector ini- Monitor shares key findings from in-depth reviews of IFC programs and projects conducted by external evaluators. The reviews address the relevance, efficiency, effectiveness and sustainability of these programs. For more information about the evaluation of IFC programs visit http://www.ifc.org/results. tiative of the Lagos Business School created to offer con- sulting services and networking opportunities to SMEs Who Uses the Toolkit? in Nigeria; and the Emerging Market Private Equity As- sociation, an organization created to help private equity and venture capital firms and institutional investors in A user survey, analysis of Web site traffic, and inter- emerging markets improve their returns and promote views with partners reveal several patterns in the use more investments. of the SME Toolkit. · Government agencies. The Small and Medium Enter- · Traffic on the SME Toolkit Web sites has been gen- prise Development Authority (SMEDA), a government erated primarily by search engines and Web links. agency in Pakistan, included some content and a link to Overall, 41% of respondents said they found out the SME Toolkit on a Web site it established to reach about the Toolkit through search engines, and SMEs that were not close to regional offices. The Minis- 33% arrived at the Toolkit sites through links from try of Industry in Madagascar originally partnered with other Web sites. This reinforces the importance of the Toolkit to launch a local content-driven site now optimizing the Web sites for search engines and managed by the Madagascar SME Solutions Center. establishing links to other sites as part of market- ing campaigns. Other methods, including through EVALUATION FINDINGS newspapersormagazines,wordofmouth,business training courses, and newsgroup postings, were Relevance. In general, the SME Toolkit is relevant to much less important, although there is substantial needs of SMEs in developing countries and the IFC's in- regional variation. In Nepal newspaper coverage stitutional objectives. wasparticularlyimportant,whilefortheMongolian, The traffic on the Web sites and results of the user sur- Spanish, and Ukrainian sites links from other Web vey indicate that users find the content useful. Content on sites were relatively important compared with other business planning appears most relevant, materials on ac- sites. Word of mouth was relatively important for counting less so. Because the SMEToolkit is distributed via the Mongolian,Ukrainian,andVietnamese sites. the Web, it is restricted to a subset of the population that · Traffichasincreasedsignificantly.InMarch2005the has access to the Internet, knowledge of Microsoft Word numberofvisitstoSMEToolkitsitestotaled30,000. and Excel, and the sophistication to absorb and use the This primarily reflects a marked increase in activity materials contained in the Toolkit. Many SMEs in devel- ontheglobalandAfricasites,drivenbyamarketing oping countries still lack affordable access to the Internet, campaign launched inAugust 2004. limiting the reach of the SME Toolkit. To mitigate this · More than half of all sessions were one minute or problem, the Toolkit team has created a CD-ROM ver- less,suggesting that many visitors come to the site sion and computer-based training modules. The need for a inadvertently. But between one-fifth and one-quar- standardWeb design and content management system was ter of visits lasted more than 10 minutes. debated by Nexus since some partners--FUNDES, PEP- · Business planning is by far the most popular topic Ukraine, NextSense, SMEDA--have developed their own for articles and downloads, accounting for 55% of Web sites using internal technical staff or external consul- the content viewed by users. tants. Moreover, Web design expertise is becoming easier · Half of all page views were requested by users in to find throughout the world at costs that are substantially Mongolia,SouthAfrica,the United States,andViet- lower than in Europe or the United States. On the other nam. Besides the United States, only three other hand, the Toolkit approach has probably saved money by developed countries-- Canada, France, and the enabling most of the partners to establish a Web presence United Kingdom--were among the top 25 coun- without bearing the expense this typically entails. tries. Unresolvable IP addresses may result as US addresses (.com) so may not be reflective of US- Effectiveness. The Toolkit has provided benefits to the based traffic. IFC, partners, and end users. It has helped the IFC pro- · Survey respondents indicated that users tend to be mote its public image, particularly in frontier countries. well educated males. Five times as many males use It has been well received by local partners. And it has theToolkit as do women,while two-thirds of the us- enabled some users to develop a Web presence at a rela- ers attended college and almost a quarter had also tively low cost. Many partners see the content as useful done postgraduate study. either in its own right or as a supplement to materials that · Users see the Toolkit mainly as a resource library, they had already developed. and secondarily as a source for online training. It is reaching SMEs in developing countries and a broad range of other organizations and individuals. Based 2 Issue No.1, January 2006 MONITOR: Measuring development results in IFC on the review's survey results, 83% of respondents indi- principal services that come in some way through the Web cated that the Toolkit includes a wide range of materials site. None of the partners are currently generating signifi- that are useful to SMEs, and almost two-thirds report that cant revenues from the Toolkit directly. the Toolkit is one of the best sites for how-to articles and business forms. Furthermore, almost two-thirds of users LESSONS LEARNED who had visited a Toolkit site more than once reported The SME Toolkit is a useful product that can serve both using it to improve their businesses. institutional and development objectives. Efficiency. Given high fixed costs, the efficiency of the Sponsoring organizations can use the Toolkit to establish SME Toolkit depends on the volume of activity. a Web presence, advertise their services, post information As of March 31, 2005, roughly $2.0 million had been relevant to SMEs, and otherwise support their partners committed and $1.6 million disbursed (not including an and clients. The ideal licensees are organizations that are estimated $800,000 in staff time) over the four-year op- committed to significant localization and ongoing main- erational period. About 42% of total disbursements had tenance of the Web site. Whether partners under take full been allocated to technology development, 17% to part- implementation or just use Toolkit content on their own ner implementation, 16% to business management train- Web sites, they should be responsible for adding content ing, 15% to content, 3% to general technical support, and that is valuable to SMEs in their markets and not widely the remaining 6% to other activities. available on other sites. Agreements should specify the na- More than $1.5 million will be invested in technical ture of the content the local partner will provide initially, enhancements in version 2.0 of the software, and addi- plans for adding additional content in the future, and a tional expenses will be incurred in rolling out new SME schedule for implementation. Toolkit Web sites in the coming years. Much of the costs incurred to date represent start-up costs--content, Web Specific policies on cost sharing are needed. site, content management system, and curriculum. If each Partners should be required to invest a minimum amount partner had developed Web sites with similar content and to cover some of the start-up costs of translation, initial functionality, the total cost probably would have been local content, and installation and the costs of ongoing higher. updates and maintenance of the Toolkit. To help establish this threshold, hard data must be gathered from existing Sustainability. The SME Toolkit will depend on contin- partners on their actual expenditures. An ongoing mecha- ued financial support from the IFC and other donors. nism to monitor partners' investment is needed to ensure Reviewers saw little chance of spinning version 1.0 that contractual obligations are met and that the invest- of the SME Toolkit off as a commercial venture given its ment threshold can be adjusted periodically. emerging markets focus and use of third-party content of- fered free of charge. No organization has yet paid for the Toolkit sponsors and local partners should regularly global content, Web site design or content management add content on areas of interest to SMEs in developing system out of its own operating budget, although partners countries. cover their own ongoing operating costs. A number of government agencies, donors, and nonprofit organizations A multitude of content providers around the world might have developed small-business-focused Web sites, and be interested in licensing materials for noncommercial more are likely to do so in the future. purposes as part of good citizenship or public relations Most partners are IFC facilities, which were not de- campaigns. Those responsible for managing content signed or envisioned to become financially self-sustaining should make sure that materials, including more interac- institutions; their ability to continue operations (including tive materials for training purposes, are at a level that less the further development and ongoing maintenance of the sophisticated users can understand and use. SME Toolkit) depends on support from international do- In the near term, more content is needed related to busi- nors. FUNDES and SMEDA, although not IFC facilities, ness planning, which is the most popular subject on cur- are similar in nature. rent sites. For the longer term, a systematic process is For private companies such as NextSense, Elite Net- needed for collecting feedback from partners and users works, and TDB, the sustainability of these Web sites de- concerning their content requirements. As part of this pro- pends on their ability to generate sufficient revenue or traf- cess, managers should assess whether low usage of some fic to cover ongoing development and maintenance costs. materials is due to limited interest, lack of relevance or Among the sources of revenue mentioned by the partners poor quality. Assuming that a registration system is ad- are advertising revenues from third parties and sales of opted, user feedback should be based on regular, random- MONITOR: Measuring development results in IFC Issue No.1, January 2006 3 ized surveys. (Version 2.0 of the SME Toolkit has been should be set for: the number of sites by business model designed to enable full-implementation partners to update (co-brand, full implementation, content only), number of their Web sites more easily and share content with other sites by partner type (IFC facilities, nonprofit organiza- SME Toolkit partners.) tions, for-profit private enterprises), unique visitors, fre- quency of visits, number of sessions, percentage of sessions Information providers should develop multiple distribu- from developing countries, average duration of sessions, tion channels for the SME Toolkit content. percentage of sessions lasting more than 10 minutes, aver- Most partners involved with the SME Toolkit indicated age depth of session (number of page views), percentage of that access to the Internet in their markets is limited, slow, sessions with more than 10 page views, percentage of users and costly. A possible solution would be to distribute con- reporting that information has been useful, percentage of tent on CD-ROMs on a much broader scale. To date, the users reporting that information is not readily accessible Toolkit team and local partners have made only limited use elsewhere, total cost per session hour, and total cost per of CD-ROMs, distributing approximately 3,000, mainly participant training hour. Results should be reported an- for promotional purposes. Organizations that are work- nually. ing with SMEs, particularly those that receive funding or technical assistance from the World Bank, would be obvi- Long-term strategic plans and annual operating plans ous candidates for such distribution. As of March 2005, should set explicit goals and objectives. all the global content of the SME Toolkit was available in A strategic plan should define the product and target mar- English, French, Mongolian, and Spanish, and portions ket precisely; provide a clear statement of guiding prin- had been translated into other languages. Planned en- ciples; define major policies; describe the management hancements for version 2.0 of the SME Toolkit will make structure and staffing (including consultants); define how it much easier for the Toolkit team and partners to publish important and recurrent activities will be carried out; spec- the SME Toolkit on CD-ROM. ify needed equipment and software; define the investment Web sites and CD-ROMs also should be considered as needed to develop, deploy, and maintain the website; ex- channels to distribute training manuals to business devel- plain how costs will be covered; and delineate the perfor- opment service providers, enabling more organizations to mance measures and standards that will be used to gauge learn how to use the SME Toolkit in training courses. whether the organization is achieving its objectives. The strategic plan should also delineate potential exit strategies Marketing is key to the success of the SME Toolkit. in the event that donors are no longer willing to support a The SME Toolkit team has successfully initiated efforts project. Annual operating plans should detail the specific to increase traffic on certain Web sites, but as of March activities that will be carried out. Since there is no price 2005, traffic on many sites was low. Since most users are mechanism to mediate demand, managers should ensure likely to reach the Web sites through search engines or that partners have explicit plans for using additional fea- links from other Web sites, the design and text of all sites tures and functionality before making an investment. should be optimized based on the algorithm that Google The strategy should also clearly articulate the role of uses for ranking. Moreover, Web sites should be updated managers in training trainers, developing curricula for on a regular basis with information of greatest interest to classroom-based management training, and delivering companies in the target market. Content should be added courses directly to end users. And it should describe how not only to benefit users, but also to increase rankings by such training efforts can be replicated to maximize the re- search engines. Other marketing approaches--direct mail, turn on training investment. broadcast media, and press coverage--should be the re- sponsibility of local partners and tailored to the particular Results Update: By June 2007, the number of regional market characteristics in each country. and local sites was 27; the number of unique visitors to the sites was 2.2 million. 85 percent of the users were from Performance metrics for the SME Toolkit need to be developing countries, and 75 percent of the users found aligned with objectives. the content to be useful. To ensure that the products meet the needs of managers, donors, partner organizations, and SMEs, annual targets International Finance Corporation 2121 PennsylvaniaAvenue,NW Washington,DC 20433 http://www.ifc.org/results