"Folks, I haven't died. I am in a McInternet checking my email." McInternet user
Should corporations try to "do good" for society? That was the question in a 2005 piece in BusinessWeek.2 Those who say "yes" list the improvements in a company's reputation that outreach actions can bring; those who oppose contend that corporations waste resources that would be better employed increasing shareholder wealth. In this paper, we suggest that these objectives are not mutually exclusive. In particular, socially-oriented information technology (IT) initiatives engendered by corporations can be simultaneously "good for business" and "good for society." IT has an inherent flexibility that allows a single infrastructure to be adapted to multiple uses, achieving a variety of benefits for different stakeholders.6
In this paper we examine how a well-orchestrated plan implemented by McDonald's/Brazil to offer free Internet access to its customers, many of them using computers for the first time, helped to decrease that country's digital divide. The digital divide refers to the division of a society into information haves and information have-nots.3 Eliminating the digital divide has been a long term project for many organizations. Sites such as the Digital Divide Network (http://www.digitaldividenetwork.org/) list many projects that have attempted to provide "digital inclusion", where people have physical access to IT resources and enough proficiency to use them to increase their knowledge base. What McDonald's/Brazil has achieved is to unite these lofty aspirations with practical gains: increased profitability, access to exclusive data about its customers, and an improved infrastructure for its own information processing needs.
"I never thought it would be like that. I want a computer now."First time Internet user, 15 years old, after trying a chat room in a McInternet
McDonald's has a well-established presence in Brazil, the first country in South America to have one of its restaurants (in 1979). Today, McDonald's has approximately 600 restaurants in the country and the local management has a proud tradition of delivering innovative solutions such as the more than 700 Dessert Centers, a concept that has been exported to other locations around the world. Brazil was thus a prime location for the McInternet concept to flourish.
The McInternet project, championed by the head of IT at McDonald's/Brazil, simply consists of having computer kiosks connected to the Internet in McDonald's restaurants. The project's main initial motivations were the potential increase in restaurant traffic and the association of the McDonald's brand with "youngsters and cool technology". However, the plan had a lukewarm reception from the firm's local top management team, despite the success of a similar initiative in Costa Rica. Overall, there was concern about the amount of extra profit the project would bring to each restaurant, especially considering the necessary infrastructure investments. Thus, the impact of the project on the company's bottom line was called into question.
As more studies about the project were developed, a potential second set of outcomes became clear: increase in digital inclusion among McDonald's users and corresponding improvement in the public's perception about McDonald's. With an average monthly income of about US$200.00, the vast majority of the Brazilian population lacks the resources to buy a computer. Indeed, a good portion of the population has never had a chance to use a computer and navigate the Internet. 4 Only about 16 million people10% of the total Brazilian populationcan be considered "digitally included". That share of the population displays higher levels of formal education (almost double the average for the total population) and income (more than triple the average).
Interestingly, because McDonald's restaurants are located in so many places throughout Brazil, the company ends up being an effective channel for digital inclusion. The McInternet would enable a customer to pay bills, check email, look for jobs, or simply surf the Web in a McDonald's restaurant. Many of these customers would be accessing the famed "Information Superhighway" for the very first time. Thus, once the full set of potential benefits (increased time spent in the restaurant by its customers, stronger links with clients, and an improved "public persona") was assessed, the McInternet plan was approved and a pilot project initiated.
"It is a nice service. I come here to read the newspaper and search the net." McInternet user, 22 years old
From conceptualization to implementation, the pilot project took nine months, including eight months of operation. To defray costs and minimize concerns about the impact on restaurant profitability, partnerships were procured. Each partner contributed an equal share of the operating capital for the project, and, as a group, shouldered all costs. The ownership in all phases of the project remained completely private, with no incentives from the government.
The initial set of partners was composed of a content provider (Terra), an Internet provider (Telefonica), a hardware provider (HP), and a bank (Itau). Itau was involved because e-banking was expected to be a major application for McInternet users. Two other companies were hired to develop the portals and software packages (including reporting tools). Finally, smaller companies were hired to provide local technical support. The expected benefit for these partners was increased visibility (about 1.5 million people use McDonald's restaurants in Brazil every day), with higher exposure of their brands in the restaurants (computer kiosk, mouse pads, and even uniforms of restaurant-based support personnel displayed partners' logos). However, McDonald's retained full control of all data generated through the use of a McInternet terminal (such as sites visited, options for further information about products, etc.).
The initial project was implemented in about 50 restaurants in Rio de Janeiro and São Paulo, each with at least four Internet kiosks. Restaurants were selected to maximize the variation in potential customers' social classes, so that the project's effects could be linked to the social strata of potential users. Operations were organized around a mix of human intervention and machine controls. After the client purchased any item from the restaurant (regardless of price), s/he received a pamphlet (which also functioned as promotional material) with instructions and access to the Internet varying between 15 and 60 minutes (distributed in increments of 15 minutes), depending on the number of people waiting for a free workstation. A "regular" McDonald's employee, trained on site prior to the wider introduction of the terminals, was responsible for this operation. To initiate the session, the user was then asked for information from his/her sales receipt. Then, if the user was connecting for the first time, s/he was asked about his/her personal data, with a warning indicating that McDonald's guaranteed the privacy of the collected data. The user was then directed to one of two portals based on date of birth: a children's portal or an adult portal. In both cases Net Nanny was used to control access to certain sites and McDonald's employees were instructed to switch off the terminal if someone started viewing objectionable material. In case of any difficulties, a regular McDonald's employee was responsible for giving immediate support. Problems with equipment were handled by external providers. All data that was collected from users' sessions was aggregated into McDonald's databases.
"I can study while I am here, instead of simply taking my time walking in the mall." McInternet user, 23 years old, student
"I needed to get some data about my car and as I walking past one restaurant, I went there." McInternet user, 30 years old, after visiting a restaurant during lunch time
After the pilot phase was completed, the project went through an evaluation process. The increase in sales in the restaurants with the McInternet expansion was relatively small (2.5%) but significant, especially in an environment as highly competitive as the fast food industry. Additional benefits were more visible, though. First, there was overwhelming user satisfaction: in a survey of 3,141 users in the pilot phase, 91% of respondents classified the McInternet initiative as either very good (about 72%) or good. Second, there was positive press around the project, with newspapers praising the initiative. Usage data showed the social impact of the McInternet. In restaurants located in poor neighborhoods, many users employed the McInternet to conduct school work and research. Considering these outcomes, McDonald's management decided to expand the project to all of its other restaurants.
Some changes were necessary, though. For example, Terra and Telefonica declined to continue in the project and were replaced by AOL. AOL participation and financial incentive led to the discontinuation of Linux and Netscape as the operating system and browser, replaced by Windows and AOL/Explorer (AOL paid for all the license fees). AOL also redesigned the portals for the system using its own content resources. New users now had a chance to open a new account with AOLalthough this was not necessary to use the systemwith AOL donating one third of the value of each new subscription made in a McInternet kiosk to the Ronald McDonald Institute. Moreover, with AOL becoming a partner, McMail, an email service provided in the first phase, was gradually phased out.
There were also some other changes related to the support infrastructure. In the pilot phase, regular McDonald's servers were responsible for queue management and user assistance. A new set of employees, McHostesses, became responsible for this task. Those were especially trained employees able to provide a more consistent level of support to users without disrupting restaurant operations, which was common when regular employees were in charge of this task. Thus, two additional McHostess positions were created in each McInternet restaurant. Moreover, to facilitate usage, educational content was developed for the Internet kiosks teaching first-time users how to interact with a computer and navigate the Web. Finally, HP decided to take over all technical support operations, replacing the external providers hired for the pilot phase. The remaining operations (such as, user authorization and authentication, and time restriction when few terminals were available) remained the same.
"Guess where I am posting from? A McInternet! Hahaha!" Blogger using a McInternet kiosk
Following the project evaluation, the McInternet project has experienced a consistent expansion.
The most recent available data indicate that by early 2007, the McInternet project had become the largest private Internet access network in Brazil, with approximately 5.7 million users logging in 600,000 monthly sessions. Over 480 McDonald's restaurants had McInternet terminals, leading to eight million pages visited and 250,000 new users registering every month (http://www.amd.com/br-pt/Corporate/VirtualPressRoom/0,,51_104_566~115495,00.html and http://computerworld.uol.com.br/mercado/2007/04/27/idgnoticia.2007-04-27.9161746170/).
Besides the modifications in operations discussed above, some significant changes took place in the type of services that were made available using the McInternet infrastructure. For example, a centralized terminal with an integrated database is now used to manage all the data generated through the use of the McInternet terminals. The system also allows for monitoring and control of the operations in the restaurants, leading to quicker repair times and monitoring of connections and potential technical problems.
Additionally, a partnership was established with a provider of educational resources that helps McDonald's employees to prepare for university admission tests in their free time. As mentioned, users have employed the kiosks to study and conduct searches for their school work. Because many of McDonald's own employees would fit into the category of "digitally excluded," the McInternet stations provided a relatively inexpensive way for McDonald's to support the advancement and educational goals of its employees.
Finally, McDonald's used the McInternet infrastructure to interconnect all its restaurants and to offer new services for online clients. The network allows McDonald's to share operational data much more quickly than before, which facilitates procurement and supply chain decisions. Additionally, the infrastructure was prompted to serve as a channel for online orders. With the "McEntrega" (McDelivery), clients can order items from the McDonald's menu using their email, a password and the delivery address.
"It's a great help since I do not need to pay anything to use it besides the price of a snack." McInternet user, 26 years old, unemployed, using the Web to search for a position
"This is a story that combines initiative, creativity, competence, and success." Elio Gaspari, commentator for O Globo, one of the largest newspapers in Brazil
Several positive outcomes combine to make the McInternet case a remarkable success. After one of the most famous political commentators in Brazil praised the project for its "creativity, competence, and success", several other news outlets followed with their own news pieces. In fact, articles about the McInternet have appeared in the international media including those from Argentina, Germany, France, Denmark, and Russia. It is easy to see the reasons for the "buzz": for about 25% of its users, the McInternet has been their first experience with the Internet. Essentially, McDonald'swith its reach across the countryhas provided many Brazilians with their first "taste" of computers and the Internet. Moreover, about 42% of the users are heavy users who were utilizing the McInternet kiosks for everything from checking their emails to updating their blogs, as well as for e-banking and regular information searches. When interviewed, many of these users vowed to return to a McDonald's restaurant to keep enjoying the McInternet services.
Additionally, with the McInternet project, McDonald's gained experience with promotional partnerships, with partners' brands prominently displayed in its restaurants. The experience came at very low cost, since, together, the partners shared most of the financial burden of the project. In fact, McDonald's internal operations received direct benefits from the project, since supply chain data could now be transferred more quickly. Furthermore, the McDonald's online sales operation has been greatly facilitated by the McInternet infrastructure.
Finally, McDonald's has accumulated a wealth of information about its clients. With the vast amount of registered users, many of them agreeing to receive promotional material, McDonald's can create ultra-targeted promotions for McInternet users. With accumulated information about users' interests aggregated in the database (via the visited links) and a fixed IP address indicating the exact location of the prospective consumer, the McInternet project can become a marketer's paradise. Although not much has been done on this front thus far, it would be relatively simple to promote purchases of products in neighboring stores by examining links being visited by the McInternet user. Thus, McDonald's is currently attempting to develop a McInternet loyalty card to improve services and ensure that the data collected can be put to optimal use.
There are still several remaining issues to be resolved in the McInternet project. For example, the telecommunications infrastructure in some locations makes it difficult to implement the required network. Also, the security of the equipment is a problem. It is not uncommon to have equipment damaged and/or stolen by users during extremely busy times in the restaurant. In one restaurant, a user attempted to take the desktop, the monitor and the mouse in a baby carriage! Damaged or stolen equipment increases maintenance costs and might create frustration for prospective users who were counting on the equipment being available in the restaurant.
It is also important to notice that, during this last decade, the Brazilian population has experienced a significant growth in income and ownership of computers. Additionally, cheaper technologies have led to expansion of connectivity opportunities in schools and community centers. Thus, the replacement of the McInternet infrastructure with Wi-Fi networks has been considered, including the implementation of pilot networks in restaurants located in more affluent communities.
Nevertheless, it is hard to consider the McInternet project anything but an unqualified success from which some valuable lessons can be learned. Privately sponsored efforts to bridge the digital divide have been conducted elsewhere, for reasons ranging from "evangelization" and future market expansion (such as Microsoft donating money to Indian state organizations and Obsidian Systems supporting the translation of Linux into several local idioms in South Africa) to simple generation of good will (such as Syscap support to increase digital awereness in the U.K.). However, the McInternet case is an example that "doing good" (by minimizing the digital divide) can also improve the firm's bottom line by increasing the number of customers. The project started with a very specific business purpose (to increase restaurant traffic), but its leaders were open to new ideas and potential benefits, reinventing the concept as necessary.5 Because of this openness to benefits beyond increase in profits, project leaders were able to embrace the less tangible results that the McInternet brought to the company, taking a long-term perspective with regard to increased public goodwill.
Additionally, this is a case where the IT infrastructure serves as a source of digital options, where new flexible uses for the information captured can be quickly devised and implemented.6,7 By its very nature IT can be adapted quickly: the same pipelines that bring operations information can bring additional content for employees or clients; the same terminal that provides financial applications can be used for education and learning. It is obvious that the reach of such initiatives is magnified in developing countries like Brazil, but it is not hard to envision, even in developed countries, terminals or local wireless content providing directions and safe driving information in gas stations, promoting healthy recipes in grocery stores and restaurants, or delivering learning tools to construction sites. There is almost no limit to content that can be provided according to a specific consumption or production context.
Finally, as more consumers access those services, rich data can be captured and mined for highly focused marketing initiatives. Because physical location can be promptly known, business intelligence projects that are responsive in real-time can be implemented, adding extra value to the consumer experience1 and further benefits to the company sponsoring those services.
3. National Telecommunications and Information Administration Falling Through the Net: Toward Digital Inclusion, U.S. Department of Commerce, Oct. (2000); www.ntia.doc.gov/ntiahome/fttn00/contents00.html.
6. Sambamurthy, V.; Bharadwal, A.S.; and Grover, V. Shaping agility through digital options: Reconceptualizing the role of information technology in contemporary firms. MIS Quarterly 27, 2, (2003), 237263.
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