SaaS Blog Posts

Most of the pundits for health care IT concur that a move to electronic records and in particular, a move to a SaaS, will significantly benefit insurance companies, hospitals, and physicians.

Looking at just the most basic factors:

• Insurance companies benefit from the online connectivity of SaaS.
• Hospitals benefit from the economies of scale using standardized data and processes.
• Physicians benefit by not having to operate their own patient management and billing systems.

The business case for moving to secure, SaaS-based solutions is real and compelling. But many health care organizations and service providers hesitate to make the first move, in part because of the magnitude of the transition. Where do you start? How do you undertake the project without creating a bloated, interminably delayed IT nightmare.

The answer is, of course, relatively unique for each company and can be determined as part of an application design evaluation. But one "off-the-shelf" approach is simply to identify processes that move electronic information to paper. In most cases these processes introduce both operational overhead expense and the potential for transcription error.

Eliminating this translation step can offer that first step in the design of a SaaS for healthcare markets. Key to success is to build the application UI using modular, reusable components. Re-usability means that you can take any of your modular elements and plug them into new applications or new screens as you expand your application or services. This lets you add on additional services discretely, in a predictable way, implemented over short time scales.

I had planned to get away without having to write a predictions blog this year, but my topic for this week's blog, turns out to also be a prediction.

I've been meeting with many VC firms, investors, and industry leaders in the Valley and it is readily apparent to me that sustainability is a topic on everyone's mind and and a business opportunity on which many startups and established players will focus over the next 5-10 years.

The motivations are very compelling:

• Energy and commodity costs will continue to increase and companies need to reduce their resource use and waste production to lower costs across internal operations and the connected supply chain. (As one colleague put it: "The days of cutting costs via off-shoring are coming to an end. Resource optimization is the future for achieving cost savings").
• Environmental regulation will certainly increase and companies will need to document, track and report their compliance for emissions and waste reductions (as well as potentially monetize their reduced carbon emissions)
• Consumers are becoming aware of and requesting information on corporate sustainability efforts. Brand value will depend on providing transparency into sustainability initiatives.

Sustainability applications will be SaaS

Clearly, companies (both large and small) are already on the move to decrease large expenditures on in-house projects and software installations with a fifth of all enterprises planning to have no internal IT assets by 2012. Instead the move is to cloud computing and SaaS - with no software to install or maintain or upgrade.

So it is a no-brainer to predict that on-premise solutions for sustainability will be rare. Instead businesses (and consumers) will be looking for SaaS solutions that can be easily accessed by employees from desktops, laptops or smartphones.

Since SaaS is inherently "connected in the cloud", a sustainability service can be effectively designed across organizational boundaries, incorporating the entire extended enterprise - partners, suppliers and customers.

Success depends on much time people devote to use

The other no-brainer is that user experience will make or break these SaaS applications. They key to making sustainability applications work, is how compelling and easy they are for users to enter information, how well they are on-boarded, and how easy it is track the impact (visually including mapping, as well as numerically). The user interface should be designed around a clear conceptual model, high value scenarios with desktop levels of performance using RIAs (Rich Internet Applications).

I'll write more about the sustainability topic in the future, but if you were wondering what the application design crystal ball holds for 2010 (and beyond), think SaaS-based energy and environmental optimization software with a compelling cross-device user interface.

In the article “5 Enterprise Trends to Watch in 2010”,  ReadWriteWeb notes how real-time services are becoming more and more integral to the enterprise, particularly those that hook into business intelligence technologies.

This mirrors our own experience on work with SaaS and RIA projects. Increasingly, the driving force behind our clients wanting to move their business to a Software-as-a-Service model and using Rich Internet Applications, is the need to interact with customers and/or data in real-time, and to respond quickly to competitive opportunities or threats.

For example, our work with 3n targeted the design of an efficient workflow and interface to track and notify people in real-time about emergency situations. Our financial services SaaS work centers around applications and dashboards to dynamically monitor and integrate real-time data streams from diverse sources, and enable predictive, spit-second financial transactions. Our biotech client work is focused on real-time, synchronous collaboration for diagnostics.  Etc. etc.

The key principal here is that SaaS and RIA’s represent a shift in software to real-time. The business enterprise of 2010 needs to be on the web 24/7, interacting with customers and data, responding instantly to changing market conditions and multiple information streams.

While many SaaS services like to explain the value of their SaaS in terms of features (it does X) or cost saving (it is cheaper than on-premise), reality is that these “value propositions” position you as a commodity and are not sustainable. The probability is high that an upstart SaaS firm will soon beat you at your own game (price and features). As an alternative, I’ve made the argument, that a well designed, user validated, SaaS user experience can be an effective and sustainable differentiator between feature-competitive software products.

The value afforded by monitoring

There are several other SaaS value propositions worth exploring. SaaS user interface elements can be designed to monitor user behavior, enabling continual refinement of your service. Monitoring not only provides insight into how the SaaS should be improved to meet changing customer requirements, but also how to proactively reduce customer churn. The value proposition this enables you to offer is: easy to get started and easy to become proficient (and easy to get hooked).

The value afforded by connectedness

“Connectedness” offers another potential SaaS value proposition. In contrast to on-premise applications, SaaS is inherently “connected in the cloud”. Because of this, it can be designed to be more than a data-driven application providing access to end users. It can be designed to incorporate your entire extended enterprise into the business process - offering integration and collaboration services to your customers, partners, and suppliers. With “local” SaaS, the way the end-user interacts with the application should tightly map to the workflow and business objectives of the organization. This same principal applies when you expand your workflow analysis to include broader business objectives across more of your value chain. The value propositions of a SaaS designed to be usable across organizational boundaries are business agility, bottom-line revenue (reduced errors and cost, higher automation), and top-line revenue (improved relationships with partners and customers).

A human resources example

For example if your business is talent management, you can extend the design of your talent management SaaS to bring together internal HR, external recruiters, relocation providers, trainers, etc. This kind of connectedness is a unique and inherent value of SaaS. Beyond the technology, the key to this approach is to define the larger value your solution delivers across the value chain for visibility, control, and real-time collaboration (both upstream and downstream). Then concentrate the design around the high value scenario for those extended relationships, addressing the entire SaaS life cycle.

Last week it was announced that Amazon has purchased the hot e-commerce up-and-comer Zappos.  Among the many things I found interesting about this announcement was how I didn’t associate any kind of logo or visual identity with either company.  The brand that defines these online companies are not the visuals that the typical interactive design firm spends so much time developing. The brand for these web companies is the interface and user experience.

The idea of brand-as-interface is not new.  Craigslist and Google are extremely well know, and incredibly recognized brands.  But as many have pointed out,  they have “less than pleasing” designs (aka butt ugly) with little visual identify.  Their strong brand identity is defined not by colors or creative visual treatment, but rather through the functionality and simple, predictable user interface.

Brand as interface and brand experience as user experience is particularly applicable to software-as-a-service (SaaS) and web applications.  The online experience is the brand.  SaaS companies will bet more bang for the buck by innovating the the level of user experience then noodling excessively over the color scheme or logo design. Unlike traditional media - the words, the colors, and the graphics are important important only so much as they facilitate and amplify the user interface,

Thinking of brand as interface has another significant advantage.  It is much harder to copy or supplant a good user interface, then it is to copy an aesthetic design. Yahoo has faced this repeatedly with Google. Their site, might look better graphically and have more features, but it has done little to provide a better user interface or identified high value scenarios to provide a more engaging user experience.  Consequently it has not supplanted the original.

To be sure, graphical treatment and visual design are important for SaaS and web applications.  But they should always be looked at in the context of how they enhance the user interface.  That is the real brand and the thing you want people to remember.

One of the unique benefits of SaaS is that the application user interface (the components the user interacts with) can be designed to monitor the users behavior and give the vendor information on how the software is actually being used. This not only provides insight into how the SaaS should be improved to meet changing customer requirements, but also how to proactively reduce customer churn.

On-boarding, the process of getting customer signed up and using a SaaS is a good example. Effective on-boarding is critical in terms of determining the tenure and profitability of a SaaS customer relationship. The challenge for SaaS vendors is to immediately gain and leverage an early understanding of new customers behavior and then drive relevant communications to facilitate both immediate on-boarding and continued engaged use for the first 60 days (and beyond).

Designing your SaaS to take advantage of monitoring

So what are some of the steps in application design for effective monitoring?

• Identify the high value scenarios for your SaaS application. We use a systematic and formal process to determine these, but on a casual level try to imagine what what customers/users want to accomplish (not what you think they need).
• Define 2-3 key benefits that differentiate your software from the competition from a customer point of view (e.g. customized interface / ready to use out of the box / cheaper / faster).
• Define the critical behaviors a user must take to successfully accomplish the high value scenarios (e.g. they must import their contact list).
• During the application design process, as you streamline workflows and user-validate the UI, track where even a small percentage of users face issues. While a goal in the design phase is to refine the user interface to minimize these friction points, track any issues that do arise, no matter how infrequently. These can be used to develop processes for intervention during on-boarding.
• Build your UI as a modular system with the capability to track user patterns and clicks, and relate them to desired behavior sequences.
• When you deploy your SaaS, use these monitoring components to identify what features of the software do not seem to be used, where users get distracted from completing high value scenarios, where they make mistakes, where they stop at signup, etc, Integrated monitoring is essentially a continuation of user-validation testing and data collection we do during the basic application design. But here is it used both as information on how to modify the software in future revs, but also where to determine where you can provide assistance before those new revisions are out.

On-premise vs SaaS on-boarding

With on-premise applications, customer on-boarding is considered as outside of the functionality of the software product itself. But with SaaS, on-boarding is an essential process and monitoring the user behavior needs to be part of the SaaS application design. Whether you are trying to get users to complete signup for a trial, or whether you are trying to get users to successfully start using your software, tracking user behavior enables the software (or humans) to intercede at any points where the user might be dropping out.

For example, if users drop out in sign-up, only partially completing the process, the SaaS application can send out an automated, semi-customized e-mail which reads "Thanks for starting your online trial. To finish the process, do XYZ."

Or if users are not going through the critical behaviors that are necessary to complete high values scenerios (and thus experience the benefits of your service), then you can have a tech support person call (costly but effective, particularly for important individuals representing large clients), or you could send them links to videos or invite them to webinars explaining how to complete these behaviors, or point them to discussion board posts that answer other users questions related to completing the tasks.

For example, based on where a customer appears to be dropping out, an automated email goes out saying: "To really take get maximum advantage from our software, you will want to do XX. We have a options to help you through the process including one on one telephone support."

Customer Engagement

This same kind of monitoring can be used to determine intelligent automated (or human-based) up-selling or to tap into social networking for referrals. Once you have determined the high value scenarios and behaviors that users need to complete in order to find "addictive" or engaging value in your software, then monitoring and intelligent SaaS application design, can help users along.

Monitoring at the user experience level is an effective way both to to correct drop out points during the first 60 days, improve effectiveness and efficiency for your customers, and quickly determine how to modify your application on a regular cycle to meet user needs, increase sales and up sell, and reduce churn.

The SaaS life cycle framework was developed on the premise that there are specific business, customer and technology dimensions that must be examined as part of the design of a successful SaaS application. You systematically identify all of the points in a SaaS application where the software or staff will need to interact with the customer (e.g. early sales, marketing, demos, provisioning, configuration, billing, monitoring, renewals, support etc). Then evaluate which of these “touch-points” should be handled as part of the SaaS application design.
Put in very broad buckets these touch-points address:
- Purchasing & Deployment
- Provisioning
- Usage
- Monitoring & Updates

In a pure SaaS model, the underlying economics mandate that almost all of the touch-points in the customer life cycle be designed, delivered and managed via the SaaS application.  Automation and self-service do the tasks that would otherwise require support staff to service so that the cost of acquiring and supporting 100 customers is just marginally higher than for 1 customer.  This is essential to achieve economies of scale, rapid iterations, and broad market appeal.

But pure on-demand SaaS is not appropriate to all business models. The underlying business value of a piece of software may require unique customer processes, or complex integration tasks that can’t be automated. The steps in the SaaS life cycle framework are however still appropriate for developing a roadmap on how to design your SaaS.  Examine the touch-points in the life cycle and determine how you design your application to address them - based on your specific business and technological situation.

In some cases you may need to offer enhanced customization, additional sales support,  or on-site professional services, and the premium you charge for this will cover the cost hit you take by not being able to scale via automation or self-service (the “pure” SaaS model).  But even in these cases, don’t fall back on traditional on-premise software approaches. You should still thoroughly examine all points in the customer life cycle and determine the fundamental cost advantages of addressing each component in software vs human services. This will help you to align your business model with the underlying economics of how the core application and supporting services are exposed to users.