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Confronting the Commoditization of SaaS through User Experience

Posted on August 14, 2008 by Paul Giurata

User experience is voguish to talk about, but the meaning is often poorly defined and consequently undervalued. Many development teams equate it with application ease-of-use or branding/visual design and marginalize it relative to the functionality of the core application - nice to have - but not a key business driver. "It would be great if we could provide a better user experience, but we really need to get the product out the door." This perception however, could not be further from the truth. When it comes to SaaS, user experience IS the product. The alternative is commoditization.

So what is user experience?

From Wikipedia:
User experience is a term used to describe all aspects of the user's experience when interacting with the product, service, environment or facility. It most commonly refers to a combination of software and business topics.

Ease-of-use or "usability" is a required component of good user experience, but it is not sufficient. A system can be easy-to-use, and still create a poor user experience. MP3 players are a simple but relevant example. If basic functionality and ease-of-use (i.e. an easy way to select and play MP3 files) were all that mattered, then the iPod and iTunes would not have achieved market dominance. But reality is that the MP3 playing part is a commodity. What makes the iPod a high value and differentiated product is the user experience.

Visual page design and branding, while also contributing to user experience, are again not sufficient. While I've always assumed this is totally obvious, we've had several clients come to us to "fix" their SaaS applications after they already invested heavily in a new visual design. The site looked good, it had a bunch of RIA functionality (e.g. AJAX or Flex), but it did not provide a user experience that could retain customers or scale with growth. In today's competitive landscape, a SaaS with a pleasing visual design that uses AJAX or Flex widgets is also a commodity.

SaaS as commodity

With SaaS, it is rare that you have a killer idea that revolutionizes the industry and that cannot be readily copied by another team of developers. You may indeed have developed great product functionally and that product might even be easy to use or look great. But if you are not providing that revolutionary, one-in-a-million grand innovation, then you end up delivering a commodity - something that can eventually be duplicated by the competition. This ends up forcing commodity pricing, and worse, no customer loyalty.

SaaS as value

So the question becomes, how do you transform your core application from a product, into a great user experience? How do you move your SaaS out of the commodity space and differentiate it from would-be competitors?

A few points to consider:

  • Focus on what your customers actually want or need to perform in doing business with you (high value scenarios) and design your application around these.
  • Don't get enamoured and side-tracked by the technology. Good user experience is not about adding AJAX or Flex widgets, or individual tools designed to make a page "sticky", or even great visual design. These tools can add value and be part of the formula but only when they actually assist a user in accomplishing their high value tasks.
  • Don't maximize growth at the expense of profitability - design your SaaS with scalability in mind from the start.
  • Plan rapid development cycles of no more than 90-180 days to enable quick incorporation of user feedback and behavior tracking.
  • Use the techniques of interaction design, information architecture, accessibility, user interface design and user-centered design that are typically applied to the design of the core application, and extend them beyond the product to all of the application touch points - marketing, sales, provisioning, training, support, billing, etc.

Commoditization is a focus on product; differentiation and value are a focus on user experience.