A World About to Change… -

Is running a company easier than picking a cereal?

NPR’s Fresh Air interviewed Jonah Lehrer today who has a new book out about how humans make decisions. A couple of topics dominated the interview:

An overload of choices make decision-making much more difficult since our pre-frontal cortex can only handle a small number of choices at a time (somewhere between 5 and 12)
Several experiments suggest that emotion is a critical ingredient to enable fast decision making and prevent analysis paralysis.

Of course, Jonah Lehrer is not the first person to cover this topic. I remember reading Barry Schwartz’s Paradox of Choice a couple of years ago, and it included references to similar ideas.

What intrigues and concerns me is the implication of this research for business intelligence. It would suggest that:

Additional data / information can lead people (and hence companies) astray while they assume that more data is always better. A lot of work has been done in this area. I vaguely remember reading about such research in a Malcolm Gladwell-genre book.
If people are making decisions based on data that may not be relevant, then we are, yet again, underestimating the role of randomness in the success or failure of companies (and CEO’s). Someone else recently wrote about this, but I do not recall who.
Emotion is a critical ingredient of important decision making; however, emotion can be significantly influenced by many other factors than data. This suggestion in turn begs the question: just how important / relevant is the data? Is it more often used for rationalizing emotional decisions than it is used for arriving at rational decisions?

While businesses will continue to move towards being run more and more by data, research like this heightens the importance of the non-technical parts of a good business intelligence implementation - understanding the data that you have available, truly understanding what you’re measuring, how it may impact the business and of course good data visualization in the final implementation.

PS. The title of this blog post refers to the difficulty the author, Jonah Lehrer, has in picking cereal due to the vast number of choices available.

¶ Posted 02 March 2009 † vinaysethmohta § UI § business intelligence § good reading ‡ Comments (0) °

Physical interfaces

When I was working on a travel-related start-up idea last year, I had a call with a senior executive from a major web travel company. What she said really surprised me - that the majority of America still decides on where to go based on the following technique: when they see a compelling destination in a magazine, they rip out the corresponding page and put it in a folder. Then, when it comes time to book travel, they look through that folder and decide where they are going to go. Whether it’s true or not, it does remind one of the obvious fact: that people are using the physical interface of paper / a magazine in order to mark information for later retrieval. Other examples include bookmarking, dog-earing a page, etc.

A friend recently showed me a demo of a product idea that he’s been playing with that brings a physical world interface to the iPhone via its touch / gesture capabilities. What truly struck me during the demo was not how useful the feature was in itself, but rather the value of the action going from being an abstract action (i.e. mouse motion / click translated into a visual representation on the monitor) to a physical action again - something that you touch and interact with ( you can’t feel the texture - yet!).

Many have talked about the advantage of a physical book over the many e-versions that we have seen over the years. And of course, simply mimicking the act of turning a page with a gesture on the iPhone screen does not dramatically change the user experience of reading. However, gestures on the iPhone (and other similar touch interfaces) do get one step closer to the physical world that we are used to and for certain applications, that will be good enough for success.

¶ Posted 03 September 2008 † vinaysethmohta § UI § enterpreneurship ‡ Comments (0) °

Google Chrome and domain name squatting

For the longest time, I have been particularly irritated about domain name squatters (many have talked about the associated issues, so I won’t rehash).

Given that users who are not tech savvy often type search queries into the URL bar, I always wondered what the value was of the URL bar. Clearly, their intention was not to go to the specific URL (unique resource locator) but rather to find out what other information there is on what they typed in. Similarly, as a tech savvy user, I rarely type in URL’s other than for a few often-used sites that I expect my browser to auto-complete. In almost every case, I search instead since I’m never sure what domain a company is using (often, due to domain name squatters). Usually, I find my desired link in the first page of search results.

My follow-up question has been - why not get rid of the URL bar and only provide a search bar? Seems that Google Chrome finally does that.

Example of a word typed into the Google Chrome Address Bar (source: http://www.google.com/support/chrome/bin/answer.py?answer=95440&hl=en)

Search queries and results are listed in line with the potential domain names that could match your query. Hopefully, Firefox 3’s AwesomeBar will provide similar functionality sometime soon (maybe another FF plugin already does?). And if there is broad adoption of Google Chrome, can we hope that the value of typo domain names and squatted domain names will decline?

I acknowledge the obvious value to Google (and Yahoo! and MSN) of additional traffic and searches; I infinitely prefer that option to the current state of affairs.

¶ Posted 03 September 2008 † vinaysethmohta § UI § firefox § task-centric design ‡ Comments (0) °

SaaS == ASP == out of business

Lawson’s chief executive, Harry Debes, just did a short interview with ZDnet Asia where he talks about the upcoming demise of SaaS.

I find several of his assertions wrong and in fact contradictory to other statements that he makes in the same interview. My takeaway: this reads like a classic case of a company not wanting to cannibalize its current revenue streams.

He makes a fair point that much of SaaS hype has been catalyzed by the success of a single company, Salesforce.com. He also points out that SAP’s SaaS offering, Business ByDesign, was a failure in the market with fewer than a 100 users after a couple of years. However, I see two major problems with his assertions:

Salesforce.com’s success has little to do with the fact that it’s been licensed under a SaaS model.
The way to retain customers is via vendor lock-in and retaining customers in SaaS is much harder because switching costs are lower.

First, to his point that he and others would use Salesforce.com because the software is very good, not because it’s SaaS, says nothing about whether or not the SaaS licensing model has helped to increase the market penetration of Salesforce.com. Fundamentally, if I’m a customer inside an enterprise and Salesforce.com gives me a packaged server I can install locally and have my users hit my local server via their browser, the primary benefit I derive is that I have more control over the infrastructure, but correspondingly, the downside is that I have to pay to maintain it. From the customer’s standpoint, the major difference is not the user experience, but the maintenance cost and the license cost structure.

From the vendor’s standpoint, the major difference is not the software, how it’s deployed, or how capital must be deployed in order to build the software (”the more you sell, the more you lose” with SaaS is his assertion). The major difference between traditional enterprise software licenses and SaaS licenses is that with SaaS, the revenues are spread out over a longer time period. Two similar situations, related to the difference between SaaS and traditional enterprise licenses are:

Term licensing vs. perpetual licensing - one option when doing an enterprise sale is to give your customer a license to your software for a certain length of time e.g. a 3-year term and then require them to renew their license at the end of that period. Say you do a software deal for $300,000 for a 3-year term. Then, the customer would pay you $25,000 quarterly. According to Mr. Debes, this is a “more you sell, more you lose” kind of model as well. In practice, it works quite well - you have very predictable revenue recognition and cash flow - as long as you are not a start-up. With a start-up, you are investing significantly ahead of revenue and the term license defers revenue, stretching out your breakeven point further.
Seat-based licenses vs. all-you-can-eat licenses - When I was selling BI software, I noticed that almost all the other major BI vendors sold seat-based licenses. That is, if you want 2000 people to read a report, you need to buy 2000 “report reading” licenses. If you want 500 people to able to write or modify a report, then you pay 500 “report writing” licenses. We decided that if we were to truly offer our customers “BI for the masses” - that is, large scale adoption of BI - we had to change our license as well. We tried out a model of per-application or per-enterprise. The other vendors could not offer the same easily; their sales incentives and organization were not structured to handle a different license structure.

I would suggest that Lawson may not be able to switch its revenue and cost structure over to a radically different licensing model. Without knowing much more, I would hypothesize that SAP’s experience may have been related to something similar. I also don’t have faith that SAP actually built a compelling SaaS product in the first place.

To Mr. Debes’ second point - that you can only accomplish customer lock-in via enterprise software, I would agree that you can accomplish stronger customer lock-in via a traditional enterprise software deployment. Usually, enterprise software deployments involve IT approval processes, small fiefdoms being built in IT around the software package, and “expertise” in maintaining the software and hardware to keep the application going. SaaS deployments, at least for initial adoption, require none of those things. So yes, it’s far easier for a customer to try out a different SaaS deployment because the barrier to use is lower; however, is the traditional enterprise model truly a better user experience for the customer?

I would argue that Salesforce.com has just as much lock-in as any other “in-the-enterprise” CRM product. There’s no lock-in because of IT approval processes and fiefdoms; the lock-in comes from Salesforce.com being a great product and the fact that companies customize their business processes around their usage of the tool. Once you have companies molding their business process around your tool, you have the ultimate form of lock-in.

On a slightly-related note, check out YC’s list of ideas that they’d like to fund. Having spoken with many enterprise customers that deal with large IT organizations, I particularly like the idea described under the heading “Outsourced IT.”

¶ Posted 28 August 2008 † vinaysethmohta § SaaS § business intelligence § enterpreneurship § task-centric design ‡ Comments (0) °

Outsourced business intelligence

As more infrastructure moves into the cloud, we have also started to see a migration of applications into the cloud. Salesforce and CRM were the early movers. More recently, I have been seeing entrepreneurs explore how to move much larger applications (like SAP) and application stacks (like BI) into the cloud.

My most recent discovery is Good Data. They’re Cambridge-based and offer outsourced BI. They have pulled down funding from Esther Dyson, Tim O’Reilly and others and have a small war chest to try out their ideas. Three areas of market reaction that I’m particularly curious about:

Are companies willing to let their most valuable data out of their doors? Clearly, they have been open to it in particular areas of their business as they have moved CRM, web analytics for their retail sites, and marketing analytics off-site. However, in this case, they’re potentially moving the entire BI stack out. Would they be willing to move their financial data out?
Good Data’s success does not depend on whether or not companies choose to ship out their most private data. There’s plenty of pain around BI in organizations that doesn’t involve sensitive data. However, it will be interesting to see corporate attitudes evolve as people get more used to sending data off-site for analysis.
Is Good Data able to improve the user experience around business intelligence? When we were bringing the Endeca business intelligence offering to market, the two frustrations that we addressed for our users were:
- IT often takes a long time to turn reports around
- The reports that they do provide are static and the tools and UI to manipulate them are really only useful to the analytics “high priests”
The former is something Good Data can address just by providing infrastructure online; the latter is much harder to do whether you are an outsourced provider or you are in house. It often requires participation of the business users and requires mapping the analysis to the business processes involved. Metrics and analytics do not mean much unless you understand what the numbers are telling you!
Can Good Data (and others in this category) truly provide outsourced BI without having a significant services component to their business? This question follows from the previous comment: that analytics becomes much more useful once you have some business context and know how to encode the business context into numbers and interpret the resulting analysis.
Furthermore, I have always believed that to truly embed BI in the organization requires moving decision-making to being part of each business process as opposed to an after-the-fact activity. Such an approach often requires a deep services component that cannot be standardized easily.

Which brings me to my final thought: Will the very existence of these tools and the pre-defined templates that they come with result in some standardization of business process across organizations? Has anyone modeled their sales process around what Salesforce.com provides out of the box? Will that lead to better efficiency? Why should this happen now when it didn’t happen during the ERP days? Companies spent 10’s of millions to change the software rather than change their business processes. Presumably it’s because a company’s business processes are one of its core sources of value.

¶ Posted 27 August 2008 † vinaysethmohta § business intelligence § data transformation § enterpreneurship ‡ Comments (1) °

Firefox-based enterprise support business

A few weeks back, I read something somewhere that talked about the fact that Firefox could increase its enterprise adoption if there were better enterprise-quality support for it. Seems like an obvious business idea with a business model similar to the RedHat support model. Are there well-established businesses out there already doing this?

¶ Posted 11 August 2008 † vinaysethmohta § enterpreneurship § firefox ‡ Comments (0) °

UI innovation at the gas pump

For the longest time, I have wondered why credit card readers at super markets, gas pumps, parking garages, and just about everywhere else require you to insert the credit card only in a single orientation. Well, finally, the Mobil gas station down the street from us has all new gas pumps where the magnetic stripe can face either direction. A small step forward in the world of gas pump UI’s.

Hopefully, we’ll see more of these readers across all types of businesses, unless of course we all change to RFID-based cash transaction systems first.

¶ Posted 11 August 2008 † vinaysethmohta § UI § task-centric design ‡ Comments (2) °

Inline commenting on the web

I recently started reading up on the Django framework. The creators of Django, Adrian Holovaty and Jacob Kaplan-Moss, recently finished publishing a book that describes Django and how best to use it. They published both an online version of their book as well as a print version.

The online version has a UI innovation that I loved: the ability to leave comments inline with the text. I often find it quite distracting to scroll between comments and the main text when reading some online publication formats. And in this case, a wiki was not an appropriate format in which to publish a book.

Instead, the site allows users to click on the left side bar, which changes to a slightly darker shade of green when you hover over it. Click on the sidebar and a comment box pops up. If comments had already been left, then you see a little callout indicating the number of comments that have been left around a particular paragraph. I believe the authors used this facility extensively while their book was in “beta” to get feedback and errata from users.

The AJAX pop-up lets you read others comments as well as post new comments:

¶ Posted 19 February 2008 † vinaysethmohta § UI § django § task-centric design ‡ Comments (2) ° Tagged: django, task-centric design, UI

A capital framework for evaluating career choices

My brother recently proposed the following framework for thinking about career choices or rather, choices “for your next gig.” It is a capital-oriented framework where traditional capital (money, equity) is just one part of it. He defines five different types of capital:

Financial capital: traditional capital falls into this category e.g. How much money will you make? How much equity will you get? What will the equity be worth?
Knowledge capital: what you are going to learn / what will you know when you leave this position e.g. People management? Project management? Ruby on Rails? Running a consumer website? Consumer marketing?
Social capital: who are you going to build relationships as a result of your work e.g. Do you meet other marketing folks? Strong technologists? CIO’s in financial services companies? VC’s who could be potential future investors?
Brand capital: how does this opportunity fit into your larger narrative and how does it develop your personal brand e.g. I have built deep infrastructure companies all my life and with this opportunity, I did it in the consumer space. I had spent a lot of time selling traditional enterprise software and now moved over to selling SaaS.
Happiness: No capital suffix attached to this one e.g. Will you be happy when you come home everyday? Will you like the people you work with? Will you find what you do fulfilling? etc.

Rating my various opportunities against these categories and how much I would grow in each has been helpful as I think about what’s next for me.

¶ Posted 14 December 2007 † vinaysethmohta § Uncategorized ‡ Comments (2) °

Revenue - cost = profit

One of the simplest and yet striking ideas that I’ve heard for thinking about case interviews has been - always start with the simple framework that you are trying to maximize profit, which is the difference between revenue and cost. Everything else should be done either to increase revenue or decrease cost. Similarly, one of the dead simple ideas I realized in the context of consumer applications on the web has been that there are really only two things that matter for a consumer application company to be successful:

build a great product that people want
tell the world about it

If you do the former and not the latter, you have the “tree falling in a forest” problem - no one knows you exist, so who really cares what you have built. If you do the latter without the former, people will come and will leave just
as quickly. For those who buy traffic, the former is what will ultimately get the company out of the business of buying traffic.

I didn’t mention making money in the above. My general take is that if you build something people want and you have a bunch of people using it, you’ll find a way to make money from it.

¶ Posted 14 December 2007 † vinaysethmohta § Uncategorized ‡ Comments (5) °

A World About to Change…