Business Case For Ria Howard Kiewe Inf Tech

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Business Case For Ria Howard Kiewe Inf Tech

  1. 1. Making the Business Case for RIAs (in the SME Market) AJAXWorld West 2008 // Howard Kiewe www.infotech.com Making the Business Case for RIAs 1
  2. 2. Topics 1. About Info-Tech Research Group 2. What’s an SME? 3. Rational Persuasion: The Business Case 4. Emotional Persuasion: Social Proof, Reciprocity, & Emotional motivation 5. Recommendations 6. Questions 7. References www.infotech.com Making the Business Case for RIAs 2
  3. 3. About Info-Tech Info-Tech Research Group, established in 1997, provides IT research and advice to over 23,000 clients globally, mostly mid market firms in the US. Howard Kiewe is a senior research analyst in application development. Previously he provided user research, UX design, and UI development services to leading companies. www.infotech.com Making the Business Case for RIAs 3
  4. 4. What’s a Small to Medium Sized Enterprise (SME)? < 1000 employees < 200 IT employees Business case is similar to larger firms, but usually less money to spend www.infotech.com Making the Business Case for RIAs 4
  5. 5. Persuasion: The Rational and Emotional Elements Rational Arguments: Cerebral Cortex RIAs represent a significant change, so they require significant persuasion Emotional Appeal: Hypothalamus, Amygdala, etc. www.infotech.com Making the Business Case for RIAs 5
  6. 6. Include UX Engineering in the Business Case AJAX, Flex, etc. provide the tools to create a rich UX However, the UX must still be researched, designed, and tested E.g. Have you ever used a GUI that made you long for a CLI? RIA with a poor UX will not delivered the promised ROI www.infotech.com Making the Business Case for RIAs 6
  7. 7. Rational Persuasion: The Business Case Making money by: Increasing conversions Increasing upsell Offering a better UX than the competition Saving money by: Reducing contact center costs Enhancing employee productivity www.infotech.com Making the Business Case for RIAs 7
  8. 8. The Business Case, 1 of 5 Increasing Conversions e.g. Single screen checkout & dynamic error checking Present Site Improved Site Conservative Best Case Projected conversion improvement - 20% 30% Average sale $1,200 $1,200 $1,200 Unit margin % 20% 20% 20% Unit margin $ $240 $240 $240 Annual site visits 100,000 $100,000 $100,000 Conversion rate (% of visitors who buy) 2% 2.40% 2.60% Development Costs ($30,000) ($30,000) Net income $480,000 $546,000 $594,000 Profit - $66,000 $114,000 ROI $1:2.20 $1:3.80 www.infotech.com Making the Business Case for RIAs 8
  9. 9. The Business Case, 2 of 5 Increasing Upsell e.g. Options & customizations Present Site Improved Site Conservative Best Case Projected increased value per sale 25% 33% Average sale $1,200 $1,500 $1,600 Unit margin % 20% 20% 20% Unit margin $ $240 $300 $320 Annual site visits 100,000 100,000 100,000 Conversion rate (% of visitors who buy) 2% 2% 2% Development costs - ($30,000) ($30,000) Net income $480,000 $570,000 $610,000 Profit $90,000 $130,000 ROI $1:3.00 $1:4.33 www.infotech.com Making the Business Case for RIAs 9
  10. 10. The Business Case, 3 of 5 Reducing Contact Center Costs e.g. Less telephone order taking Present Improved Site Site Conservative Best Case Projected call reduction - -10% -20% Calls per year 60,000 54,000 48,000 Cost per call $14 $14 $14 Costs per year $840,000 $756,000 $672,000 Savings $0 $84,000 $168,000 Development Costs ($30,000) ($30,000) Net savings - $54,000 $138,000 ROI $1:1.80 $1:4.60 www.infotech.com Making the Business Case for RIAs 10
  11. 11. The Business Case, 4 of 5 Enhancing Employee Productivity e.g. Reducing transaction costs Present Site Improved Site Conservative Best Case Projected reduction in transaction time - -30% * -40% Transaction time (seconds) 120 84 72 Cost per transaction (at $20 per hour) $0.67 $0.47 $0.40 Transactions per year 350,000 350,000 350,000 Costs per year $233,333 $163,333 $140,000 Savings - $70,000 $93,333 Development Costs - ($30,000) ($30,000) Net savings - $40,000 $63,333 ROI 1.33 2.11 * Based on test performed by Nitobi Inc., see http://www.massivetechshow.com/resources/ajax.asp www.infotech.com Making the Business Case for RIAs 11
  12. 12. The Business Case, 5 of 5 Offering a Better UX than the Competition http://reservations.ihotelier.com/onescreen.cfm?hotelID=2054 http://www.asiahotels.com/hotelinfo/Cosmopolitan_Hotel_Hong_Kong/ www.infotech.com Making the Business Case for RIAs 12
  13. 13. Emotional Persuasion Provide social proof Tap the reciprocity norm Tap emotional motivation Emotional Appeal: Hypothalamus, Amygdala, etc. www.infotech.com Making the Business Case for RIAs 13
  14. 14. Emotional Persuasion, 1 of 6 Provide Social Proof Social Proof: When we are in ambiguous situations, we tend to copy the behavior of those around us. This short cut usually helps us make good decisions quickly. www.infotech.com Making the Business Case for RIAs 14
  15. 15. Emotional Persuasion, 2 of 6 Provide Social Proof e.g. Point to peers or competitors; refer to authorities “Brick-and-mortar based small enterprises need a dynamic Web presence to look credible and generate excitement about their offerings.” Info~Tech Research Group www.infotech.com Making the Business Case for RIAs 15
  16. 16. Emotional Persuasion, 3 of 6 Do Them a Favor: Tap the Reciprocity Norm “Pay every debt, as if God wrote the bill.” Ralph Waldo Emerson Reciprocity Norm. Receiving anything positive requires that you reciprocate. Reciprocity’s powerful effect is well documented by social psychologists. www.infotech.com Making the Business Case for RIAs 16
  17. 17. Emotional Persuasion, 4 of 6 Do Them a Favor: Tap the Reciprocity Norm What is not in your job description or contract easy for you to do for them hard for them to do for themselves? These make excellent favors! www.infotech.com Making the Business Case for RIAs 17
  18. 18. Emotional Persuasion, 5 of 6 Tap Their Emotional Motivation What’s a more powerful motivator? Gaining a benefit or Avoiding a loss www.infotech.com Making the Business Case for RIAs 18
  19. 19. Persuasion: The Emotional Elements 3 of Avoiding loss! Emphasize what could happen: Loss of security Loss of revenue Loss of opportunity Embarrassment www.infotech.com Making the Business Case for RIAs 19
  20. 20. Summary of Key Approaches Rational Persuasion: The Business Case 1. Increasing conversions 2. Increasing upsell 3. Offing a better UX than the competition 4. Reducing contact center costs 5. Enhancing employee productivity Emotional Persuasion 6. Provide social proof 7. Tap the reciprocity norm 8. Tap emotional motivation www.infotech.com Making the Business Case for RIAs 20
  21. 21. Recommendations Evaluate before and after with Web analytics and usability tests Plan to invest in UX engineering Plan for measurement Consider impacts on all channels Develop the business case Apply principles of social proof, reciprocity, and emotional motivation www.infotech.com Making the Business Case for RIAs 21
  22. 22. References Cialdini, R. B. (1998). Influence: The Psychology of Persuasion. New York: Quill. An excellent work on social influence by one of the field's leading researchers. A rare combination of thorough scholarship and engaging writing style. Kiewe, H. (2006). The UXE White Paper: User Experience Engineering Essentials [Electronic Version]. user- experience.info. Retrieved September 15, 2006 from http://www.user-experience.info/uxe. User experience engineering (UXE) is a structured research, design, and evaluation process whose goal is to make user interactions with a product or service easy, efficient, and enjoyable. This white paper summarizes the UXE process and evaluates its business case. Kiewe, H. (In Press). Rich Internet Applications: What’s the Business Case? [Electronic Version]. Info-Tech Research Group, http://www.infotech.com. Evaluates the business case for RIAs and provides tools to create your own. www.infotech.com Making the Business Case for RIAs 22
  23. 23. Questions? Howard Kiewe Senior Research Analyst Application Development & Outsourcing Info-Tech Research Group 43 Front Street East, Toronto On. Canada M5E 1B3 North America: 1 (888) 670-8889 x3043 International: +1 (519) 936-2652 x3043 Cell: +1 (416) 829-8683 hkiewe [at] infotech [dot] com www.infotech.com Making the Business Case for RIAs 23

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