rich internet applications: what\'s the business case? (howard kiewe at ajaxworld west)

$: Rich Internet Applications: What\'s the Business Case? (Howard Kiewe at AJAXWorld West)$
www.infotech.com Making the Business Case for RIAs 1

Making the Business Case for RIAs(in the SME Market)

AJAXWorld West 2008 // Howard Kiewe


Topics1. About Info-Tech Research Group2. What’s an SME?3. Rational Persuasion: The Business Case4. Emotional Persuasion:

Social Proof, Reciprocity, & Emotional motivation 5. Recommendations6. Questions7. References


About Info-Tech

Howard Kiewe is a senior research analyst in application development. Previously he provided user research, UX design, and UI development services to leading companies.

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.


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


Persuasion: The Rational and Emotional Elements

Rational Arguments:Cerebral Cortex

Emotional Appeal:Hypothalamus, Amygdala, etc.

RIAs represent a significant change,so they require significant persuasion


Include UX Engineering in the Business CaseAJAX, Flex, etc. provide the tools to create a rich UXHowever, the UX must still be researched, designed, and testedE.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


Rational Persuasion: The Business Case

Increasing conversionsIncreasing upsellOffering a better UX than the competition

Reducing contact center costsEnhancing employee productivity

Making money by:

Saving money by:


Increasing Conversions

The Business Case, 1 of 5

e.g. Single screen checkout & dynamic error checking

$1:3.80$1:2.20ROI

$114,000 $66,000 -Profit

$594,000 $546,000 $480,000 Net income

($30,000)($30,000)Development Costs

2.60%2.40%2%Conversion rate (% of visitors who buy)

$100,000 $100,000 100,000Annual site visits

$240 $240 $240 Unit margin $

20%20%20%Unit margin %

$1,200 $1,200 $1,200 Average sale

30%20%-Projected conversion improvement

Best CaseConservative

Improved SitePresent Site


Increasing Upsell


e.g. Options & customizations

$1:4.33$1:3.00ROI

$130,000 $90,000 Profit

$610,000 $570,000 $480,000 Net income

($30,000)($30,000)-Development costs

2%2%2%Conversion rate (% of visitors who buy)

100,000100,000100,000Annual site visits

$320 $300 $240 Unit margin $

20%20%20%Unit margin %

$1,600$1,500$1,200Average sale

33%25%Projected increased value per sale




Reducing Contact Center Costs


e.g. Less telephone order taking

$1:4.60$1:1.80ROI

$138,000 $54,000 -Net savings

($30,000)($30,000)Development Costs

$168,000 $84,000 $0 Savings

$672,000 $756,000 $840,000 Costs per year

$14 $14 $14 Cost per call

48,00054,00060,000Calls per year

-20%-10%-Projected call reduction




Enhancing Employee Productivity


e.g. Reducing transaction costs

2.111.33ROI

$63,333 $40,000 -Net savings

($30,000)($30,000)-Development Costs

$93,333 $70,000 -Savings

$140,000 $163,333 $233,333 Costs per year

350,000350,000350,000Transactions per year

$0.40 $0.47 $0.67 Cost per transaction (at $20 per hour)

7284120Transaction time (seconds)

-40%-30% *-Projected reduction in transaction time



* Based on test performed by Nitobi Inc., see http://www.massivetechshow.com/resources/ajax.asp


Offering a Better UX than the Competition


http://www.asiahotels.com/hotelinfo/Cosmopolitan_Hotel_Hong_Kong/http://reservations.ihotelier.com/onescreen.cfm?hotelID=2054


Emotional Persuasion

Emotional Appeal:Hypothalamus, Amygdala, etc.

Provide social proof

Tap the reciprocity normTap emotional motivation


Provide Social Proof

Emotional Persuasion, 1 of 6

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.


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


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.


Do Them a Favor: Tap the Reciprocity Norm


What isnot in your job description or contracteasy for you to do for themhard for them to do for themselves?

These make excellent favors!


Tap Their Emotional Motivation


What’s a more powerful motivator?

Gaining a benefit or Avoiding a loss


Avoiding loss!

Persuasion: The Emotional Elements 3 of

Emphasize what could happen:Loss of securityLoss of revenueLoss of opportunityEmbarrassment


Summary of Key ApproachesRational Persuasion: The Business Case

1. Increasing conversions 2. Increasing upsell3. Offing a better UX than the competition4. Reducing contact center costs5. Enhancing employee productivity

Emotional Persuasion

6. Provide social proof7. Tap the reciprocity norm8. Tap emotional motivation


Recommendations

Evaluate before and after with Web analytics and usability testsPlan to invest in UX engineeringPlan for measurementConsider impacts on all channelsDevelop the business caseApply principles of social proof, reciprocity, and emotional motivation


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.


Questions?

Howard KieweSenior Research Analyst Application Development & OutsourcingInfo-Tech Research Group 43 Front Street East, Toronto On.Canada M5E 1B3

North America: 1 (888) 670-8889 x3043International: +1 (519) 936-2652 x3043Cell: +1 (416) 829-8683

hkiewe [at] infotech [dot] com

rich internet applications: what\'s the business case? (howard kiewe at ajaxworld west)

Technology

business case

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social proof

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rational persuasion

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