Pricing metrics and the customers that suboptimize them

There are many truths in life.  If it didn’t sound so geeky and pessimistic, I would add to the list “customers will always suboptimize your product based on your metrics.”  It’s not very catchy.

I previously wrote about points to consider when choosing your metrics.  It was by no means exhaustive, but it did have a “salesy focus”.  That’s because your sales people play a vital role in your pricing and licensing scheme both before it is rolled out and when their boots hit the ground (and I saved one harsh reality for the end of this post).

Additionally, I brought up a few “rules” (or at least observations I’ve discovered) about choosing your metrics.  I could have added suboptimization to the list, but I’ve found there are some finer points to consider about this psychological pattern when it comes to your software’s sales, adoption, deployment, and expansion.

Economic necessity: the tyranny of “good enough”

Bumper stickers say that life isn’t about having what you want, but wanting what you have.  Most companies just want what they have to work.

Yet, during an economic crunch, settling for less functional software can become compelling if the perceived costs are dramatically lower than a purpose-built application.  It seems “good enough” may be as good as it gets.

Outcomes of the “good enough” tactic can vary from letting deployed apps lie fallow to decommissioning an existing installation in favor of adapting something else to take its place.  It all depends on the severity of circumstances.

Economic necessity: When all you have is a hammer…

The lure of “Something as a Service” may not be for everyone, but I think some of (the few) positive aspects of hard times are discipline and innovation. 

Reflect on Michael Porter’s HBR article “What is Strategy” to see what I’m talking about.  As is validated in this blog post, everyone will cut costs and focus on operational excellence, but that opportunity is transient.

Innovation through discipline is typified in my work with small theatre companies.  The arts have known nothing but hard times.  Yet, we have pulled off miracles with zero money.  That’s not to say we couldn’t have used more funds, but creativity was the order of the day to make something out of nothing.

User innovation, like art, may actually thrive in hard times.

The sin of opulence?

Fifteen years ago great debates raged on USENET newsgroups about the merits of programming in constricted resource environments (yes, comp.sys.*.advocacy).  Assembly vs. higher level languages.  It was very geeky.

The premise was simple: relying on hardware for performance lead to undisciplined code.  Today’s constraints are different, but using existing assets better will force creative thinking – as long as there is incentive, and merit is recognized.

Users may not have access to anything in today’s buzzword parade (SOA, SaaS, etc.),  but they will discover great potential in tools like Microsoft Office.  Innovative users will exploit all their available resources if they have the time and incentive.

Problems will be solved in new ways, costs may go down, and new value may be discovered – if users are empowered.

The revolution may not be scrutinized

In almost any company, certain users have the flexibility to operate on the outskirts of IT’s control.  So experimentation could already be underway.  Using the Office example, users can install a long term trial version in stealthy manner and create the “next great thing” right under the nose of IT.

These installations can grow gradually with minimal impact on operations, and users can solve some really interesting problems for the business by just assembling components. 

D.I.Y. solutions to problems like document management, “Excel hell”, and rich application construction without programming are all possibilities given the capabilities of Office.

But companies must create a structure to reward the curiosity of its innovators.  Fear of job loss is not a motivator.  In today’s world where company loyalty has dwindled on both sides, a collaborative approach to surviving and thriving is not an option, but a requirement.

In a later post, I’ll write about how and where to draw the line in order to reap the benefits of these innovations sustainably.  Then we’ll discuss what this means for vendors.