As adoption grows for SaaS (and MVaaS) we are starting to see ripple effects, adjustments, and observations, that impact how business is conducted and what we view as best practice. Great recent article in Sand Hill highlight a top five tips for delivering value to customers.

I think all 5 are spot on but I wanted to expand a bit on #3 – Know How You Will Measure Success. For readers of this blog, and those of you familiar with Envysion, you know that we are laser focused on delivering bottom line profit improvement for our customers. Because of that focus we are actively involved both in defining metrics but also the measuring.

For this to resonate and be valuable for customers its critical that the metrics and the measurement be in terms familiar and selected by the customers. Specifically, what are their KPI’s? What matters to them? How do they calculate it? Once value and success metrics are defined with the customer the next question is how do you measure it. Here again it is critical to align with the customer on the data, method, periods etc. At Envysion we typically conduct a pilot with our customers at the beginning of which we align on success metrics and at the end we run the numbers together with the customers finance team. While we are happy to do the math and run the numbers on behalf of our customers we make sure that they completely buy in up front and the results at the end.

The net here is that not only do you need to measure success for customers – in our view you should also align with your customer on what those metrics are and how you calculate them.

When it comes to video surveillance, customers face a dizzying array of options and performance claims. From traditional hardware suppliers (cameras and DVR’s) and security integrators to resellers and consultant and of course managed and hosted video providers – each has a value prop and a performance claim. The challenge for a customer as it considers alternatives is how to test these claims, make sure the service works for them, and quantify results so that a rationale business decision can be made.

Wouldn’t it be nice if instead of these claims solution providers were willing to work with the customer to determine what to measure, how to quantify improvement, and educate on how to use the solution effectively? What if this solution provider also took the extra step to actually work with your finance team to quantify and align on the return on investment? Sound like just what the doctor ordered? At Envysion we do just that.

Envysion’s managed video value proposition is to deliver rapid and significant profitability improvement (10-15%) for multi-unit operators. We do this by making video easy to use, putting it in the hands of more people across departments, and focusing operators on actionable business insight. The other half of the value equation is what we don’t do – we don’t strain your IT organization and network so there isn’t the support and overhead cost that can come with technology solutions. The install and set up is plug and play, upgrades happen by just logging in, management or administration resource requirements are non-existent.

For a customer looking at our solution the return on investment equation is pretty straight forward. It is the net change in profit driven by our application less any incremental IT support required (zero in this case) divided by the investment. While the calculation is pretty straightforward we’ve seen tremendous value from rolling out a prescribed pilot process and ROI methodology that both trains customers how to use our solution and then analyzes profit improvement and calculates ROI.

Most innovative solutions face a similar scenario –demos, decks and traditional selling are good, but customers want quantified proof of savings and proof that it works for them. So Envysion decided the best thing was to develop and author an eight week pilot process that literally walks a customer through how to implement our managed video solution and how to use it in day-to-day operations to drive profit improvement. While many companies provide training in the mechanics of a solution (functional how to), our pilot focuses on operational usage. Specifically how an operator would use the service on a day-to-day basis to improve operations and profitability. Along the way we identify any specific customization that would benefit a customer for a full roll-out.

The last bit is the quantification of ROI. While every vendor talks about ROI measurement we’ve learned that few actually calculate it. While the math is not rocket science it helps to have experience collecting and analyzing data and of course in packaging results so they make sense and are digestible. At Envysion we leverage the fact that we’ve got some management consulting experience on our roster and we burn the midnight oil to crank these out.

Its probably not a surprise that customers have responded very favorably to our prescribed pilot and quantified ROI approach. In fact, we have heard nothing but positive feedback from customers. More than a few have said that they have been waiting for years for suppliers to put in the extra effort to do this. Of course what our customers are most excited about are the results that our Envysion managed video service delivers. Typically it’s between 150 – 250 basis points of profit improvement and 300-500% ROI. With those results, we are more than happy to do the  work to make this black and white and show the incredible value we deliver.

Security Systems News had an insightful editorial on the Integrator of the Future on Friday. Coming from observations on the front line of integrators and customers looking at large scale implementations it points out some challenges for today’s Integrators and looks to how they might change for the better. The points that stood out to me were the need to take a more solution/consulting approach as well as the need to build a relationship with customers that evolves over time. Also called on integrators to be more aware of a customer’s network and be mindful of value (you can’t charge for something when you don’t deliver and prove the value to the customer).

You are probably not surprised to hear an ‘Amen’ from the managed video as a service community on these points. At the core of what we do at Envysion is a focus on our customer’s challenge and a focus on delivering breakthrough value in an ‘easy’ package. Of course we strongly believe a managed video service delivered via the ‘as a service’ model allows us to do more for customers and partners.  We also see it differentiating us from other players.

So will the current set of integrators adjust? Will next generation of solution providers fill the void? What we likely all can agree on is that over time the winner will focus on the customer and value delivery.  Customers get to vote with each new installation.

Most people, when given the opportunity, will ”try before they buy.”  This doesn’t work in some industries (think fruit vendors).  But for others, this approach works well.  MVaaS is certainly in the latter group.

Typically, customers that are afforded a pilot are those with a large number of sites.  And it is certainly reasonable that these customers would want to “kick the tires” prior to committing to an extensive enterprise roll-out.

There are a multitude of things that a customer may want to know prior to buying.  Does the system operate as presented during the sales process?  Has the system been properly integrated with the POS System?  Are the views clear and useful to the operators?  Are people within the organization adopting the software?

But there is one ultimate question in which these companies are interested - Will our investment in this technolgy provide a healthy return?

In our experience, when our MVaaS system is utilized, customers are able to drive 1.5% to 2% of revenue to their operating profit.  This leads to a payback of five months, and a triple digit ROI!  

If these returns are achieved (and we’ve seen them replicated several times over), the logical conclusion is to move ahead quickly, because every day delayed is another missed opportunity to gather the extra cash.

Have you ever heard of the Hawthorne Effect?

The Hawthorne Effect is a term from psychology that describes the tendency of people to act differently when they know they are being studied.  The concept was named by Henry Landsberger, who was busy in the 1950′s analyzing experiments from the 1920′s at the Hawthorne Works.

The earlier experiments were designed to measure the impact of lighting on worker productivity.  Presumably they expected to find that worker productivity increased with better lighting.  However, this was not what they found.  Instead, the original researchers observed productivity improvement in both control groups, regardless of the lighting.

The researchers were puzzled by the result.  Presumably it was not until Mr. Landsberger reviewed their work was his theory postulated.

The Hawthorne Effect has since been used to describe any short-lived productivity improvement that occurs because individuals are being watched.

So what happens if you apply this concept to MVaaS customers?  If MVaaS is deployed to several “test” sites, and these sites achieve greater performance than the other “non-test” sites in the enterprise, could you dismiss the findings and conclude that this is due to the Hawthorne Effect?

In a recent post, I wrote about the economic impact of hitting and not hitting store level KPIs. It’s imperative that everyone involved in the business process have the same goals in mind – those that govern daily behaviors towards the ultimate reward of profitability. This includes, management, staff and yes, vendors (or as I like to call them, business partners).

Let’s face it, operating a profitable restaurant or retail business is a difficult task. Success lies in the ability to flawlessly execute upon well defined business processes and procedures with little to no variance, every day. The wage level employed in these environments is often ill-equipped to consistently execute due to inexperience or lack of maturity. What one gives up with inconsistency is sales and expense, and that translates directly to decreased profitability.

There are several tactics to ensure the proper beahviors are on display at all times to ensure flawless execution. I personally advocate the following: Training, followed by monitoring, measurement, correction and improvement. This cycle repeats itself indefinately in the spirit of a constantly improving business process.

So how does MVaaS help one achieve KPIs? It’s one of the five steps noted above – monitoring. Leveraging MVaaS in a routine store audit process will ensure that behaviors which compromise the ability to achieve KPIs are eradicated from the business process. I will follow up soon with several specific examples of how this works, the economic impact to the bottom line and ultimately, the Return on Investment.

I recently read a great article in my favorite restaurant industry publication Nation’s Restaurant News. Most of the headlines are laser-focused on the economy and it’s effect on the industry. In fact, of the six leading stories, five of them contained the headline words gloom, glum, laid-off, slump and downturn. On the bright side, the articles focus on solutions to these adjectives, whether it be staffing, menu updates, loyalty programs or technology.

The one that caught my eye analyzes the elimination of many midlevel execs of multiunit enterprises. The remaining staff is then required to double their store coverage, essentially trying to do more with less. While the current economy and job elimination is rarely a pleasant subject, shouldn’t businesses be constantly striving for efficiency and productivity gains, no matter the economic condition?

Let take a hypothetical situation where a single $80K field position is eliminated, thus increasing the coverage of another field position from 5 stores to 10. Further, a technology investment in MVaaS is made to boost the productivity of the remaining field employee. Mathematically, that might look something like this:

10 location MVaaS 4 camera deployment: $42K

Investment Payback: About 6 months

1st Year Profit Increase: $38K

3 Year Profit Increase: $198K

Keep in mind, this is in payroll alone. There are many additional benefits of MVaaS that contribute directly to the improvement of store operations and increased profitability without straining existing staff or IT resources. Something we should be looking at everyday, even during the good times.

Sun Microsystems, Inc. (NASDAQ GS:JAVA) President and CEO Jonathan Schwartz posted to his blog an e-mail that he shared with Sun leaders.  The e-mail was written in response to frequent questions that Mr. Schwartz has received regarding the current banking crisis in the U.S., and how this might impact Sun.

Mr. Schwartz turns the question around.  It is not how the crisis impacts Sun, but rather how it impacts Sun’s customers, both current and prospective.  In this he sees tremendous opportunity.

The statement that was most impactful for me was this:

“You’re not going to hear from any of our customers: ‘Let’s stop buying technology and hire more people to do the work.’  They’re going to default to the opposite – automating work, and finding answers and opportunities with technology, not headcount.”

Will customers be impacted?  Certainly.  This has already started.  But this stressful environment will also create opportunities for companies with technology that adds value for its customers.

In a tough economic environment, Walgreen posted an impressive 12% increase in Q4 profits.  Congratulations Walgreen!

Given the roller-coaster stock market, the cynic in us may attribute this to a surge in the sale of pain relievers and antidepressants.  But while revenues did increase, Walgreen executives attribute a portion of their improved results to cost-cutting. 

We’ve posited on these pages about the strategy of combating the economic slowdown with technology focused on improving operations.  It is unclear if this was part of Walgreen’s cost-cutting activities.  One thing is certain, however.  Success is possible in our current environment.  And investors will flock to companies who deliver outstanding results rather than offer excuses.

I’m a huge fan of the weekly publication Nation’s Restaurant News. This week’s edition had a great article in the Opinion section titled “Stopping employee theft a fast, cheap way to boost profit” by Kevin Lynch.

The article does a wonderful job detailing how a reduction in shrink of just 1% (as a percent of sales) can lead to a 20% increase in profit. This is at the core of the MVaaS payback calculation which is typically around 4 months. As Kevin continues to illustrate, the alternatives to a 20% boost in profit by increased sales would include considerable expense in marketing, build-outs, remodleing, etc…

Nice work Kevin, I’m sure we’ll be speaking soon.