Software -- A Product or Enabler?

Good software design and sales begin with a thorough understanding of the underlying business process the software is to enable. Layering software on a misunderstood and broken business process only exasperates operational issues and masks root causes.. Software should GREATLY impact the overall performance of any process, not hinder.

I have spent some time in the software business as a product manager, several years running a tech investment firm and now run a health care services company. My first love has always been solving problems using process engineering, cost accounting and total quality initiatives as they relate to business operations. Most recently, I have jumped into a health care practice with the eye of improving the operations. The first thing I noticed was how broken the process was and how poorly designed and implemented technology (software) simply confused and compounded the issues and almost never met the stated goals and expectations. Some of this failure fell squarely on our shoulders – we simply did not have a good grasp on the process. But, the companies selling into this space NEVER ask any process questions and in fact the notion of “work flow” is completely foreign to them. They did what most software comes do, sell features and functionality and promised new and exciting technologies to come.

The first thing we did was go BACK to paper and document the process. But first, we sat and watched the people work and kept our mouths closed. Spend a week just sitting and watching — hard to do, but you will learn much more. Interestingly enough, if you ask someone how they do something, they will give you a detailed set of steps, but if you sit and watch you will see things they missed or little go-arounds they failed to mention.

So, this brings me to the notion that software is a product, or more accurately, my thought that it is NOT a product, but merely an enabling technological component of the process. What we need is a software sales person that is a process/workflow consultant that can fix our process and then apply their technology; I guarantee that any sales person who uses this skill will KILL their quota. The opposite is usually true — sales guy promises nirvana, operator is desperate and buys the hype, software is installed, process is worse, more complicated and takes a PhD to fix. That sucks, pure and simple.

My advice to early stage software companies is to invest in process (lean) expertise and go WATCH how your customers MAKE MONEY. Then document how your enabling technology will make them MORE MONEY. Stop with quotas, calls, etc. Put the customer’s process first and the rest will follow.

Dear MBA Leaders,

I have an MBA. I have worked for and started technology and medical startups. I have read a ton on entrepreneurship. MBA programs need an overhaul, especially given our recent economic meltdown.

Traditional MBA programs are best suited for corporate talent development with a few teaching "entrepreneurship." One can debate whether you can actually teach entrepreneurship or not, but I suggest that graduate level programs need to seriously rethink the model.

It is impossible to simulate or teach what it is like to be in the pressure cooker of serving customers, making payroll all the while keeping the business out of the ditch. You can sit right next to the person making these decisions, work with them and discuss the details of the decisions, but there is no way to actually get that experience until you DO IT. Intellectual knowledge helps, understanding cash flow, reading financial statements, building pricing models, writing good positioning documents, etc. But all of that is for not if you cannot handle the pressure of making it all work -- AND being the last person paid!

So, my recommendation for MBA programs is to keep one year of technical training, focused on the basics -- accounting, finance, marketing and strategy. The second year should be focused on running a real business, but with some skin in the game. Maybe a team of students could run a business and if they make a profit they could earn back their tuition, but if they didn't, then they had to pay for it. Make them sign on bank loan (real student loans) and make them make payroll. Deal with REAL finicky customers and all the unpredictability of having employees. Maybe this type of program exists, it has been a long time since I got my MBA. If my children want to go to business school, I am going to "loan" them the money and have them buy a franchise, run it for two years and then tell me what they have learned. There is no substitute for being on the hook. In like the hog!

SiCKO -- Watch it Even if You Hate It

Just finished watching SiCKO and think everyone should watch it. I am not sure of Moore's facts, specifically those related to the costs of the alternatives he cites to US health care, but the underlying premise is bang on. Capitalism and health care have diverging goals; making profits and caring for people are diametrically opposed.

Having spent 4 years in health care, I can testify to the fact that insurance providers will do just about anything NOT to pay and will justify denial at almost any cost. Having just negotiated new health benefits for our small company, I can tell you that 3 of top providers place incredible limits on certain services, rendering care in those areas impractical. Because we are an orthotic and prosthetic company we pay attention to coverage for our employees (we occasionally will recruit a practitioner who is an amputee) and all of the three providers we received quotes from limited prosthetic services to $4000 per year (this was the best case). Now an average "leg" costs something like $12,000 and the high tech version, which should be the standard of care due to its incredible patient outcomes, costs well over $60,000. Effectively, this limits new prosthesis to only the highest income bracket. Typically, prosthetic patients are Medicare recipients and not in the highest income bracket. Viola, savings for providers and more profits resulting in higher bonuses and pay packages. If you want to get sick, go do the research on United Health Care executive compensation. Sounds like Wall Street, oh, about 3 years ago?

So, how do you balance the need for care with capitalism? There is no doubt that no other economic system creates innovation and wealth, but at what cost?

Software Sales? Software is a Product?

I have spent some time in the software business, looking at tech commercialization and now in the health care field. My first love has always been process engineering, cost accounting and total quality initiatives as they relate to business operations. Most recently, I have jumped into a health care practice with the eye of improving the operations. The first thing I noticed was how broken the process was and how technology (software) simply confused and compounded the issues and never provided results as promised. The first thing we did was go BACK to paper and document the process. The very first thing was to watch the operations, literally sit and watch people work and ask naive questions. Spend a week just sitting and watching -- hard to do, but you will learn much more. Interestingly enough, if you ask someone how they do something, they will give you a detailed set of steps, but if you sit and watch you will see things they missed or little go-arounds they failed to mention.

So, this brings me to the notion that software is a product, or more accurately, my thought that it is NOT a product, but merely an enabling component of the process. What we need is a software sales person that is a process/workflow expert that can fix our process and then apply their technology. The opposite is usually true -- sales guy promises nirvana, operator is desperate and buys the hype, software is installed, process is worse, more complicated and takes a PhD to fix. That sucks.

My advice to early stage software companies is to invest in process (lean) expertise and go WATCH how your customers MAKE MONEY. Then document how your enabling technology will make them MORE MONEY. Stop with quotas, calls, etc. Put the customer's process first and the rest will follow.

2008 Latest Edition - Did You Know 3.0 - From Meeting in Rome this Year