The Seapine View

Google the phrase “99.9% is good enough” and see what comes back. For the most part you will uncover the following list:

• $761,900 will be spent in the next 12 months on tapes and compact disks that won’t play.
• 1,314 phone calls will be misplaced by telecommunications services every minute.
• 103,260 income tax returns will be processed incorrectly this year.
• 107 incorrect medical procedures will be performed today.
• 114,500 mismatched pairs of shoes will be shipped this year.
• 12 babies will be given to the wrong parents every day.
• 14,208 defective personal computers will be shipped this year.
• 18,322 pieces of mail will be mishandled in the next hour.
• 2 million documents will be lost by the IRS this year.
• 2 plane landings at Chicago O’Hare will be unsafe.
• 2.5 million books will be shipped in the next 12 months with the wrong cover.
• 20,000 incorrect drug prescriptions will be written in the next 12 months.
• 22,000 checks will be deducted from the wrong bank accounts in the next 60 minutes.
• 268,500 defective tires will be shipped this year.
• 291 pacemaker operations will be performed incorrectly this year.
• 3,056 copies of tomorrow’s Wall Street Journal will be missing one of three sections.
• 5,517,200 cases of soft drinks will be shipped flat this year.
• 880,000 credit cards will be produced with incorrect magnetic strips.

Although these statistics are now dated, the message is still clear. Quality (in fact, zero defects) matters because you may not get a chance to correct the mistake. In some situations and environments you just can’t depend on a mulligan, a do-over, or a re-load.

The concept of quality as it relates to the software industry generally blends three perspectives. First, in many industries software is mission critical; meaning the features must be reliable and always work. For example, a financial services organization is not going to tolerate bugs/defects that result in posting errors. A bank needs to keep their debits and credits in the correct column; it’s just one of those regulatory things! The second perspective that directly impacts the customer experience is technical support. In the case of an issue or problem users can be very unforgiving if prompt attention and follow-up is lacking. The third area involves innovation. Software users expect applications to continuously evolve to meet their ever changing needs and desires. Each perspective is important, and consistent quality practices will help business managers make customer-focused decisions.

An article in the August 12^th edition of the WSJ (“Ford Vows to Build Higher-Quality Small Cars“) noted that “The Dearborn, Mich., company promised… that its new compact and subcompact vehicles – due out in 2010 – will beat the industry average when it comes to quality.” The company’s goal is to “keep the number of quality problems – known in the industry as “things gone wrong” – at 800 per 1,000 vehicles.” I’ll have to admit that my family, including my three children, own five Toyota’s and that Ford would have an uphill battle to capture our attention at this point. How about you? Is it too late for Ford?

Has your company recently taken a vow to higher-quality? From the very beginning of understanding your customer’s needs, wants and desires through the development of customer loyalty you’ll find that quality can create a competitive advantage. Attracting new customers, expanding current relationships through cross selling and finally, retention, these are the drivers that represent revenue growth and research shows that quality impacts all three of those drivers.

The technology industry is no exception. Poor software quality (things gone wrong) – better known as “bugs” in the software industry, impact the top line, bottom line, and everything in-between; including the customer experience. In February Seapine Software introduced the quality-ready assessment. The QRA is a high-level evaluation tool that helps develop­ment organizations measure the state of their software quality-readiness in four key ALM competency areas. Those areas include tracking, testing, automation, and change. Nearly 1,000 individuals have now completed the QRA survey, and according to the results 65 percent of the respondents stated that building quality into their software was either a top or high priority. In addition, the survey found that the top two factors driving organizations to focus on application lifecycle management are:

• The need to reduce risk by preventing poor quality from impacting customer satisfaction
• The need to quickly respond to customer requests and requirements

The take away here is that you should not be placing your quality vows on hold because there is a high probability that your competition is moving full steam ahead.

If you would like to learn more about our research results, download the QRA Fast Facts Series white paper.

“I think we’re in flight-to-quality mode,” said Michael Gross, broker and futures analyst with OptionSellers.com. His quote came from a recent article in the Wall Street Journal where he was referring to the fact that gold futures rose as the market bought the metal as a safe haven against troubled markets. Many software development organizations are also in a “flight-to-quality” mode as they focus on software quality as a safe haven in regards to their customer loyalty strategies.

Seapine Software recently released the quality-ready assessment. The QRA is a high-level evaluation tool that helps develop­ment organizations measure the state of their software quality-readiness in four key ALM competency areas. Those areas include tracking, testing, change, and automation. Nearly 1,000 individuals have already completed the QRA survey, and according to the results 65 percent of the respondents stated that building quality into their software was either a top or high priority. In addition, the survey found that the top two factors driving organizations to focus on application lifecycle management solutions are:

• The need to reduce risk by preventing poor quality from impacting customer satisfaction
• The need to quickly respond to customer requests and requirements

Customer loyalty is hard won, which means software companies cannot risk the release of a buggy product. Yet development organizations still struggle to achieve quality and deliver products on time and within budget as the research also indicates that more than one-third of companies completed their application development on time and within budget less than 75 percent of the time. If these organizations release once a year, that means they are only on time and within budget once every four years.

For more details on this important topic I recommend that you download and read “Identifying the Cost of Poor Quality.”

Remember playing “Rock, Paper, Scissors?” The basics of the game consist of each player shaking a fist a number of times (priming) and then extending the same hand in a fist (rock), out flat (paper), or with the index and middle fingers extended (scissors).  Each of these is referred to as a throw, and which one wins is dependent upon the opponent’s throw.

• Paper wins against Rock (paper covers rock)
• Rock wins against Scissors (rock smashing scissors)
• Scissors wins against Paper (scissors cut paper)

Under close examination many companies may find they are using a rock, paper, scissors business strategy. You know – prime the market with new product features, throw out a marketing campaign hoping to rock your prospects with creative copy, cover your defects with patch releases, and then cut your development time so you can do it again – only faster.

Your new product features might be on target, and your entertaining marketing copy may rock; however, your customers may still cut-out your business faster than you can scream “don’t run with scissors” if poor quality impacts their customer experience.  Research shows that your reputation for quality affects sales in three ways.  It will:

1. Reinforce the confidence of previous customers
2. Win new customers
3. Induce customers of competing brands to switch

The cost of quality may seem high, but the cost of poor quality is still higher.  If you take steps to protect your reputation for quality you will be sure to win no matter what your competition is throwing.

This expression means that it is better to try to avoid problems in the first place, rather than trying to fix them once they arise.  If that is so, and I do believe this homily is accurate, then “an ounce of prevention against poor software quality is worth a pound of customer loyalty, and a ton of corporate profits!”

How so?  Well, Seapine Software has now surveyed nearly one thousand software development and QA individuals through our Seapine Software Quality-Ready Assessment and found that 20% of organizations have limited ability to trace software development artifacts and that 19% of organizations do not track project data electronically.  The survey also uncovered that if software organizations release once per year that 34% of those organizations are only on-time and within budget once every four years.  Ouch!  What actions should they be taking to guard against poor software quality?  To find out take a look at our most recent QRA Fast Facts white paper: http://downloads.seapine.com/pub/papers/QRAFastFactsTrack.pdf

The Wall Street Journal recently featured an article (“Consumers Are Downbeat on Economy” by Sudeep Reddy) that stated “Consumer sentiment about the economy dropped to a 28-year low amid surging gasoline prices, falling home prices and a weakening job market.”  When the economy tightens the ability to maintain a quality-focused customer experience can create a competitive advantage.  But does that theory really hold true as it relates to software development?  Do customers truly care about software quality?  After all, software doesn’t really wear out, spoil, or fall apart.  In fact, sometimes defective software works; as long as it’s used in exactly the same way once the bug is fixed.  So, unless we’re talking about applications that perform critical functions in highly public situations (regulatory and compliance related), such as public transportation, utilities or medical devices, the average consumer may not actually care that much about software quality … right?  Wrong.  Seapine Software has now surveyed nearly one thousand software development and QA individuals through our Seapine Software Quality-Ready Assessment and found that the top two factors driving organizations to focus on Application Lifecycle Management solutions are:

• The need to reduce risk by preventing poor quality from impacting customer satisfaction (23.9%)
• The need to quickly respond to customer requests and requirements (21.7%)

“The need to address compliance and regulatory issues” actually came in last with 5.4% of the vote.  Now don’t get me wrong, FDA regulations or the Sarbanes-Oxley Act, which makes executives personally responsible for the quality of their organizations financial reports, certainly forces executives to focus on accountability, traceability and quality related issues.  But it’s also true that when customers demand quality corporate executives almost always pay attention.  And based on the survey numbers, customers must care a great deal about software quality.

The April 2008 issue of Quirk’s Marketing Research Review noted that research company Harris Interactive conducted an online survey to learn if having a tattoo made people feel or act differently.  The article was interesting to me because my father was 18 years old and serving in the USMC during the Korean Conflict when he was tattooed.  The motto permanently inked into his skin boldly reads “Death before Dishonor.”  If you’re an old school Marine you understand the meaning; otherwise you might think he supports the Boston hard core punk band that now uses that motto for their name.  Just kidding, it would be difficult to associate a Marine from the 1950′s with today’s punk band scene. 

The word “tattoo” is a borrowing of the Samoan word tatau, meaning to mark.  Today, people choose to be marked for several reasons, and often to symbolize their belonging to or identification with a particular group.   In some respects your brand is like a tattoo.  More than just a logo, symbol or slogan though; a brand conveys to consumers a strong, positive sense of a product, its promised value, and why it’s different and better than the competition.  As a marketer you’d probably like your brand tattooed over your customers’ heart.  So, when it comes to “quality branding” – which centers on delivering a quality customer experience in order to build a quality brand – are you using permanent ink or temporary tattoos that only last a few days? 

In the Seapine Software Quality-Ready Assessment we asked respondents: “What level of priority does your company currently assign to building quality into your software development environment?”  Nearly 65% of our over 600 respondents rated their software quality initiatives as high or one of their top priorities.  Those initiatives are likely to be marked with permanent ink so to speak.

However; it also appears that many companies are still not committed to quality branding.  In other words, they are only paying lip service about quality, and as a result there is a discrepancy with how their customers view the relationship.  Consider the following statistics from the Cutter Consortium, an IT advisory firm.

• 32% of organizations say they release software with too many defects.
• 38% of organizations believe they lack an adequate software quality assurance program.
• 27% of organizations do not conduct any formal quality reviews.

Quality, like branding must be a core business function, and it needs to be permanently inked into the skin of the entire organization to create a sustainable quality-advantage.

Did you happen to see the front cover of the April 7^th copy of “InformationWeek?”  The picture was related to the article “The end run around IT – and how CIO’s can prevent it” by John Soat.  Of all the executive level positions to choose from, why was “Marketing” pictured as the player making the sweeping end run in the OPPOSITE direction of the CIO?

Well, marketing automation, marketing optimization, marketing resource management, BI / customer profitability projects, SEM, and social networking initiatives (just to name a few) do provide plenty of technology situations in which it might be tempting to bypass my CIO and ask for forgiveness later.  On the other hand, I prefer a play book in which the CMO and CIO are leading the charge together with power sweeps.  Let me explain; at USC, opponents are often fed a healthy diet of the Trojans’ famed “student body left” and “student body right” toss sweeps. Hordes of very large sized linemen lead fleet tailbacks left or right with regularity for healthy gains.  In a like manner, I’ve found my marketing strategy is more likely to produce healthy gains when I keep my IT organization in tight, leading the charge with me.

With that said, how about your development and QA organizations?  Are they in tight leading the power quality sweep for competitive gains that result in customer loyalty and healthy profitability?  Or does it sometimes look like end runs heading in opposite directions?

The Seapine Software Quality-Ready Assessment (www.seapine.com/qualityready) asked the following key question:  How well do your development and QA teams collaborate? To date we’ve had nearly 600 responses to our survey, and the results are very interesting. The answers follow:

1. Regularly scheduled meetings keep the development and QA teams up-to-date.  29%
2. All team members stay informed of each other’s tasks and progress through automatic assignments, email notifications, and RSS feeds.  24%
3. The QA manager is informed when development is completed.  18%
4. The teams do not interact. New builds are “thrown over the wall” when they are completed.  16%
5. Development teams track their status in a spreadsheet, which the QA team can access to check the project status.  13%

At a glance it appears about half of those who have taken the survey are facing 3^rd and long situations.  By that I mean there isn’t tight collaboration between development and QA capable of producing a sustainable competitive quality-drive.  For your marketing and sales counterparts that’s disappointing news because the odds are low that they’ll be able to provide the Hail Mary pass capable of keeping your customer relationship drive alive.  No matter how you try to spin it – poor quality is a tough sell, especially in the red zone.

Does your software development and QA strategy clearly support your customer relationship strategy?  Feel free to take my polling question (to the right) and let’s see how many power sweeps are in play.

In Search of Failure.  That’s the title of chapter seven in Frederick Reichheld’s book “The Loyalty Effect” (©1996).  In that chapter Reichheld points out that an investor who built a stock portfolio out of the companies profiled in the book “In Search of Excellence” (Peters and Waterman ©1982) would have seen their returns trounced by the mediocre performance of the S&P index during the ten year period following the books 1982 publication.  In fact, by time Reichheld’s book came out in 1996 only one-fifth of the original companies profiled as “excellent” had remained excellent.

If success breeds success, how in the “quest for benchmarking best practices” did those companies lose their lofty status?  In Reichheld’s opinion what really helps us to achieve excellence is actually the study of failure.  It’s not exactly in our nature to seek out failure though; in fact, your career is probably linked to success, which means that getting too close to failure may feel threatening.  However, most people will admit that mistakes are often better teachers than success.  In fact, QA experts will attest that when one component fails, it can cast a spotlight on the workings of an entire program.

The analysis of failure is not that easy; but when the analysis leads to sustained quality the pay-off is big.  In the Profit Impact of Marketing Strategy (PIMS) project the researchers (Buzzell and Gale, 1987) reported that the profitability of a business is affected by 37 basic factors. Based on analysis of information available in the PIMS database, Buzzell and Gale hypothesized that in the long run, the most important single factor affecting a business unit’s performance is the quality of its products and services relative to those of competitors.

The trick is to set up a process and system to track, test, analyze, and address potential issues, defects or problems before they negatively impact profitability.  In many ways quality and value are interlocked.  Customer value proposition models are based on the idea that customers with different needs require different experiences and different value propositions if the relationship between the customer and company is to be mutually beneficial.  And no value proposition will succeed in delivering profit to a company unless the customer perceives the product (or service) as meeting their needs best.

Recently we released the early results from our Seapine Software Quality-Ready Assessment, a survey that evaluates key indicators of quality within software development organizations. After collecting data from over 300 respondents, the results indicate that the top two factors driving development organizations to focus on ALM solutions are:

• The need to quickly respond to customer requests and requirements
• The need to reduce risk by preventing poor quality from impacting customer satisfaction

Software quality and reliability are lifelines to customer loyalty, and profitability.  Yet development organizations still struggle to achieve quality and deliver their products on time and within budget.  Survey results indicate that more than one third of companies completed their application development on time and within budget less than 75 percent of the time.  The survey also indicates that 70 percent of the companies are undertaking one of following actions to improve the quality of their software development:

• Clearly defining quality metrics
• Undertaking pilot projects or proof-of-concepts pertaining to software development quality
• Seeking executive sponsorship for software development quality improvements

The respondents represent companies of every size. Sixty-nine percent are small companies (less than $250M in revenue), 22 percent are mid-size ($250M – $2.5B), and nine percent are large. The leading industries represented include high tech (32%), financial services (16%), consumer products/retail (9%), and telecommunications (8%).

Software development and QA organizations can complete the assessment on-line (www.seapine.com/qualityready).  Once the initial benchmarking data has been tabulated I’ll let you know how various organizations (by revenue and industry) compare.