Gamification sheds light on 'the dirty secret of SaaS'

IT managers are better off using carrots to motivate end-user engagement with SaaS, Badgeville's CEO argues, rather than the threat of a stick.

"Gamification" is a term that's being thrown around in IT circles quite a bit these days, but what does it have to do with cloud computing, and more to the point, why should enterprise IT managers care about it?

Kris Duggan, CEO of Badgeville, a startup that adds game-like features to enterprise software, sat down with SearchCloudComputing.com to connect the dots between gamification, cloud computing and enterprise CIOs.

The dirty secret of SaaS is that churn will kill your business.

Kris Duggan,
CEO, Badgeville

What exactly is gamification?

Kris Duggan: Gamification is using techniques from games and applying them to things that aren't games. What that means is really figuring out the psychology of behavior and incorporating that into some kind of digital experience to encourage people to perform more.

It's rewarding people for doing things, or incentivizing their actions using virtual rewards. Not money, but things like status or reputation or expertise. Other examples would be showing them the progress they're making inside an application relative to other people, or showing them how their performance ranks compared to other people in their department, or how their performance has changed over time.

The whole point of this is that by incorporating things like virtual rewards, progress, knowing how you're doing and how you're comparing to other people, when you apply that to literally anything, people perform more. That's because at the end of the day, reputation matters more than money.

What does gamification have to do with the cloud?

Duggan: It used to be in software you could sell the license and if people didn't use it, it didn't really matter. There was a lot of software that just became shelf-ware. Now that people are buying subscriptions to software, it's a very low up-front investment, and the whole point of subscription and annuity-based businesses is you make it up over the lifetime value of the customer. If people don't use your software, they cancel.

So the dirty secret of Software as a Service (SaaS) is that churn will kill your business. There's a point where you actually care far less about your new sales on a SaaS platform and you care far more about your retention and churn rates. A 1% shift across thousands of customers becomes a very big hole in your bucket, so to speak. That's why gamification is so timely relative to the cloud computing market.

What impact do gamification techniques have on enterprise customers?

Duggan: We work with customers that use Salesforce.com; the problem is that people don't want to use it, they don't put the data in correctly, or they stop using it -- behavior change is hard. They aren't necessarily able to motivate users to actually use the product. So we built a layer for Salesforce.com called Badgeville for Salesforce, it's on the App Exchange, and it's a gamification of CRM [customer relationship management].

We have other customers who want to add gamification to their training and HR processes. And there it's really about how do you drive compliance for these users to make sure they're fully certified on the training materials that are being deployed inside the company?

By using gamification techniques, you can be very effective to motivate employees to be compliant in that area. We also have one CFO using gamification for expense management to make sure employees get their expenses in on time, because it's better to use a carrot to reward them than a stick.

Why should an enterprise IT guy care about gamification?

Duggan: In the last five or ten years, cost reduction has been the charter of the IT manager; it's been all about consolidation, virtualization and cost control. But the next ten years in the CIO's office will be all about innovation and sparking innovation. We've seen some examples of that by a move to deploy internal collaboration platforms like Jive and Lithium or Yammer and Chatter. We've seen applications moving to the cloud like Salesforce and SuccessFactors.

With all this innovation, they're going to have to have an insurance policy -- or you could just call it an engagement strategy -- to really get people to change their behavior. This will be an ally for the CIO's office and how they think about rolling out technologies.

Beth Pariseau is a senior news writer for SearchCloudComputing.com and SearchServerVirtualization.com. Write to her at bpariseau@techtarget.com or follow @PariseauTT on Twitter.

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