It's no surprise that customers are demanding more from their software vendors these days. Although many analysts say the software industry is in a state of maturity, 50 percent of software functionality paid for and licensed by organizations is not actually used, according to a recent study by the Butler Group. The underutilization of IT equates to a trillion dollars-worth of lost productivity and business performance.

This waste is not going unnoticed by customers. Many are questioning the very fundamentals of the traditional enterprise software model. License fees, maintenance costs and the requirement to upgrade to new functionality are all being scrutinized by customers who are demanding accountability from their vendors.

This demand is making software companies think differently about how they deploy their solutions and deliver results. Understanding the critical components of how users are adopting and using software products is key for vendors to stay competitive in this changing environment.

The Crisis in Usage
If customers don't use a product properly - or don't use it at all - it makes sense that they won't be satisfied with the product - or its maker. That's the basic problem for many software vendors. The statistics about software deployment are disheartening:

• Only 34 percent of IT projects are successful - completed on time, on budget, and with required features & functions (Standish Group)
  
  
• Lack of user adoption is cited as the primary cause of 70 percent of failed CRM projects (Forrester Research cited in an Oracle white paper)
  
  
• It is estimated that only 6-13 percent of deployed clinical information technology (EHR) is being used (Markle Foundation)

The crisis in usage is a pervasive issue across most software verticals, and continues as new types of software markets develop in industries such as health care. Enabling this problem is that fact that 67 percent of companies do not track software usage according to IDC.

There is a significant revenue opportunity for software vendors that are willing to question their practice of competing solely on functionality and price. Software adoption represents a new source of competitive advantage and growth for mature and emerging players alike. This is possible because when software is used effectively, the actual and visible value of software to a customer is increased - which also creates a significant barrier to entry for rival offerings.

A competitive strategy which leverages user adoption makes sense for mature and new software vendors alike as it prevents customer attrition, increases license footprints, supports both usage-based and advertising pricing models, and creates new services revenue streams.

The Road to Effective Adoption
Neochange has developed three core concepts that define effective user adoption:

1. A critical mass of users that are actively engaged with core functionality
2. A measurable connection between core functionality and business performance
3. High levels of data quality that will improve decision making

Taken together these three areas can form the basis of an unshakeable competitive position. Even further, effective adoption could represent a new way of pricing, one more focused on value - the "holy grail" for any software company. Given the challenges of accessing critical financial information within dynamic environments to gain a definition of accountability, effective user adoption provides a great proxy for value that otherwise might not be provable.

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