How big data is changing business innovation

The way Software as a Service (SaaS) companies use data to drive decisions has completely changed the innovation process of the technology sector.

Gone are the days when traditional software companies could do two years of research and, only after all the intricate information is collated, would they set about building a product. If you did that today, the product you would end up with would already be out-of-date by the time it hit the market.

Today, innovation starts with software development teams being able to understand data at a deep level to predict what may happen in the future. Building new solutions happens in small iterative stages so each new element can be tested for market fit and fine tuned, usually while the platform is live.

This means modern SaaS companies are now constantly updating their offering - take Apple’s iOS or Xero’s cloud accounting platform - updates are continuously being pushed through in the background and with software being hosted in the cloud, you don’t get charged for the privilege of receiving a new feature or having a bug ironed out.

Customer usage: the key to progress

In the old days you would sit behind a pane of glass and watch someone interview your users. Today, data around how customers use the product is the new focus group.

SaaS companies have infinite amounts of data that can inform what customers are actually looking for. Data informs what is built tomorrow and how the current product can be improved. SaaS companies don’t necessarily spend millions of dollars on deep research - the research is often based on how customers use the product today. Deep usage studies can be conducted with groups of customers, but with million of small businesses in the world, that doesn't scale. A well built SaaS service is designed from the ground up to measure customer behaviours.

Many customers will tell you what they want, and that’s important when it comes to the current product, but many can’t tell you what they need until it’s put in front of them.

Harnessing the power of machine learning 

To improve the lives of small business owners and accountants through cloud software, at Xero we’ve harnessed the power of mobile saturation and machine learning. Machine learning was once only available to big business but now it’s everywhere – even in our pockets when we talk to Siri on our iPhones.

Machine learning for small businesses should be around automating tasks and processes so small business owners have more time to do what they love. We started with automating bank reconciliations, a tedious process that once ate up precious time and is now a thing of the past.

As systems get smarter there will be more processes that can be automated in every area of business. Systems will even get smarter at anticipating what you want.

And when it comes to notifications, they shouldn’t overwhelm you or drive you crazy. Currently we’re in a 1.0 world where you would have to spend an hour to lockdown your notifications so you only see the ones you care about. In the future your device will be smart enough to understand the notifications you care about so you won’t have to turn them on or off for each individual app. They will be based on your actions and how you interact with the system.

Small businesses don’t need flying robots, Star Trek or the Jetsons, but a system that is intuitive enough to predict their next action. The only way SaaS companies are going to deliver that is by analysing user data to extract useful insights which drive product development - giving businesses the freedom to work smarter, not harder.

Angus Norton, Chief Product Officer at Xero

Image source: Shutterstock/Carlos Amarillo