What is Electronic Transaction Governance?

Before we can answer the question of what is Electronic Transaction Governance lets define the term Governance. According to Wikipedia (http://en.wikipedia.org/wiki/Governance) , Governance is “the act of governing. It relates to decisions that define expectations, grant power, or verify performance. In the case of a business or of a non-profit organization, governance relates to consistent management, cohesive policies, guidance, processes and decision-rights for a given area of responsibility.”. Basically for business, Governance is a set of processes and best practices that assure consistent optimal operational results.

Electronic Transaction Governance deals exclusively with the processing and management of all electronic transactions (e.g. electronic payments, electronic claims, purchase orders, etc.) be it standards based (e.g. EDI ASC X12, HL7, EDIFACT, NIEM, etc.) or custom developed. The goal of Electronic Transaction Governance is to assure the proper handling, processing, and management of all electronic transactions while mitigating the risks associated with electronic commerce. Electronic Transaction Governance is composed of the following five areas:

  1. Standard Compliance
  2. Data Quality
  3. Risk Management
  4. Security Management
  5. Audit Trails

Standard Compliance

Standard Compliance is the first area of Electronic Transaction Governance that must be implemented in order to mitigate any processing risks and assure proper handling of all electronic interaction. Before an electronic transaction is exchanged between two parties a communication layout (message rules) must be agreed upon. Standard Compliance is the process of verifying that each electronic transaction conforms to the adopted communication layout thus assuring proper handling of all electronic transactions.

Data Quality

Data Quality is the area of Electronic Transaction Governance that deals with the quality of the data in the electronic transactions. It is a process where the data in the electronic transaction is verified to ensure it contains valid data. The process should verify all the fields contained in the electronic message and confirm that the data contained in them correspond to the expected values. For example, if a field should contain a contract number the Data Quality process should verify the value in the transaction corresponds to a valid contract number.

Risk Management

Risk Management is the area of Electronic Transaction Governance that helps minimize and deal with risk events in electronic transaction handling and processing. Electronic transaction handling and processing tasks have a large number of known and unknown risks. Some of the known risks are unavailability of satellite and core system for transaction processing. The Risk Management process should handle all known electronic transaction handling and processing risks, thus minimizing the possibility of lost electronic transactions. For unknown risks, the Risk Management process should alert of the unknown risks event immediately.

Security Management

Security Management is the area of Electronic Transaction Governance that secures the electronic transaction handling and processing activities. All areas of the electronic transaction handling and processing must be secure. The electronic transaction data repositories, communication channels, and processing agents must be secure to only allow access to vetted individuals.

Audit Trails

Audit Trail is the area of Electronic Transaction Governance that permits accountability and reporting of the complete electronic transaction process. All steps and interactions of the electronic transaction handling and processing must be saved into a central repository. These audit trails will include all necessary information to recreate the electronic transactions through each step of its processing. Detailed reports can then be prepared from the audit trail data.


If you implement all the areas of Electronic Transaction Governance into your electronic transaction processing engines you will assure no more lost electronic transactions. All electronic transactions will be properly handled, processed, and managed, while mitigating and managing the risks associated with these processes.


How a positive mindset can help you in your work?

When you are experiencing positive emotions like happiness, contentment, and love, you will see more possibilities in your life. Positive thinking is about much more than just being happy or displaying a great attitude. Positive thoughts can actually create real value in your life and help you build skills that last much longer than a smile.

A few points that a positive attitude can improve in you:

  • It makes you more effective regardless what type of job you have. The better your attitude, the more you get done.
  • It will help those around you, even if it is a simple smile, you never know if someone needs one.
  • The service that you provide to clients and customers improves. It is easier to listen to their needs and helps you come up with better solutions.
  • You will appreciate what you have more and people around you will be more likely to show their appreciation.

5 tips that can help you improve your positive mind-set:

  1. Every morning when you wake up, mention 5 positive great things that you have in this moment of your life. For example: “I’m glad that I am a computer scientist”, “It’s really great that I have an spectacular wife and two kids that I love”, “Wow I’m the CEO of a company”,  “I have a brand new car that is awesome” and the list can go on. Believe it or not, these things help you during the day. You can do the same thing at the end of the day with your daily achievements.
  2. Don’t let one bad thing ruin the day. Having a positive attitude is not going to prevent bad things from happening, it will help you manage them. For example, just because you got stuck on traffic jam after having a wonderful productive day doesn’t mean that the day turned out to be awful. Stop blaming things you can’t control. One negative thing shouldn’t ruin three positive ones. People often tend to see only the bad side of things. Traffic is something that you can’t control.
  3. Exercise more often. When you exercise your brain releases dopamine, serotonin, BDNF, and Norepinephrine. This hormones make you feel good, your self-esteem and confidence improve as well.
  4. Meditate. You don’t have to be a monk on the Tibet, Meditate. Recent research by Barbara Fredrickson and her colleagues, Open Hearts Build Lives: Positive Emotions, Induced Through Loving-Kindness Meditation, Build Consequential Personal Resources, suggests that people who meditate daily display positive emotions more often that those who don’t. Meditation also builds valuable long-term skills.
  5. Surround yourself with positive people. Don’t be dragged by pessimistic people. Negativism is contagious and if you are not a mentally strong person you will get ill. Get rid of those people.

All of this sounds like Bobby’s World but when you practice this you actually start to see the difference. It takes time and patience, but be certain, you will notice the difference. Please use the comments section to share additional positive mind-set tips?

Near Software Development

Can successful custom software development projects be developed outside the customer site? I not only think they can, I think they should always be developed outside the customer site.

The first reason I believe a custom software development should be done offsite is to control scope. A project developed on site is prone to constant scope changes due to the proximity of the software developers to the project stakeholders and end users. It is so easy for a customer to walk down the hall and have an informal meeting with one of the project’s developer. A lot of times these informal meetings trigger an informal scope change that bypasses the project change control structure and is noticed by the Project Manager when it is too late. Some may argue this is defective Project Management. I believe this is onsite software development reality. Customers commit to requirements better when the work is done offsite.

In my experience most offsite custom software developments are delivered on time. Again, it is so easy to simply tell a customer down the hall that the project is going to be late, “but you know we are working hard and we stay late everyday”. Offsite teams do not have the luxury of having the customer see how hard they work or how late they are staying or how complicate the logic really is. Consequently, offsite teams need to demonstrate the customer how hard they work by delivering quality software on time without excuses.

Usually, the offsite location is a more relax place for developers to work and a more relax software developer produces higher quality code. Software Developers have special needs. Software Development is as much art as science. Thus, to be more productive Software Developers need a working space that permits their creativity to flow in their own terms. This can be no dress code, flexible working hours, all you can drink coffee, or even a no questions ask thinking sofa. I have yet to see a customer site that offers contract software developers an office space where they can feel relax and not stress out that the customer is watching how they are working.

Sure there are downfalls to working offsite. For example, communication between the software development team and the customer can flow a little bit slower. The customer might think the work being performed is easier than what is the reality and thus, wants the project to be complete on a shorter time frame. But the truth is a good Project Manager can handle these “shortfalls” as normal project risks and deliver an improved customer experience with an offsite software development team.

I urge you to try out your next custom software development offsite. You will be impressed with your results.

Revenue Model Comparison: SaaS v. One-Time-Sales



There are different software offerings in the market. While many solutions may try to tackle one problems, pricing may vary among providers. In the past, companies like Microsoft have been known for offering off-the-shelf solutions that are paid for only once. E.g. MS Office for $200. You buy it once, and as long as your computer is alive and kicking, you get to use it. Other companies like Google offer a service that is invoiced on monthly basis. E.g. Google Apps for $5 per month per user. While both of these products address the similar user needs, they have very different cash flow streams. One is the one-time sale (“OTS”), while the other is known as Software-as-a-Service (“SaaS”). Both have advantages and disadvantages. In this post, we are going to identify and compare the basics of cash flow behavior for the One-Time Sale and the Software-as-a-Service models. Hopefully after this post, entrepreneurs exploring revenue models for their project will have a starting point.


We start by identifying development costs and expenses. Both models must incur in development costs and this is not particularly affected by the sales model selected. The product must be coded and these costs are normally paid up front, as you will need to hire developers to start coding your product before its ready for the market. In this example, we are assuming our product development will cost $500,000.


                Five Examples – Total Cash Flow + Break-even point


Example #1


In our base case, we assume the follow:


Assumptions – Ex. 1 Software-as-a-Service One-time Sale
Development costs $500,000 $500,000
Sales price $25 / month $300
Sales & Marketing expenses 15% of sales 15% of sales
Customer service & warranty 15% of sales 15% of sales
New clients per month 1,000 1,000
Churn rate (clients cancellations) 0% 0%


Our development costs are the same, the sales price is $25.00 a month for the SaaS and $300.00 (12 months at $25.00). Our marketing, customer service and warranty expense adds up to 30% of our monthly sales and we manage to get 1,000 new clients per month, without losing any clients (“churn”).


Figure 1


As you can see, there is a big difference between the two models. While the variables are quite similar, the fact is One-time Sales generates 12 times more cash flow due to the upfront payments. Total net cash flow generation at December is $2,020,000. Which is $1,155,000 more than the SaaS model would generate ($855,000). Total cash flow generation is one of the most important factors when analyzing the different models.


This is true because the 1,000 clients acquired in December through the SaaS model still need to pay for 11 months, in order to generate the total cash flows that the OTS would generate. The 1,000 clients acquired in November still need to pay for 10 months, in order to generate the total cash flows that the OTS would generate… and so forth.


Total cash flow generation is one of the most important factors when analyzing the different models. The second important factor is the break-even date. The break-even date answers when the total product sales provide enough cash to cover all the development costs. As the Figure 1 shows, OTS breaks even somewhere between February and March, while the SaaS model barely crosses the mark in August. If you have third-party financing (investors, bank loans, etc.), this is an important metric.


Example #2


In our second example, we assume the same facts as Example 1, except that only half of the clients accept the OTS model, 500 new clients a month. While we are not basing this on hard data, we can assume that because many clients have not tried the product, 50% of them would not pay the full price. In other words, asking for $25.00 is a lot easier than asking for $300.00.


Assumptions – Ex. 2 Software-as-a-Service One-time Sale
Development costs $500,000 $500,000
Sales price $25 / month $300
Sales & Marketing expenses 15% of sales 15% of sales
Customer service & warranty 15% of sales 15% of sales
New clients per month 1,000 500
Churn rate (clients cancellations) 0% 0%



Figure 2


Decision makers will not lean towards the OTS model so swiftly with these assumptions, would they? Analyzing total net cash flows, the SaaS model now generates $865,000. Which is $105,000 more than the OTS model. Still, the total cash flow generated by the OTS model in Example 2 is $760,000, or $1,260,000 less than Example 1. ($2,020,000). Furthermore, the break-even point for OTS is somewhere in May (instead of February) and the SaaS model’s break-even date stayed at August.



Example #3


Example 3 uses the same assumptions from Example 2, except we add a “Churn rate” of 5% to the monthly clients. In other words, the software is pretty awesome, but 1 out of 20 clients cancel subscriptions every month. Churn is normal in subscription based models. There might be a period where the company experiences no churn, but eventually, clients will start leaving. While some of the reasons can related to the product per se, some other times it is really because the company has completely independent motives not related to the product (Ie. Client closes operations, client no longer needs to the software, client is acquired and holding company uses your competition’s service, etc.)


Assumptions – Ex. 3 Software-as-a-Service One-time Sale
Development costs $500,000 $500,000
Sales price $25 / month $300
Sales & Marketing expenses 15% of sales 15% of sales
Customer service & warranty 15% of sales 15% of sales
New clients per month 1,000 500
Churn rate (clients cancellations) 5% 0%



Figure 3


By taking into account the churn rate for this product, the OTS model generates $760,000. Which is $116,605 more cash flow than the SaaS model ($643,395) . This should be easy to understand, since you are catering to a lesser amount of clients.



Example #4


Again, we maintain the same assumptions of Example 3, but add a 20% discount to the OTS model sales price to lure clients into paying a lump-sum. Like mentioned in Example 2, selling OTS for $300.00 is more difficult than selling a $25.00 a month SaaS. So, in order to provide them an incentive to go for the OTS rather than the SaaS, we provide them with a discount for paying upfront.


Assumptions – Ex. 4 Software-as-a-Service One-time Sale
Development costs $500,000 $500,000
Sales price $25 / month $300 – 20% disc. = $240
Sales & Marketing expenses 15% of sales 15% of sales
Customer service & warranty 15% of sales 15% of sales
New clients per month 1,000 500
Churn rate (clients cancellations) 5% 0%


Figure 4


These assumptions have changed the game again. Total net cash flow for the OTS model is $508,000. Which is $135,395 less than the SaaS model ($643,395). Our break-even point for the OTS has moved from May to June. That means that while we are generating less cash, it will take up one month longer to recover the investment. Again, a change in our models can convince us to change our strategy between selecting an OTS or SaaS model.


Example #5


In our last example, assumptions of the prior example remain unchanged, except for the total marketing and customer service / warranty expenses. We are assuming that the OTS model cost for marketing and customer service / warranty expense is 20% instead of 15%. We assume that because selling at $240.00 is more difficult than selling a $25.00 monthly service. So, we modify the pay structure because we need more aggressive and incentivized sales rep.


We change the commission assumption, but in reality this can be anything. We just used sales & marketing to express how important small changes in the structure change the cash flow models…


Assumptions – Ex. 5 Software-as-a-Service One-time Sale
Development costs $500,000 $500,000
Sales price $25 / month $300 – 20% discount = $240
Sales & Marketing expenses 15% of sales 20% of sales
Customer service & warranty 15% of sales 15% of sales
New clients per month 1,000 500
Churn rate (clients cancellations) 0% 0%



Figure 5


Total cash flow for the SaaS model is $643,395. Which is $207,395 more than the OTS model ($436,000). Our break-even point for the OTS has moved from May to July, taking one month longer to recover the investment than in our previous example.



While this post barely scratches the surface of Software Revenue Models, with these five (5) basic examples, we can visualize the differences between a subscription model or software-as-a-service (SaaS) and One-time Sales (OTS) models. It is important to understand how little changes in your cash inflow and cash outflow structure can completely change the profitability and risk of your project. After doing small tests within you sales organization, whether by asking your team, current customers, or prospective clients, and plugging them into your financial model; you can better assess which model will adjust better to your organization’s goal. One thing is for sure, the market is currently shifting towards the subscription-based model. Most clients will prefer to do a smaller investment in your product, while having the flexibility to cancel if they are not happy with the service or the service does not adjust to their organization’s needs. This shift is now obvious in most consumer software products. For the enterprise customers it is less obvious, as many of these developments are custom-tailored to the organization’s needs.


There are many issues that have not been addressed in this post. Our goal with this first post was to set the basis for comparison between OTS and SaaS models. In our second series we will address the metrics and other terminology frequently used within the software industry. We will also visit some of the benchmarks executives, entrepreneurs and investors are using when deciding in which software development to pour their money and energy.


Note: If you want me to send you the Excel with the formulas for this post, or if you have questions or comments, let me know. My email is: mmoreda@wovenware.com. I will respond to every email with questions or comments, and if they are important, witty and/or relevant, I will incorporate them into the following post of the financial series.

An Interview is a Pitch of You

The company should hire me because blank.

Do you know your story? Are you ready to pitch your story and get the job? “Well, tell me your story, tell me about you”, the interviewer said.

That is the moment when candidates start looking down to their resume just to make sure they do not screw up. The very busy interviewer thinks, “Did you really just do that? Don’t you know who you are? This is a waste of my time!” The candidate starts saying exactly what is on the resume and immediately highlights the non-impressive skills that are already in the resume. “Hard-worker, disciplined, multi-tasking, excellent interpersonal communication skills, organized, leader”… STOP!

Dear Candidates, we are sure that you have a lot to bring to the table…just do not read it from your resume! An interview is a conversation, not to a read out loud. Let me explain, from my perspective what an interviewer really wants when they ask, “Tell me about you”. You have lived your own life and have worked hard to be the person you are today, so before going to an interview create your success story. WAIT, WHAT? Create a chronological movie of how you came to be the professional you are now. Answer questions like: Why you decided to study what you did? How you got your first job? Why you decided to change your job? What you liked most and less from your past job experiences? And please, please know what is your competitive advantage for the position you are applying and/or the company you want to work for.

For example, your competitive advantage may be that you are a natural leader. Make sure to show in your story how it leads you to achieve your goals. Another thing to keep in mind, is to focus on your successes, I am sure that some negative things do happen within experiences but do not let them opaque your story’s bright side. (Tip: Interviewers will ask you later on about the worst experience in different situations.) After you have your storyline, ask yourself, is this movie ready to be sold? If the answer is yes…Time to Sell!!!

But how do you sell a good story? Of course, it needs an: EXTRAORDINARY MOVIE TRAILER! As movie viewers, interviewers do not have much time during an interview to know your whole story, so you have to create a movie trailer that captures his or her attention and make them want to know more about you. What should be told in this trailer? Emphasize the parts that highlights all the skills that add value to you as a professional and to the position you are being interviewed for. As a candidate you may be thinking, “Why should I do a mental movie and then a trailer?” Well, as you capture your interviewer’s attention with the trailer, more questions will come. The movie will help you answer these questions.

Finally, remember to make your movie trailer an exciting one, make the interviewer want to know the whole movie. SELL YOUR MOVIE!!! Interviews usually take 45 minutes and from those you have 5 minutes to impress and sell your story to the interviewer. Differentiate yourself and make sure that the interviewer never forgets your movie clip.

Now…GO! create your movie and tell me more!

X12 EDI: From Electronic Transaction to Paper Format

Following a brief history of our Tx Manager product, a software solution that converts electronic 837 X12 EDI transactions, e.g. electronic claims, into a visual representation of their paper format, e.g. HCFA-1500, UB-04, and Dental Claims.

Note: Although this is a universal business problem, when the article refers to electronic transactions it specifically refers to ASC X12 EDI 837 electronic claims transactions.

Electronic transactions fail to process everyday.  There are multiple reasons why electronic transactions fail to process:

  • incorrect transaction formats
  • communication issues
  • subpar systems integration
  • availability of core systems
  • etc.

What happens when these electronic transactions fail to process correctly? Do you ask your providers to resend the transactions or do you reprocess them yourself?

In our experience, we have seen that when a customers is able to identify that an electronic transaction failed, they reprocess the transactions themselves. That is, companies seldom burden their customers to resend electronic transactions that have failed to process. How do they reprocess the transactions, you may ask.  The majority of companies manually reprocess failed electronic transactions.  They usually have a data entry department that takes the failed transactions and enters them into the core system.

Having a data entry department process failed transactions can be a time consuming error-prone endeavor. It is very difficult for data entry personnel to read an electronic transaction in its original format and be able to process the data into the core system.  Data entry personnel need that the electronic transactions be converted into a readable format that allows them to understand the data details of the transactions. Once they can read the electronic transactions they are able to enter them into the core system.  But organizations need to be very careful with this approach, because processing electronic data manually can lead to serious data errors and inconsistencies.

At Wovenware, we identified this problem and built the Tx Manager to help healthcare insurance companies overcome this challenge.  The Tx Manager reads ASC X12 EDI 837 electronic claims transactions extracts their data and presents them to the user in a visual representation of their paper format (HCFA-1500, UB-04, or Dental Claim). The TxManager includes workflow functionality that allows multiple users to work in the web application at the same time, ensuring that no two users work on the same transaction. Additionally, the TxManager validates the accuracy of the transaction information in the core system, thus, ensuring data quality of the process.

We have successfully implemented the Tx Manager in various customers and have seen an improvement in the quantity and data quality of all manually processed electronic transaction in the core system. Need to improve your process, what are you waiting for?