Specifically, UX (user experience) design is broken — especially in SaaS products. As soon as you look beyond the Facebooks, Twitters, Foursquares and other upstart social apps, UX design goes right out the window. Look for an app that solves a business problem and UX starts to deteriorate pretty fast.
To the credit of some of these upstart apps, many users don’t put up with bad software and UX design like they used to. It used to be that when anything would go wrong — whether it was operator error or not — the user would quickly accept fault and be convinced they broke it. That paradigm is changing. These days, users are more likely to expect software to do exactly what they want, and if it doesn’t — regardless of operator error — it’s the software’s fault and I’ll move on to a different app that works the way I want.
Many developers and software makers focus too much on what their app does and give little thought to how or why it does what it does. The design and beauty of how a software ebbs and flows with the user’s interactions is so integral to its overall effectiveness. However, design often gets overlooked in preference of function and what it needs to do.
There are some exceptions. 37 Signals and ENTP (there are others too) are great examples of talented software makers that bring some sanity to the SaaS model. They’re proof that designers make the best software. Software should be designed and composed, not wire-framed and spec’d.