Case 4 Precise Software Solutions

Saikat Sarkar (EPGCMM11036)

1. Should Alon plan on introducing INGISHT at Open World 2000?

The arguments in favor of launching INSIGHT are:

• Setting expectations in the market: defining ‘end-to-end’ space

• Being identified as the player in the emerging segment and have a first mover advantage: As of 1999,
none of the companies offered end to end solutions , so by moving quickly and being first to market ,
precise could establish itself as the market leader.

•Easy to sell: it was thought that it would be very easy to sell it since it was easier to make the benefits
of product tangible and understandable as Investment in erp was high so no scope of errors and
fallbacks expected and applications were data intensive

• Right Place & Time: Annual conference gathered together thousands of interested and motivated
prospects, who could hear about and see demonstrations of new product. This meant a good marketing
platform for the new product with least expense in terms of cost and time and maximum impact.

• There is always a option to pull out OpenWorld if they think that they will not be able to make it

The arguments against launching INSIGHT are:

• Reputation: If Precise creates an expectation and show up with partial solution, it might have negative
impact on company’s reputation

• Impact on process: Precise might rush through the alpha and beta phases, missing important insights

• Pricing: If Precise launches a lightweight version of INSIGHT at a reduced price, it may be difficult to
raise that price later when the product is at full functionality

•Competitor’s Threat: Also, going too early with an immature product will allow competitors to come up
with better alternative solutions and snatch the chances from Precise to be a leader in the industry.

• Lack of functionality and preparation: The product if developed targeting Open World could only have
the monitor functionality in the best case scenario, however the complete analyze functionality would
be missing and will be seen as a gap. The company is still not sure on how they will market the product
and how they will price this product

Final Verdict:

Introduction in OpenWorld2000 is not recommended based on current scenario. So it is recommended

to wait for the OpenWorld2001 to release the product. An immature product, with just monitor
functionality and no nice user interface, will be seen as a down product by customers. Since a GA
version could only be available in 18 months from now, and a fully functionality only in 2 years, it will
give time to competitors to see and copy the product.

2. Should Precise launch separate sales force for the new product or sell it through their existing
sales force?
 A direct selling approach should be used for this product.
 Insight being a premium and complex product a well trained and dedicated sales force will
achieve better results.
 Difficult to sell through system integrators and VARs.
 It should be promoted and sold aggressively.
 Sales force should be trained to provide effective end-to-end performance management
solutions.
 They are recruited only to bring in clients for Insight.

3. How should Insight be priced? Develop an ROI model for Precise/SQL product

I would recommend value based pricing approach. That means a price for a customer should be
proportional to the perceived value derived by the customer from the solution.

DBA Saving:

Assuming they work for 40 hours per week No. of hours saved/DBA/Year = 9.4*52 = 489 hours

Salary of DBA = $60000/52 weeks/ 40 hours per week = $28.85/hour

Annual saving per DBA per year = 489*26.64 = $13027/DBA

Annual saving per firm = 13027*10 = $130270

Hardware saving:

Assuming annual interest rate = 10% Cost of capital saving = 143000*.10*3*.6/12 = $21450

Saving due to price drop = 1430000*.3*.6*3/12 = $64350

Total hardware saving per firm = 21450 + 64350 = $85800

User saving:

No. of daily transaction per user = 194000/215 = 903 trans/user

Daily end-user response time per user = 903*15 =13545 sec/user = 3.76 hours/user/day

Improvement in end user response time = .25*3.76 = 0.94 hours % of response time saved per user =
.94/8 = 11.75% of time Saving per user = 30000*.1175*1.33 = 4688/user/year
Total user saving = 4688*215 = $1007920/year

Total saving = 130270 + 85800 + 1007920 = $1223990/year

Average price that firm is charging = (15000+25000) /2 = $20000

ROI = 1223990/20000 = 6112%