Precise Software

Solutions
Case Study Assignment

Babita Tariyal
EPGP-12C-021

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 Company Background

Precise Software Solutions is a software developer company Located in Westwood,

Massachusetts. The company develops software that helps its clients to monitor,
evaluate and manage the performance of their information technology (IT) systems.
The key Decision makers in Precise software solutions included Shimon Alon-
President and CEO, CFO Ben Nye, General Manager Steve Campbell, and Aki Ratner,
VP of Research & Development.

Case Facts

1. Precise software Solutions is a successful software developer with a niche

market segment. They have now tapped into an innovative idea with a higher
value proposition and bigger market segment.
2. Precise Software Solutions has a very strong and well trained, single sales
force for its products. The sales rep is even good at resolving database
related issues and has built strong relationships within the industry.
3. The company has conceptualized a product called “ Insight” which is an end
to end performance management software. The company aims to position
Insight as a provider of performance management solutions rather than just a
product.
4. The conflict in the case arises from the CEO Shimon Alon’s vision of launching
the product in Openworld 2000, which is just 14 months away as a full
functionality product.
5. There are decisions to be made regarding how the product must look like,
how it should be priced and the sales force for its sale.

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 Case Questions

Question 1: Should Alon plan on introducing Insight at Oracle

Openworld 2000? Why or Why not? What business outcomes he
intends to attain with Precise Insight?

There are arguments both in favor and against targeting Openworld 2000 for the
launch of Insight.

On one hand not only Precise software Solutions will gain first mover advantage if it
can successfully launch Insight in Openworld 2000. It may also give Precise an
advantage in pricing of the product. But from what I understood from the
information given in the case, this does not seem the right choice.

i) The product is still a concept and its development into a full functionality product
with end to end solution is expected to take at least 2 year as per the VP of R&D
Mr.Aki Ratner. Rushing the deadline will lead to compromises in quality and testing.

ii) Precise has established its reputation in the industry for consistently delivering
high quality products, any slackening now will hamper company’s reputation and
ultimately business. Rushing the launch of Insight may backfire if the company fails
to deliver by compromising on the development process.

iii) If the company rushes or skips testing not only will it reflect in the performance
of the product but also they will miss the opportunity to resolve any lacunas and
improve the product. As per Ratner, they can only manage a highly basic version of
the product with only monitoring functionality at best. Launching such a basic
version may not only fail to impress the audience but can also give its competitor a
chance to catch up.

iv) Launching such a rudimentary version will also pose questions of how to market
and what to price at?

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 An immature product, with just monitor functionality and no nice user interface, will
be seen as a down product by customers. In my opinion, it will be best for Precise to
keep Insight under wraps till fully functional and well tested and rather target
OpenWorld 2001 for its launch.

Question 2: What should Precise strategy be for insight? Should

they launch a separate sale force for the new product or sell it
through their existing sales force? How good is their current sales
force?

Precise Software Solutions has so far adopted a dual channel distribution system for
all its products other than “Presto”. About 55% of its revenue in North and Latin
America comes from direct selling. Precise has a single sales force of 17 account
executives for all its products. The sales reps are very well trained and
knowledgeable in all the products offered. They have built strong and lasting
relationships within the industry. Reflecting on their performance so far, there isn’t
any doubt about how good they are. They are even consulted to resolve database
issues by database administrators.

But so far they have handled, though quite well, but essentially small products that
addressed a single tier of IT infrastructure. “Insight” is, on the other hand, a
premium, complicated product that provides end to end functionality and works in a
much more complex environment. I believe that it would be more advisable for
Precise Software to have a separate sales rep for Insight:

i) The current sales rep is already handling many products. Insight being a new
product will require time and training that the sales force will be hard pressed to
provide. I fear they will not be able to do justice with it. What the company needs is
a sales team solely focused on Insight to truly leverage the first mover's advantage
and target the wider industry that Insight will help open to approach.

ii) Insight is a very complex and multi-tier product. It will require a lot of time to
comprehend as well as the actual sale cycle will also be substantially more than the
current offerings. Having a dedicated team, exclusively and extensively trained will
be able to market and position the product well.

iii) Though the current sales team has garnered much success and built good
relationships within the industry, all the products that they dealt in were targeted

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 towards the DBA, while Insight will demand the involvement of CIO, or other
relevant upper management. This will require personalised selling and much more
aggressive as well undivided attention.

Question 3: What value is Precise SQL delivering to its clients?

Develop an ROI model for Precise SQL product.

In order to Develop a ROI model for Precise SQL product, we need to determine the
total savings that deploying the product brings. So there are three major areas that
effectively use and save owing to Precise SQL product:

1. The savings by DBA

2. The savings to End users
3. Hardware savings

Calculations:

1. Let us first calculate saving from DBA

Assuming That DBA’s work 5 days a week and on an average 10 hours a day.
We get 50 hours a week

Working hours in a week 5* 10 50 Hours

Given average DBA salary $ 60000

Hours saved by DBA per week 9.4 hour

Salary of DBA per week 60000/52 $ 1154

Amount saved by DBA per week per DBA (9.4/50)* $ 217

1154

Amount saved annually per DBA 52* 217 $11284

Average no of DBA’s 10

Total amount saved annually 10*11284 $112840

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 2. Now lets calculate hardware saving:

Average annual Hardware Budget $1430000

Hardware savings if purchase postponed by a year 30% $42900

0

Hardware savings per quarter if purchase is $429000/4 $10725

delayed 0

Probability of hardware purchase postponing by 3 60%

months

Hardware savings 107250*60 $64350

%

3. Calculating End User’s Savings (Assuming 10 hours working day)

Average End Users salary $30000

Average Employee Burden rate 33%

Improvement in response time per transaction 25%

No of daily Transactions 194000

No of End users 215

Transaction per user 194000/215 903

Daily user response time 903*15/3600 3.76hr/use

r/day

Percentage Savings in response time per day (3.76*25%)/1 9.4%

0

Total savings $30000*1.33* $806379

.094*215

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 Total Savings : Savings from DBA+ End User’s savings Hardware savings

$112840+$806379+$64350= $983569

Assuming Precise gave 25% discount

Cost of product installation= let’s say $ 25000

Total cost of 10 product installation with 25% discount= $25000*(100-

25%)*10=$187500

ROI= (savings-cost)/cost= (983569-

187500)/187500=425%

Question 4: Which value element of Precise SQL is making it

attractive for DBA's in organisation?

Precise SQL helps in monitoring and improving the performance of Database which
disproportionately accrue the benefits of using the Precise SQL in favor of DBA. The
value that DBA harness from using Precise SQL is not only in form of the savings it
make which comes out to be approx. 60% of the software cost as per our ROI model,
but the most value comes from the fact that it enhances the performance of DBA as
well as help provide an impartial evaluation of her performance. SQL also serves as
the proof for DBA in escaping what we call “Blamestorming” by exactly pinpointing
where the error lies.

Question 5: How should Precise Insight be priced?

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 Precise Insight, in my opinion should follow a Value based pricing approach. Insight
is a very complex and end to end functionality product which will benefit all walks of
the IT infrastructure of a company. It will help generate value not only for the
company itself but also the end users. We also must take into consideration that the
value thus generated by Insight will vary as per the company, taking into account
its IT Traffic and no of end users. Thus deriving Price from the value, it generates
should be the approach of the Company.

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