Q1 Should Alon plan on introducing Insight at Openworld 2000? Why or Why not?

Answer 1:
Alon should not present Insight to the Open World 2000 for the following reasons:
• It would not be a value-added solution to introduce an inadequate product to the market that only
offers monitoring features. It will fall short of the company's reputation.
• Customers seeking end-to-end solutions may not be particularly alluring as a package.
• Introducing a prototype product will allow a competitor to replicate it and develop a fully-functional
product with precise software.
• In terms of pricing and sales force, the business must also perform extensive preliminary work. From
now on, it is preferable for the company to wait.
We believe that the company should delay until 2002. In the interim, the company should attempt to
develop a complete solution with an intuitive user interface. This will increase the customer's value
proposition.

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?
Answer 2 :
To gain more insight, the best approach will be to sell it directly to the customer. This is the first
product of its kind; the company is better served and can charge a premium price for this item. In
addition, this product will provide customers with an end-to-end solution; therefore, it is
preferable to train the sales representatives separately. As an end-to-end solution, the
functionalities will be quite complex. A dedicated sales force should always be available to sell a
niche product, allowing the sales team to concentrate on marketing the new product and seizing
market share. A well-trained sales team with techno-functional/sales expertise will be an asset, as
they will be able to comprehend the customers' problem points and bring them back to the
development table in an appropriate manner. They will be able to demonstrate the value of this
end-to-end solution based on the customer's requirements.
It will be challenging to sell this product through VARs and system integrators; therefore, direct
marketing will be of great assistance in order to capture the customer's attention.
Precise's current sales team is trained to sell their product through dual channels. Each sales
representative receives an annual salary of $75,000 in addition to a commission based on product
sales. Currently, the average commission for a salesperson is $120,000. Currently, the greatest
commission is $300,000.

3.  Develop an ROI model for Precise/SQL product?

4.  How should Precise Insight be priced?
Answer 3 & 4:
Saving for the Hardware

Annual average Hardware Budget 1,430,000

Savings for hardware if purchased after 1 30%

Year

Postponing by 3 months probability 60%

Savings in Total 64350

Savings w.r.t to DBA

Savings - DBA

Assumed – 45 hours a week 45

work

Saved Hours per DBA for a 9.4

week

DBA Salary – Average $60,000

considered

Hours / Per Year 52 * 45

Hours Saved / per year 52 * 9.4 2340

Savings – Per DBA (9.4/45)*60000 488.8

Total Number of DBAs 10

DBA – Savings 10 * 12533.33 12533.3

Total Savings for users

End User Salary 30000

Average Employee Burden 33%

Time Improvement for end 25%

 user

Savings/User 2475

Number of Users in Total 215

Savings for all the users 2475*215 532125

currently in the system

Total Savings DBA installation with 25% discount

64,350+125333.3+532125 = 721,808.3 10*(25000*.75) = 187,500

ROI = ( (125333.33 – 187500) / 187500 ) = 285%