Indian Institute of Management - Kozikhode

Precise Software Solutions

Case Analysis Note

By

S.N. Name Roll No. Designation Organization

1. Mr. Marripudi Jaya Rao EPGCMM-06-010 Area Business

Manager

Biogen Idec India

2. Mr. Umesh R. Sonawane EPGCMM-06-024

Manager – Corporate

Communications

Sahara India

Pariwar

3. Mr. Raj Kumar

EPGCMM-06-015 Key Account

Manager

Nestle India Ltd

4. Mr. Roshan Joseph Pauly

EPGCMM-06-016 Sales Manager Dell India Pvt.

Ltd.

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Summary

Precise software solution is a growing company with some leading software in the Availability and

Performance management function in the IT solutions. Recently they have envisioned an opportunity

and they are working on the product to capitalise on the first mover advantage for them. The dilemma

is should they time their launch of the product for the ‘Openworld 2000’ or should they wait for the

completion of the entire programming.

1. Should Alon plan on introducing Insight at Open world 2000? Why or Why not?

Ans: In our opinion Alon should not launch the product in hurry for the conference instead they should

keep it un-announced for the reasons given below:

a. Taking unfinished product to the market will damage the reputation of the organization

b. Product without functionality will not deliver any value to the potential consumer

c. Immature product will also give competitors an opportunity to sneak and come up with better

version of the same product. This will not let Precise enjoy the first mover’s advantage.

d. Packaged product without any functionality may also raise question about firm’s capability of

actually make the product run.

e. Delaying the launch will also allow Alon and team to formulate proper marketing and pricing

strategy

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 salesforce?

Ans: Precise should employ a new sales force for the ‘Insight’ and use direct sales approach which is

best suited due to following reasons:

a. Unlike Precise’s SQL product target consumer for Insight are IT executives and CIO’s of the

companies. This group prefers personal touch and would like have a conversation instead of

one way communication.

b. Precise SQL sales team have focused only on DBA as that was the target segment which is not

the case for Insight

c. Insight is premium priced solution and complex in functionality which can be well explained

with a dedicated and trained sales team

d. Any innovation requires more focused sales effort, Insight being launched for the first time

consumer will have lot of questions and queries which will require immediate attention

e. A separate sales force can propose end-to-end implementation counselling for the client with

Insight being center of the idea, this way Precise will generate good amount of market

intelligence

Precise’s current sales force is a universal team for all of the products with fixed salary and commission

structure based on the same they make. They use dual distribution channel.

The new sales team should be different than the existing team and should only focus on the awareness

and sale of Insight. Aggressive sales strategy coupled with dedicated team should deliver the result for

Insight.

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

Ans: We recommend value based approach for pricing of the Insight with ROI model given below -

ROI for Precise/SQL

Savings from DBA

DBA’s work hour per week 40

Total worked hours per year (40 hours X 52 weeks) 2080

Average Salary of DBA $ 60,000

Salary per hour (60,000/2080) $ 28.85

DBA’s saved hours 9.4

Total hours saved per year (9.4 hours X 52 weeks) 488.8

Savings per DBA (488.8 X 28.85) $ 14,100

Number of DBA's 10

Total savings for DBA (1) $ 141,000

User Savings

Salary of the end user (x) 30000

Employee burden rate (y) 33%

Improvement in End user time per transaction (z) 25%

Savings per End User (x * y * z) $ 2,475

Number of users 215

Total savings through users (2) $ 532,125

Hardware Cost Savings

Average Precise/SQL’s effect on Annual Hardware Budget (x) $ 1,430,000

Effect on hardware cost if postponed by one year (x*30%) (y) $ 429,000

Probability of postponing hardware purchase by 3 months (z) 60%

Hardware cost saving (y*z*25%) (3) $ 64,350

Net savings (1+2+3) 7,37,475

10 DBA installations @ average cost of $ 20000 with 25% discount $ 150,000

ROI 491.65%

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