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 movers advantage.
d. Packaged product without any functionality may also raise question about firms 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 Precises SQL product target consumer for Insight are IT executives and CIOs 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
Precises 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
DBAs 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
DBAs 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/SQLs 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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