Precise Software Solutions-Case Submission PDF

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Managing Business Markets Case Assignment Precise Software Solutions

Submitted By Rakesh Mukundan Perinchery EPGP-11-093

Q.1. Should Alon plan on introducing Insight at Openworld 2000? Why or Why not? Alon shouldn’t introduce Insight at Openworld 2000 for the following reasons:   

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Insight being a product still under development, any errors would cause unprecedented loss of reputation for PSS. PSS would unnecessarily be creating a false impression of the product to consumers and the market owing to the hype created and inability to fulfil expectations. In a bid to introduce this product at Openworld 2020, the company would have to hasten and compromise on the testing phases which could lead to disastrous consequences in case of any potential future issue The development time being lesser than previously planned, the product would be more basic in nature owing to which the pricing would be reduced. This would also make it difficult to raise prices in the future in case of any upgrades. It will gauge competitors to duplicate the functionality of Insight and launch alterative products in the market. Introducing Insight without a proper marketing and pricing strategy would be averse to the company’s business

Q2. Develop an ROI model for Precise/SQL product using data in Exhibit 4. How should Precise Insight be priced? Pricing the product using value-based approach, the ROI can be computed as below: Savings from DBA DBA’s work hour per week Total worked hours per year (40 hours X 52 weeks) Average DBA salary (in $) Salary per hour (60,000/2080) (in $) DBA’s saved hours (as in exhibit 4) Total hours saved per year (9.4 hours X 52 weeks) Savings per DBA (488.8 X 28.85) (in $) Average number of DBA's (as in Exhibit 4) Total savings for DBA

40 2080 60000 28.85 9.4 488.8 14100 10 141000

User Savings Average end user salary (in $) Average employee burden rate (%) Improvement in end-user response time per transaction (%) Savings per end-user (30000*33%*25%) Number of simultaneous users Total savings through users (2475*215)

30000 33 25 2475 215 532125

Hardware Cost Saving Average Annual Hardware Budget affected by Precise/SQL Effect on hardware cost if postponed by one year (143000*30%) Probability of postponing hardware purchase by 3 months Hardware cost saving (429000*60*25%*3)

1430000 429000 60 64350

Net Savings = Savings from DBA + User Savings + Hardware Cost Savings = 141000 + 532125 + 64350 = $ 737475 10 DBA installations @ average cost of $ 20000 with 25% discount = $ 150000 ROI = 491.65% Q3. What should be the sales strategy be for insight? (a) How good is their current sales force? (b) Should they launch a separate sale force for the new product or sell it through their existing sales force?    

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PSS should adopt a direct selling approach rather than an indirect selling approach of selling through VAR’s and System Integrators As Insight is a premium product, selling it directly through a new salesforce by offering customers dedicated, specialized salesforce will be more beneficial for PSS As Insight is a new product, it requires a new, well-trained sales force who are capable of promoting and selling the product aggressively The target consumers for Insight shall be the large IT teams of large corporations who shall weigh all options, conduct research about the product, developer, functionality prior to making the purchase. Such requirement satisfaction will involve personalised, end-to-end selling and coaxing the customer Insight is a new product, first of its kind in the market. Separate sales force required to leverage first-mover advantage PSS’s current sales force is a single sales force which focusses most of their efforts on a small set of products since company’s inception in 1990.

Q4. Should Precise continue with Precise SQL after the launch of Precise Insight?  

Yes, PSS must continue with Precise SQL till a relative amount of time when Insight has managed to garner sufficient sales for the company by itself. Insight being a new, untested product by the market is still yet to show any achievable sales and revenue for the company....