Faculty : Prof.

Joffi Thomas

Case Analysis Note : Precise Software Solution

Name : Karan Aggarwal

Roll Number : EPGCMM -11-020
Organization : Varroc Polymers Pvt. Ltd.
(Manufacturer of Automotive Plastic Injection molded parts)
Designation : Manager (Business Development)
Introduction:
Company: Precise Software Solutions
President & CEO: Shimon Alon

 Precise develop software that helped its clients to monitor, evaluate & manage the performance of
their IT systems.
 This is a small but growing market for ‘performance management and availability software.
 Precise has far focused on specific niche of this market.
Issue to be addressed in July 1999
Insight, a solution for customers was seen as a key factor in Alon’s drive to make Precise a
$100million company. They had to figure out following key decisions if they want to launch the product
in Open World Conference in san Francisco in Sept 2000.
1. What should the product look like?
2. What should be selling strategy?
3. How do they price it?

Ques 1: Should Alon plan on introducing Insight at OpenWorld 2000? Why or Why not?
Ans:

Merits of Launch in 2000

1. No direct competition currently, so would allow to diversify its customer base.
2. Compared to current offering, Insight would appear as a substantial value proposition
3. Being initiator in the market, they can get good price and hence good revenue.
4. Giving end to end solution will increase their market reputation.
De-merits of Launch in 2000
1. The product might not be ready by that time as alpha will still take 6-9 months and then beta and
other stages are going to take time.
2. Incomplete product may give competition a hint of the solution and it may not then remain with
the same value proposition as thought by Alon.
3. Loss of reputation.
As this is a first time thought solution and diversified over a wide range of all 3 tiers of IT industry, the
competition will also have similar challenges to launch the product in short time as with the Precise.
In Our view, Alon should chalk down a strategic plan for marketing, pricing and giving time for
R&D to ensure proper functioning of the product and launch in Open world 2001.
Ques 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?
Ans2. Precise should employ a new sales force. 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.

1. Target consumer for Insight are IT executives and CIO’s of the companies. This group prefers
personal touch and would like to have a conversation instead of one-way communication unlike
existing way of sales.
2. As it is clear from Exhibit 3, Insight is spread over all 3 tiers of the IT industry whereas DBL is
only over Database servers and Storage, hence a different sales approach is essential

3. Insight is premium priced solution and complex in functionality which can be well explained with
a dedicated and trained sales team
4. As this is more of a solution then a product, hence, it 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
5. Precise’s current sales force is a universal team for all the products with fixed salary and
commission structure based on the same they make. For Insight being a premium product,
commissions need to be of higher terms.

Ques 3: How should Insight be priced? Develop an ROI model for Precise/SQL product.
Ans:
A- Saving /annum for DBA Salary
= Avg # of DBAs * No of Weeks * Salary saving/week
No of Weeks= 52
Avg DBA=10
Salary saving/week= $60000 / 9.4 / Hours/week(40=8Hrs/day*5day/week)= 28.85$
Saving /annum for DBA Salary = Avg # of DBAs * No of Weeks * Salary saving/week
=10*52*28.85= $141,000
 Hours saved/DBA/week 9.4
Avg DBA Salary $ 60,000 /annum
Avg end user salary $ 30,000
Avg # of DBAs 10
Avg annual hardwar budget affected by precise /SQL $ 1,430,000
Purchase postpone 1yr-hardware cost save 30%
Prob by post of 3 months 60%
Avg end user response time prior to Precise/SQL 15 sec
Improvement 25%
Avg employee burden rate(as% of salary) 33%
No of simultaneous users 215.00
Avg daily trasc by all user 194,000

B: Saving in terms of investment

= (Avg annual hardwar budget affected by precise /SQL * Purchase postpone 1yr-hardware cost save *
Prob by post of 3 months *3/12)* Intertest
= ($143,000*.3*.6*3/12)*1.12 = $70,785
C: Saving to end user
Transactions/user/day= 19400/215=902
Response time/day= 902*15/3600 = 3.76Hrs
Improvement = 3.76*.25*.33 (burden)= 0.31
Total saving = 0.31*215*52(weeks)*(30000/52/40)=$49,997

Net saving= A+B+C= $141,000+70785 +49997= $261782

Total Income= (15000*.6+25000*.4)*10= 190,000
ROI= 261782/190000= 138%