Precise Software Solutions Case Solution

1. Should Alon plan on introducing Insights at OpenWorld 2000? Why or why not?

Alon should not plan on introducing Insight at the OpenWorld 2000. There are numerous reasons for this pertinent decision. Primarily, entering the market with a product that is remarkable in its ideology and may as well provide the first mover advantage, but only at the cost of a damaged reputation, due to lack of functionality.

Additionally, with the idea in the air at such a premature stage of the product, provides ample time for competitors to come up with better and progressively efficient alternatives.

Furthermore, if Insight is to be presented at the OpenWorld 2000, only the Monitoring functionality can be arranged, which is actually a step back from what they were selling through Precise/ SQL product. Thus, the complete functionality of Analyzing is detrimental to a safe comparison between the two products of Precise.

In light of the aforementioned reasons, the viable approach would be to continue working on Insight and create a complete product before putting it up at the OpenWorld 2001.

2. What should Precise’s sales strategy be for Insights? Should they launch a separate sales force for the new product or sell it through their existing sales force? How good is their current sales force?

The sales strategy that should be utilized for Insight is the direct selling methodology. Insight is essentially, a pioneering product of its kind, which subsequently entails premium pricing, in addition to complex functionality. Therefore, the sales force must be trained with respect to the configuration, control, benefits, and efficiency implications. Subsequently, the sales force shall be able to consolidate additional knowledge with respect to end-to-end IT deployments at the respective customer sites.

Precise Software Solutions currently employs a sales force that utilizes a dual distribution system channel to sale out all its products. According to the statistics, each individual sales person is paid $ 75,000 as basic salary plus commission, which is dependent on the volume and magnitude of sales made. On average, the sales proportion of an individual sales person extends up to $800,000 per annum, whilst his commission amounts to almost $120,000. However, the highest commission earned by a sales representative can vary around $300,000.

The existing sales force should not be burdened with the targets of the new product “Insight”. A new sales force must be created with the prime concern of perpetuating the ideology and benefits. Since, Insight would be a pioneering product, which provides the value addition to end-users; its premium pricing should be justified.

3. How will the SQL sales force react to the introduction of Insights? Will this differ if we launch Insights in time for OpenWorld or not?

The SQL sales force would essentially be shocked to know that they would have to sell a new product that has not been introduced before, leading to certain consequences such as; a feeling of confusion with respect to the amount of emphasis that shall be laid on the sale of Insight as opposed to that of SQL. Additionally, since premium priced product is a hard sell, considering the budget of numerous companies, sales force may find an inclination towards giving it less concentration. This point may be reinforced by the fact that in numerous cases, the DBAs tend to decide whether to incorporate the new system or not, contingent on the lower pricing. However, a premium priced product may entail meetings with managers, to who, it has been stated, is difficult to gain their attention. A deadline with respect to OpenWorld may cause cannibalization and too much burden with respect to trainings in the sale of Insight.

4. What is the difference between selling their current core product – Precise/SQL – and selling the new Insight product?

Selling Precise/ SQL pertains to the management of performance with respect to applications utilizing Oracle databases. This is essentially suite of performance management tools for Oracle databases. It is an extremely powerful application that tends to decrease the run time remarkably. The additional benefits were: DBA productivity and the associated saving, savings in line with the deferral of hardware upgrades, and saving with respect to end-user productivity. The pricing ranged from $15,000 to $50,000 depending on the machinery used.

Insight, on the other hand, is an end-to-end performance management product, which is tangible and understandable. While offering the promise to never violate the 8-second rule, it was priced at $250,000, in Alon’s mind.

5. Keeping in mind the limited functionality of the first version of the product, how should insights be priced? How should precise think about segmentation for this new product?

Alon considers Insight to be priced at $250,000. This may be an appropriate price for the end product, considering full functionality. However, with the limited functionality, Insight cannot be priced above $50,000. The full functionality consider a stark comparison with its earlier product i.e. SQL.

The segmentation for Insight is rather interesting considering the pioneering stage of development. Due to the fact that it is a new concept, and may involve premium pricing, multinationals should be the prime target. Multinationals have operations stretched out across the globe, which is the essence of Insight operating capabilities.

6. Develop an ROI model for the Precise/SQL product. Compare this to the price they are charging for the product, Of what use are these data in developing an ROI for Insights?

Total Saving: 112,800 + 257,400 + 532, 125 = 902,325

Considering the highest cost machinery with 10 DBAs:

Cost: 10 DBA * (50,000*(1-25%)) = 375,000

ROI = 140.62%

Utility of this data toward the calculation of Insight ROI is limited due to the fact that the pertinent benefits in monetary or percentage terms cannot be determined. However, the $250,000 figure in Alon’s mind can cause the costs to surge against the benefits, leading to a lower ROI.