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Business to Business
Case Submission
 Precise developed ‘Performance Management and Availability’ software
helping clients to monitor, evaluate & manage their...
3 - Tier IT Infrastructure
 Tier 1 – Provided users with access to centralized repository of IT resources.
 Tier 2 – Spe...
 The leading seller of DBMS was Oracle followed by BMC and Quest.
 The leading storage device vendor was EMC.
 In an or...
 Precise is coming up with the new product called ‘Insight’.
 Challenge was to devise a strategy to answer two main ques...
 The market is fragmented and the products were differentiated in two ways:
1. Based on the underlying resources and plat...
 Channel Strategy:
 Direct Sales.
 Indirect Sales (Value-added resellers, System integrators and Original
equipment man...
 Precise/SQL
 Software product managing the performance of applications utilizing Oracle database.
 Targeted at users o...
 Dual-channel distribution system
 In North America the sales force was comprised of 17 account executives.
 The reps w...
 Value Proposition : End-to-end performance management product.
 USP: Important indicator of systems effectiveness: end-...
Q1)When should Alon plan to launch
‘insight’?
Options available –
Openworld 2000 or Openworld 2001
 The arguments in favor of launching INSIGHT are:
 First mover adva...
 The arguments against launching INSIGHT are:
 Reputation: If Precise creates an expectation and show up
with partial so...
Q2) Should Precise launch separate sales
force for the new product or sell it through
their existing sales force?
Arguments for single sales force:
 They have been successful in selling multiple products
(Interpoint as well as Pulse) i...
Arguments against multiple sales force:
 The buying process is quite different. DBAs bought SQL
because it helped her to ...
Q3) How should ‘Insight’ be priced?
Develop an ROI model for Precise/SQL product.
ROI model for Precise/SQL
 DBA Saving:
Assuming they work for 40 hours per week
No. of hours saved/DBA/Year = 9.4*52 = 48...
ROI model for Precise/SQL
 Hardware saving:
Assuming annual interest rate = 10%
Cost of capital saving = 143000*.10*3*.6/...
ROI model for Precise/SQL
 User saving:
No. of daily transaction per user = 194000/215 = 903 trans/user
Daily end-user re...
ROI model for Precise/SQL
 Total saving = 130270 + 85800 + 250098 = $466169/year
Average price that firm is charging = (1...
THANK YOU
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Precise case b2b

Solution to Precise case

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Precise case b2b

  1. 1. : Business to Business Case Submission
  2. 2.  Precise developed ‘Performance Management and Availability’ software helping clients to monitor, evaluate & manage their IT systems.  Served firms with complex network of hardware and software components. Introduction
  3. 3. 3 - Tier IT Infrastructure  Tier 1 – Provided users with access to centralized repository of IT resources.  Tier 2 – Specific functionality that the user sought.  Tier 3 – The database, provided access to the required information. Typical IT System
  4. 4.  The leading seller of DBMS was Oracle followed by BMC and Quest.  The leading storage device vendor was EMC.  In an organization, separate group of people managed each of the tiers in the system.  Buyers & Buying Decision Influencers  The business unit for which the application would perform (End users).  IT Department or IT Experts.  Growth Rate: The market is experiencing a very high growth rate. Expected to double in 2003. Market Dynamics
  5. 5.  Precise is coming up with the new product called ‘Insight’.  Challenge was to devise a strategy to answer two main questions, ‘When’ & ‘How’.  These challenges can be solved with designing following strategies  Product Launch Date  Go to Market Strategy  Sales Force Strategy  Channel Strategy The Challenge
  6. 6.  The market is fragmented and the products were differentiated in two ways: 1. Based on the underlying resources and platforms with which they were associated. 2. Based on the functionality they offered.  Four Prominent Groups 1. Monitoring  Real Time Functioning.  Historical record for benchmarking purposes. 2. Detection  Compare performance to historical metrics. 3. Improvement  System suggests a remedy for the problem. 4. Analysis  Program analyzes effects of prospective change before implementation. Product Types
  7. 7.  Channel Strategy:  Direct Sales.  Indirect Sales (Value-added resellers, System integrators and Original equipment manufacturing agreements).  Sales Cycle Time: 6 to 2 months long cycle time.  Pricing Strategy: Pricing structure: one-time license fee + recurring revenue from annual maintenance and service contracts and additional revenues from product upgrades.  Competitors: Oracle, BMS and Quest. Precise’s Strategy
  8. 8.  Precise/SQL  Software product managing the performance of applications utilizing Oracle database.  Targeted at users of proprietary applications.  Inter point  Software product monitoring the database efficiency of large Enterprise Resource Planning applications.  Precise/Pulse  Software product continuously monitoring the underlying database.  Precise/Presto  For monitoring the performance of EMC storage products.  Sold on an OEM basis by EMC. Product Portfolio
  9. 9.  Dual-channel distribution system  In North America the sales force was comprised of 17 account executives.  The reps were well trained in all products and good in solving database problems.  Internationally the company sold through distributors.  The target was the DBA, because the product benefits accrued to the DBA’s and impartial evaluation of DBA performance. Sales & Channel Strategy
  10. 10.  Value Proposition : End-to-end performance management product.  USP: Important indicator of systems effectiveness: end-to-end response time.  Position Strategy:  Position as a provider of enterprise performance solutions, not just products.  Position as an end-to-end infrastructure company not a database company.  Market Dynamics:  Large Market.  No Current Direct Competitor .  Substantial Value Proposition.  Available Go To Market Option:  Introduce the GA version of Insight at Oracle’s annual Open World Conference in Sept 2000. ‘Insight’ Introduction Factors To Be Considered
  11. 11. Q1)When should Alon plan to launch ‘insight’?
  12. 12. Options available – Openworld 2000 or Openworld 2001  The arguments in favor of launching INSIGHT are:  First mover advantage.  Setting expectations in the market: defining ‘end-to-end’ space.  Being identified as the player in the emerging segment.  Tying up important lead customers.  Figuring out potential problems in space before others.
  13. 13.  The arguments against launching INSIGHT are:  Reputation: If Precise creates an expectation and show up with partial solution, it might have negative impact on company’s reputation.  Impact on process: Precise might rush through the alpha and beta phases, missing important insights.  Pricing: If Precise launches a lightweight version of INSIGHT at a reduced price, it may be difficult to raise that price later when the product is at full functionality. Options available – Openworld 2000 or Openworld 2001
  14. 14. Q2) Should Precise launch separate sales force for the new product or sell it through their existing sales force?
  15. 15. Arguments for single sales force:  They have been successful in selling multiple products (Interpoint as well as Pulse) in the past.  They are experienced and successful. They know the space and their expertise has not been debated till now.  They have developed strong relationship with the DBAs and have been viewed as important problem solvers.  There is a fixed cost associated with starting and running a sales force.
  16. 16. Arguments against multiple sales force:  The buying process is quite different. DBAs bought SQL because it helped her to win ‘blamestorming’ session. But the sales of INSIGHT is based on an understanding of CIO’s pain points.  There can be problem of ‘cross-product’ effect. Sales team might not be able to allocate the right amount of effort to sell INSIGHT and SQL simultaneously.
  17. 17. Q3) How should ‘Insight’ be priced? Develop an ROI model for Precise/SQL product.
  18. 18. ROI model for Precise/SQL  DBA Saving: Assuming they work for 40 hours per week No. of hours saved/DBA/Year = 9.4*52 = 489 hours Salary of DBA = $60000/52 weeks/ 40 hours per week = $28.85/hour Annual saving per DBA per year = 489*26.64 = $13027/DBA Annual saving per firm = 13027*10 = $130270
  19. 19. ROI model for Precise/SQL  Hardware saving: Assuming annual interest rate = 10% Cost of capital saving = 143000*.10*3*.6/12 = $21450 Saving due to price drop = 1430000*.3*.6*3/12 = $64350 Total hardware saving per firm = 21450 + 64350 = $85800
  20. 20. ROI model for Precise/SQL  User saving: No. of daily transaction per user = 194000/215 = 903 trans/user Daily end-user response time per user = 903*15 =13545 sec/user = 3.76 hours/user/day Improvement in end user response time = .25*3.76 = 0.94 hours % of response time saved per user = .94/8 = 11.75% of time Saving per user = 30000*.1175*0.33 = 1164/user/year Total user saving = 1164*215 = $250098/year
  21. 21. ROI model for Precise/SQL  Total saving = 130270 + 85800 + 250098 = $466169/year Average price that firm is charging = (15000+25000) /2 = $200000 ROI = 466169/200000 = 233.3%
  22. 22. THANK YOU

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    Jan. 14, 2016

Solution to Precise case

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