Sales Soft faces a dilemma on whether to continue developing its comprehensive sales automation software PROCEED or divert resources to a sales forecasting software called Trojan Horse. While Trojan Horse could generate quicker revenue, it would mean abandoning the original goal of becoming a leader in the high-end sales automation market. A long-term analysis shows that continuing PROCEED's development is more profitable, as it has no threats from competitors and is projected to generate over $30 million in revenue by 1998 compared to under $10 million for Trojan Horse. Therefore, to achieve its long-term objectives, Sales Soft should choose the PROCEED option over the diversion to Trojan Horse for short-term gains.

1. Sales Soft Case – PGPMX, Mumbai
By Group A - PGMPX 2015 (Amit Jaitly, Mandar Risbud, Michelle DSouza, Sanmeet Dhokay & Vinod
Maliyekal)
What’s the dilemma?
Sales Softwas formed with the primary objectiveof developing and selling a
comprehensiveSales Automation (SA) product & thus becoming a leader in the
high end of SA softwareindustry. 35% of planned SA product(PROCEED) was
complete as of early 1995.
Meantime, Sales Soft came across several feedbacks realizing that it is possibleto
packagethe already completed portion of their softwareinto a “Sales
Forecasting” software(which would be altogether different than the high end
Sales Automation software).
Developing & marketing this Forecasting software(Trojan Horse) would mean
some immediate cash flow but would also mean suspending originalobjective of
becoming a leader in Sales Automation softwareindustry and relinquishing that
market share.
The dilemma was whether or not to take this diversionof route and build and sell
the intermediate Forecasting SoftwareOR stick to original plans and eventually
build and sell the top-end SA product.
Evaluationof Alternatives:
Sales Softhas option of choosing one of the below two alternatives:
1. Continue developing full-range CSAS product(PROCEED) (which is around
35% ready)
2. Use the above 35% ready productand build a mid-segment product(Trojan
Horse) instead of PROCEED & start getting early revenue. But in that effort,
relinquish market share& position of a “leading CSAS organization” to
other competitors

2. CSAS field is very niche and total market size comes to $3.1 billion (as per Exhibit
2). Developing PROCEED falls in line with Sales Soft’s original objective of
becoming the leader of the CSAS segment. Sales Softis already pursuing over 20
prospects & data of 2 such prospects shows promising ROI within 9 to 24 months
(Exhibit 7).
(Cost Benefit Analysis of Implementing PROCEED – derived from Exhibit 7)
Cost of
Implementation
$$ Saved in Sales
Cycle Time
Reduction
$$ Saved in Start-
up Time for New
Sales Person
Prospect A $2.66 mn $777,600 $181,440
Prospect B $6.35 mn $7.05 mn $1.41 mn
Upon review and comparison, following facts go againstpursuanceof PROCEED
development:
1. Revenue realization from PROCEED sales would happen only in late 1996 or
in 1997 whereas Sales Softis currently cash-strapped with net loss of $1.3
mn & will continue to do so till 1997 (Exhibit9 & 10)
2. CSAS purchasedecisions involves many stakeholders & slows down the
process
3. CSAS implementation cycles are lengthy (24-30 months) with heavy
dependence on Consultants
4. Sales Softhas limited sales force & selling Trojan Horse& PROCEED, both, is
not an option. Ithas to chooseone over other, at present
5. To continue with PROCEED development, Sales Soft is going to need
another 8 months and $1 mn more while it is already projecting losses till
1996

3. Following comparison further gives an impression that developing & selling Trojan
Horseis a better proposition:
Trojan Horse PROCEED
Simplified selling process Complex, lengthy selling process
No dependence on Consultants Heavy dependence on Consultants
Only 3 more months for development
(and $200,000)
8 moremonths for development (and
$1 mn)
Low entry barrier for Customers
because of low price
High entry barrier
Shorter implementation time (1/3rd
that of PROCEED) & buying decision
Longer implementation time (24-30
months) & buying decisions
Little end-user training needed Separate efforts/time for training
Below table shows thatin the shortterm, choosing to develop the mid-segment
Trojan Horsesoftwarecan fetch Sales Softa faster revenue realization.
PROCEED Trojan Horse
Would beready by June 1996 Jan 1996
Price/User License $2400 $1000
Estimated # of Users - 5 prospects
- 400 users per
prospect
- Total users: 2000
- 15 prospects
- 400 users per
prospect
- Total users: 6000
Revenue from Licenses $4.8 mn $6 mn
1996 Revenue $2.4 mn
(half-yearly revenue only)
$6 mn
However, this would hold true only in shortterm. Longer term thinking and
extrapolating available projections over 3 years duration projects a different
picture:

4. Basis for abovecalculation:
a) PROCEED revenue figures are taken as is fromTable A
b) Assumptions for TH revenue:
 Currentprospects = 20; out of these, 15 might turn into customers,
as the case study says “severalexisting prospects haveshown
interest in TH”
 Each prospectis assumed to have400 end users (Refer Page 6)
 Licensing price / user = $1000 (Refer Page10)
This graph clearly shows that:
Though short termrevenue calculationshows that TH development is
beneficial, long termviewproves that developing andselling
PROCEED would be far more profitable venture
Conclusion:
- Sales Soft’s originalobjective was to become market leader in the upper
end segment of comprehensiveCSAS software(PROCEED). Deviating from
this objective mid-way and selling TH might relieve PROCEED from it’s
immediate cash worries. However, itwill forceSales Soft to permanently
relinquish it’s currentpromising position in the market
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
1996 1997 1998
PROCEED Revenue
TH Revenue

5. - Though the year of 1995 and 1996 aregoing to give Sales Softno revenue
(and hence a net loss), Sales Softis adequately covered till end of 1996 via
VC funding
- Though TH market is currently promising, it will become very tough due to
planned entries of giants like Microsoftand Lotus
- There is no threat to Sales Soft in the PROCEED segment in the shortas well
as long term.
Basedon all the above points, Sales Soft shouldchoose togo with PROCEED
option.