Assignment 4

Should Alon plan on introducing Insight at Oracle Openworld 2000? Why or Why not?
What business outcomes he intend to attain with Precise Insight?

The arguments in favor of launching INSIGHT are:

o Setting expectations in the market: defining ‘end-to-end’ space

o Being identified as the player in the emerging segment
o Tying up important lead customers
o There is always a option to pull out OpenWorld if they think that they will not be
able to make it
o Figuring out potential problems in space before others

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
sales force?

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.

Arguments for 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.

What value is Precise SQL delivering to its clients? 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 = 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

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

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*1.33 = 4688/user/year Total user saving = 4688*215 = $1007920/year

ROI model for Precise/SQL

Total saving = 130270 + 85800 + 1007920 = $1223990/year

Average price that firm is charging = (15000+25000) /2 = $20000 ROI = 1223990/20000 = 6112%

Which value element of Precise SQL is making it attractive for DBA's in organisation?

We would recommend value based pricing approach. That means a price for
a customer should be proportional to the perceived value derived by the
customer from the solution