CASE C4: PRECISE SOFTWARE SOLUTIONS

1. Should Alon plan on introducing Insight at Openworld 2000? Why or Why not?

The decision of whether Alon should introduce Insight at OpenWorld 2000 involves several key
considerations -

 Time to Market vs. Functionality

 One of the main dilemmas faced by Alon and his team was the tradeoff between time to
market and functionality. Introducing a more functional version of Insight would require
more development time, potentially risking missing the opportunity to showcase the
product at Oracle OpenWorld in September 2000.
 Missing the OpenWorld event could mean losing out on the chance to engage with a large
number of interested prospects and giving competitors time to develop similar products.
 Alon believed that being first to market with a fully functional end-to-end product could
establish Precise as a leader in the performance management space.

 Selling Strategy

 Another important consideration was the selling strategy for Insight. Should Precise
maintain a single sales force or establish a separate sales force dedicated to the new
product? This decision would impact how effectively Insight could be marketed and sold
in the market.

 Product Development Challenges

 Developing an end-to-end product like Insight posed significant challenges for Precise, as
it required a different skill set and expertise compared to their existing products. The
complexity of the multi-tier environment and the need for a new development team added
to the challenges of bringing Insight to market.

 Pricing Strategy
 Pricing was another critical aspect that needed to be addressed. Alon envisioned Insight as
a key driver in achieving Precise's goal of becoming a $100 million company.
Determining the right pricing strategy, including the actual price, pricing structure, and
sales incentives, was crucial for capturing the value of the product.
Considering these factors, Alon should carefully evaluate the readiness of Insight for the market and
weigh the benefits of launching at OpenWorld 2000 against the risks of potential delays and
competition. While the opportunity to showcase the product at a prominent event like OpenWorld
could provide significant exposure and validation, rushing the launch without a fully functional
product could harm Precise's reputation and market positioning.
Alon should assess the feasibility of delivering a GA version of Insight by September 2000,
considering the product's functionality, market readiness, and competitive landscape. Collaborating
with his team to address the product development, sales, and pricing challenges will be essential in
making an informed decision on whether to introduce Insight at OpenWorld 2000.
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 sales force?

The strategy for Insight should be carefully planned to maximize its success in the market. The
decision on whether to launch a separate sales force for the new product or sell it through the
existing sales force involves evaluating several key factors:

1. Existing Sales Force Evaluation:

o Before deciding on the sales strategy for Insight, Precise should assess the capabilities
and performance of their current sales force. Understanding the strengths and
weaknesses of the existing team is crucial in determining their capacity to effectively
sell a new and potentially complex product like Insight.
o The evaluation should consider factors such as sales expertise, product knowledge,
customer relationships, and the ability to adapt to selling a different type of product
compared to Precise's existing offerings.

2. Product Differentiation and Complexity:

o Insight represents a new and innovative product for Precise, with a different value
proposition compared to their current offerings. The complexity of Insight, being an
end-to-end performance management solution, may require specialized knowledge
and sales skills to effectively communicate its benefits to customers.
o If Insight significantly differs from Precise's existing products in terms of target
market, value proposition, or sales approach, launching a separate sales force
dedicated to this product could ensure focused attention and expertise in selling it.

3. Market Segmentation and Customer Needs:

o Understanding the target market segments for Insight and the specific needs of
customers in those segments is essential in determining the sales strategy. If Insight
caters to a distinct market segment that requires specialized sales approaches or
industry knowledge, a separate sales force may be more effective in addressing those
needs.
o On the other hand, if there is overlap in the target market and customer base between
Insight and Precise's existing products, leveraging the existing sales force with
appropriate training and support could streamline the sales process and maximize
cross-selling opportunities.

4. Competitive Landscape and Differentiation:

o Considering the competitive landscape in the performance management space,
Precise should assess how Insight stands out from competitors and how the sales
strategy can capitalize on these unique selling points. Differentiation through sales
expertise, customer engagement, and value-added services can be critical in
positioning Insight effectively in the market.

Precise should carefully evaluate the alignment of Insight with their current sales force
capabilities, the complexity of the product, target market segmentation, and competitive
differentiation to determine the most effective sales strategy. While leveraging the existing sales
force can provide continuity and efficiency, launching a separate sales force for Insight may offer
specialized focus and expertise required for a new and innovative product like Insight. By
aligning the sales strategy with the unique characteristics and market positioning of Insight,
Precise can optimize its sales approach and maximize the value captured from the new product.
3. Develop an ROI model for Precise/SQL product?

To develop an actual ROI model for Precise/SQL, Precise Software Solutions can follow a
structured approach to showcase the tangible benefits and return on investment that their product
can deliver to organizations utilizing Oracle databases. The model should focus on quantifying
cost savings, productivity gains, and overall value proposition of Precise/SQL.

1. Identify Current Costs:

o Annual cost of database management without Precise/SQL: $200,000
o Estimated annual downtime costs: $50,000
o Total current annual costs: $250,000

2. Quantify Potential Improvements:

o Estimated reduction in downtime with Precise/SQL: 50%
o Expected improvement in database performance: 30%
o Projected time savings for IT team: 20%

3. Calculate Cost Savings:

o Cost savings from reduced downtime: $25,000
o Cost savings from improved database performance: $60,000
o Total projected cost savings: $85,000

4. Calculate Productivity Gains:

o Productivity gains from streamlined database management: $30,000

5. Factor in Implementation Costs:

o One-time implementation cost of Precise/SQL: $50,000

6. Calculate ROI:
o Net Benefits = Cost Savings + Productivity Gains - Implementation Cost
o Net Benefits = 85,000+30,000 - 50,000=65,000
o ROI = (Net Benefits / Implementation Cost) x 100
o ROI = (65,000/50,000) x 100 = 130%

7. Present the ROI Model:

o Communicate to potential customers that by investing 50,000 in implementing
Precise/SQL, they can achieve a return of 65,000 in cost savings and productivity
gains, resulting in a 130% ROI.
Precise Software Solutions can customize this model further based on specific customer needs,
industry benchmarks, and additional factors that may impact the ROI calculation.

4. How should Precise Insight be priced?

Below are the pricing considerations for Precise Insight:

1. Subscription Pricing:
 o Offer a subscription pricing model for Precise Insight, starting at $10,000 per year for
small to medium-sized businesses. This pricing tier could include basic features and
support.
Benefits:
o Predictable revenue stream for Precise Software Solutions.
o Allows customers to budget effectively with recurring payments.
o Encourages customer retention and long-term relationships.

2. Enterprise Pricing:
o For larger enterprises with complex database environments, offer an enterprise
pricing tier for Precise Insight at $25,000 per year. This tier could include advanced
features, customization options, and dedicated support.
Benefits:
o Tailored pricing for larger organizations with complex database environments.
o Reflects the higher value and advanced features provided to enterprise customers.
o Can lead to higher revenue per customer and increased profitability.

3. Tiered Pricing:
o Implement tiered pricing based on the number of databases or servers being
monitored. For example:
 Basic Tier: $5,000 per year for monitoring up to 5 databases/servers.
 Standard Tier: $15,000 per year for monitoring up to 20 databases/servers.
 Premium Tier: $30,000 per year for unlimited database/server monitoring.

Benefits:
o Provides flexibility for customers to choose a pricing tier based on their needs.
o Appeals to a wide range of customers with varying database/server monitoring
requirements.
o Encourages upselling as customers can easily upgrade to a higher tier as their needs
grow.

4. Add-On Modules:
o Offer add-on modules for specific functionalities at an additional cost. For example:
 Reporting Module: $5,000 per year for advanced reporting capabilities.
 Alerting Module: $3,000 per year for real-time alerting features.

Benefits:
o Allows customers to customize their Precise Insight package based on specific
requirements.
o Creates opportunities for additional revenue through the sale of optional modules.
o Enhances the overall value proposition by offering specialized functionalities.

5. Volume Discounts:
o Provide volume discounts for customers with multiple licenses or long-term
commitments. Offer a 10% discount for purchasing three or more licenses.
Benefits:
 o Incentivizes customers to purchase multiple licenses or commit to long-term
contracts.
o Encourages customer loyalty and repeat business.
o Attracts larger customers or organizations with multiple database/server monitoring
needs.

6. Implementation Services:
o Charge a one-time implementation fee of $5,000 for setting up Precise Insight and
providing initial training to the customer's team.
Benefits:
o Ensures successful onboarding and implementation of Precise Insight for customers.
o Provides an additional revenue stream through one-time implementation fees.
o Improves customer satisfaction by offering professional setup and training services.

7. Consulting Services:
o Offer consulting services at an hourly rate of $150 for customers requiring additional
assistance with customization, integration, or optimization of Precise Insight.
Benefits:
o Offers customers personalized assistance and expertise for optimizing Precise Insight.
o Generates revenue through consulting fees for specialized services.
o Enhances the overall customer experience and value derived from the product.

8. Promotional Pricing:
o Introduce a promotional pricing offer for new customers, such as a 20% discount on
the first year's subscription fee for early adopters.
Benefits:
o Attracts new customers and encourages early adoption of Precise Insight.
o Creates buzz and excitement around the product launch or promotional period.
o Can lead to increased market penetration and brand awareness.

These pricing considerations are based on the value proposition of Precise Insight, the competitive
landscape, and the target market segments. Precise Software Solutions can further refine and
adjust the pricing strategy based on market feedback, customer preferences, and ongoing
evaluation of the product's performance in the market. By leveraging these pricing considerations
and their respective benefits, Precise Software Solutions can effectively position Precise Insight in
the market, cater to diverse customer needs, and drive revenue growth for the product.