Precise Software

1. In assessing the value of Precise SQL for the user firm one has to consider increase in DBA productivity. Assuming 52 weeks in a year, how many hours does a DBA save in a year because of Precise? 3 Points DBA Hours Saved per year52 * 9. 4488. 8 DBA Hourly Wage (assuming 40 hours to a week) 3 Points Unburdened DBA salary$60,000 Hours worked Per Year52 * 402080 Burdened DBA salary1. 33*$60,000$79,800 DBA Hourly Wage (unburdened)$60,000/2080$28. 84 DBA Hourly Wage (burdened)$79,800/2080$38. 36 Annual Saving for the customer firm Hours saved per DBA per week9. 4 Hours saved per DBA per year52 * 9. 4489Savings per DBA per year (unburdened)489*$28. 84$14,102 Savings per DBA per year (burdened)489*$38. 36$18,758 Average number of DBA's10 Annual savings for firm per year (unburdened)10*$14,102$141,020 Annual savings for firm per year (burdened)10*$18,758$187,580 2. Precise SQL also helps with respect to deferral of hardware replacement decision. Answer the following questions on hardware deferral What is the probability of postponing hardware purchase for a year? Hint (a year has 12 months or four 3-month periods). 3 Points Probability of postponed purchase (A) for 3 monthsP(A) = . 6 Probability of making purchase (B)P(A) = 1-P(A). Probability of not making a hardware purchase for 1 yearP(A)4. 1296 Hardware Cost Saving if postponed by a year 30% 1 Point What is the average annual hardware budget affected by Precise? $1,430,000 1 Point Based on the above three pieces of information, what is the dollar savings due to deferral of hardware purchase? Average annual hardware budget affected by Precise$1,430,000 Hardware Cost Saving if postponed by a year30% Probability of postponing by 3 months60% Savings for three months($1,430,000*. 3*. 6)/4$64,350 Dollar savings due to deferral of hardware purchase for one year($1,430,000*. )$429,000 5 Points 3. Precise SQL also enhances end-user productivity; please answer the following questions on end-user productivity (total 15 poi nts). Number of transactions per day: 194,000 Total time in seconds spent in these transactions in one day prior to precise? 2 Points Average daily transactions processed by all users combined194,000 Average end user response time per transaction15 Total time in seconds15*194,0002,910,000 Total time in seconds spent per user per day: 2 Points Total time in seconds to accomplish 194,000 transactions2,910,000 Number of simultaneous users215Number of transactions per user194,000/215902 Total time in seconds spent per user per day:902*1513530 Total time spent per user in hours over one day? 2 Points Total time in seconds spent per user per day:902*1513530 Total time spent per user in hours over one day13530/60*603. 76 Assuming an 8 hour day – % time spent 2 Points Total time spent per user in hours over one day13530/60*603. 76 % of time spent3. 76/8. 47 (47% of user time) Improvement in end-user response time per transaction: 25% Based on the above two pieces of information, % of time saving: Total time spent per user in hours over one day13530/60*603. 6 % of time spent3. 76/8. 47 (47% of user time) Improvement in end-user response time per transaction25% % of time saving:. 25*. 4711. 75% Using information on time saving from above, the salary information, and information on burden rate , what is the $ saving per user per year? Average end user salary$30,000 Burdened rate, average end user salary$30,000*1. 33$39,900 $ savings per user per year11. 75%*$39,900$4,688 Using the above number, what is the saving for the firm (in dollars)? $ savings per user per year11. 75%*$39,900$4,688 Number of users215 Total user savings for the firm215*$4688$1,007,920 . Cost of selling a Single Unit of SQL (for 1999) : Revenues (Software License): $9,770,000 Assuming $20,000 price per unit, number of units sold: 2 Points $9,770,000/$20,000 = 489 (approx) Assuming Sales and Marketing expenses capture all sales related expenses, cost of a single sale: $7,913,000/489 = $16,183 3 Points ? 5. Total Value of Precise SQL The value of Precise SQL to an end-user firm has three components that you have calculated thus far. Taking these three components together what is the value of Precise SQL for a customer firm with one copy of the SQL? 3 PointsAnnual savings for firm per year (burdened)10*$18,758$187,580 Annual hardware deferral savings(1,430,000*. 3)$429,000 Total User Savings215*$4688$1,007,920 TOTAL$1,624,500 With a customer investment of $20K, what is the return on investment? Cost per license$20,000 Cost per firm (assuming 10 DBA's per firm and each DBA requires a license)($20,000*10)$200,000 Discount (assume 25% discount as per page 8 of case)($200,000*. 75)$150,000 ROI (12 MONTHS)($1,624,500-$150,000)/$150,000983% With your ROI calculation is Precise able to capture (appropriate) the value it creates for its customer? Why or why not?Given the scenario that led to an ROI calculation of close to 1000%, the product is priced too low. Precise needs to focus on communicating the value generated by usage of their software to potential customers in an effort to support increasing the price of their product to more accurately reflect its overall value to the end user.? 6. In terms of sales force for Insight, Precise has two choices, what are these choices and what are the two main advantagesdisadvantages of using each option. Precise currently has a single sales team trained to sell all of the company's products (other than Presto) through a dual channel distribution system.Each rep is paid a base salary of $75,000 plus a commission depending on how many licenses they sold. The average rep made sales of up to $800,000 annually and thus earned $120,000. The highest paid rep about $300,000. Options: a)Keep the same sales force Advantages – Able to continue to cultivate existing business relationships with IT managers and DBA's. Since the sales cycle of software, especially of higher priced suites, could take up to 12 months, these re lationships could prove beneficial for a new product launch.Their overall knowledge of Precise products and services is also an advantage, allowing the sales rep to leverage the full specter of Precise product offerings to a potential client. Disadvantages – The current sales team is perhaps not the best. Their annual sales and salaries are below average for commercial software sales forces. It may not be the wisest decision to leave the sales of your newest product in the hands of an underperforming team. Additionally, the current sales force is already heavily tasked, as Alon stated â€Å"They're running in ten directions at once. Adding to what appears to be an already overloaded sales team would not be the optimum way to introduce a new value and feature laden product to the market. b)Create a more specialized sales force Advantages – Precise would be able to recruit top sales people and begin product introduction with a high performing, laser focused team. This t eam would not have existing relationships with current Precise customers which could be an advantage in dealing with the echelon of Company executives required to authorize a software purchase of this magnitude.Disadvantages – Loss of the personal relationships with current customer DBA's may crimp product sales. Additionally, augmenting the existing sales force adds to the overall operating expenses of Precise and would add to their current string of operating losses. ? 7. One option to introduce Precise Insight at the Oracle OpenWorld 2000. Such an introduction could result in first mover advantage. What are the factors that likely influence the possibility of first mover advantage in this case. How would these factors impact first mover advantage in this case? 0 Points Precise conducted a survey of its customers and quickly found that â€Å"end-to-end response time† was the preferred indicator of overall system capacity and health. High dollar investments in enterpr ise applications like ERP, CRM or supply chain management left those who championed for their introduction into a Company eager to demonstrate the effectiveness of their respective choices. An end-to-end software application would help these internal champions by assuring optimizations throughout the user base.As companies continued to expand their global presence, many locations were separated geographically, at times by thousands of miles. Insight offered a solution to make high data intensive applications run more smoothly and efficiently. The need for senior executives to ensure these high dollar investments authorized by they themselves were successful was itself an undiscovered and underserved market. Meeting the needs of some top decision makers, more importantly, those with the ability to authorize large Company investments would add to the first mover advantage. Precise Software 1. In assessing the value of Precise SQL for the user firm one has to consider increase in DBA productivity. Assuming 52 weeks in a year, how many hours does a DBA save in a year because of Precise? 3 Points DBA Hours Saved per year52 * 9. 4488. 8 DBA Hourly Wage (assuming 40 hours to a week) 3 Points Unburdened DBA salary$60,000 Hours worked Per Year52 * 402080 Burdened DBA salary1. 33*$60,000$79,800 DBA Hourly Wage (unburdened)$60,000/2080$28. 84 DBA Hourly Wage (burdened)$79,800/2080$38. 36 Annual Saving for the customer firm Hours saved per DBA per week9. 4 Hours saved per DBA per year52 * 9. 4489Savings per DBA per year (unburdened)489*$28. 84$14,102 Savings per DBA per year (burdened)489*$38. 36$18,758 Average number of DBA's10 Annual savings for firm per year (unburdened)10*$14,102$141,020 Annual savings for firm per year (burdened)10*$18,758$187,580 2. Precise SQL also helps with respect to deferral of hardware replacement decision. Answer the following questions on hardware deferral What is the probability of postponing hardware purchase for a year? Hint (a year has 12 months or four 3-month periods). 3 Points Probability of postponed purchase (A) for 3 monthsP(A) = . 6 Probability of making purchase (B)P(A) = 1-P(A). Probability of not making a hardware purchase for 1 yearP(A)4. 1296 Hardware Cost Saving if postponed by a year 30% 1 Point What is the average annual hardware budget affected by Precise? $1,430,000 1 Point Based on the above three pieces of information, what is the dollar savings due to deferral of hardware purchase? Average annual hardware budget affected by Precise$1,430,000 Hardware Cost Saving if postponed by a year30% Probability of postponing by 3 months60% Savings for three months($1,430,000*. 3*. 6)/4$64,350 Dollar savings due to deferral of hardware purchase for one year($1,430,000*. )$429,000 5 Points 3. Precise SQL also enhances end-user productivity; please answer the following questions on end-user productivity (total 15 poi nts). Number of transactions per day: 194,000 Total time in seconds spent in these transactions in one day prior to precise? 2 Points Average daily transactions processed by all users combined194,000 Average end user response time per transaction15 Total time in seconds15*194,0002,910,000 Total time in seconds spent per user per day: 2 Points Total time in seconds to accomplish 194,000 transactions2,910,000 Number of simultaneous users215Number of transactions per user194,000/215902 Total time in seconds spent per user per day:902*1513530 Total time spent per user in hours over one day? 2 Points Total time in seconds spent per user per day:902*1513530 Total time spent per user in hours over one day13530/60*603. 76 Assuming an 8 hour day – % time spent 2 Points Total time spent per user in hours over one day13530/60*603. 76 % of time spent3. 76/8. 47 (47% of user time) Improvement in end-user response time per transaction: 25% Based on the above two pieces of information, % of time saving: Total time spent per user in hours over one day13530/60*603. 6 % of time spent3. 76/8. 47 (47% of user time) Improvement in end-user response time per transaction25% % of time saving:. 25*. 4711. 75% Using information on time saving from above, the salary information, and information on burden rate , what is the $ saving per user per year? Average end user salary$30,000 Burdened rate, average end user salary$30,000*1. 33$39,900 $ savings per user per year11. 75%*$39,900$4,688 Using the above number, what is the saving for the firm (in dollars)? $ savings per user per year11. 75%*$39,900$4,688 Number of users215 Total user savings for the firm215*$4688$1,007,920 . Cost of selling a Single Unit of SQL (for 1999) : Revenues (Software License): $9,770,000 Assuming $20,000 price per unit, number of units sold: 2 Points $9,770,000/$20,000 = 489 (approx) Assuming Sales and Marketing expenses capture all sales related expenses, cost of a single sale: $7,913,000/489 = $16,183 3 Points ? 5. Total Value of Precise SQL The value of Precise SQL to an end-user firm has three components that you have calculated thus far. Taking these three components together what is the value of Precise SQL for a customer firm with one copy of the SQL? 3 PointsAnnual savings for firm per year (burdened)10*$18,758$187,580 Annual hardware deferral savings(1,430,000*. 3)$429,000 Total User Savings215*$4688$1,007,920 TOTAL$1,624,500 With a customer investment of $20K, what is the return on investment? Cost per license$20,000 Cost per firm (assuming 10 DBA's per firm and each DBA requires a license)($20,000*10)$200,000 Discount (assume 25% discount as per page 8 of case)($200,000*. 75)$150,000 ROI (12 MONTHS)($1,624,500-$150,000)/$150,000983% With your ROI calculation is Precise able to capture (appropriate) the value it creates for its customer? Why or why not?Given the scenario that led to an ROI calculation of close to 1000%, the product is priced too low. Precise needs to focus on communicating the value generated by usage of their software to potential customers in an effort to support increasing the price of their product to more accurately reflect its overall value to the end user.? 6. In terms of sales force for Insight, Precise has two choices, what are these choices and what are the two main advantagesdisadvantages of using each option. Precise currently has a single sales team trained to sell all of the company's products (other than Presto) through a dual channel distribution system.Each rep is paid a base salary of $75,000 plus a commission depending on how many licenses they sold. The average rep made sales of up to $800,000 annually and thus earned $120,000. The highest paid rep about $300,000. Options: a)Keep the same sales force Advantages – Able to continue to cultivate existing business relationships with IT managers and DBA's. Since the sales cycle of software, especially of higher priced suites, could take up to 12 months, these re lationships could prove beneficial for a new product launch.Their overall knowledge of Precise products and services is also an advantage, allowing the sales rep to leverage the full specter of Precise product offerings to a potential client. Disadvantages – The current sales team is perhaps not the best. Their annual sales and salaries are below average for commercial software sales forces. It may not be the wisest decision to leave the sales of your newest product in the hands of an underperforming team. Additionally, the current sales force is already heavily tasked, as Alon stated â€Å"They're running in ten directions at once. Adding to what appears to be an already overloaded sales team would not be the optimum way to introduce a new value and feature laden product to the market. b)Create a more specialized sales force Advantages – Precise would be able to recruit top sales people and begin product introduction with a high performing, laser focused team. This t eam would not have existing relationships with current Precise customers which could be an advantage in dealing with the echelon of Company executives required to authorize a software purchase of this magnitude.Disadvantages – Loss of the personal relationships with current customer DBA's may crimp product sales. Additionally, augmenting the existing sales force adds to the overall operating expenses of Precise and would add to their current string of operating losses. ? 7. One option to introduce Precise Insight at the Oracle OpenWorld 2000. Such an introduction could result in first mover advantage. What are the factors that likely influence the possibility of first mover advantage in this case. How would these factors impact first mover advantage in this case? 0 Points Precise conducted a survey of its customers and quickly found that â€Å"end-to-end response time† was the preferred indicator of overall system capacity and health. High dollar investments in enterpr ise applications like ERP, CRM or supply chain management left those who championed for their introduction into a Company eager to demonstrate the effectiveness of their respective choices. An end-to-end software application would help these internal champions by assuring optimizations throughout the user base.As companies continued to expand their global presence, many locations were separated geographically, at times by thousands of miles. Insight offered a solution to make high data intensive applications run more smoothly and efficiently. The need for senior executives to ensure these high dollar investments authorized by they themselves were successful was itself an undiscovered and underserved market. Meeting the needs of some top decision makers, more importantly, those with the ability to authorize large Company investments would add to the first mover advantage.