For software to manage the performance of Oracle databases was one Of the largest segments Of the market. Competitors Revenue Products in performance (2000) software market Functionality “Oracle Optimizer”, as part Oracle BMW $10. 1 billion 1. 7 billion of its database package “Patrol” (created of Monitoring total revenue in 2000) ISIS million Quest (Booking) AS different products Monitoring, (S were relevant to Precise) Detection The major products Precise Software Solutions introduced into the performance management market were Precise/SQL, Precise/alienation and Precise/Pulse.
Both Precise/SQl_ and precise/alienation offered the full range of functionality trot Monitor to Analyze.
The functionality of these two products created competitive advantage for Precise Software Solutions, With the core-offering reduce, Precise/SQL, the company had built a strong reputation as a developer of high quality products. ! Consumer analysis: Database administrators (DAB) were the main targets for Precise Software Solutions. Dabs were the direct beneficiaries Of performance management software in firms.
Thus, they were capable of recognizing the products value.
However, many DAB’S were budget-limited when they purchase the product. They were only authorized to purchase a product range under $25,000. Close and VSP, Who could actually prove the purchase, were really hard to get in touch. Compared to Dabs, they were more likely not to purchase the products. Of the customer had been surveyed claimed, “end-to. End response time was the important indicators of a systems effectiveness.
For the new end-to-end product, the principal demand would come from 4 firms investing money into enterprise-wide applications. ! Product analysis: The products of Precise Software Solutions were focused.
Most of its major products were in the performance management and availability market. Precise/ SQL was designed to manage the performance of applications and utilizing Oracle databases. Precise/alienation was developed to monitor the database efficiency of large ERR applications, particularly those offered by Oracle and SAP. The leading vendor in storage device market was EMCEE.
Precise/Pulse was built to monitor the performance of EMCEE storage products, Among 400 companies on the blue-chip client list, nearly 100% of the customers used Précis’s products in conjunction with an Oracle database, These major products of precise Software Solutions were actually designed to support the utilization of their competitors’ products. As products of Oracle and EMCEE having more and more market share in the IT industry, Précis’s product could gradually penetrate into the market. The new end-to-end product, Insight, was aiming at the unfulfilled consumer demand.
It was designed to manage the performance Of entire IT system, Which actually delivering efficiency and effectiveness to customers. With a big amount of money invested in enterprise applications like ERP, CRM or supply chain management, efficiency and effectiveness were expected by users. The new end-to-end product, Insight, was needed to ensure such expensive applications running efficiently and effectively. ! Distribution analysis: There are three common channels for distributing commercial software applications such as direct sales, value-added resellers (Vicars), and systems integrators.
It was very difficult to launch new product through the latter two channels, which represented a third party approach to selling. Direct selling was generally preferred for higher-price applications and those of which the value and sales process were more complex. Précis’s competitors, BMW and Quest, sold their products into performance footwear market through direct sales channel: sales reps were the major sales force in the market. Precise Software Solutions sold its products through a duel- channel distribution system. About 55% of its revenue came from the direct channel and 45% came from the resellers. Promotion strategy: Reps were the main factor for Precise Software Solutions to sell its products. They were high motivated and professional to sell the products because of related training and high commission strategy. Precise purchased industry lists With the names and phone numbers Of key contacts in the target firms. Reps built very strong relationships With their DAB clients, which was the direct beneficiaries of Précis’s products. DAB sometimes may not be able to make purchase dictions, however, they could influence the decision-making.
Reps tried to get information from DABS and tried to keep good relationship with the diction makers. ! Pricing strategy: Other then the one-time license fee, recurring revenue was generated from most customers via annual maintenance and service contracts, which priced 15% to of the one-time license fee, Additional revenue from existing customers was IA product upgrades and cross-selling other products to satisfied customers. Software can generate revenue for a company in a long period of time, Average price of Precise ‘SQL had been between $15,000 and 525,000 with average discounts around 25%.
Giving discounts may allowed sales force to sell the products easier, since DABS can make their decision without being approved by the CICS or VSP In addition, they charged more for higher- powered computing environments, which meant that the price was actually based on the value the customers received from the performance management. Recommendations: The sales price of $250,000 Alone estimated was appropriate, since there was no direct competitor in end-to-end category. Besides, in the Hi-tech industry, the products update fast; thus the introducing price should be higher, because the price is only good as the technology last.
The high price should be charged when customers still need the products. Precise Software Solutions should use direct selling channel for the new product, Insight. Insight being a $250,000 high priced solution with more complex functionality; a well-trained sales force will achieve better results. Like what they did for the Precise/SQl the sales team will then be able to gather more and more knowledge on end-to-end IT deployments at customer places, and suggest them best possible configurations for the insight solution.
They can also accurately estimate their ROI resulting in better sales. Also, being new to market, Insight, is not mature yet, it would be hard to sell through third parties. However, all Of the recommendations above should be based on the full version of Insight. Most software sales over $25,000 require an executive approval. With a price Of $250,000, it is unrealistic to expect hat executives will commit such large amounts of their budget to an unfinished software solution.