Executive Summary:
SaleSoft, Inc. a 2 year old company in the Software Automation industry, currently markets a product called PROCEED which is a Comprehensive Sales Automation System (CSAS). It integrates and automates various functions across the organization which helps in bringing down order cycle time and improving efficiency. However, the product is still under development and will take around 8 months and 1million dollars to be completed. SaleSoft also recognizes that a greater portion of its consumer base wants a product that has greater functionality like Sales Forecasting to be provided to the finished PROCEED software. The new product, called Trojan Horse (TH), if developed will take 3 months and $ 200,000 to be completed. It uses
Developing TH will require $200000 and at least 3 months whereas PROCEED will require 1 million dollars and 8 months. This creates short-term advantage of TH over PROCEED. Since TH is more of a basic product, it will attract more customers over PROCEED which tends to lose its customers. TH is focusing on sales only, whereas PROCEED extends its range over sales, marketing and services. TH significantly decreases the number of people involved in the buying cycle as compared to PROCEED since it is easier to quantify the benefits of TH. Only a fraction of the cost of customizing PROCEED is required for TH. TH was a CMS by nature whereas PROCEED is itself a CSAS
• The market for high end products affords higher barrier to entry, lesser competition and offers first mover advantage.
• Comparatively, the market for low end products has high competition and many new entrants (Microsoft, Lotus).
• There has already been a large investment in development of PROCEED, which would increase with shift to TH. The probability of recovery goes down with increasing competition, making return back to PROCEED’s development a murkier proposition.
• SaleSoft’s existing 5 customers have been promised a complete release of remaining modules by June