Group 8 Assignment submission

Salesoft, Inc. (A)

Problem statement : Salesoft was faced with a dilemma whether they would go ahead with
1. Development of three modules (sales system, marketing system and services system) of PROCEED
which would cost a million dollars.
2. Development of “Trojan Horse” which could
 distract salesoft form its primary objective of becoming a market leader in CSAS
 Cannibalize sales of PROCEED
 Prevent forming relationship with consultants whose support was critical to the success of
PROCEED.

OVERVIEW : CASE FACTS

Potential US market is $1 M market which would grow by 40%. This market included 9.2 M people.
Current penetration is 26% which is 2.4 M. Types of sales automation include – Contact management
system (CMS), Comprehensive sales and automation system (CSAS). Leader of CMS is ACT (Symantec).

CMS: Allows the user to maintain access and update details of contact persons in a database that
resided in the sales person’s laptop.
CSAS: i) Provides sales, marketing and service personnel with the suite of integrated tools to enable
them to communicate better and to perform their jobs more efficiently and effectively.
ii) Provide management with backend support system to enable them to manage marketing, sales and
service resources more proactively.
Sales of CSAS product is called PROCEED SMRP®.

PROCEED SMRP®:
PROCEED had eight modules.
Sales System Marketing System Services System
 Field Sales  Campaign  Incident Tracking
 Opportunity Management  Relationship
Management  Marketing Management
 Sales Management Encyclopaedia
 Literature Fulfilment

IDENTIFICATION OF POSSIBLE OPTIONS

a) Proceed with sales of PROCEED at $2400 per user.

b) Launch TH at $1000 per user.
c) Launch TH at $400 per user.

Evaluation of alternatives
PROCEED
Focused on sales, marketing and service
Number of people in buying cycle is higher
Difficult to quantify the benefits of PROCEED
Higher time required to sell PROCEED
Requires 8 months of development time for
marketing and services.
$1 M is required to develop and rollout.
Trojan Horse
Focused only on sales
Number of people in buying cycle is lower
Easier to quantify the benefits of Trojan
One third time of that in PROCEED is required
Needs minimum customization of PROCEED.
This include changing number and name of
segment in opportunity pipeline.
A fraction of cost of PROCEED i.e. $0.2 M
Group 8 Assignment submission

PROCEED would require collaboration with No relation with customers involved.

consultants which would unlock the consultant’s
customers for PROCEED.
Possible alienation of PROCEED from other No such issue in Trojan.
consultants and customers.
Existing: 5 customers and just under 300 users
Prospective: 20 prospects with 200-600 users
per prospects. (Approximately – 8000 new users
of which 25% are sure to come.)
Higher marketing cost than TH. Half a million dollar for broad based marketing
strategy. Eventual marketing cost would be one
third of that of PROCEED.
Separate efforts, time and training is required Little end user training required
High entry barrier Low entry barrier because of low price
PROCEED:

Strength Weakness
Being a CSAS product, it could leverage consultant Decentralized focus, high entry barrier
base of its consultants. because of higher cost per user $2400
Opportunity Threat
Expansion to 8000 new users Microsoft and Lotus.
CMS vendors to upgrade their capability.
TH:

Strength Weakness
Centralized focus on sales with reduced number Cannot leverage consultant customer base and
of people in buying cycle which would take one customers convinced about implementing CSAS
third the time to sell. would not be interested in TH
Opportunity Threat
Capitalize 74% of US market. CSAS, Microsoft, Symantec ACT, Lotus
First mover advantage.

PARAMETER PROCEED TROJAN HORSE($1000)

No. of prospects 5 15*
No. of users per prospect 300 300
Price per user $2400 $1000
Revenue of license $3.6M $4.5M
*(since it takes 1/3rd the time to convert a user, we can convert thrice the number of users that
PROCEED converts.)

Our recommendation:
Thus, Trojan Horse looks like better proposition in short term. But in long term, PROCEED seems
promising because it is the core competency of Salesoft which was its primary objective of the
company being market leader in upper segment of comprehensive CSAS software. PROCEED would
cater to all three functions, marketing, service and sales. Its revenue would rise to $19.2M in 1998 if
it reaches to its prospective i.e. 20 prospects and 8000 user base.